Globe & Rutgers Fire Ins. Co. v. United States

• Decision Date: 26 June 1939
• Docket Number: No. 186.,186.
• Citation: 105 F.2d 160
• Parties: GLOBE & RUTGERS FIRE INS. CO. et al. v. UNITED STATES et al. UNITED STATES et al. v. GLOBE & RUTGERS FIRE INS. CO. et al.
• Court: U.S. Court of Appeals — Second Circuit

105 F.2d 160 (1939)

GLOBE & RUTGERS FIRE INS. CO. et al. v. UNITED STATES et al. UNITED STATES et al. v. GLOBE & RUTGERS FIRE INS. CO. et al.

No. 186.

Circuit Court of Appeals, Second Circuit.

June 26, 1939.

COPYRIGHT MATERIAL OMITTED

Forrest E. Single, of New York City (Douglas D. Crystal and Wilbur H. Hecht, both of New York City, of counsel), for libellants-appellants-appellees and cross-respondents-appellees.

Lamar Hardy, U. S. Atty., of New York City (William E. Collins, of New York City, and Myron H. Avery, Paul D. Page, Jr., Bon Geaslin, Gen. Counsel, United States Maritime Commission, and J. Frank Staley, all of Washington, D. C., of counsel), for the United States.

Before SWAN and AUGUSTUS N. HAND, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

It will facilitate the discussion of the respective rights of the parties to this appeal to consider first whether the cross-libellant is entitled to recover from the cargo underwriters any balance due in General Average. It is argued that the shipowner should recover General Average contribution because of an agreement made on November 24, 1920, to settle all controversies by a General Average adjustment. The agreement provided as follows:

"On fire and beached at Port of Spain, Trinidad. The cargo of coal has been badly wetted in extinguishing the fire, the water having reached a height of 28 ft. in the hold and as it is deemed dangerous and inadvisable to reship coal because of the most certain probability of its firing on account of having been badly wet, it is proposed to sell same at Trinidad if possible, loss to be made good in General Average.

"The United States Shipping Board, owners of the vessel, have concurred in the above, in so far as the vessel is concerned.

"We, the undersigned interested Underwriters on cargo, assent to the foregoing arrangement in so far as interested."

The foregoing document was signed by the underwriters but it is to be noticed that they assented to the arrangement only "in so far as interested". These words may be regarded as reserving both the question whether the owner of the vessel possessed the right to enforce a settlement in General Average and also the question whether the amount stated by the adjusters as due from the cargo was correctly computed. But even if the words were insufficient to reserve the right to contest liability in General Average, the circumstances under which the assent was given seem to negative any intent to settle all disputes by that method and to abandon all defenses. As the court below held, the apparent purpose of the contract of November 24, 1920, was to "provide for the prompt sale of the coal in Trinidad so as to avoid further loss from deterioration and carrying charges." The owner never signed the document and so far as appears never claimed a right to recover in General Average until years after the statement showing a balance due to it was issued. Moreover, an arrangement for procuring the submission of a statement in General Average, or even the giving of a bond to secure payment of a contribution due in General Average, does not normally prevent questioning either the existence or the amount of a General Average obligation. McAndrews v. Thatcher, 3 Wall. 347, 18 L.Ed. 155; Wellman v. Morse, 1 Cir., 76 F. 573, 581; The L'Amerique, D.C., 35 F. 835, 848; Lowndes, General Average, 5th Ed., Appendix V by W. R. Coe, p. 718, at 776.

It follows from the above that the agreement of November 24, 1920, furnishes no ground for a recovery by the shipowner of a general average contribution from the cargo owners.

It is contended, however, that recovery in General Average may be had under the "Jason" clause in Article 11 of the contract of affreightment because the shipowner had exercised due diligence to make its vessel in all respects seaworthy. But the owner of the vessel had the burden of proving such due diligence, May v. Hamburg, etc., 290 U.S. 333, 54 S.Ct. 162, 78 L. Ed. 348; The Wildcroft, 201 U.S. 378, 26 S.Ct. 467, 50 L.Ed. 794, and the district judge held, for reasons that appear to us sufficient, that it had failed in its proof.

The Zaca sailed from Norfolk on October 1, 1920. During the next two weeks the vessel experienced recurrent breakdowns even though the weather was clear. Shortly after leaving Norfolk one generator burned out and the testimony shows frequent trouble with the electrical equipment. Thus, on October 2nd all the electric running lights went out for half an hour; likewise, on October 6th, the dynamo again failed to work and refrigeration ceased. This condition still existed on October 7th so that oil lamps had to be used. On October 9th she arrived at St. Thomas to take on oil, but secured none. She remained there twenty-four hours, sailing thence for Point Au Pierre and then for Port of Spain, Trinidad. On October 11th the dynamo remained out of order and there was no refrigeration. At Port of Spain both dynamos were in very bad condition and were taken ashore for repairs; one was in such shape that it could not be repaired there. There was testimony that the location of the generators was on a flat in the engine-room in a hot part of the ship and that this may have been the cause of the short circuiting and burning out of the generators. Considerable trouble with the generators had been experienced on previous voyages.

