Pacific Queen Fisheries v. Symes
| Decision Date | 13 September 1962 |
| Docket Number | 17461.,No. 17460,17460 |
| Citation | 307 F.2d 700 |
| Parties | PACIFIC QUEEN FISHERIES et al., Appellants, v. L. SYMES et al., Appellees. PACIFIC QUEEN FISHERIES et al., Appellants, v. ATLAS ASSURANCE COMPANY et al., Appellees. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Dow & Stonebridge, Wilbur E. Dow, Jr., and W. Shelby Coates, Jr., New York City, Happy, Copeland & King, and Robert W. Copeland, Tacoma, Wash., Lillick, Geary, Wheat, Adams & Charles, and Allan E. Charles, San Francisco, Cal., for appellants.
Stephan, Gorton, & Hemstad, and Albert E. Stephan, Seattle, Wash., for appellees.
Before POPE, BARNES and HAMLEY, Circuit Judges.
This is a consolidated appeal taken after trial in the United States District Court in which judgment was entered for appellee insurance companies holding them exonerated from liability on certain contracts of insurance. Appeal No. 17,460 was formerly No. 2348 in the district court and was originally filed in the Superior Court for the State of Washington from which it was removed to the district court only to be remanded back to the State court. Appeal No. 17,461 was formerly No. 2543 in the district court; it was originally filed in the Superior Court for the State of Washington from which it was removed to the district court and a motion to remand was denied. After removal of No. 17,461 to the district court, appellants stipulated the then State court case could be retransferred to the Federal court, and moved to consolidate No. 2348 with No. 2543. The motion was granted and the two cases consolidated for trial. Diversity of citizenship existing, and an amount in controversy exceeding $10,000, the district court had jurisdiction to hear the consolidated cases under the provisions of Sections 1332 and 1441(a) of Title 28, United States Code.
Judgment for appellees in both cases was entered March 23, 1961. Timely notice of appeal was filed. This court has jurisdiction to review the judgment entered below under the provisions of Sections 1291 and 1294(1) of Title 28, United States Code.
Both actions were brought by appellants to recover from appellee insurance underwriters on contracts for marine insurance for loss and damage resulting from the total constructive loss of appellants' diesel powered fishing vessel, the Pacific Queen, owned by Pacific Queen Fisheries, a partnership.1
The Pacific Queen was built in 1943 for the Navy. The vessel had a wooden hull and structure with steel decks and deck-house; she was 988 gross tons, 672 net tons, 173 feet in length, 37 feet in width, 18.8 feet in depth, and propelled by 1600 HP twin-screw diesel engines. Built for Navy salvage operations, she had been outfitted with two 1500 gallon gasoline tanks which were equipped with "a very safe" aqua or hydraulic system which dispensed gasoline by injecting water through interior piping into the tanks (thus forcing the gasoline of lighter specific gravity to rise) thereby transferring the gasoline through permanent piping to pumps and discharge valves, located above deck.
In 1948 the Pacific Queen was bought as war surplus by an individual who resold her to a corporation then controlled by appellant Breskovich. The corporation then sold the vessel to appellants, or their predecessors in interest.
The Pacific Queen became a total constructive loss on September 17, 1957 because of a violent explosion. Immediately thereafter, in the regular course of its official duties, the Coast Guard made a full investigation. The transcript of the Coast Guard's hearing, its detailed findings and conclusions, recommendations and official action, were offered into evidence by appellants and admitted without objection. The district court found the Coast Guard's findings and conclusions to be true and incorporated them by reference and adopted them into its own findings of fact.
Beginning in 1950, appellants operated the Pacific Queen between Puget Sound and Bristol Bay, Alaska, as a refrigerated vessel to freeze and transport catches of salmon from Alaska to ports on Puget Sound. In 1951 regulations which prior thereto had prohibited power-driven fishing boats in Bristol Bay, as a fish conservation measure, were relaxed and power boats (e. g., gillnetters) up to thirty-two feet in length were permitted. Many of the gillnetters are powered by gasoline; others are powered by diesel fuel. Both types of fuel may be obtained from various sources in Alaska.
During the years beginning 1950, appellants insured the vessel with various insurance companies, including some but not all of the respective appellees which insured her in 1954.
