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AMERICAN INDEP. OIL CO. v. M. S. ALKAID

November 22, 1967

AMERICAN INDEPENDENT OIL COMPANY, Plaintiff,
v.
M. S. ALKAID, her engines, etc., and Alvion Steamship Corporation, and Clyde Valley, Defendants, and v. Merritt-Chapman & Scott Corporation, Defendant-Impleaded


Wyatt, District Judge.


The opinion of the court was delivered by: WYATT

WYATT, District Judge.

This is a suit in admiralty by the owner of a cargo of crude oil on account of (a) loss of a part of the oil and (b) contamination of other parts of the oil. The suit has been tried to the Court on the issue of liability; if there is liability, damages are by the pretrial order to be later determined or agreed upon.

 There is jurisdiction under 28 U.S.C. § 1333.

 Plaintiff American Independent Oil Company, Incorporated (Oilco) wanted to ship crude oil from the Persian Gulf to 138th Street and East River, New York City.

 Defendant Alvion Steamship Corporation (Alvion) is the owner of the Motor Ship Alkaid.

 Oilco chartered the Alkaid to carry the oil. About June 15, 1960 the Alkaid loaded some 22,500 long tons of fuel oil at a Persian Gulf (Kuwait) port; this oil belonged to Oilco. On July 14, 1960 the Alkaid reached an anchorage in the Narrows off Stapleton, Staten Island. About 0130 in the morning of July 15, two tugs belonging to Moran Towing & Transportation Co., Inc. (Moran) joined the Alkaid at the anchorage and Clyde Valley, a licensed pilot, went aboard the Alkaid. Daylight Saving Time was then in effect in New York (General Construction Law, McKinney's Consol. Laws, c. 22, § 52) and times expressed herein are Eastern Daylight Saving Time. The ship got under way for its destination up the East River, with Valley acting as pilot and with the tugs accompanying. Shortly after passing under the Williamsburg Bridge going upriver, the ship struck something below the water, ruptured some of her cargo tanks, and lost some oil cargo. This was about 0233 on the morning of July 15 and is referred to as the "upriver stranding"; the ship did not stop or even lose speed when it struck the object below water.

 The injured ship continued upriver to the area near East 42nd Street where she was intentionally pushed to the west side of the East River alongside the seawall near the United Nations Building. She was held by the tugs in position against the wall, her bow upriver.

 During the morning of July 15, Alvion arranged for salvage to be performed by Merritt-Chapman & Scott Corporation (Merritt), a professional salvor. About 1330 on July 15, the Master of the Alkaid signed a salvage agreement with Merritt and Merritt then took over control of the ship.

 Merritt took the ship down river in the afternoon of July 15. As she was going down the East River, with three tugs now assisting, she stranded in an area slightly above the Williamsburg Bridge; this was about 1540 in the afternoon of July 15 and is referred to as the "downriver stranding". Merritt was able to refloat the ship by 2245 on the same day and got her under way, with a fourth tug now assisting; the flotilla arrived about 0230 on July 16 at the anchorage off Stapleton (or nearby Tompkinsville), Staten Island. There the Alkaid remained until July 20, during which period a part of her cargo oil was transferred to four barges. These barges took their cargoes to a pier of the Bayonne Terminal Warehouse Company at Bayonne, New Jersey, and discharged the oil into shore tanks.

 On July 20, the Alkaid was itself moved to the pier at Bayonne and on the same date began discharging cargo oil (including some mixed with water) into shore tanks. Discharge was completed on July 28. Thereafter the ship was taken to a drydock and was delivered by the salvor to the owner on August 10, 1960.

 As a result of the events described, there was a loss of cargo by leakage from the ship. In addition, salt water had become mixed with some of the oil before discharge at Bayonne; this mixture had to be treated to separate the oil from the salt water. As to a quantity of the mixture, such treatment was successful. As to the rest of the mixture discharged at Bayonne, the treatment was not successful; the water could not be eliminated to the extent necessary to meet commercial standards and this part of the cargo had to be sold at a price discount. Oilco asserts that the oil in this part of the cargo was emulsified with water through the action of chemicals used in tank cleaning operations wrongfully performed before the ship was entirely discharged at Bayonne and that these chemical emulsifiers were negligently permitted to mix with the cargo.

 The complaint filed by Oilco on August 28, 1961 contained three separate claims.

