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December 14, 1967


The opinion of the court was delivered by: MCLEAN*

This is a suit in admiralty by the owner of five barges which in the summer of 1963 were employed in transporting rip rap stone from a quarry in Secaucus, New Jersey, to Port Elizabeth, New Jersey, where the stone was used by defendant in constructing a wharf for the Port of New York Authority. Plaintiff claims that each of the barges was severely damaged in the course of discharging operations carried on by defendant. Plaintiff contends that it is entitled to recover for that damage on two theories: (1) that defendant expressly agreed to pay plaintiff for all damage to the barges caused by the discharging operations, regardless of any negligence on defendant's part; (2) that in any event, the damage was caused by defendant's negligence. Defendant disputes each of these contentions. After hearing the evidence, I find the facts to be as follows.

The Callanan Road Improvement Company ('Road Improvement') is in the construction business. It owns marine equipment, including the five barges involved here. An affiliated company, Callanan Trap Rock Corporation ('Trap Rock') operates a stone quarry at Secaucus, New Jersey. Before Trap Rock was formed, Road Improvement had operating rights to this quarry under a contract with the Board of Freeholders of Hudson County, New Jersey.

On March 31, 1962, Road Improvement entered into a contract with Mario Gallo by which Road Improvement granted to Gallo 'the exclusive right to purchase, distribute and/or sell 'rip-rap' from said quarry to be shipped by water for use in the Port Newark-Port Elizabeth area.' Road Improvement agreed to sell and Gallo agreed to buy the rip rap 'for shipment by scow to Port Newark-Port Elizabeth area at $ 2.00 per net ton delivered.'

 The contract further provided that 'payment for the same shall be due when GALLO receives payment from his customer or within sixty (60) days following shipment by CALLANAN to GALLO, whichever event occurs first.' Subsequently Road Improvement assigned its rights under this contract to Trap Rock and Gallo assigned his rights under it to a corporation of which he is president, Hudson Crushed Stone Sales Corp. ('Hudson').

 For the purposes of this action, Road Improvement and Trap Rock may be treated as one and the same. *fn1" Whatever the reasons may have been for complicating the situation by creating Trap Rock as a separate entity, they are immaterial here. The fact that the two Callanan corporations chose to sell through Gallo, or his company Hudson, however, instead of themselves selling the stone directly to the ultimate purchaser, raises a question which will be discussed hereinafter.

 In January 1963 defendant was awarded a contract by the Port of New York Authority to construct wharf facilities at Port Elizabeth, New Jersey. In general, the work to be done consisted of constructing a dike some 3,000 feet long parallel to the shore and some 300 feet out in the water away from the shore. Piles were to be driven in the water, sheathing was to be placed against them, and the structure was then to be reinforced with rip rap stone. On top of the dike thus created a concrete deck was to be built. Another contractor was to pump sand into the area between the shore and the dike, displacing the water and thus creating additional land all the way out from the original shoreline to the dike.

 The Authority specifications for the rip rap provide:

 'Rip rap shall be a graded mixture of primary crusher run quarry stone with no piece weighing more than 120 lbs. and no more than 30% Passing a 2'. sieve nor more than 5% Passing a No. 200 sieve and having a minimum weight dry in air of at least 112 lbs. per cubic foot when measured in an uncompacted state.'

 The specifications further provided that the rip rap 'shall be placed, not cast by clamshell bucket or other approved means * * *.' In other words, the contractor was forbidden to fling the stone from the bucket into the water. The bucket was to come to a stop over the spot where the rip rap was to be deposited, so that the stone could fall vertically from the bucket directly on to the proper place on the dike.

 On January 30, 1963, Keith Callanan, president of both Callanan companies, and Battin, vice president of Road Improvement, met with Lazar, president of defendant. The two Callanan officers suggested to Lazar that defendant buy its rip rap for this job from Hudson. Following this meeting Lazar inspected the Secaucus plant. Another meeting then took place on February 8, 1963. It was attended by Keith Callanan, by Gallo representing his company, Hudson, and by Lazar on behalf of defendant.

 At this meeting Lazar agreed to buy defendant's requirements of rip rap for the Port Elizabeth job from Hudson. He and Gallo agreed upon the price. There was then a discussion, of primary importance in this action, about possible damage to the barges in the course of discharging their cargo. *fn2" Gallo explained that on another job with which he was familiar, the barges had been damaged during the unloading operations. Lazar agreed that when the barges were discharged, defendant's employees would leave some of the stone in the barge adjacent to the rails or sides of the cargo box. This 'berm' of stone would serve to protect the rails to some extent from injury through contact with the heavy buckets used in the discharging operation.

 There was also some discussion of protecting the deck area within the cargo box of the barges with a layer of concrete. Lazar agreed to do this, but whether he agreed to do so at this February 8 meeting or in a subsequent telephone conversation is not clear from the testimony. The date of his agreement as to this particular precaution is unimportant.

