Krawill Machinery Corp. v. Robert C. Herd & Co.

• Decision Date: 26 September 1957
• Docket Number: Civ. No. 8117.
• Parties: KRAWILL MACHINERY CORPORATION, a Michigan corporation, Kraus Manufacturing Corporation, a Michigan corporation, Engineering Industries International, S.A., a corporation, v. ROBERT C. HERD & COMPANY, Inc., a Maryland corporation, Bethlehem Steel Company, a Delaware corporation.
• Court: U.S. District Court — District of Maryland

155 F. Supp. 296

KRAWILL MACHINERY CORPORATION, a Michigan corporation, Kraus Manufacturing Corporation, a Michigan corporation, Engineering Industries International, S.A., a corporation, v. ROBERT C. HERD & COMPANY, Inc., a Maryland corporation, Bethlehem Steel Company, a Delaware corporation.

Civ. No. 8117.

United States District Court D. Maryland, Civil Division.

September 26, 1957.

Ober, Williams, Grimes & Stinson, Baltimore, Md. (William A. Grimes, Baltimore, Md., of counsel), and Fildew, DeGree, Fleming & Gilbride, Detroit, Mich. (Leslie W. Fleming, Detroit, Mich., of counsel), for plaintiffs.

Lord, Whip & Coughlan, Baltimore, Md. (George W. P. Whip and Robert E. Coughlan, Jr., Baltimore, Md., of counsel), for Robert C. Herd & Company, Inc.

Semmes, Bowen & Semmes, Baltimore, Md. (William D. Macmillan and William A. Fisher, Jr., Baltimore, Md., of counsel), for Bethlehem Steel Co.

THOMSEN, Chief Judge.

The former opinion in this case, 145 F.Supp. 554, stated my reasons for concluding: (1) that negligence on the part of the stevedore, Robert C. Herd & Company, Inc., was responsible for dropping into Baltimore harbor a crate containing a heavy press and other items, and (2) that the stevedore was not entitled to the $500 limitation of liability which the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1300 et seq., provides for a ship and its owners. The questions now before the court are: (a) the amount of damages recoverable, and (b) the party or parties entitled to recover those damages.

Findings of Fact

W. H. Kraus owns or controls all of the stock and is the president of (1) Krawill Machinery Corp., of Michigan (Krawill), which trades in second-hand machinery, (2) Engineering Industries, Inc., of Michigan (E. I. Inc.), which manufactures tools and dies, and (3) Engineering Industries International, S.A., a Tangier corporation (E. I. Int'l), which undertakes contracts to build plants in Spain and elsewhere, furnishes the engineering services, and subcontracts the other work. Kraus also owns 60% of the stock and is president of Kraus Manufacturing Co., of Michigan (Kraus Mfg.), which, until the spring of 1954, was engaged in manufacturing tools, die parts, and the like.

In 1953, Comercio, Industria y Transportes, S.A., of Spain (Cointra), had a contract with the United States Army to manufacture and supply in Spain a considerable quantity of land mines. Through Low Shaw & Co., Inc., of Paris (Low Shaw), Cointra entered into a contract with E. I. Int'l to supply and install at Cointra's plant at Puzol, near Valencia, Spain, the machinery necessary to produce such land mines. In the final letter, which was accepted by Low Shaw on behalf of Cointra, E. I. Int'l stated:

"We herewith submit our quotation for dies, tools and gages (sic) as outlined on attached 21 sheets on your M6A2 Land Mine contract.

"Our price includes design, build and tryout on our facilities, dies to be production type to meet suitable press requirements.

"* * * High quality of presses, dies, etc. specified * *

"You are to furnish at our facilities qualified personnel whom we will thoroughly acquaint with this programme. This personnel shall be responsible for running production and inspection of this job.

"Sample parts to be approved by our personnel prior to shipment. We will supply sample parts to you for inspection at your plant.