 The first claim was against the ship and her owner, Alvion. It averred that the upriver stranding was due to the negligence and incompetence of those in charge of navigating the Alkaid in that she struck "a known and charted shoal or rocky area" resulting in "loss by leakage" of cargo and additionally in water contamination of cargo. Recovery was sought (a) for the value of all cargo lost by leakage, (b) for expenses of reconditioning the water contaminated cargo, and (c) for contribution of cargo to a salvage award as a general average expense. While the wrong alleged against the ship was negligence causing the upriver stranding, damages were asked (paragraphs Ninth and Tenth) for all cargo lost by leakage, whether during the upriver stranding, during the stay at the U.N. Building, or during the downriver stranding. This becomes of some significance to part of the claim of Oilco directly against the salvor, Merritt.

 The second claim in the complaint was against Moran, its two tugs, and Pilot Valley. It averred that Moran was engaged by the shipowner to supply towage and pilotage of the Alkaid up the East River, and that Moran supplied the two tugs and its employee, Pilot Valley. The second claim averred that the damage to cargo from the upriver stranding was caused by the negligence of the two tugs or to their "insufficiency in power or inability * * * etc." or to the negligence and incompetence of Pilot Valley. Recovery was sought exactly as in the first claim.

 The third claim in the complaint was against the ship and her owner. It was based on the claimed damage of cargo by emulsifiers at Bayonne and averred that this resulted from the wrongful conduct of tank cleaning operations while cargo was being discharged and from negligently discharging the tank cleaning material through cargo discharge lines, such material being thereby deposited in the same tank with cargo. Recovery was sought for the damage to that part of the cargo which had to be sold at a price discount.

 Jurisdiction was duly obtained over the ship, the tugs, and the other parties defendant.

 Answers were filed which put in issue the claims made.

 The ship and her owner duly brought in Merritt by impleading petition under old Supreme Court Admiralty Rule 56 (it being long before the unification of admiralty and civil practice, effective July 1, 1966).

 Merritt duly answered the complaint and the petition, thus putting in issue the averments of the complaint as well as those of the impleading petition.

 Alvion moved in advance of trial to dismiss the first claim (that against the ship and her owner) as insufficient on its face. The position taken by Alvion was that this claim was based on negligence in pilotage and navigation, whereas the charter party specifically provides that neither the ship nor the owner shall be liable for any such negligence. The position taken by Oilco was that under the charter provision the ship was not excused for such negligence if there was "personal design or neglect of the Owner" (wording which in fact applies only to the "fire" exception) or if "caused by want of due diligence on the part of the Owner to make the Vessel seaworthy or to have her properly manned, equipped and supplied" (wording which in fact applies only to the "unseaworthiness" exception). Oilco also urged that the claim ought not to be dismissed before trial but that the questions raised ought to be answered after all evidence was taken. The motion of Alvion was denied by Judge Edelstein without opinion (from the Bench).

 Plaintiff Oilco elected to discontinue as against Moran and the two tugs. An order of discontinuance as to them was made by the Court on the stipulation of all parties.

 It is agreed by all parties that the Carriage of Goods by Sea Act of 1936 applies (46 U.S.C. § 1300 and following ("Cogsa")).

 I

 The Claim for the Upriver Stranding Against the Ship and Her Owner

 During trial on November 1, 1966, plaintiff was permitted to amend paragraph eighth of the complaint (part of the first claim but realleged in the second and third claims). The amendment added after the words "a known and charted shoal or rocky area in the East River" the words "at the location bordered on the south by 40 degrees 40 minutes north latitude and on the north bordered by 40 degrees 45 minutes north latitude". The effect of this amendment was to indicate to some extent where in the East River the upriver stranding was claimed to have occurred.

 During trial on the following day and in open Court, plaintiff was permitted to amend paragraph eighth of the complaint so that said paragraph as amended read as follows:

 
"EIGHTH. On or about July 15, 1960, the M. S. Alkaid arrived at the Stapleton Anchorage in the port of New York and thereafter with pilot aboard and aided by tugboats proceeded toward her destination at the dock of the Metropolitan Fuel Company, 138th Street, East River. Thereafter said vessel and its owner and operators failed to deliver said cargo in the same good order and condition as delivered to the ship upon loading, but rather was delivered short in quantity and damaged in quality as hereinafter alleged."

 At the same time plaintiff was permitted to amend paragraph ninth of the complaint to eliminate the beginning words: "As a result of the occurrence described in Article Eighth". The effect of these amendments was to abandon any claim of negligent navigation as against the ship or her owner; instead plaintiff now relies solely on failure to turn out the cargo delivered.

