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O'Brien Bros. Inc. v. Moran

March 28, 1947

O'BRIEN BROS., INC.,
v.
THE HELEN B. MORAN ET AL.



Author: Hand

Before L. HAND, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

On December 17, 1942 while the tug Helen B. Moran was towing the libellant's lighter Dayton from the slip between Piers 8 and 9 bound for Brooklyn the United States Navy tug collided with the lighter and caused the latter to sink within a few minutes after she had been towed back into the slip. The libellant thereafter filed a libel against the tug Helen B. Moran and her owner which as against those parties was dismissed by consent. Thereupon the cause was left to proceed against the United States which had been impleaded and consented to an interlocutory decree awarding to libellant 80% of its damages arising out of the collision, the computation of which was referred to a Commissioner. The Commissioner found the damages to be $61,021.59, 80% of which amounted to $48,817.27. That percentage of the amount of damages found was the limit of the amount allowable under the terms of the interlocutory decree. From a final decree confirming the report of the Commissioner, the United States appeals.

The question is whether the amount of damages awarded to the libellant was established by the evidence. In our opinion the libellant failed to prove the amount of damages awarded by the decree, which accordingly should be reversed.

The United States introduced evidence to the effect that the value of the barge at the time of the collision was $15,000 to $16,000. The libellant showed what the repairs had cost and what hire it received for its barge. While the net of $101.85 per day, and an apparent likelihood of prolonged use, were some evidence of a greater value than $16,000, the United States introduced evidence that a similar barge could have been built new for $33,000 and that upon such an assumed cost there should be allowed a depreciation of $17,800 in order to obtain a proper valuation of a barge that was twelve years old at the time of the collision, as was the Dayton. The actual cost of the Dayton according to books of the libellant was $44,653, and the depreciation taken on the books was $28,212, leaving a book value of $16,441. Yet the Commissioner and the District Judge allowed $7,732.21 for expenses of raising the wreck, $37,014.99 for repairs, $6,230.23 for repairs still to be made, $3,423.91 for miscellaneous items of damage, and $6,620.25 for demurrage, making a total of $61,021.59, upon which the 80% allowed under the provision of the interlocutory decree was based, or a net of $48,817.27.

In The Reno, 2 Cir., 134 F. 555, 556, the owner of a vessel sunk in a collision had her raised and repaired. In a suit to recover damages for the collision this court, in an opinion by Judge Wallace, set forth the rule to be applied in such cases as follows:

"The damages sustained by the owner of a vessel which is sunk in a collision, when the vessel is a total loss, is her value at the time of the loss, to which interest may be added to afford complete indemnity; and to this may also be added the necessary expenses of raising her, when that is necessary to determine whether she can be repaired advantageously; and when she is sunk in a place where she is liable to be an obstruction to navigation, the expenses of removing her may also be added. If she was not a total loss, then the measure of damages is the reasonable expense of raising and repairing her to an extent sufficient to put her in as good condition as she was before the collision. The burden is upon the owner to prove the amount of his loss, either by showing the vessel to have been a total loss, actually or constructively, or by showing the extent and cost of the necessary repairs and the incidental expenses."

In The Havilah, 2 Cir., 50 F. 331, in an opinion by Judge Lacombe, in which Judge Wallace concurred, this court held that where a vessel worth $3,800 was sunk and then raised at a cost of $1,900, and thereafter repaired at a cost of $6,800, the wrongdoer was liable only for the value of the ship, cargo, freight and personal effects which were on board before the collision and not for the cost of repairs except in so far as they did not exceed the foregoing value.

The effect of both of the above decisions was to limit recovery of damages arising from a collision to the actual loss suffered, and not allow to the injured party expenses of repair exceeding that limit.

The Commissioner appointed under the interlocutory decree for the ascertainment of the damages suffered by the libellant reported that: (1) The Dayton was not a total loss because she was capable of being repaired and was repaired; (2) The doctrine that a vessel owner may not spend on the repair of his vessel more than the amount for which a comparable or similar vessel can be purchased in the open market is based on the obligation of the party who has been wronged to minimize damages and there was no evidence indicating that the libellant could buy in an open market another vessel comparable to the Dayton for less than the cost of the repairs; (3) Under conditions existing at the time of the collision, the value of the Dayton greatly exceeded the sum of $16,000, and it was doubtful whether a seller of a lighter comparable to the Dayton, and in reasonably good condition, could have been found; (4) The burden of proving that the value did not exceed $16,000 was on the United States.

For the foregoing reasons the Commissioner held that the Dayton's worth was substantially in excess of $16,000 (the respondent's figure) and thereupon allowed 80% of the sum of $61,021.59, or a net of $48,817.27 as the amount of damages.

One of the principal reasons for the Commissioner's estimate of damages caused by the sinking of the Dayton was founded on the statement of Justice Grier in The Granite State, 3 Wall. 310, 70 U.S. 310, 314, 18 L. Ed. 179, that: "When the injured vessel is not a total loss, and is capable of being repaired and restored to her original situation, the cost necessary to such repair cannot be said to be an incorrect rule of Damages." However, in The Baltimore, 8 Wall. 377, 75 U.S. 377, 387, 19 L. Ed. 463, Justice Clifford said that: "Persons injured in their property by collision are entitled to full indemnity for their loss, but the respondents are not liable for such damages as might have been reasonably avoided by the exercise of ordinary skill and diligence, after the collision, on the part of those in charge of the injured ship."

In our opinion the holding of the Commissioner that the respondent had the burden of proving that the value of the barge at the time of the collision did not exceed $16,000 was erroneous. The court adopted that view because it considered that the sole issue was one concerning the duty of an injured party to "minimize damages." But that duty only applies in dealing with expenditures that should be allowed if found to be reasonable under the circumstances. It does not affect the ordinary rule that an injured party has the burden of proving the damages he has actually suffered. United States v. The Oceanic SS. Nav. Co., 2 Cir., 56 F.2d 764, 766. Here the libellant has merely shown what he has paid out for repairs and attendant expenses, while the respondent has shown, without contradiction, that those sums were expended on a vessel that was worth much less than the expenditures. It seems quite evident that the real loss involved no such amount if in fact the value of the vessel at the time of the collision was less than the sums expended to restore her to service.

Pound, Ch. J., in the New York Court of Appeals, discussed the principles involved where an automobile was injured in a collision and the repairs were found to cost more than the vehicle was worth. He stated a rule, which the decisions we have already quoted show to be equally ...


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