 Callanan wanted something more. He proposed that a survey be made of each barge by surveyors representing each party at the beginning of the work and again at the end, and that defendant undertake to pay for any damage reflected on the outgoing survey which had not appeared on the ingoing. After discussion, Lazar agreed to these surveys and agreed that defendant would pay for any damage to the barges for which defendant's employees were responsible.

 On February 19, 1963, defendant sent to Hudson defendant's formal written purchase order for the rip rap. It ordered approximately 163,000 cubic yards of this stone, to conform to the Port of New York Authority specifications, at a price of $ 2.45 per ton delivered at the job site, delivery to begin by March 15, 1963, and up to 3,000 tons per day to be delivered. The only reference in this purchase order to protecting the barges against damage was a provision that defendant would not completely unload the barges but would leave a cushion of stone on the deck. The letter said nothing about liability for damage to the barges.

 Hudson accepted the purchase order and returned signed copies of it in its letter to defendant dated March 5, 1963. The letter made no reference to protecting the barges or to liability for injury to them.

 It was later agreed between the parties that instead of laying concrete on the decks, timbers would be used to protect the deck surface. Defendant at its own expense installed such a timber floor within the cargo box of each barge. As it turned out, this was adequate to preserve that part of the vessels from injury.

 Five barges were employed in this rip rap service, Able, Baker, Charlie, Delta, and Ida. All five were made of steel. Able, Baker, Charlie and Delta were of similar design, built by the Richmond Steel Co., Inc. in 1960, at a cost of approximately $ 65,000 each. Each barge was 120 feet long and 38 feet wide, with a depth of 11 feet 3 inches. Each carried a cabin on her afterdeck.

 Ida was built by Wiley Manufacturing Company in 1962 at a cost of approximately $ 57,000. Her dimensions were approximately the same as the others, but she did not have a cabin. Her design was different from the other barges with respect to the locations of the brackets or stanchions outside the rail of the cargo box, a point which will be referred to again hereinafter. Each of the barges could carry approximately 1,200 tons of stone.

 In the spring of 1963, before the barges began their voyages from Secaucus to Port Elizabeth, each of them was inspected by two surveyors, one representing Road Improvement and the other representing defendant. The barges' condition was not perfect. The surveyors noted various dents and dislocations. The welds at the bottom of some of the brackets were fractured, as were some of the welds at the corners formed by the sides of the cargo box and the bulkheads at each end. It is unnecessary, as well as impracticable, to repeat here the endless detail of these survey reports. Suffice to say that the defects were minor, the result of ordinary wear and tear. Although the barges were not untarnished and pristine, their condition was no worse than one would expect it to be after a few years' service.

 Delta was the first of the five barges to begin the transportation of rip rap. She took on her first load on April 11, 1963. Baker, Charlie, Ida and Able began on April 15, 16, 23 and May 7 respectively.

 The barges were loaded at a dock at Trap Rock's property in Secaucus by means of a conveyor belt which dropped the stone from a tower on the dock into the barges alongside the dock. The stone was first carried to the top of this tower and allowed to fall down through baffles on to the conveyor belt from which it eventually fell into the barges. At low tide the conveyor belt was approximately 20 feet above the deck of the barge when the barge was light. The distance was 15 feet at high tide. The stone was dropped first into the middle of the barge. When a barge was finally loaded, a pile of stones 9 feet high sloped down from the middle to the rails on each side.

 The pieces of stone varied in size. In order to pass through the opening of the crusher, one dimension of a piece could not exceed 7 inches. A piece could not exceed 2 feet in any dimension. Otherwise, it would not pass through the baffles. These dimensions restricted the maximum weight of a single piece of stone to between 60 and 70 pounds, according to one witness' estimate. However, another witness testified that actual weighing of samples under supervision of the Port of New York Authority revealed one stone which weighed 86 pounds. This was substantially less than the maximum of 120 pounds permitted by the Port of New York Authority specifications. Most pieces were smaller. Most of them were approximately 'eight-inch cobbles.'

 Defendant's employees unloaded the barges at Port Elizabeth. The unloading was accomplished by clamshell and 'orange peel' buckets which were suspended from cranes which were mounted on car floats moored in the vicinity of the dike. The various buckets weighed from approximately four to six tons. A crane lowered a bucket on to the pile of stones in a barge, picked up a bucketful, raised it, and swung it over the appropriate spot on the dike and let the load fall. The car floats tilted somewhat in the water as the cranes swung the buckets back and forth.

 As early as May 1963, plaintiff's officers and employees observed damage to the barges as they returned to Secaucus from their trips to Port Elizabeth. The rails, i.e., the sides of the cargo boxes, were dented. The bulkheads at the ends of the cargo boxes were also dented, as were some of the cabins. Keith Callanan complained to Lazar in May and again in June and July as the number of dents increased. Not only were there dents, but the ...

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