Todd Shipyards Corporation v. The City of Athens

• Decision Date: 28 February 1949
• Docket Number: No. 2942.,2942.
• Parties: TODD SHIPYARDS CORPORATION v. THE CITY OF ATHENS et al.
• Court: U.S. District Court — District of Maryland

83 F. Supp. 67

TODD SHIPYARDS CORPORATION v. THE CITY OF ATHENS et al.

No. 2942.

United States District Court D. Maryland.

February 28, 1949.

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John H. Skeen (Frank, Skeen & Oppenheimer), of Baltimore, Md., and E. Curtis Rouse, of New York City, for Todd Shipyards Corporation.

Sidney Hillman (Hillman & Hillman), of Baltimore, Md., and Harry D. Graham, of New York City, for intervening passenger libellants Rae, Acker, et al.

Southgate L. Morison (Ober, Williams, Grimes & Stinson), of Baltimore, Md., for United States Lines as assignee of certain passenger claimants and Panamanian Lines, Inc.

Robert W. Williams (Ober, Williams, Grimes & Stinson), of Baltimore, Md., for Phillip L. Rhodes.

Sol C. Berenholtz, of Baltimore, Md., for officers and members of crew.

Robert H. Williams, Jr., of Baltimore, Md., for Dracoulis, Ltd., Gastaldi & Co., and Nicolas Kambanis.

CHESNUT, District Judge.

The SS "City of Athens", a trans-Atlantic passenger-cargo ship, was libelled in the Port of Baltimore on July 12, 1947 by the Todd Shipyards Corporation of New York, for the balance due for repairs and reconstruction of the ship in the total amount of $491,077. Many intervening libels and other claims against the ship were filed; and in due course the ship was sold by the Marshal of the court on August 13, 1947 to the Panamanian Lines, Inc., for $400,000, which sum (together with the sum of $1837.71 representing earned freight) less certain expenses of administration, represents the total sum available for lien claims in the amount of $775,457.82. On August 14, 1947 the case was referred to Mr. L. Vernon Miller, a member of the Baltimore Bar thoroughly experienced in admiralty matters, as Commissioner, "to take evidence therein and to report to the Court his findings of law and fact therein with all convenient speed", and the clerk was directed to give notice by publication that all claims against the proceeds of the ship should be filed within a specified time. The Commissioner's report was filed October 7, 1948. The delay seems to have been unavoidable in view of the very large number of claims which had been filed and which had to be considered by the Commissioner, many of the claimants being foreigners and the questions both of fact and of law having been important and some of them difficult. The Commissioner's report, with accompanying schedules, fills 161 large typewritten pages. The Commissioner also filed with his report a stenographic transcript of the evidence before him consisting of more than 1500 pages resulting from 15 hearings. A reference to the report itself will show the extended consideration given to the respective claims filed in the case.

Schedule X (the last page of the report) lists in summary all claims allowed as liens. They embrace basic wages of the crew in the amount of $24,733.74; additional wages for the crew at $15,141.54; one extra month's pay for certain members of the crew $2,033; repatriation claims $945; additional wages to skeleton crew July 12 to July 22, 1947, $1,375.66; maintenance and cure $236.25; personal injury claims $4,000, and unclassified crew claims in the amount of $8,422.25; head tax claims of $1,624, and cargo claims $1,074.57. The total of such claims was $59,586.01. Other claims for supplies or "necessaries" to the ship on various voyages allowed as liens aggregated $715,871.81. Of this latter amount those accruing in the calendar year 1947 amounting to $291,921.68 were determined to be paid in full as having priority, and the remainder, $423,950.13, a large amount of which was allowed to the Todd Shipyards Corporation arising in 1946, was to be deferred to the prior payment claims. The estimated net fund available for distribution after deducting certain expenses of administration including the Commissioner's fee, will be about $380,000. The total claims allowed priority in payment and thus to be paid in full, aggregate $351,507.69. As the deferred claims aggregate $423,950.13, and the remainder of the fund available for distribution is only about $30,000, it appears that the claims deferred in payment by the Commissioner's report will receive a dividend of less than 10%.