 Thereafter on the same day and when plaintiff had rested, the ship moved to dismiss the first claim, as amended. The motion was granted on the ground that the damages averred in the first claim were due either to negligent navigation or to perils of the sea and in either event the ship would not be liable under Cogsa, the charter, or the bill of lading.

 Thereafter in January 1967 and before the trial had concluded, plaintiff served a written notice of a motion "for reinstatement of the first cause of action contained in the original libel as amended during the trial of this action".

 Because of the possibility of confusion from the several amendments asked for by plaintiff during the trial, efforts were made to establish precisely in what form plaintiff desired its claims to be made. Finally there was agreement on the exact statement of the first claim of plaintiff, that against the ship and her owner. Counsel were notified by letter on February 2, 1967 that such would be considered by the Court as the statement of the first claim; no objection was made.

 It appears therefore that the first claim against the ship and her owner is intended to be stated in principal part as follows:

 
"SIXTH: Thereafter and on about June 15, 1960, at the port of Mena Abdulla, Kuwait, libelant caused to be delivered to and loaded aboard the respondent M.S. ALKAID, a quantity of 22,557.055 tons of fuel oil for carriage and transportation to the port of New York in accordance with the said charter party aforesaid, said cargo being then in the quantity so stated and in good order and condition.
 
"SEVENTH: The quantity of 22,557.055 tons of fuel oil delivered to the M.S. ALKAID, equivalent to 150,369.27 barrels, was loaded into tanks numbered 1, 2, 4, 7, 8 and 9 center and port and starboard wing tanks and No. 5 and 6 center tanks.
 
"EIGHTH: On or about July 15, 1960, the M.S. ALKAID arrived at the Stapleton Anchorage in the Port of New York and thereafter with pilot aboard aided by tugboats proceeded toward her destination at the dock of the Metropolitan Fuel Company, 138th Street, East River. Thereafter said vessel and its owner and operators failed to deliver said cargo in the same good order and condition as delivered to the ship upon loading, but rather was delivered short in quantity and damaged in quality as hereinafter alleged.
 
"NINTH: The quantity of libelant's cargo of fuel oil which was delivered in sound condition by M.S. ALKAID was only 64,729.83 barrels as compared with the shipped quantity of 150,369.27 barrels. A further quantity consisting of an admixture of fuel oil and harbor water which had entered the ship's tanks through the ruptured hull of ALKAID, and calculated to be 92,786.3 barrels, was discharged from the M.S. ALKAID into harbor barges or shore tanks thereafter to be reconditioned by removing the water so commingled with the fuel oil.
 
"TENTH: As a result of the premises aforesaid libelant has suffered damages in the loss of such quantities of fuel oil as leaked from the M.S. ALKAID the sum of $45,000.00 and has incurred expenses in an effort to recondition the 92,786.3 barrels of admixed harbor water and fuel oil the sum of $16,984,27 and has been called upon to pay cargo's proportion of salvage, general average and other expenses not as yet finalized in amount, but approximating $50,000.00, or in all the sum of $111,984.27, no part of which has been paid to libelant although duly demanded."

 The question is whether the first claim, having been dismissed, is to be reinstated in the form indicated. This is not a question of pleading, nor of the burden of going forward, nor of a prima facie case, nor of the burden of proof. The trial has been concluded. All amendments to the first claim at any time asked by plaintiff have been permitted. The question now is whether plaintiff on the evidence is entitled to judgment against the ship and its owner on the first claim, as thus amended.

 The motion to reinstate the first claim was considered at the trial and decision was reserved.

 The first claim was originally for damages from the upriver stranding only. This appears from paragraph eighth of the complaint as filed and from the trial brief for plaintiff.

 As now amended, the first claim is against the ship and her owner for all damages from loss wherever occurring.

 It is clear from the evidence, however, that the cargo can have no claim against the ship for any loss of cargo.

 Both the charter party and Cogsa itself relieve the ship from any liability for loss or damage resulting from negligence "in the navigation or in the management of the ship" or from "perils, dangers, and accidents of the sea or other navigable waters" (46 U.S.C. § 1304).

 The upriver stranding resulted from either the one or the other of these causes and in neither event could the ship be liable.

 Cogsa does require that the carrier act "properly and carefully" toward the cargo (46 U.S.C. § 1303), meaning that the carrier is liable for negligence in caring for the cargo.

