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United States v. Carroll Towing Co. - 160 F.2d 482 (2d Cir. 1947)

Rule:

The  right of set-off is subject to the condition that, if one third of the "cargo damage claims" is greater than that value to which the Conners Marine Company may limit its liability, the amount of the set-off will be correspondingly limited. 

Facts:

The United States made "cargo damage claims" against appellant towing company for the loss of its flour, which the railroad paid. A marine company filed a libel against the towing company. The district court found that, if the value of the limitation of the tug was great enough to pay the cargo damage claims and the claims of the line and marine companies, the towing company could set-off one-third of the cargo damage claims against the recovery of the marine and line companies in the limitation proceeding.

Issue:

Can the "cargo damage claims" for the loss of flour during shipment be set-off?

Answer:

Yes

Conclusion:

The United States Court of Appeals determined the set-off rights: if the value in limitation of the towing company's tug proved to be great enough to pay the cargo damage claims and the claims of appellees marine line and railroad, then the towing company will be allowed to set-off against the recovery of each of those companies in the limitation proceeding one third of the "cargo damage claims" recovered in that proceeding. The towing company's right of set-off would be correspondingly limited if one-third of the cargo damage claims was greater than the value to which the marine company could limit its liability, which was a determination for the commissioner. This right of set-off was made subject to the condition that, if one third of the "cargo damage claims" is greater than that value to which the marine company may limit its liability, the amount of the set-off will be correspondingly limited. 

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