Between Norfolk and St. Thomas the vessel experienced priming of the boilers, probably due to a leaking condenser. The evidence indicates that the boilers were priming continuously.

The testimony also shows that on October 2, 3, 5 and 6 the steering gear of the Zaca was out of order. Captain Griffin, at an inquiry before the British Vice-Consul at Port of Spain, testified:

"On the voyage from Norfolk to St. Thomas we twice had machinery trouble. The dynamo broke down and we had priming of boilers due to a leaking condenser."

* * * * * *

"I remained at Port of Spain in consequence of repairs being necessary to boiler tubes, condenser tubes, dynamo, machine, feed pumps and fuel pumps, etc. and cylinder heads, springs, etc."

The Zaca also suffered constant breakdowns on her prior voyage. After leaving Hamburg in June she had to stop on account of boiler trouble and to be towed to New York by the Pocahasset for a distance of about 1,000 miles. On the trip from New York to Norfolk she had steering gear trouble, her boilers primed, and she was towed into port. On August 29th the Zaca sailed from Norfolk for New York, after specified repairs had been completed, but failed to get out of the harbor.

The respondents attempt to meet this evidence of unseaworthiness by offering proof of the following repairs and tests made at Norfolk:

When the Zaca broke down in the harbor at Norfolk it was thought to be unsafe to proceed further without repairs. Accordingly, an attempt was made to cure priming by relocating the dry pipes and steam lines of the boilers. Likewise the condenser, the leakage of which had contributed to the priming on the last voyage, was tested and made tight. There was evidence that after these repairs were completed a test was made which showed that the priming had ceased.

Proof was also offered that the steering gear was overhauled, tested, and found to be in good working order. In August the generators were repaired and tested by running them for three hours under full load. Repairs were also made to them in September.

In view of the frequent breakdowns during clear weather we cannot say that the finding by the trial court of lack of due diligence was not justified. Taking the evidence in the aspect most favorable to the shipowner there was at least justification for a doubt in the mind of the judge as to the adequacy of proof of due diligence. The Southwark, 191 U.S. 1, 24 S. Ct. 1, 48 L.Ed. 65; International Nav. Co. v. Farr & Bailey Mfg. Co., 181 U.S. 218, 21 S.Ct. 591, 45 L.Ed. 830; Benner Line v. Pendleton, 2 Cir., 217 F. 497, 504, 505, affirmed on other grounds, 246 U.S. 353, 38 S.Ct. 330, 62 L.Ed. 770; Compagnie Maritime Francaise v. Meyer, 9 Cir., 248 F. 881. The equipment of the Zaca did not become disabled during a storm as in the case of The Floridian, 2 Cir., 83 F.2d 949. Consequently the court was justified in ascribing the breakdowns to defects existing at the commencement of the voyage. Work v. Leathers, 97 U.S. 379, 24 L.Ed. 1012.

The shipowner presents a further ground for claiming General Average based upon the rule laid down by the House of Lords in Louis Dreyfus & Co. v. Tempus Shipping Co., 1931, A.C. 726. It was there held that a shipowner might recover in General Average where a loss was occasioned by a fire which happened without the fault or privity of the owner despite the fact that the fire was caused by the unseaworthiness of the vessel. This was because the British Fire Statute expressly exempted the "owner of a British seagoing ship" from liability for damage to the cargo by reason of fire on board the ship where the loss happened "without his actual fault or privity". The reason for the decision was given by Lord Atkin:

"If by convention between the parties the so-called fault is an act which is not actionable as between them, the foundation for the doctrine invoked disappears. It is no longer a wrong of the shipowner which has caused the peril: it is no longer inequitable for him to enforce a contribution. * * * That the act or omission is made by statute not actionable rather than by agreement can hardly be a circumstance affecting the ultimate liability. By the most effective method it is prescribed that in cases falling within the statute there is no actionable fault. If so the right to contribution is not destroyed."

The distinction between the English decisions and that of the United States Supreme Court in The Irrawaddy, 171 U.S. 187, 18 S.Ct. 831, 43 L.Ed. 130, was expressly mentioned by Lord Atkin in Louis Dreyfus & Co. v. Tempus Shipping Co., supra. In The Irrawaddy it...