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NEUBROS CORP. v. NORTHWESTERN NATL. INS. CO.

October 17, 1972

NEUBROS CORPORATION et al., Plaintiffs,
v.
NORTHWESTERN NATIONAL INSURANCE COMPANY et al., Defendants


Mishler, Chief Judge.


The opinion of the court was delivered by: MISHLER

MEMORANDUM OF DECISION AND ORDER (October 17, 1972)

Mishler, Chief Judge.

 On September 3, 1968, the deck of steel sand-barge SEL-1 fractured during a fill loading operation conducted by the defendant Levon Properties Corporation (Levon). Levon constructed a dock at Jamespont, Long Island, and installed equipment for loading barges with fill which were towed across Long Island Sound to ports in Connecticut. Levon was a bareboat charterer under a charter-party dated June 19, 1968 with plaintiffs, South and Eastern Barge Leasing Company (plaintiffs). *fn1" The fracture resulted in a constructive total loss of the barge. The action is brought against the Hull Underwriters (Underwriters) and Levon for a constructive total loss of the barge in the sum of $75,000.

 On April 26, 1968 the plaintiffs entered into a charter-party with Levon for the bareboat charter of fifteen (15) steel barges to be constructed by plaintiffs. *fn2" It provided for the delivery of two (2) barges in April 1968, and three (3) each month thereafter. It further provided for the execution of a bareboat charter-party in the form annexed for each barge at the time of delivery. Levon had asked for a representation that these Newbuildings would be able to carry 1200 long tons on a draft of 10 1/2'. *fn3" Plaintiffs were unwilling to make that representation. A supplement to the charter-party gave Levon the option of terminating the agreement and refusing all undelivered barges within seven days after delivery of the first barge if upon a survey to be conducted by Edward F. Ganly it was found that the barge was not capable of carrying "approximately 1200 long tons of cargo at a draft of 10 1/2'."

 At the time the charter-party was executed, i.e., April 26, 1968, two barges were in construction. The charter-party provided for delivery in April 1968. Delivery of the first two barges was delayed until June 15, 1968. On that date barges SEL-7 and SEL-8 were delivered to Levon. The charter-party provided for a term of five years at a charter hire of $1,050 per month.

 Levon required additional barges in June 1968. On June 19, 1968 it entered into a bareboat charter-party with plaintiffs for a steel deck barge that was then lying in Kearney, New Jersey -- the SEL-1. *fn4" The SEL-1 was larger than the Newbuildings. It was 150' in length, 40' beam, and 12' in depth. It was built by Duval Shipyards of Green Cove Springs, Florida, from parts of scrapped liberty ships in April 1967. The SEL-1 was built to plaintiffs' plans and specifications and under plaintiffs' supervision. *fn5" On September 1, 1967 it transported two cranes from Green Cove Springs, Florida to Jersey City, New Jersey. Thereafter she was berthed at Kearney, New Jersey, until chartered to Levon. The SEL-1 was towed to Reynolds Shipyard for certain repairs. The bareboat charter-party for the SEL-1 provided for a term commencing with the date of completion of the "on hire" survey until December 15, 1970 at a hire of $1,200 per month. The "on hire" survey was made by United States Salvage Association in accordance with the charter-party. It was completed on June 20, 1968. The barge was delivered to Levon on June 24, 1968. The barge's intended use was fully described, *fn6" in the charter-party, which also required Levon to insure against damage to the hull in an amount not less than $75,000. *fn7"

 On May 13, 1968 Underwriters issued a marine policy #68H101 insuring barges owned and/or operated by Levon as listed in a schedule *fn8" attached to the policy against marine risks including among others, negligence of charterers and accidents in loading, discharging or handling cargo. The policy contained an Inchmaree clause providing coverage for damage caused by,

 
". . . any latent defect in the . . . hull (excluding the cost and expense of replacing or repairing the defective part)."

