Farrell Lines, Inc. v. Jones - 530 F.2d 7 (5th Cir. 1976)

Rule:

The determination of whether a shipowner is entitled to limitation employs a two-step process. First, the court must determine what acts of negligence or conditions of unseaworthiness caused the accident. Second, the court must determine whether the shipowner had knowledge or privity of those same acts of negligence or conditions of unseaworthiness. Knowledge or privity of any fact or act causing the accident is not enough for denial of limitation; it is only knowledge or privity of negligent acts or unseaworthy conditions which trigger a denial of limitation. Although the petitioner in limitation bears the burden of proving lack of privity or knowledge, the initial burden of proving negligence or unseaworthiness rests with the libellants.

Facts:

Appellant ship owner's steamboat struck a bridge that killed and injured people. Appellant filed a petition for exoneration from or limitation of liability, which the district court denied. According to the district court, the appellant had failed to sustain its burden of proving that navigational errors which caused the collision were without its privity or knowledge. Appellant ship owner sought review of the decision. 

Issue:

Under the circumstances, was the appellant entitled to limited liability? 

Answer:

Yes.

Conclusion:

The court reversed the district court’s decision, and found that appellant had no knowledge of the navigational error that caused the accident. The bridge complement utilized by appellant was reasonable and prudent because one person was continually available to monitor the helm. The positioning of the indicator was not a proper basis for a finding of unseaworthiness. Thus, the district court erred in finding that appellant's steamboat was unseaworthy for those reasons, and appellant was entitled to limited liability.