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COMPANIA PUNTA ALTA, S.A. v. DALZELL

May 28, 1958

COMPANIA PUNTA ALTA, S.A., as owner of THE Steamship MARJORY, Libelant,
v.
Lloyd H. DALZELL, as managing owner, and tugs THE DALZELLACE, THE CAPTAIN A. F. BENNETT, THE LLOYD H. DALZELL and THE DALZELLITE, Respondents. Lloyd H. DALZELL, as managing owner of tugs The Dalzellace, The Captain A. F. Bennett, The Lloyd H. Dalzell and The Dalzellite, Cross-Libelant, v. COMPANIA PUNTA ALTA, S.A., Cross-Respondent. INSURANCE COMPANY OF NORTH AMERICA et al., Libelants, v. Lloyd H. DALZELL, as managing owner and tugs The Dalzellace, The Captain A. F. Bennett, The Lloyd H. Dalzell and The Dalzellite, Respondents



The opinion of the court was delivered by: DIMOCK

Respondents except to the report of Paul E. Lockwood, Esq., who was appointed, pursuant to an interlocutory decree of this court dated February 29, 1952, Commissioner to ascertain and compute damages.

The controversy arose out of a collision which occurred on December 11, 1946, between the S. S. Marjory, owned by Compania Punta Alta, S.A., hereinafter libelant, and the S. S. Joseph E. Wing, a dead ship in tow of four tugs owned by Lloyd H. Dalzell, hereinafter respondent. The only physical damage resulting from the collision was that sustained by libelant, the live ship. Temporary and then permanent repairs were made to the ship and, after the temporary repairs had been completed, libelant asserted its right to general average contribution. Security was obtained from insured cargo but not from uninsured.

 On May 4, 1948, libelant brought this libel against respondents, the four tugs and their owner, for damages. Thereafter Insurance Company of North America and others, as insurers of part of the cargo on the live ship, brought a libel against respondent for recovery of that cargo's contributions in general average. Respondent filed a cross-libel against libelant for recoupment in the event of a recovery by the insurers against respondent. The suits were consolidated.

 In a general average adjustment dated July 31, 1950, it was determined that the insured cargo's share of the damage was $ 6,653.62. This sum libelant collected from the insurers. The uninsured cargo's share of the damage was determined to be $ 4,311.36 but it was not collected by libelant.

 The decree of February 29, 1952, determined that libelant and respondent were both to blame and provided for equal division of damages. It further directed that the insurers should recover their damages from respondent and that the amount which would be paid by respondent to reimburse the insurers pursuant to this direction should be included by respondent in the amount of the damage to be shared equally between it and libelant. The conclusions reached by the Commissioner may be tabulated as follows : Expense incurred by libelant as a result of the collision including cost of temporary and permanent repairs and cost of general average adjustment $21,856.07 Interest on claim of insurers of cargo for reimbursement of amount paid by insurers to libelant in satisfaction of insured cargo owners' liability in general average 532.29 Total damages $22,388.36 Amount of respondent's liability being one-half of total damages $11,194.18 Less amount paid by respondent to insurers of cargo in reimbursement of amount paid by insurers to libelant in satisfaction of insured cargo owners' liability in general average: Principal $6,653.62 Interest 532.29 7,185.91 Balance due from respondent to libelant $4,008.27 I

 Respondent excepts to the Commissioner's refusal to deduct from the shared damages the sum of $4,311.36, representing the general average contribution due but not collected from uninsured cargo.

 The Commissioner in refusing to make this deduction relied on Pool Shipping Co. v. United States, 2 Cir., 33 F.2d 275, which held, per A. Hand, C.J., that a carrying vessel's damages should not be reduced by the contribution in general average made by the cargo to the carrying vessel. The court stated that if the sum has been paid by the cargo the carrying vessel can recover 'for the benefit of the cargo' and 'if, on the other hand, the cargo has not paid its general average contribution', the carrying vessel may 'recover this amount in its own right against the tort-feasor as part of the collision damages.' Id., at page 277.

 Respondent contends that this case is no longer good law in that the analogy drawn by the court between general average and an insurance claim, with respect to which the cargo owner in effect would be subrogated to the claim of the shipowner against the tort-feasor in the amount of its contribution, was repudiated by the Supreme Court in Aktieselskabet Cuzco v. The Sucarseco, 294 U.S. 394, 55 S. Ct. 467, 79 L. Ed. 942. The rule in the Pool Shipping case does not stand or fall on this analogy which was repudiated in the Sucarseco case; on the contrary it is supported by the analysis of the nature of general average in the two cases relied on by respondent: the Sucarseco case and Morrison Steamship Co., Ld. v. Greystoke Castle (Cargo Owners) (1947) A.C. 265, where the House of Lords, affirming the decision of the Court of Appeal (sub. nom. 'The Cheldale') (1945) P. 10 (C.A.), adopted the rule of the Sucarseco case.

 In these two cases the courts held that the cargo owner had a direct right against the tort-feasor for the amount of its loss as measured by the general average contribution that it paid. In defining the nature of general average, Chief Justice Hughes stated, 294 U.S. at page 404, 55 S. Ct. at page 471:

 'The nature of these expenditures and the fact that they are traceable directly to the collision are not changed by the sharing in general average. That merely affects the distribution of the loss, not its cause. The claim of the cargo owners for their general average contributions is not in any sense a derivative claim. It accrues to the cargo owners in their own right. It accrues because of cargo's own participation in the common adventure and the action taken on behalf of cargo and by its representative to avert a peril with which that adventure was threatened.'

 It follows that the 'common adventure' collectively is entitled to recover the full amount of expenditures resulting from the collision and made for the benefit of those who share in the adventure; the general average contributions 'merely affect the distribution of the loss'. If the carrying ship incurs the entire expense and chooses to bear that expense rather than collect the share due from its fellow adventurers, the cargo owners, it may certainly recover its total expense from the tort-feasor.

 The right of the shipowner to recover its total expense for the adventure resulting from the collision was expressly recognized by the three opinions constituting the majority in the House of Lords in 'The Cheldale', supra. *fn1" Lord Porter stated at p. 298

 'In my view the injured ship might sue not only for her own direct loss but also for any damage to the cargo of which she was bailee, and similarly might sue as bailee for the expense to which she was put in incurring general average expenditure even though that expense was incurred in the general interest of all those concerned in the adventure.' *fn2"

 Lord Justice Scott's view below, (1945) P. at 13, cited by respondent, that the tort-feasor was liable to the injured shipowner for its net loss only, i.e., after deducting the amount recovered by general average contribution, was ...


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