 Levon notified Underwriters of the delivery of the SEL-1. Underwriters mistakenly believed that the SEL-1 was a Newbuilding. Since this was the third barge delivered by plaintiffs to Levon (SEL-7 and SEL-8 having recently been delivered) Underwriter issued its endorsement extending policy #68-H-101 "to Newbuilding steel barge 3" on June 26, 1968. *fn9" After Levon advised Underwriters of the error in description a further endorsement was issued dated July 12, 1968 stating:

 
"Referring to endorsement dated June 26, 1968, the 'SEL-1' is not Newbuilding Steel Barge 3."

 Underwriters has failed to sustain its claim that Levon concealed the fact that the SEL-1 was not a Newbuilding.

 The frame of the SEL-1 was made from scrapped parts of World War II Liberty ships. Since the component parts were not fabricated in accordance with plans but rather the other way around in that the available parts were sorted out to match the plan, the precise size was not always used. The side frames were spaced 30 inches apart and designed to support the deck beams running from port to starboard which were also spaced 30 inches apart; but the deck beams did not always meet the side frames. The hatch beams of the Liberty ship were used on the SEL-1 as longitudinals which supported the deck beams, the longitudinals in turn were supported by stanchions. Two stanchions supported each longitudinal in each of the four compartments. There were three longitudinals in each compartment. The longitudinals were not in alignment with those of the other compartments. The compartments were 27 feet 6 inches wide. The stanchions were set 9 feet 2 inches apart. The stanchion's outer diameter measured four inches. Where the various parts of the frame were joined by welding, the welding did not penetrate and was defective. The stanchions had single brazing fore and aft. They did not have X bracing or buck bracing.

 The SEL-1 carried fill from Levon's dock at Jamesport across the Long Island Sound to Connecticut on six occasions. The largest load was on July 10, 1968 when it carried 1,079 cubic yards or approximately 1,276 long tons. *fn10" On August 31 and September 1, 1968, fill from along the inner side of the loading berth was placed on the SEL-1. *fn11" Approximately 350 cubic yards had been dredged up from alongside the loading berth by crane and clamshell bucket. Excess water ran off leaving a minimum amount of water in the fill. On September 3, 1968, dry fill was added to the load from the shore loading facility. The loading equipment consisted of a conveyor in a fixed position extending 20' from the pier side. The fill was distributed by moving the barge by means of cables attached to winches that moved the barge fore and aft. On September 3, 1968, the dry land fill packed to a height of not more than nine feet above the deck along the fore and after center line. During the loading operation the internals buckled and the deck fractured causing a total constructive loss. The deck fractured eight feet aft of the bulkhead. *fn12" The fracture was caused by the collapse of the frame supporting the deck upon placement of the additional dry fill at that site. Though the deck plates on the SEL-1 were thicker than plates normally used, the weld was defective. The fracture split the deck athwartship causing a breach in the deck of about 2 1/2 feet. The derangement of the members of the vessel's frame at the time of the loading on September 3, 1968 caused the fracture.

 The Warranty of Seaworthiness to the Charterer

 The general rule is that every charter implies a warranty by the owner that the vessel is seaworthy unless the parties agree to the contrary. The Caledonia, 157 U.S. 124, 131, 15 S. Ct. 537, 540, 39 L. Ed. 644 (1895); McAllister Lighterage Line, Inc. v. Insurance Co. of North America, 244 F.2d 867, 871 (2d Cir. 1957); Jordan, Inc. v. Mayronne Drilling Service, 214 F.2d 410 (5th Cir. 1954), Gilmore and Black, The Law of Admiralty, p. 182. Knowledge by the charterer of an unseaworthy condition will not deny him the right to rely on the owner's implied warranty of seaworthiness. Church Cooperage Co. v. Pinkney, 170 F. 266 (2d Cir. 1909), cert. denied, 214 U.S. 526, 29 S. Ct. 704, 53 L. Ed. 1068. Agreements relieving the owner of obligation under the implied warranty of seaworthiness are not favored. The Carib Prince, 170 U.S. 655, 659, 18 S. Ct. 753, 755, 42 L. Ed. 1181 (1898). In the Carib Prince the Court said:

 
". . . clauses exempting the owner from the general obligation of furnishing a seaworthy vessel must be confined within strict limits, and were not to be extended by latitudinarian construction or forced implication so as to comprehend a state of unseaworthiness, ...

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