The Commissioner rejected as maritime liens and therefore made no allowance for distribution to certain claimants. The principal class of such claims so rejected were those of more than 300 prospective passengers who had bought and paid for transportation by the ship on a projected voyage from New York to Mediterranean Ports with a sailing date of July 19, 1947, seven days after the ship was libelled in Baltimore; and for even later sailing dates up to October 13, 1947. Many, if not all, of these passengers filed claims for the return of passage money paid and incidental damages for breach of contract of carriage totalling nearly $500,000. After very full consideration in the report the Commissioner rejected all these claims on the ground that none of them constituted a maritime lien on the ship. There were also about 100 seamen in the crew of the ship. While the great majority of the claims of these seamen were allowed, a minor part of the amounts claimed by a number of the seamen and the whole of the claims of a few were rejected by the Commissioner for the reason stated in the report.

In due course, after the filing of the report, separate exceptions to the report have been filed by 26 individuals or classes of claimants; many of the exceptions embrace numerous sub-divisions. A hearing for all the exceptions, after due notice, was set by the court for January 20, 1949. At the beginning of the hearing the court referred to the large number of exceptions which had been filed and stated that all interested parties would be heard in oral presentation of the exceptions; but that the court would consider as waived any and all exceptions which were not orally argued or presented by counsel or parties. Oral argument for two full days was presented on behalf of various exceptants by ten counsel, and numerous briefs were filed by them and considered. At the hearing many of the exceptions were expressly waived or abandoned, and those not orally presented were considered impliedly waived. In result the exceptions which are still pressed may be conveniently classified now into three parts: (1) Passenger claims; (2) the preferred and deferred classification of supply or so-called "necessary" claims; and (3) certain miscellaneous claims. These will be discussed in their order, but first it will be helpful to make a brief statement with respect to the history and activities of the ship and particularly of her several voyages under her last ownership before the libel. And as all the claims have been so fully considered both as to the facts and the applicable law in the Commissioner's report, it will be sufficient here to recite only the dominant considerations of fact and law which are involved in the several questions to be considered.

The ship was built in 1920 at Hog Island, Pennsylvania, and named "The American Banker". She was of 7430 gross tonnage, 436.9 feet in length and 58.2 foot beam. Later she was renamed the "Ville D'Anviers" and under that name acquired in 1946 by the Sociedad Naviera Trans-Atlantica S. A. a Panamanian corporation, and registered under the Honduras flag. The corporation seems to have had little or no assets other than the ownership of the ship, but the stock of the corporation was owned by Basil Hanioti, of Greek extraction but a citizen of the United States. He also owned directly or indirectly at the time one or more other ships. It is said that Hanioti paid $430,000 for the ship which he purchased for the special purpose of passenger and cargo transportation between New York and Mediterranean ports. The ship had previously been used as a troop transport. To adapt her to the new and anticipated large passenger traffic, it was deemed essential to make extensive repairs and for that purpose the Todd Shipyards, a New York corporation, was employed. Todd began work on the ship in October 1946. It was evidently a rush job because Hanioti was insistent upon early completion to take advantage of anticipated large passenger business. It appears that the work was done night and day with much overtime and possibly without adequate detailed supervision in the interests of the owner. But the Commissioner found no satisfactory evidence to contradict the reasonableness of the itemized invoices and accounts rendered by Todd in support of its claim. By November 12, 1946 Todd had done work as per invoices in the amount of $646,105. The ship made her first voyage to Europe leaving New York in November 1946. In due course she returned to New York about January 1, 1947 and thereafter during 1947 made three additional round-trips, the last one terminating at Baltimore in early July 1947. During 1947 Todd performed additional repair and construction work on the ship making its aggregate charges $758,010, with total cash and credits paid or allowed in the amount of $266,933, with balance now claimed to be due in the amount of $491,077, of which amount the Commissioner by schedule D (page 157) has allowed $104,972 as ranking in 1947; and allowed a balance of $386,105 ranked in 1946 for deferred payment.

It appears from the report that the cost of repair of the ship by Todd was very greatly in excess of what Hanioti had anticipated, and that his insufficient capital resources finally resulted in the libelling of the ship. After the ship was libelled in Baltimore Hanioti was unable to pay the wages due to the crew not only for the last voyage but for some preceding voyages. During each of the ship's voyages it became necessary to obtain for her, frequently in foreign ports, supplies and "other necessaries". Claims for these have been filed in these proceedings and practically all have been allowed by the Commissioner as...