 If the upriver stranding was the result of negligence by the pilot (as Oilco asserts against the pilot in its second claim) this was clearly negligence in the navigation or management of the ship rather than negligence in caring for the cargo. Sometimes it may be difficult to distinguish between these two kinds of negligence. The Germanic, 196 U.S. 589, 25 S. Ct. 317, 49 L. Ed. 610 (1905); Knott v. Botany Mills, 179 U.S. 69, 21 S. Ct. 30, 45 L. Ed. 90 (1900); Gilmore and Black, The Law of Admiralty 134-137 (1957). See General Foods Corp. v. The Mormacsurf, 276 F.2d 722 (2d Cir.) cert. denied, 364 U.S. 822, 81 S. Ct. 58, 5 L. Ed. 2d 52 (1960). The case at bar is not in this respect difficult; it is much clearer than Luria Bros. & Co. v. Eastern Transp. Co., 89 F.2d 900, 901 (2d Cir. 1937) where selecting an unsafe anchorage and failing to sound distress signals were held acts of negligence in the navigation or management of the ship, and not lack of due care toward the cargo.

 Is the ship liable for anything occurring after the upriver stranding?

 The ship did not lose speed because of the upriver stranding but some of her tanks were ruptured and, as a result, oil escaped, water came into the pumproom and elsewhere, and the ship began to list heavily to starboard. The ship continued slowly upriver but the Master soon concluded that the danger of capsizing or sinking required that the ship be grounded out of the channel. Accordingly she was pushed still afloat alongside the seawall at the United Nations Building, port side against the wall, bow upriver, with the two tugs on the starboard side keeping her in position and to some extent counteracting the starboard list.

 During the ebb tide, the ship settled on the bottom. In the morning, a representative of the owner asked assistance from Merritt, including dispatch of a salvage vessel. Shepherd, senior salvage master for Merritt, went aboard the Alkaid promptly, and talked with Captain Stange, Master of the Alkaid. Apparently the Master wanted at first to rent equipment and to have limited assistance from Merritt, but Shepherd told him that Merritt would do the whole salvage job or nothing. Shepherd had with him a form of contract but the Master refused to sign it, apparently hoping to get the ship out of its peril without the necessity of a salvage contract. About noon, a Merritt salvage vessel, the "Curb", arrived at the Alkaid with salvage equipment; Zickl, another Merritt salvage master, was in charge of the Curb. Zickl promptly came aboard the Alkaid. At about 1300 the ship floated free on the flooding tide. Shortly afterwards, the Master concluded that his only choice was to sign the salvage contract and possibly he received instructions from the owner to do so. In any event, at about 1330 the Master signed the salvage contract.

 From the moment of execution of the salvage contract about 1330 on July 15, Merritt was in complete control of the ship. This was not specifically expressed in the contract but was clearly contemplated by it; Merritt agreed "to salve the Alkaid and her cargo" and to provide "all proper steam and other assistance and labour". It is stipulated in the pretrial order that Merritt "assumed management, supervision and control" of the ship and this is moreover established by the evidence.

 Plaintiff makes no claim that the ship failed in its duty to cargo between the time of the upriver stranding at about 0230 on July 15 until the execution of the salvage contract at about 1330 on the same day. Any cargo lost or damaged in this period is conceded by plaintiff to have been due to the upriver stranding.

 From 1330 on July 15 until August 10, 1960, the ship remained in the control of Merritt. During this period occurred the downriver stranding and the contamination of cargo at Bayonne, on account of which plaintiff does demand judgment against the ship and her owner.

 There is no evidence that Merritt was an incompetent salvor or was known to be such. On the contrary, Merritt has had an experience of many years with salvage operations and it appears to be assumed by all parties that the reputation of Merritt in this field was good.

 The ship was in peril at the time the salvage contract was executed; the Master had never been in the East River before and was unfamiliar with the tides and channels. Plaintiff states that "the original danger" had been "averted at the time she was put ashore at the U.N. Building" and further that she was not thereafter "in an emergency status". If this means that the offer of Merritt to salvage should have been rejected, plaintiff is in error. If it means that the ship was not then in such danger or peril as to be the proper subject of salvage, plaintiff is equally in error. Kennedy, Civil Salvage (4th ed. London 1950) 14-19, 21-24; Norris, The Law of Salvage (New York 1958) 97-105.

