resulting from maritime disasters. Figures of 1 million, 5 million or even a half million may sound substantial, but such figures are not meaningful unless they are translated into awards for individual claimants. A perfect example is found in the collision between the USNS Mission San Francisco and the SS Elna II in March of 1957. For 3 death claims and 42 personal injury claims, the Admiralty Court denied limitation of liability and approved awards totaling approximately $4 million. This makes an average of approximately $90,000 for each claimant. In this connection, it is significant to note that the Warsaw Convention which provided for an upper limit of $8,300 per passenger for personal injury or death was denounced by the United States on November 15, 1965, as being unconscionably inadequate, and the State Department has notified the other governments that, as a condition to the withdrawal of its denunciation, it will require the limit to be raised to $100,000 per person.

With these figures as an authoritative background, we proceed to examine the shipowners' committee's figures, as outlined by Mr. Gerrity, to determine what they mean to individual claimants.

On page 12 of the shipowners' statement, there is listed a group of vessels with the amount of the limitation funds which would be available under the existing law at the rate of $60 per ton-conveniently omitting the higher figures which would be available based on the actual values of the vessels-as compared to the fund, which would be available under the Brussels Convention.

The first vessel listed-as a total loss-is the SS United States, with a capacity of 1,700 passengers, and a crew of 1,051, totaling 2,751 persons. The limitation fund under existing law is stated to be $2,286,180; under the Brussels Plan, the amount available exclusively for personal injury and death is $5,334,420, and a balance of $2,552,901-to be apportioned between property losses and personal injury and death. Dividing the total number of persons aboard2,751-into the fund available exclusively for personal injury and death-$5,334,420-produces an average sum of $1,938 per person. The remaining sum which must be divided between property losses and personal injury and death is $2,552,901. Taking one-half of this sum for personal injury and death, divided by 2,751 persons, gives an additional $928-making a total of $2,866 per person for injuries and deaths arising out of the disaster. Comparison of this figure with the actual average award per person of $90,000 in the Mission San Francisco case or the new limit of $100,000 per person which the U.S. Government has fixed for airline accidents is, indeed, shocking. It demonstrates that the awards under the so-called "enlightened" Brussels Plan are a pitiful 2.2 percent of what the claimants are entitled to receive as a bare minimum. Clearly, these are not limitation of liability statutes, even though they are so titled. They are confiscatory acts which literally rob the widows, children, cripples, and otherwise injured persons.

To dispel any doubt that might be raised because the compilations above stated were based on only one ship, we proceed to the SS Constitution, next cited by the shipowners' committee, a vessel with a capacity of 1,025 passengers and 604 crewmen. The available fund for death and injury is $2,636,242 and the mixed fund for property,

injury, and death is $1,261,630 or a total of $2,005 per person, an incredible 2 percent of what the individual claimants would be entitled to receive.

Proceeding next to the Argentina class, which was cited by the shipowners, with a passenger capacity of 525 and 376 crewmen, the total amount available for injury and death would be $1,527,148, and the mixed fund of $730,849. The total award per person would be $2,100 or 2.1 percent of what each claimant would be entitled to receive.

The Santa Rosa class, next cited by the shipowners, with a passenger capacity of 300 and a crew of 227, would amount to a total of $4,282 per son, or 4.2 percent of what each claimant was entitled to receive. In the case of the Santa Magdalena class, next cited by the shipowners, with a passenger capacity of only 110 and a crew of 115, the total amount payable per person for death or injury would be $9,800, or 9.8 percent. (This approximates I would note this as a significant factor the $8,300 figure per person under the Warsaw Convention which the U.S. Government declared to be unconscionable and denounced the treaty as a result.)

Going to the next case cited by the shipowners, in the case of the Santa Isabel class, with a passenger capacity of only 52 and a crew of 83, the total amount payable per person for death or injury would be $9,755, or 9.75 percent of what each claimant would be entitled to

receive.

The two most recent tragedies involved the Yarmouth Castle and the Viking Princess. The shipowners emphasize page 11 of their memorandum-that the limitation funds under existing law would be more than doubled under the Brussels Convention. It is therefore fitting to determine how much the increased funds would provide for the individuals involved.

With regard to the Yarmouth Castle, the fund solely available for injury and death is $570,444, and the mixed fund adds an additional $136,499 or a total of $706,943. The vessel carried 376 passengers and a crew of about 250, making a total of 626 persons. The total average amount payable to each claimant would therefore be $1,129 or 1.1 percent of the amount each would be entitled to receive.

