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The measure of damages recoverable from a vessel for damage to a cargo of steel through its fault is the difference between the market value of the cargo at the port of delivery in its damaged condition and its value if it had been delivered in good condition, with interest from the time of delivery and other items of expenditure made necessary by reason of the damage. In such a case the shipper or owner cannot recover for loss of a profit he would have made by delivery of the steel on a prior contract of sale, which delivery was refused by the purchaser on account of its damaged condition; the vessel having no relation to such contract.
[Ed. Note.--For cases in point, see Cent. Dig. vol. 44, Shipping, $ 485.) In Admiralty. Suit for damage to cargo.
Certain steel was shipped on the barque Bérengére from Antwerp, in Belgium, to be carried to Portland, Or. The shippers, having received their bills of lading, indorsed them to Henry Lund & Co., the libelants, who were to deliver the steel to Robertson-Manning Company, on its arrival at destination, at the alleged invoice price of $3,656.20. The steel was damaged on the voyage by rust, from contact with salt water, concededly through the fault of the ship. Robertson-Manning Company, becoming aware of its condition, refused to receive the same, and negotiations were entered upon between libelants, the agents of the ship, and the underwriters of the cargo, looking to a settlement of differences arising on account of the damages sustained, resulting in the agreement as to the steel that it should be sold for what it would bring in the market, leaving other matters to abide further arrangement or the determination of the court. W. B. Honeyman became the purchaser at $2,750. Prior to the sale Honeyman had, at the instance of the underwriters, made a survey of the damages incident to the corrosion, and fixed them at the sum of $240. In his purchase he allowed the market value in Portland, less the amount of his appraisement, thus making the steel worth, in good condition, $2,990. The sale was not consummated until December 22, 1903, although the ship arrived in port some time in October previous; delay in the meanwhile being occasioned more or less by the negotiations pending for settlement of damages. Steel declined in the Portland market, between the day of shipment from Antwerp and the time of the ship's arrival in Portland, from $5 to $6 per ton.
W. C. Bristol, for libelant.
WOLVERTON, District Judge (after stating the facts). What measure of damages should be applied for the ascertainment of the amount of libelants' recovery? This is the principal question for determination. Proctor for libelants insists that the measure should be the difference between the invoice price libelants were to receive for the steel from Robertson-Manning Company and the amount paid therefor, in its damaged condition, by Honeyman. It is reasoned that the ship is liable in that measure because it is responsible for the damaged condition of the steel, and it was that condition that prompted Robertson-Manning Company to refuse to receive it. Upon the other hand, it is urged that the true measure is the difference between the market value of the merchandise in Portland at the time of the ship's arrival and the value thereof in its damaged condition.
It is a general rule, recognized both in this country and in England, subject to certain well-established qualifications, that anticipated profits prevented by the breach of a contract are not recoverable in the way of damages for such breach. The application of the rule, however, is not always the same in different jurisdictions. The grounds that go in support of it are ordinarily the dependency and contingency of that character of profits upon uncertain, variable, and changing conditions, their remoteness, and the omission of any engagement, either express or implied through contractual relations, to answer therefor. But where such anticipated profits are not contingent, uncertain, or remote, or where, from the express or implied terms of the contract or the special circumstances under which it was entered into, it may reasonably be presumed that they were within the intent and mutual understanding of the parties thereto, they constitute, by the consensus of judicial opinion, a proper measure for recovery in the way of damages for breach of the contract. Howard v. Stillwell & Bierce Mfg. Co., 139 U. S. 199, 11 Sup. Ct. 500, 35 L. Ed. 147; Western Union Tel. Co. v. Hall, 124 U. S. 444, 8 Sup. Ct. 577, 31 L. Ed. 479; Hockersmith v. Hanley, 29 Or. 27, 44 Pac. 497. This latter principle has been applied, as between carrier and shipper, where an unreasonable delay has been suffered by the carrier, and the contract of affreightment, through intendment, contemplated that the goods should be delivered for immediate sale in the market at destination. In such case the carrier is liable to the shipper for the decrease in the market value of the goods from the time they should have been delivered in due course. The Caledonia, 157 U. S. 124, 15 Sup. Ct. 537, 39 L. Ed. 644, affirming the decision of the Circuit Court to the same effect in 43 Fed. 681. “The liability of the vessel,” says Brown, District Judge, in The Giulio (C. C.) 34 Fed. 909, "for the loss of a market during the period of negligent delay after the goods have been taken on board, has been often decided in the courts of this country.” See, also, The Sammie (D. C.) 36 Fed. 568; The City of Para (D. C.) 44 Fed. 689. The rule, however, is otherwise where there has been no delay, and the cargo is damaged through fault of the carrier. measure of damages is the difference between the value of the goods in their damaged state and their value at the port of destination, had they been delivered in good order. Henderson & Gaines v. Ship Maid of Orleans, 12 La. Ann. 352; Western Manuf'g Co. v The Guiding Star (C. C.) 37 Fed. 641.
