Alaska S.S. Co. v. Inland Nav. Co.

• Decision Date: 02 February 1914
• Docket Number: 2276.
• Citation: 211 F. 840
• Parties: ALASKA S.S. CO. v. INLAND NAVIGATION CO.
• Court: U.S. Court of Appeals — Ninth Circuit

211 F. 840

ALASKA S.S. CO. v. INLAND NAVIGATION CO.

No. 2276.

United States Court of Appeals, Ninth Circuit.

February 2, 1914

It is alleged in the libel filed by the Inland Navigation Company that on the night of April 25, 1912, while its steamship, the Telegraph, was lying at her berth in good safety on the north side of the Colman Dock in the city of Seattle, Wash., the steamship Alameda, through the gross negligence of the crew of her engine room, and in direct violation of the orders of her master, was driven at great speed head on against the south side of the Colman Dock, and completely through said dock, and the stem of said steamship Alameda was driven into the side of the hull of the said steamship Telegraph causing the latter to sink and founder; that as a result of said collision and of the ramming and sinking of said steamship Telegraph she became and was a total loss; that said collision, ramming, and sinking of said steamship Telegraph was without any fault, neglect, or wrongful act on the part of said steamship Telegraph or any of her officers or crew but was due wholly to the fault of the said steamship Alameda.

The libelant further alleged that said steamship Telegraph immediately prior to the time of said collision was of the value of $55,000; that as a result of said collision and sinking she became of no value whatsoever; and that the libelant was thereby damaged in the sum of $55,000.

In the answer filed by the respondent the allegations of the libel with respect to the circumstances surrounding the collision between the steamships Alameda and Telegraph were not denied nor did the respondent deny liability for the damages sustained by the Telegraph. But the respondent did deny that the steamship Telegraph immediately prior to the time of said collision was of the value of $55,000, and further denied that the libelant, as a result of said collision and sinking of its steamship, the Telegraph, had been damaged in that sum.

The cause was referred to a United States commissioner for the taking of testimony. The testimony was returned into court by the commissioner, and thereafter a final decree was entered by the court below in favor of the libelant and against the respondent for the sum of $45,000, from which final decree the respondent has appealed to this court.

W. H Bogle, Carroll B. Graves, F. T. Merritt, and Laurence Bogle all of Seattle, Wash., for appellant.

Ira Bronson and J. S. Robinson, both of Seattle, Wash., for appellee.

Before GILBERT, ROSS, and MORROW, Circuit Judges.

MORROW Circuit Judge (after stating the facts as above).

Neither the pleadings nor the evidence in this case raise any issue with respect to the liability of the appellant for the damages suffered by the appellee through the loss of its steamship, the Telegraph. It is admitted by the appellant that the sinking of the Telegraph was caused by negligence and fault on the part of the Alameda, and it is also admitted by the appellant that by reason of such sinking the Telegraph became and was a total loss.

But the contention of the appellant is that the court below erred in finding and decreeing that the value of the steamship Telegraph at the time of her loss was the sum of $45,000, or any sum in excess of the sum of $25,000. The amount which the appellee is entitled to recover as the value of the Telegraph at the time she was sunk by the Alameda is the only question we are called upon to determine.

In fixing the sum of $45,000 as the value of the Telegraph at the time she was sunk, the court below proceeded upon the theory of original cost, allowing for the difference of her upkeep and the natural fair depreciation of her hull, engines, house, and equipment. It is insisted by the appellant that the court erred in adopting this method of computation; that the rule of market value should have been followed; that the testimony showed that there was a market for vessels of the type of construction of the Telegraph; that the testimony further established the fact that the market value of the Telegraph at the time she was sunk would not have exceeded $25,000; and therefore the rule of market value should have been adopted by the court in fixing the value of the Telegraph at the time she was sunk. The appellee contends, on the other hand, that, under the circumstances of this case, the market value of the vessel did not measure the damage.

