                   United States Court of Appeals,

                             Fifth Circuit.

                              No. 94-60551.

 In re In the Matter of the Libel and Petition of KRISTIE LEIGH
ENTERPRISES, INC., as Owner of M/V KRISTIE LEIGH, et al., for
Exoneration from or Limitation of Liability

     In the Matter of the Libel and Petition of KRISTIE LEIGH
ENTERPRISES, INC., as Owner of M/V KRISTIE LEIGH, et al.,
Plaintiffs.

  GATEWAY TUGS, INC., as Owner Pro Hac Vice, of the M/V KRISTIE
LEIGH, Plaintiff-Appellant,

                                      v.

             AMERICAN COMMERCIAL LINES, INC., Defendant,

Norma L. Castillo, Individually and as surviving spouse of Daniel
Castillo, and as personal representative of the estate of Daniel
Castillo, Deceased, and for and on behalf of all persons entitled
to recover for the wrongful death of Daniel Castillo, and as next
friend to Alisha Danielle Castillo, et al., Claimants-Appellees.

                             Jan. 12, 1996.

Appeal from the United States District Court For the Southern
District of Texas.

Before KING, DAVIS and SMITH, Circuit Judges.

     W. EUGENE DAVIS, Circuit Judge:

     Following a collision between the tow of the M/V KRISTIE LEIGH

and two outboard pleasure fishing vessels, resulting in loss of

life and injury, Gateway Tugs, Inc., sought exoneration from or

limitation   of   its   liability.1        Following   a   bench   trial,   the

district court denied Gateway both exoneration and limitation.


     1
      Kristie Leigh Enterprises, Inc., the owner of the tugboat,
and Valley Line Co., the owner of the barges, were also parties
to the litigation. The district court exonerated both companies
at the close of trial. They are not involved in this appeal.

                                      1
Gateway appeals only the latter decision.   We reverse the district

court's denial of limitation and remand for further proceedings.

                                  I.

     On May 9, 1992, the M/V KRISTIE LEIGH was pushing three empty

barges through the Intracoastal Waterway (ICW) from Brownsville to

Harlingen.     Rather than lashing the barges end to end, Captain

Robert F. Rogers, Jr., the master of the tug, arranged them

three-abreast with the tug pushing the center barge.           In this

configuration, the KRISTIE LEIGH's tow was 105 feet wide and 195

feet long.    Its width, however, made it easier to maneuver in the

strong crosswinds customary at that time of year.     The collision

occurred just south of the intersection of the ICW with the Arroyo

Colorado.     The navigable portion of the ICW is 150 feet wide at

this point.

     Because the wind forced the KRISTIE LEIGH's tow to travel at

an angle, the barges filled the bulk of the channel.      Also, the

position of the tow created a 500 to 600 foot blind spot for the

operator stationed in the wheelhouse.

     At approximately 7:30 a.m., Captain Rogers first spotted the

two fishing boats anchored near the western edge of the channel,

just south of marker 4.    They were more than a mile ahead.    As the

KRISTIE LEIGH approached the boats from the south, Rogers estimated

that he would miss the boats by only five or six feet.   Although he

had two experienced deckhands available and a considerable blind

spot, the captain did not post a lookout.      Nor did he signal a

warning with his horn.    At approximately 7:45 a.m., the tow of the


                                  2
KRISTIE LEIGH struck the fishing boats.

     The district court denied exoneration to Gateway.               The court

concluded that Captain Rogers' violations of Rules 5, 9, and 34 of

the Inland Navigational Rules (INR), 33 U.S.C. §§ 2001-73 (1987),

constituted fault which caused the accident.             Specifically, Rogers

failed to post a lookout under circumstances requiring such action.

See 33 U.S.C. § 2005 (Rule 5).               He did not keep as far to the

starboard side of the channel as possible.                  See 33 U.S.C. §

2009(a)(i) (Rule 9).     And he did not sound a danger signal to warn

the pleasure craft to take evasive action.               See 33 U.S.C. § 2034

(Rule 34).    Despite ruling that Captain Rogers' negligence caused

the accident, the district court did not find him incompetent.

     The district court, nonetheless, denied Gateway limitation.

It charged the company with constructive knowledge of Captain

Rogers' negligence on grounds that neither its president nor its

port captain possessed enough expertise to determine whether the

ships' masters they employed acted reasonably.                The court found

they were in no position to evaluate how tows should be configured

or whether additional crew were needed for a larger-than-usual

load. The company, moreover, "made no efforts to ensure compliance

with [the INR] by its captains."             Finally, the court found Gateway

negligent    for   failing   to   hold       safety   meetings,   enact   safety

policies, or make any inquiry into their captains' operational

decisions.    Therefore, the district court concluded, Gateway bore

" "complicity in the fault' for Captain Rogers' negligence" and was

not entitled to the protection of the Limitation of Liability Act.


                                         3
                                       II.

         The only question this case presents is whether the district

court erred by denying Gateway the right to limit its liability.

     Section 183(a) of the Limitation of Liability Act provides in

relevant part:

     The liability of the owner of any vessel ... for any loss,
     damage, or injury by collision ... incurred, without the
     privity or knowledge of such owner or owners, shall not,
     except in the cases provided for in subsection (b) of this
     section, exceed the amount or value of the interest of such
     owner in such vessel, and her freight then pending.

