Gulf Oil Corporation v. Panama Canal Company

Citation481 F.2d 561
Decision Date29 June 1973
Docket NumberNo. 72-2074.,72-2074.
PartiesGULF OIL CORPORATION, as owner pro hac vice, of the STEAMSHIP GULFSPRAY, Plaintiff-Appellant-Cross Appellee, v. PANAMA CANAL COMPANY, Defendant-Appellee-Cross Appellant.
CourtU.S. Court of Appeals — Fifth Circuit

481 F.2d 561 (1973)

GULF OIL CORPORATION, as owner pro hac vice, of the STEAMSHIP GULFSPRAY, Plaintiff-Appellant-Cross Appellee,
PANAMA CANAL COMPANY, Defendant-Appellee-Cross Appellant.

No. 72-2074.

United States Court of Appeals, Fifth Circuit.

June 29, 1973.

481 F.2d 562
481 F.2d 563
481 F.2d 564
Joseph C. Smith, New York City, David De C. Robles, Balboa, Canal Zone, for appellant

Dwight A. McKabney, John L. Haines, Jr., Balboa Heights, Canal Zone, for appellee.

Before JOHN R. BROWN, Chief Judge, and THORNBERRY and MORGAN, Circuit Judges.

JOHN R. BROWN, Chief Judge:

Proving again that mortals die but some cases never do, see Brothers Inc. v. W. E. Grace Manufacturing Co., 5 Cir., 1963, 320 F.2d 594, 597-598,1 this run-of-the-mill maritime allision, see Andros Shipping Co. v. Panama Canal Co., 5 Cir., 1962, 298 F.2d 720, 725, has gone from Gulfspray I to Gulfspray II and hopefully will end with this as Gulfspray III.2

What and all that is now involved is the issue of recoverable damages. That none but one of the questioned items would merit any more discussion than a single-worded Rule 21 opinion3 highlights the fact that for the first time in 59 years the 1914 regulations culminating in § 293 of the Canal Zone Code are the subject of judicial decision. Not until this case did Judge Crowe, in his two decades on the Canal Zone bench, ever consider it or for that matter apparently ever have to pass on a collision damage claim. But thereby in part hangs this tale. For unlike a private non-governmental tortfeasor whose settled "practice" in adjusting damage item claims would scarcely impress an adversary, Canal Company insists that in these six decades it has developed settled practices which, emanating from a sovereign's bosom, somehow have the force of the law of the Medes and Persians which altereth not, and certainly not in favor of allowing a disputed item.

Dollarwise the big items, both in principle and principal, are pre-judgment interest and the temporal duration of the detention period beyond the actual time of making repairs on which the Court in a Solomonic way, The Noah's Ark v. Bentley & Felton Corp., 5 Cir., 1961, 292 F.2d 437, 438, 1961 A.M.C. 1641, 1642, held both for shipowner and Canal Company by disallowing the former and allowing the latter. Neither party is satisfied and both appeal.4 We hold that he was half right, half wrong. See Commercial Trading Co., Inc. v. Hartford Fire Insurance Co., 5 Cir., 1972, 466 F.2d 1239, 1241, 1972 A.M.C. 2495, 2496.

In The Beginning

The incident, long ago held in Gulfspray I, to give rise to a claim against Canal Company and determined in Gulfspray II to have been the fault of Canal Company, still has some relevance.

On April 2, 1966, the S/S GULFSPRAY, conned by Canal Company pilots left the Port of Cristobal for a southbound transit through the Canal anchoring in Balboa Harbor that evening. After shifting to a bunkering dock at Balboa she departed in the early hours of April 3, 1966. Shortly after entering the Canal bound for the Pacific terminal it was discovered that a 15-20° right rudder was required to maintain

481 F.2d 565
the channel course. After departing the sea buoy at 0512 hours the vessel continued to take a 15-20° right rudder. Her master determined to return to Canal Zone waters for underwater inspection which he did at about 1218 hours.5 On April 4, a Canal Company diver determined that the rudder was in a position 22 inches off center to the left when the rudder indicators were in an amidships position

In view of this information as to the extent of her damage, it was decided that the GULFSPRAY should deviate from her voyage to Yokahoma and proceed directly to San Pedro, California, to make repairs. It was necessary to discharge her cargo of jet fuel at San Pedro.

Counting the time from putting back into the Canal Zone, survey and inspection there, steaming time to San Pedro, time required for surveys, inspections, discharging, reloading of the vessel, and making repairs, the District Court, 335 F.Supp. 406, found that a total of 11 days was lost and detention claim items were computed on that basis.

