Maritime Overseas Corp. v. PUERTO RICO DRYDOCK & MAR. TERM., 6976.

• Decision Date: 29 March 1968
• Docket Number: No. 6976.,6976.
• Citation: 391 F.2d 1010
• Court: U.S. Court of Appeals — First Circuit
• Parties: MARITIME OVERSEAS CORPORATION, Claimant, Appellant, v. PUERTO RICO DRYDOCK & MARINE TERMINALS, INC., Libelant, Appellee.

391 F.2d 1010 (1968)

MARITIME OVERSEAS CORPORATION, Claimant, Appellant, v. PUERTO RICO DRYDOCK & MARINE TERMINALS, INC., Libelant, Appellee.

No. 6976.

United States Court of Appeals First Circuit.

Heard February 6, 1968.

Decided March 29, 1968.

Max Taylor, New York City, with whom Raymond J. Burke, New York City, Antonio M. Bird, Hartzell, Fernandez & Novas, San Juan, P. R., and Burke & Parsons, New York City, were on brief, for appellant.

Eli Ellis, New York City, with whom Richard Gonzales, Fiddler, Gonzales & Rodriguez, San Juan, P. R., and Hill, Betts, Yamaoka, Freehill & Longcope, New York City, were on brief, for appellee.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

This is an appeal from a judgment entered by the district court, sitting in admiralty, in favor of Puerto Rico Drydock & Marine Terminals (Drydock) on its claim for labor and materials used in repairing the tanker ELAINE, managed by Maritime Overseas Corporation (Maritime).

The ELAINE sustained grounding damage in early June 1966, in Florida waters, and arrived at Drydock's facilities in San Juan on June 15, 1966 for examination and repairs. After inspection, it was decided not only to repair bottom damage, but also damage caused by heavy weather and to have other work done to allow the ELAINE to maintain its Lloyd's Certificate of Seaworthiness and Classification. The bottom and heavy weather damage were covered by British and American insurance (insurance damage) while the classification work was principally to be paid by Maritime (owner's account).

The issues before us are whether the district court properly held that the parties had agreed on a fixed price for the repair of the insurance damage (or, alternatively, that the prices charged for this work were reasonable); and whether the prices charged for the work done on the owner's account were reasonable. A refusal by the court to admit expert testimony is also charged as error.

The Insurance Damage

After the ELAINE reached drydock, she was inspected by representatives of Maritime, Drydock, Lloyd's Classification Society, and American and British underwriters. After discussion and examination of at least one preliminary estimate, a "Joint Survey" was drafted, typed, and signed by representatives of Maritime, Drydock, and the underwriters. This survey described the damage occasioned by the grounding, the work to be done, and concluded with the sentence: "It is agreed that the approximate estimated cost of the above repairs will amount to approximately $107,600." A few days later a similar survey was executed for the heavy weather damage concluding with the sentence: "It is agreed that the estimated cost of the above repairs will amount to approximately $23,400."

Drydock presented invoices for $109,526.46 for bottom damage and $23,400 for heavy weather damage, which Maritime has not paid. Drydock's claim is based on the contention that, except for a minor reserved area for adjustment principally related to drydock time in the case of bottom damage,¹ the joint surveys stated prices which had been agreed. Maritime contends that the surveys constituted agreements to do the described work at reasonable costs not to exceed the stated figures.

The district court's finding was that:

"* * * Mr. Anderson, representing Drydock, was requested to furnish a price for the repairs * * * quoted a price which was only subject to whether Drydock would be allowed additional charges for drydocking. * * * The Owners\' (sic) and underwriters\' Representatives agreed to the price quoted which was rounded out to $107,600.00, and stated in a Joint Survey * * *."

Maritime contends that the two surveys constitute wholly integrated written contracts, and that these documents are not only the best, but the only evidence of their agreement, citing The Valmar, 38 F.Supp. 618 (E.D.Pa.1941). The Valmar, however, involved a situation where the parties had deliberately drawn up a formal executory charter agreement. Its provisions were carefully articulated within the four corners of the document itself. An attempt to use parol evidence to add another provision to the contract was rejected because of the clear intent of the parties that "all preliminary negotiations, conversations and verbal agreements" be merged in and superseded by the subsequent written contract. The Valmar, supra at 620.

