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EconLawFinalExamCases - P alsgraf v Long Island Rai lway Co...

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Palsgraf v. Long Island Railway Co. 248 N.Y. 399, 162 N.E. 99 (1928) “Proximate Cause” Facts: Court Held: U.S. v. Carroll Towing Co. 159 F.2d 169 (2d Cir. 1947) The defendant’s tugboat was hired to take one barge out of the busy wartime New York Harbor, no one was on any of the numerous barges which happened to be on the same mooring line, and the tug employees rearranged the lines so as to release the one barge--but did so improperly and later one barge broke loose, collided with a ship, and the barge & its cargo sank. The owner of the sunken barge sued the tug’s owner and claimed its employees had been negligent in readjusting the mooring lines. The tug owner responded that the owner of the barge was negligent because its agent (called a bargee) was missing from the barge for no good reason from 5 p.m. one day until the barge floated away at 2 p.m. the next day) and could have made sure the mooring lines were secure if he had been present on the barge. Judge Learned Hand applied economic analysis and concluded that the barge owner was negligent because the marginal cost of additional precaution that could have been taken before the accident (but was not) was less than the marginal benefit that would have resulted. This was the origin of the famous marginal or incremental Hand rule: If w i < -p’A ----> the injurer is negligent
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OR If w v < -p’A ----> the victim is contributory negligent Blyth v. Birmingham Water Works 156 Eng. Rep. 1047 (Ex. 1856). Facts: The Court Held: The T. J. Hooper 6 F.2d 737 (2d Cir. 1932) Barges No. 17 and No. 30 picked up coal cargoes headed for New York at Norfolk, Virginia in March 1928. Two tugs, the Montrose and the Hooper , towed them. The barges and cargoes were lost at sea off the Jersey Coast in a storm on March 10 and the cargo owners sued the barges and the barge owner sued the tugs for its own loss and as bailee [custodian] of the cargoes. Each tug had three barges in tow and in each instance; the lost barge was at the end. The trial court concluded that the barges and tugs were all unseaworthy . Judge Learned Hand wrote in the Appeals Court decision that the only radio receivers on the tugs were owned by members of the crew and were not in working order. He said there was no general custom among coastwise carriers to equip their tugs with radio receivers--some did and many did not. He asked a rhetorical question “Is it then a final answer that the business had not yet generally adopted receiving sets?” [I.e. is custom an accepted defense?] He went on to say “. . . a whole calling [industry] may have unduly lagged in the adoption of new and available devices. . . . There are precautions so imperative that even their universal disregard will not excuse their omission. . . . We hold the tugs liable therefore because, had they been properly equipped, they would have got the Arlington [storm] reports. The injury was a direct consequence of this
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unseaworthiness.” Thus, this famous decision held that custom was not a defense for negligence.
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