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McAllister Lighterage Line Inc. v. Insurance Co.

decided: May 29, 1957.

MCALLISTER LIGHTERAGE LINE, INC., PLAINTIFF-APPELLEE,
v.
INSURANCE COMPANY OF NORTH AMERICA AND SCOTT PAPER COMPANY, DEFENDANTS-APPELLANTS.



Author: Lumbard

Before MEDINA, HINCKS and LUMBARD, Circuit Judges.

LUMBARD, Circuit Judge.

Defendants appeal from a judgment entered upon the verdict of a jury by Albert L. Reeves, Judge, sitting in the Southern District of New York, in the amounts of $20,000 against the Insurance Company of North American and $3,456.19 against Scott Paper Company.

This action arose out of a charter of the McAllister scow 58 to the Scott Paper Company in August 1953. McAllister delivered the 58, a wood hull harbor scow built in 1911, to Scott at its Wilmington Marine Terminal on the evening of August 25, 1953. The following day McAllister and Scott executed a written demise charter of the scow for one year at $650 per month. The terms of the charter required Scott to furnish and pay the crew and furnish all victuals, supplies and equipment. Paragraph 4 of the charter provided: "The acceptance of said scow by the Charterer is to be conclusive evidence of the seaworthy condition of said scow at the commencement of this charter." The charter party required Scott at its expense to insure with full fire and marine insurance for the protection of owner and charterer "as interest may appear" in the sum of $20,000.

Just prior to the charter McAllister had drydocked the scow for an in-going survey at its expense, including the recaulking of the hull. On August 27 the scow was loaded with 605 short tons of wood pulp, a load well within the capacity of 700 tons. During the loading Scott's bargee, Samuel Church, found a small amount of water in the hull which he pumped out, before noon, with a gasoline pump aboard. Just before 6 P.M. he started the pump again to remove additional seepage. At 6:30 P.M. a tug proceeded to tow 58 toward the Scott plant at Chester, Pennsylvania, about 14 miles away, going down the Christiana River for three quarters of a mile with a fair current and then north on the Delaware River with increased engine speed against the ebbing tide.

The 58 was unattended because Church did not remain aboard as he had been instructed, but instead drove along the shore.Off Claymont, Delaware about 8:30 P.M. the mate on the tug noticed that 58 was listing slightly and upon going aboard a few minutes later the tug's captain found water "bursting right in." Within a few minutes the scow's rail was under water and the tug beached 58 at the ice breaker above Marcus Hook. There she sank before Church, who meanwhile had arrived from shore, could hook up a pump.

The 58 was later refloated and upon inspection at the marine railway it was found that the caulkers, working for McAllister to repair and fit the scow according to the agreement between Scott and McAllister, had neglected to recaulk a seam 18 inches long in the bottom planking. Though the seam was uncaulked for a space of 18 inches, certain interior structures reduced the clear opening to 10 inches. This much is undisputed, and from this it seems clear that the residue of old oakum left by the outfitters "blew out" as the 58 started up the Delaware River.It is undisputed that it was through the resulting 10 inch opening the 58 filled with water and sank.

Scott and North America filed a joint answer alleging that the insurance never became effective because the scow contained a hidden defect which breached McAllister's implied warranty of seaworthiness, that Scott had no knowledge or means of obtaining information regarding the unseaworthy condition of the scow, and that it could not be and was not observed on reasonable and proper inspection. Secondly, it was alleged that paragraph 4 of the charter was inoperative, since it was intended to apply only to patent defects.

McAllister moved to strike the second defense on the ground that acceptance of the scow pursuant to paragraph 4 of the charter was conclusive evidence of seaworthiness, and not restricted to patent defects.Judge Clancy granted the motion and struck the defense.

At the trial before Judge Reeves and a jury, McAllister sought to prove that the sinking was due solely to the negligence of Scott. It was urged that if the barge captain had remained aboard and run the pump, the scow would not have sunk, since the opening in the seam would admit only 4,419 gallons of water per hour and the pumps could handle at least 5,800 gallons per hour.

The jury's answers to written interrogatories submitted to it may be summarized as follows:

1. The loss of the scow was proximately caused by Scott's negligence after the scow's delivery.

2. The reasonable cost of repairs was $23,456.19, and the market value was $20,000.

3. The scow was not unseaworthy when the policy endorsement was issued ...


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