         Once a claimant proves that negligence or unseaworthiness2

caused an accident, an owner seeking limitation must show it lacked

privity or      knowledge   of   the   condition.       Cupit    v.    McClanahan

Contractors, Inc., 1 F.3d 346, 348 (5th Cir.1993), cert. denied, --

- U.S. ----, 114 S.Ct. 1058, 127 L.Ed.2d 378 (1994).                  A corporate

owner, however, will not satisfy its burden by merely demonstrating

ignorance.      It is charged with the knowledge of any of its managing

agents    who    have   authority   over     the   sphere   of   activities   in

question.       Cupit, 1 F.3d at 348 (quoting Coryell v. Phipps, 317

U.S. 406, 410, 63 S.Ct. 291, 293, 87 L.Ed. 363, 367 (1943)).

     The case before us raises a narrow question.                The appellant

does not contest the district court's finding that Captain Rogers'

negligence caused the collision.              And both parties accept the

court's determination that Rogers did not occupy a high enough

position in Gateway's organization so that Rogers' negligence is

     2
      Unseaworthiness is not an issue in this case. The district
court concluded that the duty to provide a seaworthy vessel did
not extend to these claimants because they were not doing
seaman's work. That holding has not been appealed.

                                        4
imputed to it.    The only issue we address, therefore, is whether

the district court erred in concluding that Gateway could not limit

because it failed to exercise reasonable diligence in discovering

similar navigational errors Captain Rogers had made earlier and

because it did not provide better training and supervision.

      We have found no decision of the Supreme Court or this court

that supports denial of limitation under the facts as found by the

district court.   In Coryell v. Phipps, 317 U.S. 406, 412, 63 S.Ct.

291, 294, 87 L.Ed. 363, 368 (1943), the Court held that "[o]ne who

selects competent men ... and who is not on notice ... cannot be

denied the benefit of ... limitation."      In Mac Towing, Inc. v.

American Commercial Lines, 670 F.2d 543, 548 (5th Cir.1982), we

noted that "[o]rdinarily "errors in navigation or other negligence

by master or crew are not attributable to (the shipowner) for

limitation purposes.' "

      In Continental Oil Co. v. Bonanza Corp., we stated:       "[N]o

court has previously denied a corporate shipowner limitation of

liability for a master's navigational errors at sea when the owner

has   exercised   reasonable   care   in   selecting   the   master."

Continental Oil Co. v. Bonanza Corp., 706 F.2d 1365, 1377 n. 15

(5th Cir.1983) (en banc) (Rubin, J.).

      In Tittle v. Aldacosta, 544 F.2d 752, 756 (5th Cir.1977), we

stated that:

      Ordinarily [limitation] is to afford protection to the
      physically remote owner who, after the ship breaks ground, has
      no effective control over his waterborne servants. Thus the
      errors in navigation or other negligence by master or crew are
      not attributable to him on respondeat superior for limitation
      purposes. In the typical situation of a corporate owned ocean

                                 5
     vessel the privity and knowledge scrutiny focuses in on
     whether the shore-based high-levelled management is aware (or
     should have been) of the likelihood of the occurrence
     happening after the ship is underway.

     The district court did not find that Captain Rogers was an

incompetent     master,      and    the    record    would     not   support    such a

finding.     Captain Rogers was a properly licensed tug captain with

over thirty years of experience.                    With the exception of one

accident,     Captain    Rogers      had    a   clean    record.3         No   evidence

suggested that Gateway knew or should have known that Captain

Rogers had previously committed navigational errors.                            Without

knowledge by Gateway that its captain was inadequate or unsafe the

record does not support a conclusion that Captain Rogers was

incompetent     and    needed      additional       training    or    instruction    in

performing his duties.          Language of the Ninth Circuit in The G.K.

Wentworth,     67     F.2d   965,    966    (9th     Cir.1933)       is   particularly

instructive in this respect:

     It seems to us that the fact that the G.K. Wentworth was a
     river towboat navigating inland waters does not place it in a
     different light, and an owner who has appointed a competent
     shipmaster is entitled to rely on his judgment in the
     navigation of the ship, and should not hamper the further
     exercise of his judgment with instructions and orders....

     The ability and experience of the captain and the other
     officers of the Wentworth are not challenged. It was proper
     for the owners to entrust the management of the vessel to
     them. The appellant had the right to rely upon the fact that
     this competent master would observe the rules of navigation,
     which he well knew....

         The principal authority appellees rely on, Hercules Carriers,


     3
      Captain Rogers' license was once suspended for one month
after he allowed his tow to collide with the Brazos Locks
floodgates, believing them to be open.

                                            6
Inc. v. Claimant State of Florida, 768 F.2d 1558 (11th Cir.1985) is

readily distinguishable.   In that case, before the vessel put out

to sea the owner should have known that the crew failed to meet the

licensing requirements. As the Fourth Circuit points out, the fact

that the vessel's crew was not properly licensed was imputable to

the owners and put it on notice that its vessel was unseaworthy.

Hellenic Lines, Ltd. v. Prudential Lines, Inc., 813 F.2d 634, 639

(4th Cir.1987). In contrast, Gateway had no knowledge that Captain

Rogers was in any way inadequate as a master.    The record does not

suggest that any complaints were ever filed against him or that

anyone ever reported to Gateway that Captain Rogers had improperly

navigated his vessel.   An employee's negligence at sea, without

more, is not enough to deny limitation.         See Grant Gilmore &

Charles L. Black, Jr., The Law of Admiralty 894-95 (2d ed. 1975)

("So long as the Limitation Act is on the books, the owner will of

course be entitled to limitation for events which occur during the

voyage which lie beyond the possibility of his control.")

      In short, the record presents no justification for departing

from the well established rule that, for limitation purposes, an

owner may rely on the navigational expertise of a competent ship's

master.   We therefore reverse the district court judgment denying

Gateway's petition to limit its liability and remand this case for

further proceedings consistent with this opinion.

     REVERSED and REMANDED.




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