1. The Federal Control Act did not authorize an action in tort
by the owner of a vessel against the Director General of Railroads
for her loss through collision while operated by the Director
General. P. 154.
2. Where the Director General, under his contract with the owner
for the use and upkeep of transportation properties taken over
under the Federal Control Act, made a settlement including an
allowance for a vessel lost by collision during operation by the
Director General,
held that the common law rule that one
who accepts satisfaction from one of two joint tortfeasors cannot
recover from the other was inapplicable to extinguish the claim of
the owner against the owner of the other vessel in pending
limitation of liability proceedings to which both owners and the
Director General were parties.
Id.
3. Upon an appeal in admiralty, there is a trial
de
novo opening the whole case, so that a party is not bound by
the decree below through failure to join in the appeal. P.
268 U. S.
155.
4. In the absence of a market value, such as is established by
contemporaneous sales of like property in the ordinary way of
business, the damages to which the injured party is entitled in
admiralty for the loss of a vessel is that amount which,
considering all the circumstances, probably could have been
obtained for her on the date of the collision -- the sum that in
all probability would have resulted from fair negotiations between
an owner willing to sell and a purchaser desiring to buy. P.
268 U. S.
155.
Page 268 U. S. 147
5. Cost of reproduction as of the date of valuation is evidence
to be considered, but neither that nor that less depreciation is
the measure or the sole guide; value is the thing to be found, and
there should be a reasonable judgment of this based on a proper
consideration of all relevant facts. P.
268 U. S.
156.
6. In view of changed prices,
held that original cost
of a vessel was not a useful guide to her value when lost. P.
268 U. S.
157.
292 F. 560 affirmed.
Certiorari to a decree of the circuit court of appeals modifying
a decree of the district court (266 F. 570; 285
id. 617)
in proceedings for limitation of liability in admiralty. The
district court found that both the petitioner's vessel and that of
the Southern Pacific Company were at fault, and fixed the damages
of the latter. The circuit court of appeals found petitioner's
vessel alone at fault, and increased the damages. For preliminary
proceedings in this Court,
see 263 U.S. 681, 696;
265 U. S. 569.
Page 268 U. S. 152
MR. JUSTICE BUTLER delivered the opinion of the Court.
August 19, 1918, the steamship
Cushing, owned by the
petitioner, Standard Oil Company, and the
Proteus, owned
by the respondent Southern Pacific Company and operated by the
Director General of Railroads, collided. The
Proteus and
her cargo were lost. Petitioner and respondents filed their
petitions for limitation of liability. R.S. §§ 4283-4285. Admiralty
Rule 54. The proceedings were consolidated. The district court
found that both vessels were at fault, and referred the question of
damages to a commissioner.
The Cushing, 266 F. 570. He
reported that there should be awarded on account of the loss of the
Proteus $750,000, with interest. The report was confirmed
and decree entered, November 28, 1922.
Petition of Standard Oil
Co. of New Jersey, 285 F. 617. Petitioner and Southern Pacific
Company appealed; the Director General did not appeal. The
petitioner maintained that the
Cushing was not at fault,
and sought reversal on that ground. The Southern Pacific Company
contended
Page 268 U. S. 153
that the commissioner's valuation of the
Proteus was
too low. The circuit court of appeals affirmed the fault of the
Cushing and held that the value of the
Proteus at
the time of the collision was $1,225,000, and the decree of the
district court was modified accordingly. The
Cushing, 292
F. 560. The petition to this Court for a writ of certiorari alleges
that, at the time of the collision, the
Proteus was under
the sole control of the Director General of Railroads, and that, if
the vessel had not been lost, it would have continued in his
control until March 1, 1920; that the claim of the Southern Pacific
Company was against the Standard Oil Company and the Director
General, who were joint tortfeasors causing the loss of the
Proteus, and that, after the expiration of the term of the
circuit court of appeals, petitioner learned that a final
settlement had been made between the Southern Pacific Company and
the Director General by which the liability of the latter for the
loss of the
Proteus was satisfied by payment of $750,000,
or by adjustment and settlement on that basis. And the petition
asserts that thereby any claim of the Southern Pacific Company
against petitioner was extinguished, because a settlement with one
joint tortfeasor precludes recovery from the other for the same
loss. The petition was granted. 263 U.S. 696. Later the order
granting the writ was vacated as to personal injury, cargo, and
passenger claimants against whom no error was assigned. 263 U.S.
