De Farconnet v. Western Ins. Co.

• Decision Date: 03 August 1901
• Parties: DE FARCONNET et al. v. WESTERN INS. CO.
• Court: U.S. District Court — Southern District of New York

110 F. 405

DE FARCONNET et al. v. WESTERN INS. CO.

United States District Court, S.D. New York.

August 3, 1901

Butler Notman, Joline & Mynderse, for libelants.

Wing Putnam & Burlingham, for respondent.

BROWN District Judge.

The libel in this case was filed on January 14, 1893, claiming a total loss, upon an abandonment, under a certificate of marine insurance issued by the respondent's agents at Baltimore, Md., on February 8, 1890, for $5,600 upon 5,000 cases of refined petroleum, valued at that sum and shipped by libelants' agents on board the Italian bark Sempre Avanti, at and from New York to Marseilles. The libel alleges that the loss was by sea perils; that the ship became disabled at sea and was towed into St. Georges, Bermuda, in distress, whereby large salvage expenses were incurred, and port expenses in the repair of the bark for the purpose of prosecuting the voyage; that all efforts to obtain funds to pay the salvage charges and other expenses were unsuccessful and that ship and cargo were thereupon sold by the master, as authorized by the Italian consul, and the proceeds applied in payment of said charges, less L89-15-5 remitted to the owners of the ship; that the cargo became a total loss, and that the libelants had made due abandonment to the insurers. An amendment alleged the stranding of the bark for about half an hour, through sea perils, in entering St. Georges, and particular average damage to the cases of oil varying from about 25 to 40 per cent. of its value, through the severe weather, stranding, the leaking of the vessel, and through handling, discharge and storage at Bermuda.

The answer, beside general denials, alleged that the loss was not covered by the policy; that no decree for salvage had been made; that none of the Bermuda expenses were general average that the abandonment was insufficient; and that the suit was barred by the failure of the libelants to prosecute, as required by the policy, within one year after the loss.

The evidence sustains all the most material averments of the libel. The bark was of about 400 tons, staunch and seaworthy. She sailed from New York on March 5, 1890. When three days out she met severe weather, which continued until March 10th, when her rudder was broken by heavy seas and the bark became unmanageable. On the 12th she began to leak, through the pounding of broken pieces of the rudder which were then thrown overboard. A temporary spar-rudder was then rigged up, which gave poor service until the 17th, when it became necessary to cut it adrift. On the 22d the steamer Cathay, in response to the bark's signals of distress, took her in tow, and with considerable difficulty brought her on March 24th within three miles of St. Georges, whence she was taken by two tugs into the harbor. While crossing the bar, however, she grounded upon a coral reef, apparently without negligence in the tugs, but in consequence of her unmanageable condition. She lay there pounding for about half an hour in a strong wind and high sea before she could be hauled off. The stranding caused much additional damage, and increased leaking to the extent of six inches per hour until checked by divers. On surveys the keel was found much chafed, the scarph open a half inch, the keel splintered under the mainmast, and started at the stern post about three-fourths of an inch and the copper off on both sides, requiring about 600 sheets to be replaced.

The value of the bark in her existing condition on arrival at St. Georges was appraised at L300. The estimated cost of repair including dockage and replacing ship's new material used up in salvage amounting to L165-16-7, was L1,223,-11-5. For the purpose of continuing the voyage, the vessel three days afterwards was docked, and the repairs expeditiously made, at an expense, according to the vouchers returned, of about L1,280 for actual repairs, including docking, though there were other incidental charges. The most important items of repair were for calking and for remetaling. Meantime on March 24th, the very day of arrival, a libel for salvage in behalf of the Cathay was filed in the vice admiralty court against the bark, her cargo and freight, which on the 28th were released on bond for L3,000. After a trial, a decree was entered on May 26, 1890, for L2,027, salvage, with L67-14-9 costs, to which are to be added charges for sureties and counsel, making a total aggregate for salvage expenses for L2,337.

The award of salvage for two days' service seems excessive, being about 42 per cent. of the total value of ship and cargo; and this large award was no doubt one of the causes of the subsequent inability to obtain bottomry, resulting in the breaking up of the voyage.