 The situation is that, the ship being in peril, her owner (through the Master) accepted the offer of salvage of a professional salvor of good repute and turned over control of the ship and cargo to that salvor. The ship thereby discharged its duty to use due care toward the cargo.

 Merritt was not an agent or servant of the ship but an independent contracting salvor. There is no principle of law which would make the ship liable for any negligence of the salvor while in control of the ship. The Clarita and The Clara, 23 Wall. 1, 90 U.S. 1, 11-12, 23 L. Ed. 146, 23 L. Ed. 150 (1874); 2 Harper & James, Torts § 26.11 (1956), cited in Friendly, Benchmarks 9 (1967). The cases cited for plaintiff do not stand for any such principle. Indeed, not one of them even discusses whether a ship is responsible for the negligence of an independent contracting salvor.

 In respect of the alleged damage from emulsifiers at Bayonne, plaintiff asserts that there was negligence by the owner itself, apart from the alleged negligence of Merritt. This assertion will be dealt with later.

 There must be judgment on this first claim in favor of the defendant ship and her owner.

 II

 The Claim for the Upriver Stranding Against Clyde Valley, the Pilot

 The complaint against the pilot was amended at trial and as so amended the claim is stated in principal part as follows:

 
"In navigating the waters of the East River to the designated destination those in charge of the pilotage, navigation, operation and control of the M.S. ALKAID, due to their incompetency, negligence and carelessness, or through acts of fault of the assisting tugs, so navigated the M.S. ALKAID as to cause, permit and allow said vessel to strike upon a known and charted shoal or rocky area in the East River at the location bordered on the south side by 40 degrees 43 minutes north latitude and on the north bordered by 40 degrees 45 minutes north latitude, thereby causing such damage to the M.S. ALKAID that certain of her cargo tanks became ruptured with resultant loss by leakage of libelant's cargo."

 The issue is whether the upriver stranding was caused by negligence on the part of Valley, the pilot.

 Valley started in about 1937 as a deckhand on boats in New York harbor; since about 1942 Valley has had a license from the Coast Guard as master of vessels up to 600 gross tons upon bays, sounds and rivers; since about 1943, Valley has had a license from the Coast Guard as pilot of all kinds and sizes of vessels in the waters around New York City, including the East River to Stepping Stones, a water area in Long Island Sound off Kings Point (46 U.S.C. § 224; 46 C.F.R. §§ 10.02-1(b), 10-05-17, 10.05-39). While it does not appear from the record, I assume that Valley had a license under Article 6 of the Navigation Law of New York to act as pilot for the port of New York by way of Sandy Hook, such a license, rather than a Coast Guard license, seems to have been required. Navigation Law § 88; Anderson v. Pacific Coast S.S. Co., 225 U.S. 187, 32 S. Ct. 626, 56 L. Ed. 1047 (1912). Valley had piloted some 60 or 70 ships of the Alkaid size up the East River by night and day. He had piloted a ship from 138th Street down the East River about a month before and about three or four months before had piloted a ship with a 33 foot 6 inch draft up the East River to 138th Street (as will shortly appear, this was a deeper draft than the Alkaid). Valley had been going up and down the East River since 1942. He testified that he was thoroughly familiar with the waters and shore marks in and along the East River. He was employed as a pilot by an organization called "Reynolds Pilots" and had also been employed for five years by Moran as master of the tugboat Eugene F. Moran, apparently operating at all times in New York Harbor.

 The Alkaid was of Panama registry. She was built in 1953 in Amsterdam. She was 603 feet long. She had 27 cargo tanks; there were nine large tanks down the center, nine smaller "wing" tanks down the port side, and nine such wing tanks down the starboard side; the tanks were numbered from 1 to 9 beginning at the bow.

 As she arrived at New York Harbor, wing tanks 3, 5 and 6 on port and starboard sides were empty and the two wing tanks 7 had a small amount of cargo. Her weight was 30,267 long tons (22,557 tons of cargo and 7,710 tons light weight of the ship). Her draft was 30 feet 8 inches forward and 30 feet 4 inches aft.

 The Master of the Alkaid, Karl H. Stange, was a German who had been going to sea for almost 25 years and was licensed as a Master. The crew was principally German.

 Alerted by the New York agent of the ship, two tugs met the Alkaid at about 0100 on July 15. One of the tugs was the Eugene F. Moran, of which Valley was master. At about 0130 Valley boarded the Alkaid and assumed duty as pilot; Cummings was left on the Eugene F. Moran as acting master. ...


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