Tropical Marine Prod. v. Birmingham Fire Ins. Co. of Pa.

• Decision Date: 11 September 1957
• Docket Number: No. 16071.,16071.
• Citation: 247 F.2d 116
• Parties: TROPICAL MARINE PRODUCTS, Inc., Appellant, v. BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

247 F.2d 116 (1957)

TROPICAL MARINE PRODUCTS, Inc., Appellant, v. BIRMINGHAM FIRE INSURANCE COMPANY OF PENNSYLVANIA, Appellee.

No. 16071.

United States Court of Appeals Fifth Circuit.

August 13, 1957.

Rehearing Denied September 11, 1957.

Wilbur E. Dow, Jr., New York City, Arthur L. Willner, Miami, Fla., for appellant.

Douglas D. Batchelor, David W. Dyer, Miami, Fla., for appellee, Smathers, Thompson & Dyer, Miami, Fla., of counsel.

Before TUTTLE, JONES and BROWN, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

This appeal by the shipowner tests the correctness of the adverse judgment of the District Court after a trial without a jury denying recovery under an American Institute Time Hull Policy for a sinking from unknown causes. So uncontradicted are the facts, as found or as controlling, that the District Judge's findings of fact were an almost verbatim adoption of those proposed by the plaintiff Shipowner, the losing party. The case turned finally in the Judge's analysis upon successive presumptions.

Except for a few editorial changes involving no matter of substance, ours is a direct recital, with an occasional paraphrase, of the Judge's findings.

The policy was for the period August 14, 1953 to August 14, 1954. The vessel was valued at $30,000. The Sea Pak was a wooden hull vessel originally built for the United States Coast Guard. She was 71'7" long, 13'6" wide and drew 4'6" of water. In the summer of 1953, she had been overhauled¹ in Miami and in August 1953 was in good condition and seaworthy. She left Miami in August 1953 and was operated from that time until her loss in and around Caicos Islands in the Bahamas. She had not been hauled out of the water subsequent to August 1953, although she had been placed in shallow water and her bottom scrubbed on several occasions while she remained afloat.

The Sea Pak left Cockburn Harbour, South Caicos Islands, on August 9, 1954. It proceeded to a fishing anchorage in the lee of Long Key.² This was a distance of about eight miles. The fishing anchorage was protected from the prevailing winds and from the sea and the water, and the anchorage remained calm all the time the Sea Pak was anchored there. The vessel remained at anchor in about 15 feet of water in this protected area until approximately 5:00 a. m. on August 13. During this time the vessel was collecting conch from small skiffs that were fishing in that area.

At about noon on August 12, the Master noticed that the Sea Pak was beginning to take on an unusual amount of water and that the automatic pump was working more than normally necessary. During that afternoon and night the leaking became progressively worse. An inspection of the vessel revealed that the water was coming from underneath a refrigerated space in the forward part of the ship. Because of the construction of the interior of the vessel, the bilge underneath this area was inaccessible. Shortly before daylight on August 13, the Master felt that the leak had developed to such an extent that he should attempt to return to Cockburn Harbour.

As soon as it was daylight, or about 5:00 a. m., on Friday the 13th, the anchor was raised and the boat proceeded around the south end of Long Key into the open waters of Turks Island Passage in an effort to return to Cockburn Harbour. At this time, the sea on the wind-ward side of Long Key was choppy and there was a moderate breeze. These conditions were not unusual for that area and were not such as would ordinarily have caused the vessel any difficulty.

After the vessel got underway, the leak continued to get progressively worse and before the ship could reach Cockburn Harbour, the leak had progressed to such an extent that the vessel's engine was drowned out. The vessel then drifted back along the shoreline of Long Key until the Master ordered the crew to abandon her. The four men on board then rowed ashore in a 14' rowboat which was being towed astern of the Sea Pak and the Sea Pak eventually sank outside the 100 fathom curve. Because of the depth of the water, no salvage attempt was made.

The Court concluded, as both plaintiff and defendant urged and as the physical loss which destroyed all evidence required, that "there is no explanation as to what caused the leak which resulted in the loss of the vessel."

Proceeding apparently then from an implied application which was not spelled out of a presumption³ of unseaworthiness because the vessel developed a leak in these calm waters in the lee of Long Key, the Court held as a legal conclusion that in the face of this presumption, there was not a counter presumption⁴ that the loss came within the perils covered by the policy. The Shipowner contended that even though the sinking of the vessel in calm protected waters might give rise to an inference of unseaworthiness, proof of seaworthiness, here admitted, as of the inception of the risk, was sufficient upon which the usual presumption⁵ would operate that, in the absence of a showing that it occurred from an excepted peril, the loss was caused by a peril insured against.