1. That a ship may have a market value, and that such market value, if made to appear, must be used as the basis for computing the amount of damages with which the owner of a negligent vessel is chargeable in a case where, through such negligence, another vessel has been sunk and the owners thereof have sustained a total loss, is a rule laid down by all writers on maritime law.

In Lowndes, Admiralty Law, p. 140, the method of computing the damage to persons who have suffered loss by reason of a collision resulting from faulty conduct on the part of the other ship is stated in the following terms:

'The general principle governing the computation of damages is that the sufferer by a collision which is the result of wrongdoing, whether negligence or mistake, is entitled to 'restitutio in integrum'; he is, so far as practicable, to be restored to the same pecuniary position as if no collision had taken place. * * *

'In the case of a ship totally lost, the owner is entitled to recover the actual value, and this is defined in the admiralty courts to be her market value; that is to say, the gross sum for which she might have been sold immediately before the collision.'

In support of this rule the author cites the decision of Dr. Lushington, in the case of The Clyde, Swabey, p. 23. In that case the celebrated admiralty judge said:

' * * * Wherever damage is done by one vessel to another, the parties are to be restored into the same state as they were before the accident; that is to say, they are to have the full value of the property lost; restitutio in integrum is the leading maxim. The value is the market price at the time of the destruction of the property, and the difficulty is to ascertain what would be its market value. * * * In order to ascertain this, there are various species of evidence that may be resorted to; for instance, the value of the vessel when built. But that is only one species of evidence, because the value may furnish a very inferior criterion whereby to ascertain the value at the moment of destruction. The length of time during which the vessel has been used, and the degree of deterioration suffered, will affect the original price at which the vessel was built. But there is another matter infinitely more important than this-- known even to the most unlearned-- the constant change which takes place in the market. It is the market price which the court looks to, and nothing else, as the value of the property. It is an old saying, 'The worth of a thing is the price it will bring." In the nature of things, the market for ships is different from the market for more numerous articles of lesser value; nor is the market value of a ship so readily ascertainable as the market value of an article of merchandise whereof daily sales are made and daily prices quoted. And with ships, as with other articles, one might have a peculiar value-- a value above that which it would ordinarily have-- on account of its adaptability for a special purpose, or on account of possession of some extraordinary qualification, as that of speed. This rule, with the exception, is stated by Roscoe, in his work on Damages in Maritime Collisions, as follows (page 24):

'When a vessel is totally lost by a collision with another vessel, which was caused by the negligence of those in charge of such other vessel, in order to place * * * the owner of the innocent ship as nearly as possible in the same position as he was before the collision, he should recover from the owner of the wrongdoing vessel the value of the lost ship. In most cases this value is the market value, having regard to the age, character, and condition of the ship. ' It is the market value which the court looks to, and nothing else, as the value of the property. It is an old saying: 'The worth of a thing is the price it will fetch." Dr. Lushington, in The Clyde, 2 Swa. 25. Market value must, however, be distinguished from anything like a forced sale value, for the value for the purposes of compensation is that which a willing seller and a willing purchaser would place upon a ship. While also the above statement of Dr. Lushington, as well as the adage, may be admitted to be correct generally, it is obvious that some vessels may have a value peculiar to themselves, having regard to their use, or the position or occupation of the owner. Therefore, if either owing to the absence of a market, or the peculiar or special character of her trade or work, the lost ship cannot fairly be valued at a market price, then the basis of assessment is the value of the vessel to her owners as a going concern.'

In Marsden's Collisions at Sea (6th Ed.) p. 101, it is said:

'If the ship is totally lost, the owner is entitled to recover her market value at the time of the collision. * * * Where the ship is of a special construction or character, and although of special value to her owner, has little or no market value, damages must be estimated by considering what is her value to the owner as a going concern at the time she was lost. Her original cost, her condition at the date of her loss, money spent in upkeep, and her past earnings, have all to be considered.'

In the Treatise on the Law of Maritime Collisions, by Herbert R. Spencer, we find the following (section 200):

'Restitution is the rule in all cases where repairs are practical, and

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