681. By leave of this Court, additional testimony relating to the
settlement was taken in accordance with paragraph 2 of Rule 12.
265 U. S. 569.
The material facts may be briefly stated. December 28, 1917, the
President took over the combined rail and water transportation
system of the Southern Pacific Company and its subsidiaries.
February 19, 1919, the Director General and the owner made a
contract in respect of the operation and upkeep of the properties
and for the compensation to be paid for their use during federal
control. By it, the Director General was required to pay for
Page 268 U. S. 154
property destroyed and not replaced. December 19, 1922, final
settlement under the contract was made. The total amount of all
items claimed by the company was $54,252,694.57. There was paid
$9,250,000 as a lump sum, and that was accepted in full
satisfaction of all claims, with certain exceptions not here
material. The company claimed $1,268,090.26 for the
Proteus and $16,663.80 for the lighter
Confidence. The Railroad Administration kept a record
showing how the lump sum was arrived at. In this record, there was
allocated on account of the
Proteus and the
Confidence a lump sum of $885,000, but this was not in any
wise communicated to the company. There was no agreement as to the
value of the
Proteus, or as to the amount included in the
lump sum on account of her loss, or on account of any other item.
On the facts disclosed, it is impossible to attribute to her loss
any particular amount.
The rule of the common law that one who is injured by a joint
tort and accepts satisfaction from one of the wrongdoers cannot
recover from the other does not apply. By reason of the immunity of
the United States from suit, the Southern Pacific Company did not
have the same remedy against the Director General that an owner
would have against a private charterer. Waiver of sovereign
immunity from suit was not broad enough to permit an action in tort
by the company against the Director General for the loss of the
Proteus. See § 108 Federal Control Act, 40 Stat.
456, c. 25;
Dupont De Nemours & Co. v. Davis,
264 U. S. 456,
264 U. S. 462;
Missouri Pacific R. Co. v. Ault, 256 U.
S. 554. In respect of that, there was no breach of duty
owed to the respondent by the Director General as a common carrier.
As was said in
The Western Maid, 257 U.
S. 419,
257 U. S.
433:
"The United States has not consented to be sued for torts, and
therefore it cannot be said that in a legal sense the United States
has been guilty of a tort."
At the time of the collision, the Director General was a special
owner having exclusive possession and control
Page 268 U. S. 155
of the vessel; the Southern Pacific Company was the owner of the
reversion. Together, they had full title, and joined in the
petition for limitation of liability. Adjustment of their interests
under the contract could be made before as well as after the end of
litigation. No question of tort or negligence on the part of the
Director General was involved. The settlement had no relation to
the wrongful act of petitioner, and did not affect its liability.
Ridgeway v. Sayre Electric Co., 258 Pa. 400, 406.
Petitioner is not entitled to dismissal as against the Southern
Pacific Company. Nor is the Director General bound by the decree of
the district court as to the amount of damages. On appeal in
admiralty, there is a trial
de novo. The whole case was
opened in the circuit court of appeals by the appeal of the
Southern Pacific Company, as much as it would have been if the
Director General had also appealed.
Reid v. American Express
Co., 241 U. S. 544;
Watts, Watts & Co. v. Unione Austriaca, 248 U. S.
9,
248 U. S. 21;
The John Twohy, 255 U. S. 77;
Munson S.S. Line v. Miramar S.S. Co., 167 F. 960.
And
see Irvine v. The Hesper, 122 U. S. 256,
122 U. S.
266.
It is fundamental in the law of damages that the injured party
is entitled to compensation for the loss sustained. Where property
is destroyed by wrongful act, the owner is entitled to its money
equivalent, and thereby to be put in as good position pecuniarily
as if his property had not been destroyed. In case of total loss of
a vessel, the measure of damages is its market value, if it has a
market value at the time of destruction.
