Petitioner, as sole owner of the fishing vessel Aloha, on February 24, 1928, brought a proceeding in the federal District Court for the Western District of Washington, praying a limitation of liability under Rev. St. §§ 4283, 4284, 4285 (U.S.C. title 46, §§ 183, 184, 185 (46 USCA §§ 183-185)), which are copied in the margin. It was stipulated by the parties that the vessel was of no greater value than the sum of $5,000. After setting forth that petitioner was the sole owner of the vessel, and that the vessel was seaworthy in all respects, the petition alleged, among other things, that the respondent on October 11, 1927, had commenced an action in a superior court of the state of Washington against petitioner to recover damages in the sum of $25,000 for personal injuries suffered while employed upon said vessel. The petition for a limitation of liability was filed four months later while that action was pending, and, it is said and not denied, within two days before the date set for the trial in the state court. Following the filing of the petition, the federal District Court issued an order restraining further proceedings in the state court, and a monition to all claimants to present their claims within a time fixed. The respondent, in response to the monition, filed his claim in the amount of $25,000 for damages resulting from the personal injuries referred to above. No other claim was filed.
Thereupon respondent moved to dissolve the restraining order upon the ground that the state court had jurisdiction of the cause; that there was only one possible claimant and one owner; and that petitioner, therefore, might claim and obtain the advantage and benefit of the limitation of liability statute by proper pleading in the action pending in the state court. This motion the District Court denied, and the cause in respect of respondent's claim was tried. Upon the hearing, the District Court determined that it should first inquire whether there was any liability, and, if there was, then, whether it should be limited; and, at the conclusion of respondent's evidence without taking evidence on the part of petitioner, the court held that there was no liability, and entered a decree accordingly. 32 F.(2d) 284. Respondent appealed to the Circuit Court of Appeals; and that court reversed the decree and remanded the case to the District Court, with directions to dismiss it for want of jurisdiction. 35 F.(2d) 447.
In the Court of Appeals, the decree was assailed upon the grounds (1) that, there being but one possible claim and one owner, the shipowner should have sought his remedy for a limitation of liability by proper pleading in the state court; and (2) that the record disclosed the privity and knowledge of the owner in respect of the matters and things by which the injury to respondent resulted. The court rejected the first contention upon the authority of White v. Island Transportation Co., 233 U.S. 346, 34 S.C.t. 589, 58 L. Ed. 993; but sustained the second, holding that the pleadings and evidence disclosed that the injury complained of was occasioned with the privity and knowledge of the shipowner, and consequently the District Court was without jurisdiction.
We are of opinion that the second contention, upon which the decree below was predicated, did not present a jurisdictional question. The District Court had jurisdiction to pass upon the sufficiency of the pleadings and to decide the question upon the evidence; and a determination thereof either way, whether right or wrong, would have been a determination by that court upon the merits in the proper exercise of its jurisdiction. Binderup v. Pathe Exchange, 263 U.S. 291, 44 S.C.t. 96, 68 L. Ed. 308, and cases cited; Moore v. N. Y. Cotton Exchange, 270 U.S. 593, 608, 46 S.C.t. 367, 70 L. Ed. 750, 45 A. L. R. 1370. In the Binderup Case the rule was stated as follows (page 305 of 263 U.S., 44 S.C.t. 96, 98):