Canal Company asserted unsuccessfully that detention and related expenses should be confined to the four days actually used in making the repairs in the shipyard at San Pedro. But the Judge under compulsion of the Canal Zone Code did disallow pre-judgment interest.

The Ebb And Flow of Sovereign Immunity

As Gulfspray I develops, the change in the political and industrial structures of Panama Canal operations brought about a marked relaxation in sovereign immunity and a like extension of the waiver. In 1914, Congress ordained the promulgation of regulations to permit the acceptance and payment of claims for vessel damage in the locks (now 2 C.Z.C. § 291). In the major restructuring of the Panama Canal operations in 1950, Congress for the first time prescribed a like liability for injuries outside the locks. By § 292 of the Canal Zone Code,6 in its post-1950 form, Congress imposed on Canal Company the obligation to "promptly adjust and pay damages". Undoubtedly because of the international character of these waters and the likelihood that the great majority of the claims would be asserted either by foreign governments or their nationals for damage to men of war or privately owned merchantmen, the approach was an affirmative one, rather than the

481 F.2d 566
traditional negatively framed waiver of sovereign immunity.7

In this structure it was therefore appropriate that—to use a term coined much later in the 20th Century—guidelines were ordained for the settlement of such claims. The heart of our problem is found in § 2938 of the 1963 recodification which in its current form is virtually a codification of regulations originating in 1914 as issued by the Governor of the Canal Zone, later executive orders of the President9 and finally legislation

481 F.2d 567
enacted by Congress in 1950. But, of course, this was backed up in § 296 by the traditional language which allowed suit to a claimant "who considers himself aggrieved by the findings, determinations, or award . . ." of Canal Company.10

We Never Have—So Why Pay Now?

With respect to each of the ten items allowed over Canal Company's objection and the disallowed prejudgment interest, Canal Company through claims managers, auditors, examiners, both present and past, sought to establish that these types of claims had never been allowed. They were rejected for GULFSPRAY since the pattern of rejection had been consistent and no one had ever challenged it in Court although § 296 (note 10, supra) opened up an available and physically/geographically contiguous courthouse door. The Judge credited this testimony. But he pointed out that these witnesses ". . . quoted entirely from memory relative to the criteria that has been established throughout the years in settling claims of the nature herein, and no manual or well-defined rules for the interpretation of the statute were ever presented . . ." in Court.11

The Judge summed it up in this pithy way. "The witnesses took refuge in the fact that it had just never been done any other way and that they had learned the method of settlement from their predecessors." The Judge then overruled Canal Company's objection to the ten items because the ". . . decisions by Canal Company . . . were arbitrary and based upon interpretations . . ." which the Judge regarded as outmoded and not in line with the interpretation which, he thought, called for "an equitable approach . . . with a view toward attaining justice for a damaged litigant . . . in harmony with the rest of the Code which did not become effective until 1962." In reaching this conclusion one thing emphasized by the Judge was that Canal Company in the past had been in a position to be quite arbitrary because of the limited opportunity for redress on the part of claimants.

On the Judge's crediting the historical practice followed in denying claims of these fifteen items, Canal Company insists that, as with any governmental administrative agency, these time honored consistent practices must be accepted by a Court entertaining a suit bottomed on dissatisfaction with such administrative rulings under § 296 (see note 10, supra). To sustain this they stress a number of cases in which courts have held that an established administrative construction of a statute should be observed.12

481 F.2d 568

And they particularly stress those which indicate that these principles have particular force where there has been acquiescence by the public in a governmental agency's interpretation of a law. FTC v. Mandel Bros., 1959, 359 U.S. 385, 391, 79 S.Ct. 818, 823, 3 L.Ed.2d 893, 898. We have, of course, accorded great significance to an administrative agency's interpretation of its own organic law and the existence of circumstances calling for the exercise of its powers even to the point of its determining initially its own jurisdiction.13

Prior Rejections—How Significant?

Although in a claims-pay-waiver structure of this kind we think the considered practice in the administration of the act is a factor to be taken into account by the Court in a § 296 suit protesting the administrative handling by the Canal Company, we do not believe that this measures up to the significance accorded determinations by congressionally established administrative agencies (see note 12 and related text, supra). Apart from § 293 and its regulatory executive order predecessors (see note 9, supra) which specify allowable and nonallowable items, there is nothing in the administrative machinery which either calls for or provides a set of more or less formalized standards to govern the handling of a particular claim, and more significantly, individual items by the nature of the claim. One of the reasons why a consistent administrative interpretation or practice is of...

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