"Technical assistance in Europe until date included in price. We also agree to supply one engineer for two weeks from date at our cost. Also we will supply one qualified technician for two weeks to act in an advisory capacity in setting up production of these tools in your plant.

* * * * * *

"Delivery will be made piecemeal in single or families of tools on a given part."

With Kraus acting on behalf of all parties, E. I. Int'l contracted (a) with Krawill to supply four presses, including the 100-ton Clearing press involved in this action, (b) with Kraus Mfg. to produce the necessary die parts, attachments, etc., and (c) with E. I. Inc. to prove the dies and to make the pilot runs necessary to produce the sample parts for 100 mines called for by the contract with Cointra. Seven other presses were purchased in Europe.

After the four presses had been obtained by Krawill and the dies and attachments had been manufactured, the tests were made and the sample parts were produced in Michigan. Thereafter, all of the machinery, attachments, die parts, and sample parts were crated and packed into cases at E. I. Inc.'s plants in Detroit, and were turned over to agents for shipment by rail and water to Spain. In the crate with the 100-ton Clearing press were packed certain die parts, some of the sample parts for the land mines, and a spare crankshaft for one of the other presses. The proof of what die parts and sample parts were packed in that crate is not satisfactory, but when depositions were taken in Michigan, Herd's counsel accepted without objection five shipping invoices (Pl. Ex. 9) to show, in his own words, "that the other items on pages 2, 3, 4 and 5 were packed with the 100-ton press". In view of that statement by Herd's counsel, plaintiffs' counsel may be excused for not offering further proof of those items. There is other substantial additional evidence of many of the items.

Immediately after the case dropped into the waters of Baltimore harbor on the afternoon of April 14, 1954, Kraus was notified, and he arrived in Baltimore that evening. The press had been lifted out of the water, and some of the other contents of the case were recovered during the next day or two. Many of the attachments on the press had been torn off; all of its parts, including the gears in the gear case, had been exposed to brackish water for at least four hours; the visible unpainted parts already showed some corrosion; and there was evidence of damage to the nut around one of four massive bolts, which indicated an impact sufficient to disturb the delicate adjustment of the internal mechanism of the press. Many of the die parts and sample parts which were recovered showed corrosion or damage or both. Herd made some effort to prevent further corrosion by having the press and the other material cleaned and treated, but the effort was only partially successful.

The press and the other material recovered from the river were shipped back to the E. I. Inc. plant in Detroit by rail. At whose instance this was done was not proved; the bill was paid by the insurance company which had issued an inland marine policy on the press.

Kraus flew to Spain promptly, explained the situation to Cointra, and showed them some photographs, which were offered in evidence. Cointra refused to accept the press because of the nature of the damage it had sustained. Kraus attempted to find a replacement in Europe, without success, and Cointra did not find a replacement for several months.

In the meantime, Kraus secured an estimate for repairing the obvious damage to the press. The estimated cost was $10,000, plus $200 cartage, with no guarantee that the press would operate satisfactorily after the repairs were made. The value of similar presses in the second-hand machinery market was around $10,000. All witnesses on the subject testified that it would have been an unwise economic decision to attempt to repair the press, and that it had only a salvage value. The highest salvage value given was $500 net. I accept this evidence.

Under the contract with Cointra, E. I. Int'l would have received $20,433, c. i. f. Valencia, for the press, including the new attachments which had been added. The $20,433 was equivalent to $18,790 at Baltimore, including packing and freight from Detroit.

It was necessary for plaintiffs to replace the lost or damaged die parts and sample parts as soon as possible to avoid claims for delay by Cointra. Kraus Mfg. was already out of business, so Kraus arranged to have the die parts made by E. I. Inc. Since all of the other presses and die parts were already in Spain, it was necessary to prove and test the new die parts there. The work in Spain included: (1) try-out of the replacement die parts and attachments, (2) reassignment of 80-90% of the dies among the...