Allen N. Spooner & Son, Inc. v. Connecticut Fire Ins. Co.

Decision Date29 June 1962
Citation206 F. Supp. 495
PartiesALLEN N. SPOONER & SON, INC., Libellant, v. The CONNECTICUT FIRE INSURANCE COMPANY, Respondent.
CourtU.S. District Court — Southern District of New York

Burlingham, Underwood, Barron, Wright & White, New York City, Hervey C. Allen, Kenneth H. Volk, New York City, of counsel, for libellant.

Bigham, Englar, Jones & Houston, New York City, Sheldon A. Vogel, New York City, of counsel, for respondent.

LEVET, District Judge.

The libellant in this suit in admiralty seeks to recover upon a marine hull insurance policy issued by respondent. The libellant claims this policy covered damage sustained in loss of libellant's Pulling Machine No. 12 (hereinafter "No. 12") on July 24, 1958, allegedly due to accidental damage on July 24, 1958.

At the time of the accident, when a port guy wire parted and a 75 foot tall leader collapsed, the No. 12 was under a bareboat charter to R. W. Stasch & Company and was being used in salvaging the sunken tanker, Empress Bay, which was located about in the center of the East River between the Manhattan and Brooklyn Bridges.

As a result of the accident, the No. 12 was declared a constructive total loss, since cost of repairs exceeded the insured value of $35,000. The parties have stipulated that in the event of liability, libellant may recover from respondent $32,020 with statutory interest from July 24, 1958. The difference represents a deductible amount of $480 and the value of the hulk after the accident of $2,500.

The issues under the policy are whether the loss of the barge (No. 12) was occasioned by a peril insured against under the policy and whether the loss of the barge resulted from a want of due diligence by the owner of said barge.

The proposed findings of fact, conclusions of law and briefs of the parties having been received, the court, after considering the pleadings, evidence, exhibits, briefs and stipulations of the parties, now makes and files herein its Findings of Fact and Conclusions of Law, separately stated.

FINDINGS OF FACT

1. Libellant is a corporation duly organized and existing under and by virtue of the laws of the State of New York and with an office for the transaction of business at 143 Liberty Street, Borough of Manhattan, City, County and State of New York.

2. At all times hereinafter mentioned, at the commencement of this suit, the respondent, The Connecticut Fire Insurance Company, was and now is a corporation organized and existing under and by virtue of the laws of the State of Connecticut and was and is engaged in the business of marine insurance, with an office for the transaction of said business within this district at 99 John Street, Borough of Manhattan, City, County and State of New York, and within the jurisdiction of this court.

3. At all times hereinafter mentioned, libellant was the owner of crane barge Pulling Machine No. 12 and prior to the accident hereinafter described said No. 12 was in all respects well found and seaworthy.

4. The No. 12 was a floating derrick, the lifting machinery having been mounted on a wooden barge 139 feet long and 38 feet wide. The tower, or leader frame, was approximately 75 feet high rising almost vertically from the center of the forward end of the barge. The lifting block and cables extended down from the top of the leader frame which was fixed or stationary, being supported by guy wires and steel beams. The hoisting engine was located at the other end of the barge in a small cabin. (Lib. Exs. 3 and 4; SM 46.) The No. 12 was capable of lifting 400 tons. (SM 47; Lib. Ex. 12, pp. 27-28.)

5. Libellant, on July 15, 1958, entered into a bareboat charter with R. W. Stasch & Company for the No. 12 to be used for salvage of the Empress Bay in the East River, New York, N. Y. It further provided that the lessee covenanted and agreed to —

"Return the equipment in the same condition as when received, allowance being made for reasonable usage. Any breakage, damage, or loss to be renewed or replaced to the satisfaction of the LESSOR."

6. In June 1958 libellant agreed to rent the No. 12 to R. W. Stasch & Company to be used in raising the sunken tanker, Empress Bay, lying in about 60 feet of water in the East River about mid-channel between Brooklyn and Manhattan Bridges. (SM 15, 131, 291.) Libellant notified respondent through Carpinter & Baker that it was going to rent the No. 12 to R. W. Stasch & Company to be used in raising the Empress Bay and respondent agreed to this arrangement. At the same time libellant asked that the value of the No. 12 be increased. (SM 17-18, 20, 21, 256-257, 265, 274.)

