Moore-McCormack Lines v. The Esso Camden

• Decision Date: 02 May 1956
• Citation: 141 F. Supp. 742
• Parties: MOORE-McCORMACK LINES, Inc., as charterer in possession of THE WILLIAM S. HALSTED, Libellant, v. THE ESSO CAMDEN, Standard Oil Company (N. J.), Claimant.
• Court: U.S. District Court — Southern District of New York

141 F. Supp. 742

MOORE-McCORMACK LINES, Inc., as charterer in possession of THE WILLIAM S. HALSTED, Libellant, v. THE ESSO CAMDEN, Standard Oil Company (N. J.), Claimant.

United States District Court S. D. New York.

March 29, 1956.

Rehearing Denied May 2, 1956.

COPYRIGHT MATERIAL OMITTED

Burlingham, Hupper & Kennedy, New York City, Adrian J. O'Kane and Richard W. Palmer, New York City, of counsel, for libellant.

Kirlin, Campbell & Keating, New York City, Raymond T. Greene, New York City, of counsel, for claimant.

WALSH, District Judge.

Both parties have excepted to the report of the Commissioner, Thomas H. Middleton, Esq., fixing damages due as a result of a joint fault collision between their vessels. All other matters having been stipulated, the items in controversy relate to damages for detention of both vessels and the recovery by the libellant of certain general average disbursements.

The collision occurred in Chesapeake Bay on November 2, 1946. The Halsted was outward bound from Baltimore for the Baltic, the Camden inbound for Baltimore from Baytown, Texas, and Sewell's Point, Virginia. After the collision the Camden proceeded to Baltimore and discharged her cargo. She was then detained for 17 days, 23 hours, and 41 minutes for repairs due to the collision. The Halsted returned to Baltimore where she was delayed 17 days for collision repairs. She then carried out the voyage to the Baltic on which she had been engaged at the time of the collision.

The exceptions are overruled.

The Halsted's Award

Libellant was charterer in possession of the Halsted. The record contains little as to her commitments at the time of collision or her actual loss of profits with respect to the collision voyage. A stipulation merely recites that at the time of collision she had sailed on a voyage to Baltic ports "which said voyage was duly carried out after collision repairs had been effected".

The Commissioner computed her detention damages on the basis of the estimated average daily earnings she could have commanded at the time of collision. In constructing this estimate he averaged the daily net profit of the collision voyage as subsequently completed, $1,227.06, with the daily net profit of the pre-collision voyage, $1,156.35. He refused to take into account the daily net profit of the post-collision voyage which was only $413.26. The collision voyage and the pre-collision voyage were made to the Baltic during the winter coal trade. Upon the vessel's return from the collision voyage this trade was no longer available and her next trip was to South America at a less profitable rate.

A. Exceptions by Claimant.

Claimant contends that under the rule of The Gylfe v. The Trujillo, 2 Cir., 209 F.2d 386, 388 and Quevilly-Sampson, 1938, A.M.C. 347, 350, the Commissioner should have estimated the vessel's loss of profits as of the period when she was next available for new employment.¹ It argues that this would have been the period beginning when the collision voyage would have been completed but for the collision. It further urges that in the absence of proof that Baltic trade would still be available, the lower profits of the South American trade should have been used as a basis for the Commissioner's estimate.²

To recover damages for detention it must be established first, that profits have actually been lost, and second, the amount must be proven with reasonable certainty. The Conqueror, 166 U.S. 110, 125, 17 S.Ct. 510, 41 L.Ed. 937. Yet, the Commissioner may not speculate as to the loss of voyage profits caused by the detention; he may only allow a per diem rate based upon the charter rate for comparable vessels, or, if such evidence is not available, upon the owner's record of earnings of the detained vessel about the period of detention. The Apollon, 9 Wheat. 362, 376, 6 L.Ed. 111; The Conqueror, supra, 166 U.S. at pages 125-127, 17 S.Ct. 510.

