1. Where one of several tugboats, all acquired, maintained, and
used by their owners in a regular towing business, was laid up by
collision and the owner provided no substitute, but took care of
the business by working the other tugboats overtime,
held
erroneous, in assessing damages, to allow as demurrage the market
cost of hiring a substitute during the time of repair. P.
287 U. S.
174.
2. "Spare boat" doctrine considered and held inapplicable. P.
287 U. S.
176.
3. An appeal to the Circuit Court of Appeals in admiralty case
is a trial
de novo. Id.
4. An assessment of damages in admiralty may be corrected on
appeal if erroneous in law or extravagant in fact.
Id.
54 F.2d 978 affirmed.
Certiorari, 286 U.S. 538, to review an admiralty decree
modifying an assessment of damages in a collision case.
Page 287 U. S. 172
MR. JUSTICE CARDOZO delivered the opinion of the Court.
On September 30, 1920, the dredge
Raritan, belonging to
the United States, collided in New York Harbor with the steam tug
Integrity, belonging to the petitioner. A libel in
admiralty to recover the damages to the tug was filed by the
petitioner in conformity with an act of Congress whereby the United
States consented to be sued. Act of February 16, 1925, c. 241, 43
Stat. 1566. A cross-libel for damages to the dredge was filed by
the government. The trial court held both vessels at fault, and
determined that the damages to each should be equally apportioned
between the owners. A Special Commissioner was appointed to
ascertain the damages and report.
Page 287 U. S. 173
The controversy hinges upon an item of demurrage. As to the
repair bills ($26, 114.57 for the
Integrity and $2,230 for
the
Raritan), as well as some other items, the parties are
now at one. The conflict between them, once waged along a wider
front, has narrowed to a single point. The District Court,
confirming the Commissioner's report, allowed demurrage to the
petitioner at the rate of $150 a day, the market hire of another
tug, during the seventy-eight days when the
Integrity was
withdrawn for repairs. This item ($11,700) the Circuit Court of
Appeals excluded. 54 F.2d 978. A writ of certiorari has brought the
case here.
The petitioner was in the business of towing car floats for
railroads between points in New York harbor. It did not use its
boats for hire generally. Its business was sufficient to occupy
three tugs during regular working hours in the transfer of railroad
cars from one point to another. When the
Integrity was
laid up, the petitioner did not hire an extra tug as a substitute
for the one disabled. Instead, it used its two other tugs overtime,
and thus kept down the cost while doing business as before. The
same crews were employed, but, if extra wages were paid, the amount
has not been proved. Extra wear and tear there may have been, but
there is nothing in the record to indicate how much. Indeed, the
witness for the petitioner frankly stated that the loss, if any,
from that cause was too uncertain to be measured. The award for
demurrage allowed by the District Court and disallowed by the Court
of Appeals was not made upon the basis of depreciation of the boats
in use. It is measured by expenses that in fact never were
incurred, but that might have been incurred and charged to the
respondent if the necessities of the business had been something
other than they were.
Our decision may not overleap the limitations of the record. To
dispose of the case before us, we do not need to hold that, through
the use of the other vessels, the possibility
Page 287 U. S. 174
of all demurrage has been excluded by an inexorable rule of law.
Other courts have held, in situations not dissimilar, that
demurrage may be measured by the interest on the capital value tied
up in the disabled boat during the term of disability, and thus
unfruitfully employed.
The Susquehanna, [1926] A.C. 655,
363, 664.
Cf. The Greta Holme, [1897] A.C. 596. To approve
or disapprove that measure is unnecessary here, for the record does
not contain the figures that would enable us to apply it. Even now,
the petitioner is not seeking for a judgment upon that basis, nor
indeed upon any other basis than the one adopted at the trial. The
question narrows itself to this -- whether the full-time hire of an
extra boat must be charged to the respondent as damage flowing from
the collision when there was no need of such a boat to keep the
business going, and none in fact was used or paid for. Is an award
upon that basis either erroneous in law or extravagant in fact?
Erroneous and extravagant we think it must be held to be.
The Conqueror, 166 U. S. 110,
166 U. S. 125,
166 U. S. 134;
The Susquehanna, supra; cf. The North Star, 151 F. 168;
The Wolsum, 14 F.2d 37;
Cuyamel Fruit Co. v.
Nedland, 19 F.2d 489;
Newtown Creek Towing Co. v. City of
New York, 23 F.2d 486;
The Glendola, 47 F.2d 206. The
disability of a vessel will not sustain demurrage at the rate of
the value of her hire unless an award at such a rate can be seen to
be reasonable when the disability is viewed in the setting of the
circumstances.
The Conqueror, supra. Only when thus
enlightened can we choose the yardstick most nicely adjusted to be
a measure of reparation -- in some instances, no doubt, the hire of
another vessel, in other instances, it may be, a return upon the
idle capital (
The Susquehanna, supra), in others,
something else. Only then, indeed, can we know whether the
interference with profit or enjoyment is to be ranked
Page 287 U. S. 175
as substance or as shadow. The vessel may have been employed in
a business of such a nature that, for the avoidance of loss, there
is need of the employment of a substitute. In such circumstances,
the fair value of the hire may be an element of damage, and this
whether the substitute is actually procured or not.