In the case of the Viking Princess, the total amount available solely for injury and death would be $1,610,392, and the additional sum of $385,344 from the mixed fund-making a total of $1,995,736. The vessel carried 496 passengers and required a crew of about 350. The amount payable to each person would be $2,359 or 2.3 percent of what each person would be entitled to receive.

Senator MORTON. Mr. Freedman, if you would yield at that point. You have given us a great many figures. Aren't you going on the assumption that everybody is killed in a disaster?

Mr. FREEDMAN. No, sir, absolutely not. We are going on the assumption that there will be some killed, and there will be some injured, and that some will only suffer a slight mishap. We are going on the assumption of actual cases involving deaths. As a matter of fact the Mission San Francisco was an actual case cited not too long ago not by a jury but by a commission a court. There is no emotionalism entering into it. In that case there were 3 deaths, and 41 or 42 injury claims of greater or lesser degree. Approximately $4 million was

awarded in a situation which involved one of these similar type maritime catastrophes.

The $4 million, the point that I am making, the average which I have taken is the average of all of them. In other words some will be higher, some will be lower. But this is the average, involving personal injury and death.

Senator MORTON. But you say here, on page 11 of your testimony, in talking of the Yarmouth Castle, which was a great tragedy, one of the greatest tragedies we have had in modern times, no question about it. You say the total average amount payable to each claimant would be $1,129.

Mr. FREEDMAN. That is average, Senator. That is average when you take the full amount. Any one claimant in the death cases, and any one of the death cases on the Morro Castle, would have consumed most if not all of this fund. You have people of affluence, people well up in the higher brackets, and they would be entitled to receive what they would have recovered had they lived.

It is of interest, Senator, also to note that the people who get the highest awards are not the victims, those who are killed, but those who sustain personal injury. In other words a personal injury award is generally higher than the death claim.

Senator MORTON. It seems to me that these figures that you have put in in the last four pages of your testimony are hypothetical figures that assume that there is complete loss of life of all the passengers and all the crew.

Mr. FREEDMAN. No, Senator. It assumes only what has been average loss of life and personal injury. We are basing this on an actual case recently decided which involved only a relatively few deaths and a large number of personal injuries, where claimants made recoveries in greater or lesser amounts, and we averaged them. It does not as

sume that everyone will be killed. As a matter of fact the awards would be greater if they weren't killed because the exposure and the traumatic effect of this type of disaster is such that the awards are generally higher than they are in the case of deaths. As a matter of fact in the Mission San Francisco, the awards for personal injury exceeded the awards, per case, for death.

Senator MORTON. Of course in the case of aircraft, unfortunately, the tragedies which we have often result in killing everybody on board. Mr. FREEDMAN. Yes.

Senator MORTON. This is not the case in the maritime

Mr. FREEDMAN. This might sound strange, Senator. There is a saying that we get out of the law and this is common: It is cheaper for a tortfeasor, a shipowner, to kill rather than to cripple. Much cheaper to kill than cripple. This is common, and everybody knows it. This kind of disaster, there were papers written about this kind of disaster, and the impact of the shock left on the victims, which haunts them for the rest of their lives. These are terrible, terrible tragedies. The shock is even greater, that is the loss is even greater, and the awards are greater, when they are short of death. As I said, this is something that you will find, and every judge will tell you it is a fact, that it is cheaper to kill a victim rather than to just injure him.

Senator MORTON. Continue with your statement, Mr. Freedman. I will have more questions later.

Mr. FREEDMAN. If you think it would be helpful, Senator, I would be delighted to furnish you with figures which substantiate what I just said, statistics, figures, and other documentation which would be irrefutable.

Senator MORTON. I think you have plenty of figures here. I am just trying to figure out what they mean.

Mr. FREEDMAN. All they mean, to boil it right down, is that under today's laws or under the so-called "enlightened" Brussels Convention, a claimant would get in the neighborhood of 4 percent, sometimes 1 percent, sometimes 2, but an average of about 4 percent of what he is entitled to recover under the law. About 4 percent, under so-called "enlightened" legislation. That is what these figures mean, boiled down to one sentence.

Senator MORTON. Enlightened legislation?

Mr. FREEDMAN. That is what they call it, enlightened legislation. Senator MORTON. I thought it was a treaty.

Mr. FREEDMAN. The Brussels Convention; yes, sir. That is supposed to be more enlightened. It is not as good as the remedy they have today, as I believe was demonstrated in the papers heretofore. Senator MORTON. You may proceed.