The two surveys in this case cannot be said to be such extensive, formal, or carefully articulated documents. It appears to us, moreover, that the district court did not find that they were integrated documents reflecting the entire agreement between the parties but, rather, that the price quoted ("which was only subject to whether Drydock would be allowed additional charges for drydocking") was "agreed to", "rounded out", and "stated" in the surveys. Even if, however, the surveys could be said to be "the" contracts between the parties, resort to parol evidence here is necessary to resolve the ambiguities present in "estimated costs".

Despite what must surely be a new record in redundancy, with the use of "approximate", "estimated", and "approximately" in one sentence, neither party contends that this is sheer guesswork and nothing more. Maritime in its brief argues that the surveys constitute "an agreement to do the work set forth therein for the actual and reasonable cost of the work not to exceed" the figures stated. Drydock contends that the figures represent a fixed price subject only to previously discussed adjustments. Under the circumstances, we think the intention of the parties can be illuminated only by extrinsic evidence. See 3 Corbin, Contracts (1960 ed.), § 579.

The evidence apart from the survey documents themselves seems adequate, at the very least, to preclude our finding that the district court was clearly erroneous. McAllister v. United States, 348 U.S. 19, 75 S.Ct. 6, 99 L.Ed. 20 (1954). This evidence is both testimonial and circumstantial. Drydock's witness Anderson testified that he had been asked to come up with "a price to do the job"; that he got a fixed price from a subcontractor to which he added the work Drydock would do; that he presented his figure to underwriters' and the Owner's representatives and after discussion made some changes, at which point it was accepted by all; and that "the signing of the survey after agreement was the last step."

Anderson's testimony was corroborated by Captain Crocco who, while being an employee of Drydock, was also the representative for the British underwriters and found credible by the court. He confirmed that Anderson had been asked to give a price and added that his signature under the rubric "seen and noted" on both bottom and heavy weather damage invoices denoted agreement and acceptance by the British underwriters whom he represented.² Potts had also signed for the American underwriters.

Pena, the comptroller of Drydock, testified that, after the surveys had been executed, he had asked one Ellis, then a vice president of Maritime, for an advance of the "sum of the two insurance accounts which had been agreed by all the parties", and that Ellis said that he would bring "a check with him for the amount I was requesting."

This testimony of Drydock employees is corroborated by the testimony of Jose Iguina, the general superintendent of Sucesores de Abarca (Abarca), a subcontractor, who said he did not keep records of the work Abarca did on the insurance repairs, because this work was done for a "definite price".

The testimony of Maritime's witnesses gives oblique and unintended support to the agreed price theme. Both Ellis, Maritime's vice president, and Carnes, its Puerto Rican representative, said that at the time of the surveys Potts, one of the American underwriters, was generally protesting that the price was too high. If the price was merely an estimate, nothing more, there would seem to be no reason for objection. Yet Ellis himself testified in his deposition that if any of those present at the discussion of the bottom damage survey did not wish to agree that the estimated price was $107,600, "He shouldn't have signed it." Neither Carnes nor Ellis ascertained basic costs of labor or steel to be charged by Drydock at any time before the work was completed, nor did they communicate their objections to the underwriters.

Ellis further revealed that invoices "normally" included the notation "Without prejudice to the underwriters", which means that the invoice price is "subject to adjustment". On Ellis' assumption as to normal practice, the absence of this notation on these invoices is further evidence that subsequent negotiations regarding the invoice prices were not contemplated.

Finally there was the evidence, see n. 1, of the one reserved area for modification and the testimony that Potts, while wanting to leave the price at the survey figure, agreed to make an adjustment on the item of days in drydock that had been specifically reserved as open for discussion. Though he was available to rebut all testimony mentioning him, he was not called.

Accordingly we affirm the findings of the district court that the bottom and heavy weather damage repairs were performed for agreed prices. We are thus not called upon to assess whether or not these prices were reasonable.

Owner's Account

The invoice representing the work done on owner's account was in the amount of $82,356. Here, there being no contention as to an agreed price, the issue is whether the district court properly found the charges reasonable. The court did not find credible the testimony of Maritime's witnesses that work was deficient and charges unreasonable. It cited particular challenged items concerning which there was adequate contradictory testimony. It listed the documentary evidence of labor and materials supplied by Drydock and its subcontractors and the testimony of supporting witnesses, all of whom were found frank and honest....