Cf. The
Lagonda, 44 F. 367;
The Mediana, [1900] A.C. 113;
Perkins v. Brown, 132 Tenn. 294, 177 S.W. 1158;
Cook
v. Packard Motor Car Co., 88 Conn. 590, 92 A. 413. The vessel
may be a yacht, employed for pleasure and not for business. Even
then, in the judgment of many courts, the value of the use may be
considered by the triers of the facts in fixing the recovery if
there has been a substantial impairment of that enjoyment for which
such vessels are maintained.
The Lagonda, supra; Cook v.
Packard Motor Car Co., supra; Banta v. Stamford Motor Co., 89
Conn. 51, 56, 92 A. 665;
Perkins v. Brown, supra; Hunt Co. v.
Boston Elevated R. Co., 199 Mass. 220, 235, 236, 85 N.E. 446;
The Astrakhan, [1910] P. 172, 181. There are statements in
The Conqueror (p.
166 U. S. 133) that may be in conflict with that view,
but they were not essential to the judgment (p.
166 U. S.
134), and, in the light of later decisions as to the
loss of pleasure vehicles, are unquestionably in opposition to a
strong current of authority.
See cases,
supra.
The owner of the
Conqueror would not have let his yacht to
anyone if there had been no occasion to repair her, nor, during the
season that she was out of service, would he have used her for
himself.
The Conqueror, 166 U.S. at
166 U. S. 134.
There was neither interference with profit nor substantial
disturbance of enjoyment. The Court did not hold that, even then,
there could be no recovery whatever.
Cf. Cook v. Packard Motor
Car Co., supra at p. 596. It held that recovery was excessive
when based on the returns of an imaginary letting. We are to have
regard in every case to the reasonable probabilities of time
Page 287 U. S. 176
and place and circumstance. Demurrage on the basis of the cost
of a substitute, actual or supposititious, may be no more than fair
indemnity when gains have been lost or enjoyment seriously
disturbed. Demurrage on a like basis may be so extravagant as to
outrun the bounds of reason when loss of profit has been avoided
without the hire of a substitute, and the disturbance of enjoyment
has been slight, or perhaps fanciful.
The Conqueror,
supra. Cf. Cook v. Packard Motor Car Co., supra, p.
595;
The Susquehanna, [1925] P. 196, 207,
aff'd
[1926] A.C. 655. A wide range of judgment is conceded to the triers
of the facts in the choice of the standard to be applied and in the
method of applying it.
Cook v. Packard Motor Car Co.,
supra. The choice, however, may not be arbitrary, nor is the
range of judgment without limit. We think that, on the face of this
award, there is declared a principle of assessment that, in the
setting of the circumstances, exceeds the bounds of any discretion
allowed to the assessors. In admiralty, an appeal to the Court of
Appeals is deemed to be a trial
de novo. Munson
Steamship Line v. Miramar Steamship Co., 167 F. 960;
Gilchrist v. Chicago Ins. Co., 104 F. 566, 571;
cf.
The Abbotsford, 98 U. S. 440;
Watts, Watts & Co. v. Unione Austriaca di Navigazione,
248 U. S. 9,
248 U. S. 21;
Standard Oil Co. v. So. Pacific Co., 268 U.
S. 146,
268 U. S. 155.
An assessment of damages may be corrected if erroneous in point of
law, but also it may be corrected if extravagant in fact.
The doctrine of the "spare boat" cases is invoked by the
petitioner as decisive in its favor, but we think without avail.
Shipowners at times maintain an extra or spare boat which is kept
in reserve for the purpose of being utilized as a substitute in the
contingency of damage to other vessels of the fleet. There are
decisions to the effect that, in such conditions, the value of the
use of a boat thus specially reserved may be part of the
demurrage.
Page 287 U. S. 177
The Cayuga, 7 Blatch. 385,
aff'd, 81 U. S. 14 Wall.
270,
81 U. S. 278;
The Favorita, 8 Blatch. 539,
aff'd, 85 U. S. 18 Wall.
598,
85 U. S. 603;
New Haven Steam-Boat Co. v. The Mayor, 36 F. 716, 718;
The Emma Kate Ross, 50 F. 845;
The Providence, 98
F. 133. If no such boat had been maintained, another might have
been hired, and the hire charged as an expense. The result is all
one whether the substitute is acquired before the event or after.
The same doctrine has been recognized in the English courts, where
a boat thus held in reserve is known as a standby.
The
Mediana, [1900] A.C. 113. In those courts, however, as in our
own, there has been a refusal to extend the doctrine to boats
acquired and maintained for the general uses of the business. Just
such a state of facts was considered by the House of Lords in
The Susquehanna, supra, a case hardly to be distinguished
from the one at hand. In the speech by Lord Summer, we are told
that
"the Admiralty, by prompt effort and economy in consumption,
acting in accordance with their obligation to minimize the damages,
managed to get through their work"
without the disabled vessel. "They cannot," he continued (p.
663), "get damages based on the use of a standby when in fact they
did very well without one."
So here. The petitioner was engaged in an established business
using tugs for a single purpose. It had no thought to turn that
business into one of a different kind while this tug was out of
service. Mindful of the need to minimize the damages, it used to
the full its available resources, and was able, by special effort,
to make them do the work. We are unable to accept the argument that
the expenses which it saved are to be charged to the respondent as
if they had not been saved at all.
The judgment of the Circuit Court of Appeals which modified the
judgment of the District Court is accordingly
Affirmed.