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Crain Brothers Inc. v. Duquesne Slag Products Co.

decided: December 30, 1959.


Author: Hastie

Before GOODRICH, STALEY and HASTIE, Circuit Judges.

HASTIE, Circuit Judge.

Plaintiffs have sued for and have recovered judgments against the defendant for the total loss or the damaging of some eighteen barges, severally owned by them, said to have been caused by the negligence of the defendant. Plaintiff Crain Brothers, Inc. owns a controlling interest in plaintiff Duquesne Sand Co., although they are separate corporations. The barges in suit were used by the plaintiffs for hauling sand and other materials on the navigable rivers in the Pittsburgh area.

It is the theory of the libel that defendant, having possession and control of two barges, negligently failed to secure them properly during a storm, with the result that they broke from their moorings, proceeded down stream and struck and damaged various other craft, including an entire moored fleet of barges which was caused to break loose. Some of the damaged barges were recovered afloat; others sank and were raised. Some were a total loss; others were repaired and returned to service.

The court found for the plaintiffs on the contested issues of negligence and causation. On this appeal we find adequate basis in the record for the trial court's conclusion that, all circumstances considered, the defendant failed to use due care in securing the barges which first broke away. We also find sufficient evidence that it was these barges which struck and caused damage to the various other barges involved in this suit. Thus, the finding of liability is well founded and must stand.

However, various substantial questions have been raised concerning the determination and award of damages. Crain recovered the principal sum of $128,992.82. Duquesne recovered $100,504.10. Each lump sum award was determined by aggregating numerous items such as market value, repair cost, salvage cost and detention damages as determined for each barge separately. On this appeal these computations and allowances are challenged in detail.

Included in the damages awarded for Crain barges 105, 309, 104, 337, 332 and 433, and Duquesne barges 21, 201 and 215, were allowances for "loss of use". Although the amounts awarded for loss of use were not segregated in the court's findings, it is asserted without contradiction on this appeal that these detention damages as allowed aggregated $3,180 for Crain barges and $1,660 for Duquesne barges. The proof on this matter consisted of evidence of the number of days each barge was out of service and testimony that the charter rate for open steel barges of this type in the Pittsburgh area at the time in question was twenty dollars a day. Also said to be relevant is testimony that the barges were damaged during a busy season and at a time when there was a general shortage of such vessels in the area.

On the other hand it is correctly pointed out that at the time the barges in suit were damaged there were some fifty-five barges in the Crain fleet and all were not constantly in use. Moreover, for more than six years Crain had not released any of its idle barges to others on charter. The evidence also established that during the period that the damaged barges were out of service the appellees did not obtain or attempt to obtain by charter any additional equipment to supplement the available units of their own fleet. They conducted the transportation required in their business with their own undamaged barges until the others were returned to service. It does not appear whether during this period it was necessary that the appellees curtail their normal business activity in any way, or whether the undamaged barges were sufficient for all of the hauling their business required. There is no showing of diminished profits while barges were out of service. True, it seems likely that, with so much equipment out of service at a busy time, diminished ability to transport sand and other commodities would result in some economic loss. But there is simply no proof on this issue. We have only a showing as to the general value of the use of barges in terms of customary charter rates in the community.

The above outlined proof is insufficient to support an award of detention damages. The unquestioned general rule governing the award of detention damages is that "demurrage will only be allowed when profits have actually been, or may be reasonably supposed to have been, lost, and the amount of such profits is proven with reasonable certainty". See The Conqueror, 1897, 166 U.S. 110, 125, 17 S. Ct. 510, 516, 41 L. Ed. 937. In applying this rule in Brooklyn Eastern District Terminal v. United States, 1932, 287 U.S. 170, 53 S. Ct. 103, 77 L. Ed. 240, the Supreme Court set aside an award measured by the cost of chartering a substitute tug where it appeared that claimant had not in fact chartered a substitute for its own damaged tug, but had used its other two tugs overtime to handle the additional work normally assigned to its temporarily disabled vessel. It was not shown that this had increased transportation costs or increased depreciation on the undamaged vessels. More recently the Court of Appeals for the Second Circuit has clearly stated and applied the applicable doctrine, saying:

"Where, as here, demurrage is claimed for a ship used exclusively to transport cargo used in the business of the shipowner, the damage may be shown by the cost of a substitute or by proving the loss to the business of the shipowner by being deprived of the use of the ship in that business. * * * As no substitute vessel was procurable or procured, the loss is to be measured by the extra cost, if any, of transporting, processing, and selling the petroleum which the 'Hurley,' but for the detention, would have transported * * *." Sinclair Refining Co. v. The American Sun, 2 Cir., 1951, 188 F.2d 64, 66.

Perhaps closest on its facts to the present case is The Glendola, 2 Cir., 1931, 47 F.2d 206, 208, where the cost of a substitute vessel was proved but the evidence showed that the remainder of the claimant's fleet had absorbed the work of the damaged vessel. The court summed the matter up as follows:

"* * * damage lay either in the embarrassment to its business in general, or in the cost of a substitute, chartered to take the Tilford's place.* * * [The] first is not provable when, as here, no definite sum can be attributed to the detention. It was certainly not enough to show the reasonable hire of such a ship as the Tilford, measured in terms of current fixtures."

Thus, on the present record an award of detention damages is not justified. But even so, appellees point to the normal expectation of substantial injury as the result of the disabling of so many vessels as were damaged in this case and urge that it would be fair to give them an opportunity even now to supply the district court with evidence of the fact and the amount of detention damages, although such evidence was not included in the original presentation. We are disposed to grant this request, particularly since appellant too has asked to be permitted to submit additional proof, albeit on another point to be discussed.

Guided by estimates of expert witnesses for plaintiffs, the court awarded $17,500 and $15,000 as the fair market value of Crain barges 333 and 334, although defense experts estimated the value as much less. Crain had purchased these vessels as old barges in 1949 for about $4,800 each. Thereafter, it had made very substantial repairs and renewals, putting the barges in first class condition. In addition, there was testimony that these barges were lost at ...

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