The repairs were completed by the 26th of May, on which day the master obtained the consul's permission to reload the cargo for the purpose of continuing the voyage. The reloading was completed by June 4th. The master in the meantime had been endeavoring to obtain the funds necessary to pay the charges for salvage, repairs and other Bermuda expenses, first from the ship owners and then by bottomry. For the latter purpose he came twice with the consul's permission to New York, where he employed competent counsel and Mr. Seagur, a shipping expert, to assist in obtaining the money. Correspondence and communication were had with the national board of marine underwriters, of which the respondent was a member, and both had full notice at the time of all the master's proceedings in this regard, as well as of the subsequent sale of ship and cargo. An application to them for the loan was entertained, but on consideration declined. Due advertisement was made for the bottomry loan both in Bermuda and New York, and when all these efforts were found to be unavailing, the master by his counsel sent a circular letter to the marine board and to all the underwriters, agents and shippers, informing them of the fact, and that the master would return to Bermuda and sell so much of the cargo as might be necessary for the purpose of raising funds. The master returned to Bermuda on June 19th. He was accompanied on the same steamer by Capt. Cann, a surveyor in the employ of the marine board, who was appointed by the respondent to examine into the circumstances at Bermuda and report, and he was apparently authorized by the respondent to buy in the oil at certain figures given him by the respondent, as recommended by the marine board.

On June 23, 1900, the master applied to the consul for leave to sell vessel and cargo, so far as necessary to pay the charges and expenses, reciting the facts, and in concluding the application he says:

'I hereby give notice to this consulate of my abandonment of said cargo and vessel aforesaid.'

On June 24th, the consul's leave to sell was granted and the sale was advertised for July 8th. On June 16th Captain Cann left Bermuda, and on the 30th of June, after arrival in New York, reported that the oil was to be sold on July 8th; that it was likely to bring three shillings a case, a fair price, and that the 'figures given him' would not probably buy it. On July 8th, the sale was made; the oil brought an average of about three shillings per case, amounting in all to L732-5-0 gross; or L676-16-8 net. The rest of the cargo brought L4,117-3-6 gross. The vessel brought L1,100-0-0 gross, or net L1,017-10-0. The net receipts from the entire cargo were L4,541-3-5. Total net receipts L5,558-13-5. This was L89-8-9 only in excess of the salvage and Bermuda expenses, and this excess was remitted by the master to the owners at Naples 'to be paid to the interested parties.

On July 21, 1890, the libelants informed the respondent's agents of the loss, of the failure of the master's attempts to obtain bottomry, of the sale, and of their desire to abandon. The respondent answered denying any liability, and on November 6, 1890, the libelants made a formal abandonment to the respondent and to the other insurers of particular average losses.

The result, ruinous as it was, was apparently foreseen by the marine board, and its advice to the respondent, one of its members, to buy in the oil, was seemingly given in expectation of some such outcome.

The charges against the ship and owners for general average, approximately reckoned according to the local English rule, and for repairs, docking, commissions, wharfage, wages, provisions and other ship's expenses and port charges not included in general average under the English rule, were apparently not less than L1,900, or about $4,300 more than was realized from the sale of the vessel after she was repaired. To this extent at least the cargo was applied directly to pay the debts of the ship and owners, for which the latter would remain answerable to the cargo owners, and their insurers.

The respondent argues that the proceedings for the sale of the ship and cargo were collusive and fraudulent. But no such charge is made in the answer. The answer alleges, however, that the sale of the cargo was unauthorized and void, and refers to a subsequent adjudication in Bermuda in an action on the master's bottomry draft pledging ship and freight, in which the sale of the ship was held invalid, as appears by the exhibits here offered, on the ground partly of insufficient proof of proper communication with the owner of the bark. The proceedings in that cause, however, being between different parties and on different evidence, are not admissible as evidence in this case, nor is the judgment in any way binding here; it is the same also as respects the suit on the other policies in the French court.

But the question whether the sale of the ship was collusive and fraudulent, or the sale of the entire cargo unauthorized, or the disposition of the proceeds,...