Mr. FREEDMAN. The foregoing calculations establish, from the shipowners' "enlightened" figures that the average recovery per person for death or personal injury is about $4,200 or about 4.2 percent of what each claimant should have received as a minimum. This is about one-half of the amount allowed under the Warsaw Convention$8,300-which latter figure the U.S. Government has officially declared to be so unconscionable as to necessitate withdrawal from and a denouncement of the international agreement. It is incredible that this shocking situation should have been allowed to exist for so long at the expense of the victims of maritime tragedies.

The proposed bill, S. 3251, will correct the situation by repealing the limitation statutes, at least so far as death and personal injury is concerned. The shipowners have complete insurance protection, and there is no sensible or logical reason for perpetuating an iniquitous practice which has required the victims of a disaster to subsidize the merchant marine.

In this connection, reference to the second section of the bill becomes most appropriate. Having become aware of the practices of certain maritime operators to escape liability through the corporate device and other similar devices, the bill requires proof of financial responsibility to meet "any liability for death or injury to passengers or other persons on voyages to or from U.S. ports.' We respectfully suggest that the bill should also require "liability" insurance-I emphasize the word "liability”—not "indemnity" insurance, which most, if not all, insurance companies in the shipping industry carry today. Many shipping companies incorporate each vessel so that if a disaster should occur and the single corporation covering the vessel is unable to carry the financial obligation, as is generally the case, the insurance company escapes completely because the policy provides for indemnity-not liability. The victim of the disaster thus suffers the loss because he cannot collect on his judgment against the corporation.

In Maryland Casualty Co. v. Cushing (347 U.S. 409) a case involving a direct action by an injured party against the tort feasor's insur

ance company under a Louisiana statute, Mr. Justice Black said such a statute "would further the equitable aims of admiralty by providing relief not otherwise available for maritime wrongs"; that behind such a statute "lies a long history of state attempts to protect the public interest by insuring that liability policies furnish adequate protection to persons injured." Further, Justice Black made these very significant comments on the question under consideration here:

At one time insurance companies were commonly able to avoid payment of a single dollar on their policies whenever the insured was insolvent and therefore judgment-proof. The insurance, although bought and paid for, would remain untouched while valid claims went entirely unsatisfied. To prevent this injustice many states passed laws of one kind or another which required insurance companies to pay injured persons even though the insured had paid out no money. The Massachusetts Supreme Judicial Court took the lead in sustaining a law of this type, Chief Justice Rugg suggesting its need to prevent liability insurance from becoming a "snare to the insured and a barren hope to the injured." Lorando v. Gethro, 228 Mass. 181, 189, 117 NE 185, 189, 1 ALR 1374. And, despite the fact that these state statutes wrote compulsory terms and obligations into all insurance contracts, this Court sustained such a statute applying to automobile insurance. Chief Justice Taft said that "* ** it would seem to be a reasonable provision by the State in the interest of the public, whose lives and limbs are exposed, to require that the owner in the contract indemnifying him against any recovery from him should stipulate with the insurance company that the indemnity by which he saves himself should certainly inure to the benefit of the person who thereafter is injured." Merchants Mut. Auto. Liability Ins. Co. v. Smart, 267 US 126, 129, 130, 69 L ed 538, 542, 45 S Ct 320 (U.S. at 431). In concluding Mr. Justice Black held (at p. 438):

Seamen have traditionally been the wards of the admiralty, and admiralty has been increasingly solicitous to provide compensation for accidents occurring in their dangerous work. Thus both the general trend of the law and the specific bent of admiralty support the policy of the people of Louisiana which permits recovery here.

Section 2 of the proposed bill should, therefore, be enlarged to protect all persons against injury or death in maritime disasters on all types of vessels by providing for compulsory "liability"-not indemnity-insurance.

Section 2 of the proposed act is a responsible and necessary provision. Legislation for compulsory liability insurance in connection with the operation of motor vehicles is becoming more and more common in the United States. Much more common, of course, is the requirement in connection with licensed common carriers (Couch on Insurance 2d, section 45:658-45:660). The experience which the various legislatures have encountered in requiring and administering this form of compulsory insurance can be of very significant help to Congress in connection with a present bill, since the public policy involved is the same. Thus, very important is a provision that the conduct of the insured shipowner does not avoid the coverage; and that no statement by the insured or violation of the terms of the policy can insulate the insurer, defeat a claim or avoid a judgment recovery. (See Opinion of Justices, 251 Mass. 569, 147 N.E. 681.) Further, as discussed heretofore, the insurance policy should cover liability as opposed to indemnity, and include a clause permitting direct action by the claimant against the insurer. (See Schmid v. Automobile Underwriters, 215 Iowa 170, 244 N.W. 729; David v. Cal. Highway Indemnity Exchange, 118 Cal. App. 403, 5 P. 2d 447.)