Id. 3. Statutory provisions for limitation of liability should be construed liberally to effectuate their purpose. P. 24. 4. A judgment is not conclusive of those matters as to which a party had the option to litigate but did not in fact do so. P. 25. 66 F.2d 651, affirmed. CERTIORARI, 290 U.S. 624, to review the reversal of a decree dismissing a petition to limit liability.

Claim preclusion does not apply where the claim in question could not have been brought in the prior proceeding due to limitations on the prior court's jurisdiction. Marrese v. Am. Acad. Of Orthopaedic Surgeons, 470 U.S. 373, 382, 105 S.Ct. 1327, 1333 (1985) ("[C]laim preclusion generally does not apply where '[t]he plaintiff was unable to rely on a certain theory of the case or to seek a certain remedy because of the limitations on the subject matter jurisdiction of the courts'.") (citing Restatement (Second) of Judgments § 26(1)(c)(1982)); The Norco, 66 F.2d 651, 653 (9th Cir. 1933) ("Parties are not required to set up and litigate rights over which the court had no jurisdiction in order to protect themselves in enforcing their rights in a court which has jurisdiction."). The jurisdiction of the bankruptcy courts, like that of other federal courts, is grounded in, and limited by, statute.

The first is: Did the petitioner waive his right to limit liability in this court by failing to set up the defense of limitation of liability in the state court? The second is: Must the petitioner pay the costs of the claimant in the state court action as a condition of maintaining these proceedings? The third is: Does the charterer have to surrender the entire value of the vessel and freight or merely his interest therein? The first question has been answered by the recent ruling of the Circuit Court of Appeals for the Ninth Circuit in The Norco, 66 F.2d 651, 652, decided August 21, 1933. It was there held that the failure of the defendant to set up limitation of liability as a defense in the state court action did not amount to a waiver of his right to proceed in the admiralty court at a subsequent date to limit his liability, on the ground that "the District Court sitting in admiralty has exclusive jurisdiction to determine all the questions involved in a proceeding for the limitation of liability." The failure to set up a defense of which a court has not jurisdiction neither makes it res judicata nor waives the right to later assert it in appropriate proceedings.