In this jurisdiction interest has been allowed on the measure from the time of delivery. The Nith (D. C.) 36 Fed 86. This as between the shipper and the carrier. But the ship’s liability is not to be affected by private contracts between the shipper and strangers for the purchase and sale of the goods. The Compta, 6 Fed. Cas p. 233, No. 3,070. The reasoning of Judge Hoffman in that relation is cogent and pertinent. He
"The shipowner by the bill of lading does not enter into any engagement with the owner of goods that may be damaged to go into a joint speculative operation founded upon the anticipated state of the market at some indefinite future time, to be judged of by the shipper, who retains in his own hands the whole conduct of the adventure. Such a rule would impose on the shipowner obligations and liabilities little suspected by persons engaged in that
business, and of which his contract by bill of lading contains no hint. The only safe, rational, and equal rule is to hold, as before stated, the vessel liable for the difference between market value of the goods, if sound, and their value in their damaged condition at the time and place of delivery.”
These authorities leave nothing for me to add in the determination of this cause. The damages sought to be recovered were occasioned, not by delay, but by the failure to carry in good condition, and the rule applicable in determining the measure thereof is plainly the one last stated. The amount recoverable, therefore, is $240, with interest thereon at the rate of 6 per cent. per annum from October 1 1903, the date of the arrival of the ship in port. To this should be added other items of expenditure occasioned by the damage, namely: Moving steel on Columbia dock, $3.50; wharfage, $22.25; storage, $22.60; (The Giulio, supra); and also, I think, commission on sale of the steel, $68.75—making a total added of $117.10.
I disallow the item for telegrams and that for counsel fees, as being for the individual benefit of the libelants; also the items for premium occasioned by giving bond in court, $5.00, and court costs advanced, $18.20, because I assume they will be taxed, of course, following the decree in favor of the libelants.
(District Court, W. D. Washington, W. D. August 17, 1907.)
TOWAGE-LOSS OF Tow-INSUFFICIENT ANCIIORAGE.
A tug which had engaged to tow two schooners out of Gray's Harbor to sea started with them, but, the tide not being favorable for crossing the bar, anchored the two vessels inside the bay to await the proper condition of the tide on the next day, and left them. The wind was high at the time from the east, and increased later and the tide was ebb. At once one of the vessels commenced to drift; it appearing from a preponderance of the evidence that the anchor chain parted. Another anchor was dropped, but its chain also parted, and the vessel drifted on the bar and was wrecked. Both anchor chains were worn and rusted. The other vessel remained safe at her anchorage. IIeld, that the tug was not in fault for not at once taking the vessels over the bar, although it could possibly have been done with safety, that being a matter as to which the master was required to exercise his judgment, but that she was in fault for anchoring the vessels so near together that the one which was wrecked could not use a proper length of anchor chain and for leaving them without seeing that both were securely anchored; that the wrecked vessel was also in fault because of her defective and insufficient anchor chains, and entitled to recover only half damages from the tug.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 45, Towage, $8 23, 25.]
In Admiralty. Suit in rem, to recover damages for the loss of the three-masted schooner Alcalde, alleged to have been caused by negligence in the performance of a towage contract. On the evidence, the court decides that the loss of the Alcalde was caused by concurring negligence of the owners and masters of both vessels, and that the damages and costs be divided equally.