The
Baltimore, 8 Wall. 377,
75 U. S. 385.
Where there is no market value, such as is established by
contemporaneous sales of like property in the way of ordinary
business, as in the case of merchandise bought and sold in the
market, other evidence is resorted to. The value of the vessel lost
properly may be taken to be the sum which, considering all the
circumstances, probably could have been obtained for her on the
date of the collision -- that is, the sum that in all
probability
Page 268 U. S. 156
would result from fair negotiations between an owner willing to
sell and a purchaser desiring to buy.
Brooks-Scanlon Corp. v.
United States, 265 U. S. 106,
265 U. S. 123.
And by numerous decisions of this Court it is firmly established
that the cost of reproduction as of the date of valuation
constitutes evidence properly to be considered in the ascertainment
of value.
Southwestern Bell Telephone Co. v. Public Service
Commission, 262 U. S. 276,
262 U. S. 287,
and cases cited;
Bluefield Co. v. Public Service
Commission, 262 U. S. 679,
262 U. S. 689;
Georgia Ry. & Power Co. v. Railroad Commission,
262 U. S. 625,
262 U. S. 629;
Brooks-Scanlon Corp. v. United States, supra, 265 U. S. 125;
Ohio Utilities Co. v. Public Utilities Commission,
267 U. S. 359. The
same rule is applied in England.
In re Mersey Docks and
Admiralty Commissioners, [1920] 3 K.B. 223;
Toronto City
Corp. v. Toronto Railway Corporation, [1925] A.C. 177, 191. It
is to be borne in mind that value is the thing to be found, and
that neither cost of reproduction new, nor that less depreciation,
is the measure or sole guide. The ascertainment of value is not
controlled by artificial rules. It is not a matter of formulas, but
there must be a reasonable judgment having its basis in a proper
consideration of all relevant facts.
Minnesota Rate Cases,
230 U. S. 352,
230 U. S.
434.
The
Proteus was a steel passenger and freight
steamship, built in 1900 for use in the Southern Pacific Company's
service between New York and New Orleans. Her original cost was
$557,600. In 1909, she was reboilered and otherwise improved at a
cost of $90,000. The evidence shows that she was unusually well
kept, and in excellent condition for use. The district court found
that, in 1917 and 1918, on account of unprecedented demand and a
shortage of shipbuilding facilities, the market value of ships was
higher than the cost of construction, and also found that, in 1918,
when the
Proteus was lost, the cost of construction was
approaching the peak which came some months later.
Petition of
Standard Oil Co. of New Jersey, 285 F. 619, 620.
Respondents
Page 268 U. S. 157
called three witnesses experienced in shipbuilding and familiar
with construction costs and value of ships in 1918. Each made an
estimate of the cost of reproduction of the
Proteus as of
the date of the loss. Their estimates were, respectively,
$1,755,450, $1,750,000, and $1,750,000. One of these witnesses and
two others called by respondent testified respectively that, in
1918, the value of the
Proteus was $1,225,000, $1,297,637,
and $1,350,000. The petitioner called a mechanical engineer and
naval architect connected with its construction department who
testified that the cost of reproduction of the
Proteus in
1918 would have been three times its original cost, or
approximately $1,679,000. It called two other witnesses, who had
been members of a government board of appraisers for the
determination of just compensation for vessels requisitioned. They
expressed the opinion that the cost of reproduction of the
Proteus in 1918 would have been 2 1/2 times its original
cost, or approximately $1,400,000. But they made no detailed
estimates. The figures were arrived at by examination of statistics
showing labor and material costs. These three witnesses testified
respectively that, at the time of the loss, the value of the ship
was $630,000, $650,000, and $611,000.
In view of changed prices, the original cost of the vessel was
not useful as a guide to her value when lost. In
The
Clyde, 1 Swabey 23, Dr. Lushington, speaking of what a vessel
would fetch in the market, said (p. 24):
"In order to ascertain this, there are various species of
evidence that may be resorted to -- for instance, the value of the
vessel when built. But that is only one species of evidence,
because the value may furnish a very inferior criterion whereby to
ascertain the value at the moment of destruction. The length of
time during which the vessel has been used, and the degree of
deterioriation suffered, will affect the originals price at which
the vessel was built. But there is another matter infinitely more
important than this -- known even to the most unlearned -- the
Page 268 U. S. 158
constant change which takes place in the market. It is the
market price which the court looks to, and nothing else, as the
value of the property. It is an old saying, 'The worth of a thing
is the price it will bring.'"