7. On July 24, 1958, while engaged, in collaboration with certain other craft, all under the control and direction of one Richard W. Stasch of R. W. Stasch & Company, in salvage operations in the East River in New York City in connection with the sunken vessel, Empress Bay, one of the guy wires supporting the lifting crane of the No. 12 parted. As a result, the crane collapsed, was lost over the side, doing severe damage to the hull of the No. 12, which became a constructive total loss.

8. On or about January 7, 1957, respondent executed marine insurance policy No. H231-158 covering various vessels owned by libellant, including the No. 12, valued under the policy at $24,000. Thereafter, on or about December 31, 1957, in consideration of an agreed premium which has been duly paid by the libellant, said policy was renewed with attachments and endorsements extending the term of insurance to December 31, 1958. On or about July 18, 1958, in consideration of an agreed additional premium which has also been duly paid by libellant, the stated value of the No. 12 was increased to $35,000. At the time of the accident marine policy H231-158, issued by respondent, was in full force and effect. (SM 4-5.)

9. The policy contains a so-called "Perils" clause, which is as follows:

"Touching the adventures and perils which we, the said Insurers, are contended to bear and take upon us, they are of the Harbors, Bays, Sounds, Seas and other waters as above named, and Fire, it being the intent of these Insurers to indemnify the Assured for these Insurers' proportion of General Average and/or Salvage Charges and/or loss, damage, detriment or hurt to the said vessel arising from perils aforementioned for which these Insurers may be liable under this policy; it is a condition precedent, however, to any liability under this policy, that the Assured establish that any claim, whether for general average charges, salvage expenses or loss, damage, detriment or hurt to said vessel, has been directly caused by a peril insured against as aforesaid, and that the Assured further establish that such general average charges, salvage expenses or loss, damage, detriment or hurt has not arisen from or been caused by, either directly or indirectly, any of the following or other excluded causes, namely: incompetency of the master or insufficiency of the crew, or want of ordinary care in loading or unloading, stowing or broaching the cargo of the vessel; rottenness, inherent defects, or other unseaworthiness; theft, barratry, or robbery. It is further mutually agreed that this policy does not cover bursting or explosion of boilers, collapsing of flues or injury, derangement or breakage of machinery and/or any expense in consequence thereof or any loss of or damage to any such parts and/or to any other parts of the vessel directly or indirectly resulting from such occurrences, unless the Assured shall establish that such occurrences were caused solely by sinking, stranding, collision with another vessel or burning. No loss is to be paid when such loss arises from failure to keep the vessel well pumped out." (Lib. Ex. 1.)

The policy also contains the so-called "Inchmaree" clause, which is as follows:

"This insurance also specially to cover (subject to the average and all other conditions of this policy not conflicting herewith) loss of or damage to hull or machinery through the negligence of master, mariners, engineers or pilots, or through bursting or explosion of boilers, breakage of shafts, or through any latent defect in the machinery or hull, provided such loss or damage has not resulted from want of due diligence by the owners of the ship, or any of them, or by the manager, but free from any claim for the part in which latent defect existed." (Lib. Ex. 1.)

10. On July 15, 1958, libellant entered into a written contract with R. W. Stasch & Company under which libellant bareboat chartered the No. 12 for the salvage operation. (Lib. Ex. 6; SM 18) Libellant promptly notified respondent through Carpinter & Baker that the charter agreement had been signed and requested that R. W. Stasch & Company be included as a named assured during the period of the charter, which respondent agreed to do. At that time it was also agreed by libellant and respondent that the valuation of the No. 12 be increased to $35,000. These agreements were embodied in an endorsement to the insurance policy executed by respondent. (Lib. Ex. 2; SM 2-3, 7, 18-19, 260, 263; Ans. paragraph Fourth.)

11. The No. 12 was delivered to R. W. Stasch & Company at Pier 31 in the East River on July 18, 1958. (SM 33, 54-55.) The No. 12, including her hoisting equipment, cables, guy wires and machinery, was at this time and on July 23, 1958, prior to the accident, in good condition and seaworthy. (Lib. Ex. 8; SM 25, 34.)

12. Richard W. Stasch of R. W. Stasch & Company was familiar with the No. 12, having used it to lift a sunken dredge in another salvage operation about a year previously. (Resp. response to Request for Admissions, dated March 31, 1960; Lib. Ex. 12, p. 5; SM 10-12, 16, 49.)

13. Under a contract between R. W. Stasch & Company and the United States, Stasch was to remove the sunken Empress Bay from the bottom of the East River. Various craft, all under the direction of Richard W. Stasch, were attempting to perform the contract. These craft included Stasch's...

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