H. W. Hutton and W. L. Sachse, for libelants
HANFORD, District Judge. In the month of February, 1904, the steam tug Printer undertook to tow the three-masted schooner Alcalde, together with the schooner W. J. Patterson, both loaded with full cargoes of lumber, from Aberdeen on Gray's Harbor, in the state of Washington, outward to sea. The weather on that day was cloudy and wet, and there was an east wind prevailing, the velocity of which, according to the record of the weather station at North Head, 40 or 50 miles from Aberdeen, until 1 o'clock p. m., was from 16 to 21 miles per hour, and increased in force during the afternoon to 28 miles per hour, and continued to increase to 39 miles per hour at midnight; the highest velocity during the day being 44 miles. This record indicates the proximate force of the wind affecting the case with greater accuracy than any other evidence submitted. The vessels started from Aberdeen about 11 o'clock a. m. on a flood tide, and about one hour before the time of high tide. There is a bar at the entrance of Gray's Harbor, and it is not deemed by navigators to be prudent to attempt to take a vessel over the bar on an ebb tide, and for that reason the tug took the two vessels to an anchorage near the north shore of Gray's Harbor, about seven or eight miles below Aberdeen, arriving there about 1 o'clock p. m., where she first let go of the Alcalde, and then placed the W. J. Patterson, which was a larger vessel, about three-quarters of a mile distant downstream, where she was safely anchored and remained during the prevailing storm, holding by one anchor with 70 fathoms of chain. The captain of the tug deemed the position of the Alcalde to be unsafe, being too near the mud flats at low tide. He therefore returned and took that vessel in tow, and moved her to what he deemed to be a better position, about the same distance from the Patterson as her first position, where her port anchor was dropped and 30 or 40 fathoms of chain paid out, and, as soon as the towline was released, the tug steamed away to Hoquiam, to wait until the next day, when, at the proper stage of the tide, she was to return to complete her contract by towing both vessels to sea.
The time of the second anchorage of the Alcalde was between 1:30 and 2 o'clock p. m., which was but a short time after the beginning of the ebb tide. The force of the wind was then in the same direction as the tide—that is, outward, towards the bar—and by the combined force of the wind and tide the Alcalde drifted by the W. J. Patterson, and continued drifting until she struck on the bar, and became a complete wreck. The Alcalde carried a port anchor, weighing about 1,400 pounds, and a starboard anchor, weighing 1,600 pounds, and a small kedge. There is no important contradiction or discrepancy in the testimony upon which the facts thus far recited have been established. As to other facts the evidence is conflicting, and my conclusions are based upon what I deem to be the preponderance of the evidence.
The place where the vessels were left by the tug is customary anchorage ground, and as good for the purpose as any part of Gray's
Harbor. The Alcalde's anchor chains were old, worn, and crystallized, and unfit for service as ground tackle for a vessel of her size. The testimony on the part of the libelants is to the effect that the Alcalde began to drift immediately after releasing the tug the second time; that she dragged her port anchor with 35 fathoms of chain until after she passed the Patterson; that it was unsafe to pay out more chain when she began to drift because of the danger of running afoul of that vessel; that, after passing the Patterson, she dropped her starboard anchor, and paid out 35 fathoms of chain, which broke as soon as that anchor took hold upon the bottom; that she then paid out more chain on the port anchor until about 55 fathoms in all had been paid out, when that chain also broke. I discredit all the testimony to the effect that the port anchor was dragged, and I am convinced that the vessel went adrift for the sole reason that each of her chains successively broke immediately upon being subjected to the strain of the vessel. My reasons for this conclusion are as follows:
(1) The chains were weak and incapable of standing a severe strain. Under the same conditions, one chain held a larger vessel near the place where the Alcalde started to drift, and it is a self-evident proposition that a good anchor with a sufficient length of good chain would have held the Alcalde also.
(2) The testimony of some of the libelants' witnesses is to the effect that the vessel was not held by her port anchor at all, but commenced to travel downstream as soon as she was released from the tug and continued going unchecked by her port anchor, until she had drifted two miles or more, when she came up on the chain with a jerk, and it then immediately parted, and that, while she was still dragging her port anchor, the starboard anchor was dropped; that the vessel pulled up on it with a jerk, and that chain immediately "snapped”; that she continued dragging the port anchor for an additional mile; that after breaking away from the starboard anchor she swung around, so that her stern came up into the wind, until she was athwart the current and had the wind abeam, and drifted broadside to both the current and the wind, and that she persisted in refusing to head up to the wind after the spanker had been set for the purpose of forcing her stern forward, so that her keel would be in line with the anchor and chain attached to her bow. This testimony is simply absurd, for, unless natural laws were suspended, if the vessel drifted broadside to both current and wind, there was no 1,400 pound anchor with 40 or more fathoms of chain pulling against her bow.
(3) The testimony given in behalf of the libelants by the mate of the Alcalde, although corroborating some of the absurdities sworn to by his associates, contradicts them in one important particular. He says that there was no jerk nor sudden strain upon either chain, but that each in succession parted under a steady strain. The most reasonable inference to be drawn from the circumstances is that the port anchor remained where it was dropped, as the starboard anchor did.
The unsuitableness of the anchor chains was a contributing, and the principal, cause of the loss of the vessel, and it is immaterial whether other faults on her part charged in respondent's answer are sustained or not sustained by the evidence.