Eastern SS Lines v. United States, 1228.

• Decision Date: 14 August 1947
• Docket Number: No. 1228.,1228.
• Citation: 74 F. Supp. 37
• Parties: EASTERN S. S. LINES, Inc. v. UNITED STATES.
• Court: U.S. District Court — District of Massachusetts

74 F. Supp. 37

EASTERN S. S. LINES, Inc. v. UNITED STATES.

No. 1228.

District Court, D. Massachusetts.

August 14, 1947.

Arthur J. Santry and Putnam, Bell, Dutch & Santry, all of Boston, Mass., for libellant.

William T. McCarthy, U. S. Atty. and Edward O. Gourdin, Asst. U. S. Atty., both of Boston, Mass., for respondent.

HEALEY, District Judge.

The Eastern Steamship Lines, Inc., brings this libel in admiralty to recover from the United States of America just compensation for the S.S. "George Washington", which was declared a constructive total loss by the United States on October 30, 1944, after it was damaged in a collision with another vessel on September 10, 1944.

The United States, as charterer, and the Eastern Steamship Lines, Inc., as owner entered into a bareboat charter of the S.S. "George Washington" on March 11, 1942. Under the terms of the charter, the United States assumed all maritime and war risks, and agreed that in case of a total loss, it would be obligated to pay to the libelant "just compensation to be determined in accordance with Section 902 of the Merchant Marine Act, 1936, as amended", 46 U.S.C. A. § 1242. Also, by the terms of said charter, any serious casualty suffered by the vessel could be declared a "constructive total loss" at the option of the United States, in which event the United States would be obligated to reimburse the libelant in the same amounts and in the same manner as it would in the case of an actual total loss.

On demand made upon the United States by the libelant for a determination of the amount of just compensation in accordance with Section 902 of the Merchant Marine Act, 1936, as amended, and for a tender of the amount so determined, the United States on September 28, 1945, offered to the libelant the sum of $667,500 as just compensation for the vessel. The libelant rejected the offer and has brought this action.

The sole question to be determined here is the amount of money that will be just compensation for the loss of the S.S. "George Washington" on October 30, 1944.

Just compensation means the full and perfect equivalent in money of the vessel that was lost. The owner is to be put in as good position pecuniarily as he would have occupied if his property had not been lost. United States v. Miller, 317 U.S. 369, 373, 63 S.Ct. 276, 87 L.Ed. 336, 147 A. L.R. 55. The owner is entitled to the fair market value of its vessel, i. e., the amount that a willing buyer would pay to a willing seller on the date of the loss. However, when for any reason, there is no market, then the owner is entitled to the fair value of the vessel as determined by all the available circumstances and relevant facts, giving each its proper weight and bearing. The Petar, D.C., 68 F.Supp. 296.

Or as was stated by Mr. Justice Butler in Standard Oil Co. of New Jersey v. Southern Pacific Co. and James C. Davis, Director General of Railroads, 268 U.S. 146, 155, 156, 45 S.Ct. 465, 467, 69 L.Ed. 890.

"In case of total loss of a vessel, the measure of damages is its market value, if it has a market value, at the time of destruction. The Baltimore, 8 Wall. 377, 385, 19 L.Ed. 463. Where there is no market value, such as is established by contemporaneous sales of like property in the way of ordinary business, as in the case of merchandise bought and sold in the market, other evidence is resorted to.

"The value of the vessel lost properly may be taken to be the sum which, considering all the circumstances, probably could have been obtained for her on the date of the collision; that is, the sum that in all probability would result from fair negotiations between an owner willing to sell and a purchaser desiring to buy. Brooks-Scanlon Corporation v. United States, 265 U.S. 106, 123, 44 S.Ct. 471, 68 L.Ed. 934. And by numerous decisions of this court it is firmly established that the cost of reproduction as of the date of valuation constitutes evidence properly to be considered in the ascertainment of value. citing cases. It is to be borne in mind that value is the thing to be found, and that neither cost of reproduction new, nor that less depreciation, is the measure or sole guide. The ascertainment of value is not controlled by artificial rules. It is not a matter of formulas, but there must be a reasonable judgment having its basis in a proper consideration of all relevant facts. Minnesota Rate Cases, 230 U.S. 352, 434, 33 S.Ct. 729, 57 L.Ed. 1511, 48 L.R.A.,N.S., 1151, Ann.Cas. 1916A, 18."

It, therefore, appears that in determining the fair value of the S.S. "George Washington", no one factor, but several, must be considered, and that the fair value of the vessel must be determined in the light of all the material facts and circumstances, one of which is reproduction cost, new, depreciated to the time of the loss.

Other factors which must be taken into consideration are the value placed on a vessel for insurance, the earning capacity of the ship, its possible future uses, and the manner in which the ship has been maintained. However, each of these factors must be subjected to the test of relevancy, competency and weight. The Petar, supra.

The facts to be found from the evidence are as follows:

The S.S. "George Washington" was a combination passenger and cargo steel merchant vessel, built in 1924 at Newport News, Virginia. She was 375 feet 5 inches in length, 54 feet 2 inches in breadth, 29 feet 9 inches in depth, of 5,184 gross and 3,167 net registered tonnage. She had a speed of 16 knots normal, 17 knots maximum, fully laden under good weather conditions. She had a passenger carrying capacity of 320 first class and 35 second class, and crew accommodations for 125. Her dead weight capacity for cargo, fresh water and stores was 2,475 tons (of 2,240 lbs) and her bulk cargo capacity was 244,000 (bale) cubic feet, of which approximately 10,000 cubic feet was refrigerated space for commercial cargo, with a temperature range from 15° to 35°. Her motive power consisted of a 2 cylinder steam turbine — Newport News — Curtis type — with 4 Babcock and Wilcox watertube boilers fired by oil.

Her original cost of construction was $1,617,183.81 in 1924, and the cost of betterments, installed at later dates was $157, 184.66. At all times, she was solely owned by the libelant and was engaged solely as a merchant vessel. She was always, to the time of her charter to the United States, maintained in excellent condition by the libelant, and up to the time of her loss, was classed A-1 by the American Bureau of Shipping and the Coast Guard....