## Facts

- Cargo owners shipped goods on the S.S. *Nathaniel Bacon*, a United States–owned vessel operated as a commercial carrier.
- The bills of lading included a “both-to-blame” clause addressing mutual-fault collisions and requiring cargo to indemnify the carrier for amounts the carrier might bear in a divided-damages adjustment.
- The *Nathaniel Bacon* collided with the *Esso Belgium*; both vessels were found negligent, and cargo was damaged.
- Under admiralty’s divided-damages rule for mutual-fault collisions, aggregate losses (including cargo damage amounts) were totaled and then shared equally between the two vessels through an accounting.
- The district court required the *Esso Belgium* to pay cargo interests for cargo damage, but included those cargo damages in the overall aggregate used to divide losses between the two ships.
- Because statutory rules limited the carrier’s direct cargo liability for negligent navigation/management, the United States sought to enforce the “both-to-blame” clause to obtain indemnity from cargo interests for any carrier share of cargo damages reflected in the divided-damages accounting.
- The district court upheld the clause; the court of appeals reversed and held it invalid.

## Issues

1. Whether a “both-to-blame” clause in an ocean bill of lading is enforceable when it requires cargo interests to indemnify the carrier for amounts attributed to the carrier’s fault in a mutual-fault collision.
2. Whether the Harter Act or the Carriage of Goods by Sea Act (COGSA) authorizes such a clause or otherwise permits a carrier to reduce cargo’s recovery through contractual indemnity.
3. Whether enforcing the clause would improperly allow a common carrier to contract against the consequences of its own negligence.

## Decision

- The Supreme Court affirmed the court of appeals.
- The Court held the “both-to-blame” clause invalid and unenforceable against cargo owners and their insurers.
- The Court rejected the argument that the Harter Act or COGSA created an exception permitting the clause.
- The Court reaffirmed that the traditional equal sharing of aggregate losses in mutual-fault collisions remained unchanged by those statutes.
- The Court distinguished *The Jason*, which involved general average contributions rather than a collision-based device shifting the carrier’s negligence burden to cargo.

## Legal Principles

- Common carriers generally may not contract for immunity from liability for their own or their servants’ negligence.
- The Harter Act and COGSA, while limiting certain direct cargo claims against carriers for navigational/management faults, do not authorize carriers to use contract terms to recapture from cargo any portion of cargo’s recovery attributable to the carrier’s negligence.
- Neither the Harter Act nor COGSA altered admiralty’s long-established rule that, in a mutual-fault collision, the full burden of combined losses is shared equally between the vessels through the divided-damages accounting.
- Contract terms that, in substance, shift back to cargo interests the carrier’s collision-loss share function as impermissible indirect exculpation.
- Any change to the rule barring ocean common carriers from stipulating against their own negligence requires congressional action, not private contracting.

## Conclusion

The Court invalidated “both-to-blame” clauses because they operate as an indirect means for an at-fault carrier to avoid bearing its collision-loss share, and it held that neither the Harter Act nor COGSA authorizes such contractual shifting of negligence consequences onto cargo interests.


United States v. Atl. Mut. Ins. Co., 343 U.S. 236 (1952)