Kalodner and Hastie, Circuit Judges, and Van Dusen, District Judge.
VAN DUSEN, District Judge.*fn*
This consolidated appeal is from multiple judgments in admiralty entered in the District Court against Charles Zubik (Charles, Sr.), individually,*fn** and Charles Zubik & Sons, Inc. (Zubik Corporation). The claimed damages to personal property and equipment occurred early on the morning of March 6, 1964, when an unusually large ice flow coming down the Allegheny River broke several of the appellants' sand and gravel barges from their moorings at the 16th Street landing in the City of Pittsburgh. The drifting vessels caused damage to the several appellees having a total value of $207,540.
Appellants make three arguments: that the wrong test of negligence was used by the trial judge; that, even if the Zubik Corporation was liable, the court erred in disregarding the corporate entity and treating Charles, Sr. and Zubik Corporation as one and the same; and that, even if the Zubik Corporation was liable, the original individual respondent, Charles, Sr., was not personally liable for negligence in his own acts.
On the issue of the liability of Zubik Corporation, there is sufficient evidence to support the conclusion of the trial judge that the appellant did not sustain its "heavy" burden of proof. As the leading case in this Circuit sets forth, Swenson v. The Argonaut, 204 F.2d 636 (3rd Cir. 1953), when a collision involves a vessel drifting loose from its moorings, the respondent must overcome a presumption of fault. And if the defense, as in this case, is "inevitable accident" or vis major, the respondent's burden includes proving freedom from negligence or inevitable circumstances unalterable by human effort, precaution, or proper nautical skill. The Louisiana, 70 U.S. (3 Wall.) 164, 18 L. Ed. 85 (1866); Swenson v. The Argonaut, supra, 204 F.2d at 640. The record shows such sufficient evidence of warning of the ice flow, time to act to move some or all of the barges to safe waters, improper fastenings of some lines, and improper positioning of the fleet of barges that we cannot find the judgment below "clearly erroneous" or the result of a "mistake." McAllister v. United States, 348 U.S. 19, 75 S. Ct. 6, 99 L. Ed. 20 (1954); Knox v. United States Lines Company, 320 F.2d 247, 249 (3rd Cir. 1963). We therefore affirm the trial court's finding of negligence as to Zubik Corporation (Conclusions of Law Nos. 2, 5 & 11).
The issue of Charles Zubik, Sr.'s personal liability occupied a large part of the trial below. The trial judge's several findings of fact concerning the interrelation of Charles, Sr.'s personal affairs and the affairs of Zubik Corporation led him to the conclusion that:
"The corporate defendant is nothing more than the alter ego of the individual defendant. * * * All of the defendant's finances, activities, operation of the corporation business were intertwined with that of the corporation. The overwhelming weight of the evidence indicates that there is no demarcation between the individual and corporate defendants." (1155-39a)
This conclusion of "lack of demarcation" or conclusion that the corporation was the "alter ego" of Charles, Sr. rested upon Findings of Fact concerning the Zubik business operation. In these Findings the trial judge stressed that Zubik Corporation was "purely an operating company" with records inadequate even to designate what property owned by Charles, Sr. was leased to the corporation and at what rent. The intertwining of Charles, Sr.'s personal affairs with the corporation was inferred, particularly from the fact that all of his personal expenses were paid directly by the corporation with merely a bookkeeping entry against Charles, Sr.'s credit account. Emphasis was placed upon the fact that Charles, Sr. was the only one authorized to sign corporate checks, although, via a personal power of attorney, his daughter often signed for him. A disregard of the corporate formalities of meetings for some years, the use of oral leases of equipment from Charles, Sr. at fluctuating rentals, and the general "intertwining" of personal and corporate finances, relating to the sale of barges and the borrowing of money, provided additional "facts" from which the trial judge concluded that the corporate "fiction" of Zubik Corporation could not be relied upon by Charles, Sr.*fn1
Consideration of the record as a whole, however, requires the conclusion that libellants did not sustain their burden of proving that the corporate entity should be disregarded.*fn2 An examination of the record has established that the additional facts summarized below are supported by uncontradicted evidence. Zubik Corporation was formed in 1948 on the advice of counsel when Charles, Sr. became too ill to continue physically in his business and when he wanted to let his children run the business he had created. Engaged primarily in the sand and gravel business, after 1957 the corporation expanded into the related field of producing concrete. In both businesses, the corporation paid its own expenses of operation, hired its own employees, paid their wages and made the various tax, social security, and unemployment payments. Although the corporation borrowed from Charles, Sr. on several occasions it borrowed from other stockholders as well. The corporation kept records reflecting such loans.
Considerable testimony was heard concerning the leasing of barges and other assets owned by Charles, Sr. Although the bulk of the equipment used by Zubik Corporation was leased from Charles, Sr., some barges were leased from others and the corporation owned some assets of its own (over $67,000. one witness testified) such as cement, gravel, sand, gasoline, tools and rope.*fn3 The great bulk of the "assets," however, were owned by Charles, Sr., including those used in the cement business, and leased in their entirety to Zubik Corporation. Charles, Sr. owned very little he did not lease. Some controversy existed over the financial arrangement of such leases from Charles, Sr.; however, all sides seem to agree that payments to Charles, Sr., including his salary, took the form of credits to his account with the company. Whether these payments and leases are characterized as "purported" or not (see appellees' brief, p. 26, Nos. 7, 11), Charles, Sr.'s credit account was carefully debited to reflect payment of all of Charles, Sr.'s personal expenses. In this fashion, Charles, Sr. was "paid" his salary, rental and loans, by having the corporation "pay" for his personal expenses. All of the evidence concerning the written and oral leases, as well as the bookkeeping and activities concerning sale, purchase, sub-letting, repairs, and maintenance of equipment, tended to show a possible lack of arm's-length dealing between Charles, Sr. and the corporation or a lack of some of the formal elements of a lessor-lessee relationship found outside a closely-held corporation.*fn4 This informality extended to the observance of corporate procedure as to meetings [no records for 1961 through 1963] and as to expenses, oral renewals of leases, and alteration of rentals and salaries to reflect the success of operations. But there is no evidence that funds oscillated at will between Charles, Sr. and Zubik Corporation,*fn5 and the Internal Revenue Service apparently forced some uniformity, at least as to fair and consistent rentals.
Since the trial judge did not disbelieve or reject the testimony concerning oral leases of marine equipment,*fn6 it is difficult to understand his Conclusion of Law 8 that the barges which broke away "were not under lease" to ...