On various occasions between 1950 and 1957, before each year's fishing season began, appellants, through a broker,2 requested that the vessel be surveyed by the Board of Marine Underwriters of San Francisco, or by United States Salvage Association. On other occasions during this period appellants requested through a broker, other well recognized and competent surveyors to survey the vessel. This was done in 1950 by Alexander Gow, Inc., and in 1953 by Captain Adrian Raynaud, but neither surveyor reported the existence of any gasoline or gasoline tank capacity aboard the Pacific Queen.3
On or about May 3, 1955, Hansen & Rowland, acting as broker for appellants, requested United States Salvage Association to make a condition survey of the Pacific Queen. One Edward Marquat, an experienced surveyor, since deceased, was assigned to the task. He made an exceptionally careful and meticulous survey. His condition report (six single-spaced pages) is dated May 13, 1955. With respect to gasoline, his report read in full text:
The court found Pacific Queen Fisheries knew Marquat's report was the only information appellees had concerning gasoline "because, in 1956, appellant John Vilicich, one of the active partners experienced in the marine insurance business asked for and received a copy of the report."
The Pacific Queen did not engage in Alaskan operations in 1956. She remained in lay-up status. On about May 2, 1957, Hansen & Rowland, again acting as appellants' broker, requested United States Salvage Association to make a condition survey. Appellants particularly requested a survey of two newly purchased gillnetters and, incidentally, of the Pacific Queen. J. E. Elkins, an experienced surveyor, made the survey. Elkins' only other survey of this vessel was made in 1949 — at which time no gasoline was being carried by the vessel. His report (Exs. 359, 360), dated May 2, 1957, like those of Gow's (in 1950) and Raynaud's (in 1953), made no reference to gasoline tank capacity, nor to any bulk gasoline carried aboard the vessel. Elkins reported the vessel to be a mothership for gas-powered gillnetters. .)4
At the time of the explosion on September 17, 1957, the gasoline tank capacity of the Pacific Queen had been increased from 3,000 to 8,000 gallons. This increased gasoline tank capacity was accomplished by filling two tanks, theretofore used for diesel fuel, with 5,000 gallons of gasoline. Gasoline is a far more hazardous commodity than diesel oil to use or transport. Appellants inserted below-deck exposed gasoline-discharge valves into fittings that had been designed and used for insertion of permanently secured drainage plugs. These valve replacements were located in or near a passageway where ship's equipment, fishing gear and personnel frequently passed.
These alterations for discharging gasoline adapted by the Pacific Queen were apparently unique to her. Such a system or method of handling and discharging gasoline was not in common usage. It was not used on other vessels in which some of the Pacific Queen's owners had, and have, an interest. There was no positive evidence the same method had ever been used on other vessels.
The appellants accomplished this change in the vessel's gasoline tank capacity (i. e., the increase of gasoline tank capacity from 3,000 to 8,000 gallons by means of the above described alterations) at some date subsequent to the May 13, 1955 Marquat condition survey, and prior to the attachment of insurance on May 24, 1957.
On May 27, 1957, the Pacific Queen departed from Seattle and proceeded to Alaskan water to engage in fishing. She commenced her adventure with the increased gasoline tank capacity and the changed method of piping, valving and internal method of discharge of gasoline described above known to her owners and manager.
After the Pacific Queen returned from Alaska, she shifted to various Puget Sound docks, and with her increased gasoline tank capacity and changed method of piping, valving and internal method of discharge of gasoline as hereinabove described, and with the knowledge of her owners and manager, she then was sent from Seattle to Friday Harbor.
While the Pacific Queen was at Friday Harbor, she had on board approximately 2,000 gallons of gasoline. On September 9, 1957, while at Friday Harbor, 500 to 600 gallons of gasoline were spilled from one of the vessel's tanks in its hold into the interior of the vessel. While appellants minimized the seriousness of this spillage, the court below believed it was a serious incident. It created great hazards to the ship, life and property. Gasoline from the spillage soaked and impregnated large parts of the wooden hull and structure of the vessel. It was not a sudden spill. It began early in the evening preceding its discovery at 4:00 a. m. by the cook. It lasted at least six hours, probably longer. In the course of the spillage, liquid gasoline and gasoline fumes permeated the lower after portion of the vessel.
The spillage was reported to one of the...
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