Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


January 9, 1935


The opinion of the court was delivered by: KIRKPATRICK

The Commissioner in this case was appointed to ascertain the damages arising from a collision which occurred on November 22, 1929, as a result of which the libelant's dredge Manhattan was damaged and sank in the navigable channel of the Delaware river.

Both parties filed exceptions to the Commissioner's report which have been fully argued twice before the court, the argument taking in all more than two full days. The report itself is carefully considered and may be referred to for a concise but none the less thorough discussion of the points here involved and an excellent analysis of the evidence. I shall therefore deal very briefly with the points raised by the exceptions.

 The first question is as to the general measure of damages applicable. The Manhattan was actually raised and repaired by its owner, but the Commissioner applied the doctrine of constructive total loss and allowed its value at the time of the collision as damages.

 In order to do so the Commissioner made two fact findings: First, that the value of the ship immediately prior to the collision was less than the cost of raising and repairing; and, second, that the owner's decision to raise and repair the ship was not arrived at in a bona fide effort to minimize damages (in which case costs of raising and repairing might have been allowed although in excess of the value of the ship), but arose from considerations which subordinated economy to immediate expediency.

 The Commissioner found that the value of the Manhattan was $299,982 and that the allowable cost of raising and repairing was $336,977.22, and took the smaller figure of the two as the principal item of damage. The respondent accepts the theory of constructive total loss and in effect accepts the Commissioner's figure as to the cost of raising and repairing, but contends that the value should be reduced to $236,437.87. The libelant, on the other hand, asks for the cost of raising and repairing as the measure of its damage placing it at $428,094.35, as against a value for the ship of $516,006.51.It will thus be seen that the most important finding for review here is that which relates to the value.

 1. Value of the Manhattan.

 Without amplifying or repeating unnecessarily the Commissioner's discussion upon this point, I hold:

 (1) That the Commissioner correctly applied the principles laid down by the supreme Court in The Proteus Case (standard Oil Company of New Jersey v. Southern Pacific Company, 268 U.S. 146, 45 S. Ct. 465, 69 L. Ed. 890), and that in the absence of evidence of contemporaneous sales or market value he properly based his finding upon the cost of reproduction, less depreciation.

 (2) That in arriving at the reproduction cost, it was proper to use as a guide what has been referred to as the I.C.C. method of computing reproduction cost -- a table or formula published by the American Railroad Presidents Conference Committee for use in determining the reproduction cost of vessels and other floating equipment, and used by the Interstate Commerce Commission in valuing vessels for ratemaking purposes. Under this system the known original cost is transmuted into reproduction cost for any given year by applying certain coefficients, percentages, and multiples, giving the changes in costs for that year and representing the resultants of the combined increases or decreases of various items, between the date upon which the vessel was built and the date on which reproduction cost is to be estimated. Without intending to establish a hard and fast rule, I hold that in this case the Commissioner was justified in giving greater weight to the I.C.C. method of valuation than to the libelant's method, which consisted in taking the blueprints and specifications, applying present-day prices as estimated by witnesses from price lists, bids, etc., and adding all the items together.

 (3) That in adopting a 4 per cent. depreciation rate, applied progressively to ascertain present value, the Commissioner's judgment was properly exercised. The respondent contends that, having started with the I.C.C. method of valuation, the Commissioner had no logical course open but to apply a 5 per cent. rate to it. It is true that the libelant did not offer testimony as to the propriety of applying lower depreciation rates in using the I.C.C. method -- quite naturally since it did not accept that method. However, in arriving at present-day value there is no reason why the reproduction cost cannot be ascertained by the use of that method and the court's independent judgment as to the proper depreciation rate for a particular vessel then applied. The Commissioner was not bound to choose between the 5 per cent. contended for by the respondent and the 2 1/2 per cent. contended for by the libelant and used in The Proteus Case. In the first place, it is perfectly clear that the rate of 2 1/2 per cent. adopted in The Proteus Case was the result of exceptional conditions of demand for and scarcity of vessels during an abnormal period; and, in the second place, there was testimony before the Commissioner which clearly indicated a smaller rate for the Manhattan than 5 per cent. (which figure may be, and no doubt is, the rate ordinarily applied in connection with the I.C.C. method). This testimony showed that the Manhattan had been kept in exceptionally good condition by constant supervision and care; that she had been engaged in fresh-water service where deterioration is less rapid than in salt; and that many factors, which make for rapid obsolescence in passenger vessels and less rapid but still formidable obsolescence in cargo ships, do not exist in the case of a seagoing hopper dredge of this type.

 It is to be remembered that the value found by the Commissioner is an ultimate figure and represents an exercise of judgment upon a question of fact. This judgment must be based upon the evidence, but that includes all matters of fact properly in the record, and the composite need not coincide with the judgment of any particular expert witness. The process by which the final figure is arrived at is of minor importance. A recapitulation of the steps by which it is reached may disclose reasoning which may not appear entirely logical at all points. It is not necessary to set out the process at all, but to do so serves to inform and assist the court upon review. Provided it does not appear that the final result is based upon incompetent testimony, or that matters which should have been considered have been ruled out and disregarded, and provided it coincides with the judgment of the court, based on the evidence, as to the fair value of the property, the Commissioner's figure should stand, and in this case I accept it as correct.

 The value thus found being less than the cost of raising and repairing, I am satisfied that the constructive total loss doctrine was properly applied.In raising and repairing the Manhattan the government was obviously solely influenced by the exigencies of the service in maintaining rivers and harbors. The vessel could be gotten back into service in less time than it would take to construct a new one. Beyond this fact the government did not investigate. I do not think the burden which lies upon one who claims repairs greater than the loss of the vessel because of ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.