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Lago Oil & Transport Co. v. United States

decided: January 17, 1955.


Author: Frankfurter

Before FRANKFURTER, Circuit Justice, and FRANK and HINCKS, Circuit Judges.

FRANKFURTER, Circuit Justice.

The libel of the Lago Oil and Transport Co. is based upon services rendered to a tanker owned by the United States while in distress outside the port of Aruba, Dutch West Indies. In making an award to members of the crew, which we find no reason to disturb,*fn1 the District Judge recognized that the services rendered by Lago's tug, the Captain Rodger, were "of a salvage nature," but denied recovery to Lago in its own right on the ground that payment by the United States of a bill rendered by Lago constituted a full discharge of whatever obligation resulted from Lago's services.

The tanker, the S.S. Fisher's Hill, had caught fire on the evening of April 13, 1947, shortly after leaving Aruba with a cargo of oil. Efforts to extinguish the blaze failed, and the ship's master sent the following message to Lago, which had acted as ship's agent to the tanker while at Aruba:

"* * * Engine Room Afire Please Rush To Marine Department And Let Them See What They Can Do About Assistance 1910 Abandoning Ship."

The Captain Rodger was immediately dispatched to the tanker's assistance. The fire continued to spread and the ship, without motive power, was driven by rough seas toward the nearby coast. Upon arrival, the tug pumped water on the Fisher's Hill and, as found by the District Court, "contributed to the control of the fire and helped to prevent its spread." The tug terminated its efforts to extinguish the fire in order to remove the crew from the tanker and from a lifeboat which was dangerously close to the shore, bringing them safely to Aruba. The Captain Rodger returned just after midnight to the tanker, at which time the fire was out and the port anchor has been lowered at a point within one mile of shore. The captain of the tug felt that the tanker was nonetheless in danger of drifting in the rough seas and attempted to tow the tanker to a safer position. During this attempt, the Captain Rodger's steering gear cut out, causing the tug to foul its tow line and be driven aground and lost. The tanker later was partially repaired at Aruba, and departed in tow for Baltimore on May 7, 1947.

At no time was there any discussion between the master of the tanker and Lago's representatives as to the basis of compensation for the services of the Captain Rodger. A bill was rendered on May 7, 1947, which included an item of $560 as Lago's agency fee covering, at a per hour rate, the entire period between the first arrival of the Fisher's Hill at Aruba and its departure in tow for Baltimore. On May 31, 1947, a bill was rendered for chemicals damages on the tug while fighting the fire. Certain other bills not here relevant were also rendered, but none related to the services of the Captain Rodger. On September 15, 1947, the Government wrote Lago as follows:

"In view of the various insurance claims resulting from the fire aboard the SS Fisher's Hill, April 13, 1947, it is extremely important for us to have on hand a complete account of all disbursements directly relating to or arising from said disaster.

"In this connection we would, therefore, appreciate your advice as to whether we have been completely billed for these expenses, or whether supplementary expenses are to follow. If the latter case applies, we would appreciate your billing us as soon as possible."

Lago replied on November 1, 1947:

"As requested in your letter of September 15, 1947, we are enclosing herewith our invoice No. P.H.-1 in the amount of $2,756.60 covering services rendered the S.S. 'Fisher's Hill" by our Tugs 'Captain Rodger' and 'Delaplaine' and our lake tankers 'Missoa' and 'Tasajera' during April and May, 1947."

Accompanying this letter was an invoice "For services rendered the s/s 'Fishers Hill' by the following vessels during April and May, 1947," making charges for the entire time spent by the Captain Rodger prior to its loss at a per hour rate of $50, and for ferrying services performed by the other mentioned vessels. This bill was paid by the United States.

Since the District Court drew the legal conclusion of accord and satisfaction, the case largely turns on construction of these documents in the setting of their circumstances. To a considerable degree, this in turn depends on the view taken of the relationship of the parties, and the rights and obligations growing out of them, as they existed prior to the payment of Lago's bill. In the absence of any specific provision of the agency contract - and none was shown - the perilous undertakings of the night of April 13 would not constitute a part of the normal obligation of a ship's agent at a port of call. Such a relationship might, as a matter of economic self-interest, be an influence in undertaking unrewarding salvage efforts, and as such may be deemed an element in calculating the amount of the award. But the mere fact that Lago as ship's agent for the S.S. Fisher's Hill before and after the fire does not preclude an otherwise meritorious claim for salvage, and the District Court found, as we have stated, that "the services rendered by the Captain Rodger and the members of the crew were of a salvage nature." No direct precedent in American law has been called to our attention.*fn2 In the somewhat analogous case of salvage work by a tug already engaged under contract, the pre-existing contractual relationship has not been an obstacle to an award where the services were extraordinary in that they were beyond anything reasonably called for by the contract.*fn3 English admiralty decisions, with which our maritime law as a rule finds itself in accord,*fn4 "from motives of public policy" recognize salvage claims under these circumstances.*fn5

The government contends that, in view of the agency relationship, the request for assistance to Lago should be construed as an offer to pay for services at the rates customarily charged by Lago, irrespective of the outcome of the effort to save the ship, and that the contract resulting from performance of services in response to that offer negatived voluntariness essential for a salvage award. The finding of the District Court that the request for assistance was made to Lago "in its capacity as agent of the SS Fisher's Hill" is not a finding of fact but an interpretation of the legal meaning of the facts. No doubt Lago would have been entitled to the compensation which it received regardless of whether or not its efforts contributed to the safety of the S.S. Fisher's Hill. Yet it is not every contract for payment irrespective of success which will preclude an award. According to The Camanche, 8 Wall. 448, 19 L. Ed. 397, "the rule is that nothing short of a contract to pay a given sum for the services to be rendered, or a binding engagement to pay at all events, whether successful or unsuccessful in the enterprise, will operate as a bar to a meritorious claim for salvage." Id., 8 Wall. at page 477, 19 L. Ed. 397. This suggests that only where the contract entered into is shown to enclose the entire undertaking, will it be a bar to recovery. The circumstances here surrounding the request for assistance do not lead to the spontaneous inference that the parties meant to strike a comprehensive arrangement. The fact that Lago would have received some compensation in any event may well bear on the amount of an award.*fn6 But to make ...

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