And see City of Winona v. Wisconsin-Minnesota Light &
Power Co., 276 F. 996, 1003.
Restitutio in integrum is the leading maxim applied by
admiralty courts to ascertain damages resulting from a collision
(
The Baltimore, supra, 75 U. S. 385),
and, on the same principle, value is the measure of compensation in
case of total loss. The evidence requires a finding that, as of the
date of her loss, the cost of reproduction new of the
Proteus was not less than $1,750,000. Ordinarily,
contemporaneous cost of construction would be a good indication of
the amount of damages resulting from the loss of a new ship. There
ought not to be any difference between reasonable original cost and
estimated cost of reproduction as of the date when built. But the
Proteus was 18 years old when lost, and all the witnesses
who testified on the subject fixed her value at that time higher
than her original cost and lower than the estimated cost of
construction. There is no established method or rule for
determining the difference between her value at the time of the
loss and what her value would have been if then new. It was shown
that annual rates of depreciation used in the accounts of
shipowners varied from 2 1/2 to 5 percent, and that such rates are
affected by the policy of the owners, business conditions, taxes,
and other things. It was not shown whether such deductions covered
annual depreciation resulting notwithstanding proper maintenance,
or whether they included all or part of the current cost of upkeep.
It did not appear whether the rates were applied to reproduction
cost or to original cost, or to an amount remaining after deduction
on account of scrap value or salvage value or other minimum. In
August, 1918, the immediate demand for ships was greater than the
supply, the
Page 268 U. S. 159
shipyards were working to full capacity, wages and prices were
high, the trend of construction costs was upward, and the element
of time was of the utmost importance. And witnesses on both sides
testified that such conditions make for a lower rate of
depreciation to be taken into account in determining value. If new,
the
Proteus would have been worth at least her cost of
reproduction. Plainly, conditions in 1918 justified a smaller
deduction from cost of reproduction new than before the war, and
made value of a vessel in good condition and ready for use approach
more nearly its value new.
Petitioner's mechanical engineer arrived at $630,000, by taking
34 percent of $1,670,000 reproduction cost as found by him, and by
making some relatively small adjustments on account of expenditures
for maintenance and improvement. He arrived at 66 percent deducted
by taking 4 percent for 14 years and 2 1/2 percent for four years,
making an average of over 3.6 percent. The two other witnesses
called by petitioner arrived at $650,000 and $611,000,
respectively, by taking 45.2 percent of $1,400,000, reproduction
cost found by them, and by making similar adjustments. They arrived
at 54.8 percent deducted by the use of a depreciation table
prepared by another member of the board of appraisers. This table
applies to steel steamers in salt water service. It is based on a
life of 40 years. It makes a different deduction for each year .
For the first 20 years, it takes off 60 percent, and for the last,
40 percent. The average annual rate is 2 1/2 percent. The evidence
showed that the useful life of such a vessel is not any fixed
number of years, but varies greatly depending on upkeep and
maintenance. The table was intended to reflect average conditions
of the different depreciable elements of ships of that class, and
to guide to average values over extended periods, including times
of depression as well as of prosperity. The value fixed by each of
petitioner's witnesses is more than $1,000,000 less than the
Page 268 U. S. 160
reproduction cost. The rate of depreciation taken by
petitioner's mechanical engineer is too high in view of the
conditions prevailing at the time of the loss. The other witnesses
based their calculation on a reproduction cost that was too low.
Moreover, certain valuations made by the government board of
appraisers of which they were members seriously impair the weight
of their testimony. In 1917, the United States requisitioned the
Havana and the
Saratoga, vessels of the same type
as the
Proteus and about 1 1/2 times its size, and
constructed in 1906. Cramp's estimated reproduction cost of each in
1917 to be $3,000,000, about 3 times original cost. The board fixed
value at $2,240,000 each, about 74 percent of reproduction cost.
But the value of the
Proteus, as given by these witnesses,
was less than 38 percent of her cost of reproduction new.
We think the commissioner and district court failed to give due
regard to construction costs, conditions, wages, and prices
affecting value in 1918, and that the evidence sustains the decree
of the circuit court of appeals.
Decree affirmed.