The Underwriter argues that, accepting these cases urged by the Shipowner, the counter presumption that the loss was from an insured peril, does not arise unless the owner proves that immediately before the loss the vessel was in a seaworthy condition. On this it emphasizes that the Court held as a fact that the Shipowner had not shown that the vessel was seaworthy immediately prior to the developing of the leak.

But we think that the difficulty with this decision stems from the fact that, like the underwriter, the Court assumed that the policy only insured "* * * the vessel against loss from extraordinary occurrences and does not insure her against those ordinary perils which vessels must encounter * * *." In the quaint language which persists in this ancient policy form, the Calmar Steamship Corp. v. Scott, 345 U.S. 427, 73 S.Ct. 739, 97 L.Ed. 1125, 1953 A.M.C. 952, with its "Pirates, Rovers, Assailing Thieves * * * and Detainments of * * * Princes * * *," the Court's opinion makes it plain that all he thought involved was the initial insuring clause which he quoted:

"Touching the Adventures and Perils which we, the said Underwriters, are contented to bear and take upon us, they are of the Seas, Men-of-War, Fire, Lightning, Earthquake, Enemies, Pirates, Rovers, Assailing Thieves, Jettisons, Letters of Mart and Counter-Mart, Surprisals, Takings at Sea, Arrests, Restraints and Detainments of all Kings, Princes and Peoples, of what nation, condition or quality soever, Barratry of the Master and Mariners and of all other like Perils, Losses and Misfortunes that have or shall come to the Hurt, Detriment or Damage of the said Vessel, & c. or any part thereof."

This was to overlook a substantial insurance undertaking which, history shows, The Spot Pack, Saskatchewan Government Insurance Office v. Spot Pack, Inc., 5 Cir., 242 F.2d 385, 1957 A.M.C. 655; Ferrante v. Detroit Fire & Marine Insurance Co., D.C.Cal., 125 F. Supp. 621, 1954 A.M.C. 2026, was added voluntarily by underwriters, (with successive amendments to meet like conditions) to expand protection to shipowners and thereby overcome court decisions favorable to an underwriter but which, the underwriting fraternity thought unrealistic and a denial of coverage reasonably needed. Personified by the name of the vessel giving rise to the decision, The Inchmaree clause, with almost ritualistic uniformity provides generally, and here, specifically:

"This insurance also specially to cover * * * loss of or damage * * * directly caused by the following: —

* * * * * *

"Breakdown of motor generators or other electrical machinery and and electrical connections thereto, bursting of boilers, breakage of shafts, or any latent defect in the machinery or hull, (excluding the cost and expense of replacing or repairing the defective part);

* * * * * *

"Negligence of Master, Charterers other than an Assured, Mariners, Engineers or Pilots;

"Provided such loss or damage has not resulted from want of due diligence by the Assured, the Owners or Managers of the Vessel, or any of them. * * *"

This affords both an additional series of perils insured against and markedly affects the warranties of seaworthiness between Shipowner and Underwriter.

The Court here apparently labored, as did so many so long under some sort of notion that the owner owed the duty to keep and maintain the vessel in seaworthy condition and consequently, to recover, the owner must establish this as a fact. Indeed, the point of departure⁶ between the plaintiff's proposed and the Court's findings adopted was over the seaworthiness⁷ of the vessel immediately prior to the loss.

But as we, The Spot Pack, Saskatchewan Government Insurance Office v. Spot Pack, Inc., supra, and the Second Circuit, New York, New Haven and Hartford R. Co. v. Gray, 2 Cir., 240 F.2d 460, 1957 A.M.C. 616, certiorari denied 77 S.Ct. 1050, 1 L.Ed.2d 915, by almost simultaneous decisions have recently pointed out, the owner's obligation under a Time Policy, as was this one, is extremely limited: the vessel is seaworthy at the attachment of the insurance, but henceforth it is a sort of negative warranty, i. e., the owner or those in privity with him will not knowingly send the vessel to sea in a deficient condition.

Here the most that was determined as to unseaworthiness of the MV Sea Pak was the Court's negative finding that the owner had not sustained its burden of proving seaworthiness. This is far from the opposite holding that the vessel was unseaworthy. On that, the Court did not make such a finding and perhaps for the reason that, on the record before him, it was doubtful that there was sufficient proof.⁸ There was evidence that two fishermen skindivers (not ship repairmen) made an underwater inspection a month or so before and drove in a few wooden plugs, but whether in blanked off auxiliary openings or elsewhere was extremely vague. One diver,...