No case referred to by counsel has limited damages to the daily rate the vessel would earn when next actually available for hire although several have taken into account post-collision charter rates in an effort to calculate what rates the vessel could have earned if she had been free for new employment during the period of actual detention. Even in The Gylfe v. The Trujillo, supra, and Quevilly-Sampson, supra, relied upon by the claimant, this was done.³ The vessel does not recover her actual earnings lost but rather the estimated charter hire she could have earned if free for new employment at the time of detention. Her actual earnings, present, past or future, are merely a basis for constructing this estimate of detention period charter rates. The James McWilliams, 2 Cir., 42 F.2d 130, 133.⁴

Although this rule has its arbitrary aspects, an attempt to speculate as to what the detained vessel would have actually earned if her collision voyage had not been prolonged would usually involve so many contingencies that proof would be cumbersome and the result uncertain. To be fair it would be necessary to recognize the converse of the claimant's contention, that if but for the delay due to a collision the libellant's vessel could have made a third trip to the Baltic, then she should not recover only for her seventeen days' detention based upon the daily average profit of such a voyage, but rather she should receive the difference in total voyage profit between a voyage to the Baltic which she lost and a voyage to South America which she was required to accept in its place. This is the very type of speculation which The Apollon condemned.

The Commissioner therefore properly based detention damages upon the charter hire a comparable vessel could have obtained if free for new employment during the period of her detention. He correctly declined to compute these rates for the period commencing with the originally scheduled termination of the collision voyage.

In estimating the vessel's potential charter rates during the period of her detention, a great variety of estimates have been used, not only the three voyage rule (pre-collision, collision and post-collision voyages) referred to in The Gylfe v. The Trujillo, supra, 209 F.2d 386, 389; The Tremont, 9 Cir., 161 F. 1, 2, but also many others depending upon the nature of the business in which the vessel was employed.⁵ In The Gylfe v. The Trujillo, and Quevilly-Sampson, the courts were confronted with rapidly changing charter markets and the charter rates under which the vessel was actually employed on the collision voyage gave no fair guide as to what she would earn if re-employed during the period of detention. In The Gylfe v. The Trujillo, the court awarded damages based upon the rates proposed for a prospective voyage, the charter for which was under negotiation at the time of collision. In Quevilly-Sampson, supra, the Commissioner averaged the collision and post-collision voyages in an effort to compute her potential charter rate during the detention period not, as contended by claimant, to determine what she could earn at the end of the collision voyage.⁶

In the present case the Commissioner was not confronted with a changing charter market, but rather the problem of a vessel engaged in a seasonal trade.⁷ There was very little fluctuation between her earnings on her first Baltic voyage and the second, the collision voyage. These were the vessel's only two voyages in that service, the service for which she would have been available at the time of collision. Therefore he computed her probable earnings for this period by averaging these two voyages. Her earnings in the South American trade did not reflect a general decline in charter hire but the earnings available for a different type of work, work completely unrelated to that in which she was engaged, and apparently could have been re-engaged at the time of collision. The judgment of the Commissioner in such a matter is not to be set aside unless clearly erroneous. Here, it was not.

Claimant also excepts to the Commissioner's allowance of certain items of general average disbursements as part of libellant's collision damages. It is conceded that such disbursements are generally recoverable. Corning-Isabella, S.D.N.Y.1928, A.M.C. 1495; Corning-Gulf of Mexico, S.D.N.Y.1924, A.M.C. 932. These disbursements include:

                (a) Commission on general
                average disbursements
                and sacrifices at
                2%                                 $  312.80
                (b) Interest on general
                average disbursements
                and sacrifices from dates
                of outlay or loss to March
                31, 1952, at 6%                     5,296.99
                (c) Settling agent's commission
                commission for
                collecting and settling the
                general average, at 2½%             592.04
                

Claimant argues, that the claim for interest on these disbursements made by libellant should be disallowed because the libellant, as ship charterer, was itself a 65% contributor to the general average fund, and is to that extent really recovering interest on collision damages although it was one of the parties at fault⁸ and that this is contrary to the rule of Canadian Aviator, Ltd. v. United States, 2 Cir., 187 F.2d 100; and The Wright, 2 Cir., 109 F.2d 699, 702.⁹

Interest on general average disbursements is an allowance for the use of the shipowner's funds advanced in the common interest of ship and cargo. The partial coincidence of the amount so allowed with the interest on the ship's collision damages should not be permitted to confuse these two concepts. In theory, the shipowner would be entitled to the same amount of collision damages whether he took prompt action to resume the interrupted voyage or not, his damages being reduced to the extent he failed to minimize them. It is to encourage him to lay out new capital and resume the voyage promptly that interest is allowed on his general average disbursements. This policy should not be embarrassed by a generalization that this allowance must be reduced by the percentage of the hull's liability to the general average fund. The policy of...