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ENGLISH WHIPPLE SAILYARD, LTD. v. THE YAWL ARDENT

October 30, 1978

The ENGLISH WHIPPLE SAILYARD, LTD.
v.
The YAWL ARDENT



The opinion of the court was delivered by: KNOX

STATEMENT OF CASE, FINDINGS OF FACT, DISCUSSION AND CONCLUSIONS OF LAW

A. Statement of Case

 There is before the court a bitter dispute in admiralty as the result of the purchase, installation of additional equipment on, and sinking of the Yawl "Ardent" at Erie, Pennsylvania.

 Plaintiff, being unable to adjust its claims as to amount due issued a warrant of arrest in rem on August 27, 1975. On the same day, a bond was presented for approval to Judge Teitelbaum of this court who ordered the vessel released.

 The defendant *fn1" thereafter filed an answer, set off and counterclaim seeking damages for breaches of contract and repairs made necessary by the sinking of the boat while work was in progress.

 After extensive discovery and pretrial motions the case was tried non jury requiring all or part of eight trial days.

 The court thereupon directed the filing of briefs and proposed findings with reply briefs due June 22, 1978. Defendant's briefs and proposed findings were duly filed but plaintiff's were not. As a result on August 3, 1978, the court at defendant's behest entered an order precluding plaintiff from filing briefs or requested findings. The court is therefore proceeding to adjudicate the matter without any argument or requests from plaintiff.

 The court makes the following

 B. Findings of Fact

 (1) The plaintiff as dealer and the defendant as purchaser entered into a purchase agreement dated August 30, 1974, providing inter alia, for the sale and purchase of a new Morgan Out Island 36 Sailboat, No. 361-084, with the Sailaway Cruising Package, and other manufacturer supplied and dealer supplies options.

 (2) At the time the parties entered into the purchase agreement, the vessel was in stock located in the storage yard of the manufacturer, Morgan Yachts, of Largo, Florida.

 (3) Morgan Yachts had a published manufacturer's option list, but since the Vessel had already been constructed, certain manufacturer options were built into the boat, while others could not be added feasibly by the manufacturer in the Vessel's "as built" condition. Included in the former category were the deck color options and the ketch rig; in the latter category were the auxiliary generator and extra water tanks. However, many of the items appearing on the manufacturer's option list were still available. Various additional options could be procured through the dealer some of which the parties at that time were in a position to specify, others required further study and evaluation. Among the major items of equipment which had been discussed by the parties during the pre-contract negotiations, but not yet specified, were an auxiliary generator, refrigeration equipment and heating and air conditioning equipment.

 (4) Although it was very late in the 1974 sailing season, the parties believed conceptually that the vessel could be ordered and received from the manufacturer in the fall of 1974, thereby permitting outfitting and the installation of additional options and equipment to be done during the off season (the winter months of 1974-75), enabling the vessel to be ready for the start of the 1975 sailing season.

 (5) In order to afford time for study and evaluation of options available through the dealer beyond those specified in the purchase agreement, the agreement states that "Dealer agrees to supply and furnish purchaser such other accessories and equipment for installation on, or for use in connection with, the Out Island 36, as purchaser may order from dealer at any time prior to April 30, 1975, at dealer's cost, plus time and material for installation, provided such other accessories and equipment can be reasonably obtained by dealer. Counsel for plaintiff acknowledged that $ 5,000 or $ 6,000 of such extras were contemplated.

 Moreover, consistent with the overall plan that the dealer would be working on the vessel over the winter months, the purchase agreement states that "Dealer agrees to provide purchaser . . . with winter storage for the period through April 30, 1975 at dealer's facility near the public docks at Erie, Pennsylvania." (Emphasis added)

 (6) It was expected that the dealer would complete its performance by April 30, 1975, the approximate beginning of the 1975 sailing season, and the contractual provisions referred to above are consistent with this completion schedule.

 (7) With respect to express warranties, the purchase agreement, besides identifying the vessel as a "new Morgan Out Island 36 Sailboat, with the Sailaway Cruising Package", and with specified manufacturer supplied and dealer supplied options, states that "(t)he manufacturer and dealer warrant that the Out Island 36, together with the options installed thereon, and the equipment and material furnished hereunder, will be free of defects in material and workmanship for a period of one year after delivery to purchaser."

 (8) There are no provisions in the purchase agreement which exclude implied warranties, limit remedies, or restrict the recovery of consequential or incidental damages.

 (9) The purchase price under the purchase agreement was $ 43,423.85, less $ 9,000 for a used vessel tradein, plus sales tax of $ 2,065.43, for a net amount of $ 36,489.28. Since the parties contemplated that additional equipment would be supplied and work done by the dealer, the purchaser remitted the sum of $ 38,000 upon the arrival of the vessel in Erie, Pennsylvania, on or about October 1, 1974.

 (10) The vessel was delivered to Erie Yacht Club facilities where defendant was a member and thereafter removed to plaintiff's facility at English Whipple Sailyard.

 (11) It was reasonably within the contemplation of the parties under the contract relationships and the scope and manner of the work to be performed that plaintiff would use reasonable care to protect and safeguard the vessel while it was within its custody and control for work and storage.

 (12) Plaintiff impliedly warranted that the vessel and all equipment installed thereon and supplied therewith would be merchantable and would pass without objection in the trade and be fit for the ordinary purposes for which the vessel was to be used.

 (13) As a consequence of defendant's overpayment of the stated purchase price under the purchase agreement and in view of the fact that plaintiff had yet to perform any work on the vessel, defendant in the early fall of 1974 requested that plaintiff return to defendant the sum of $ 5,000 to be held pending plaintiff's performance of the work under the purchase agreement. Plaintiff agreed, but plaintiff never performed.

 (14) In the fall and early winter of 1974, progress on the outfitting of the vessel at plaintiff's sailyard proceeded with the purchaser being engaged in the selection of the major additional systems to be installed on the vessel and with the dealer occupied with rigging and performing some outfitting on the vessel. By January of 1975, purchaser had procured and the dealer had on hand the refrigeration, ice making, and heating/air conditioning equipment to be installed on the vessel. Although tentative arrangements had been made by the dealer for the procurement of new auxiliary generating equipment, these arrangements were voided when identical equipment of the same manufacturer became available at a nearby shipyard on a used basis at a substantial discount from the price of new equipment. No written confirmation of the price or other terms of purchase was exchanged between the parties, and the evidence is in conflict as to precisely what price, if any, was cleared by the dealer with the purchaser. It is agreed, however, that the price was to represent a substantial reduction from that of the new equipment, possibly as much as $ 1,000 according to plaintiff's president. Plaintiff's president also claimed that the seller of the used equipment provided a full warranty; but yet the seller (Paasch) maintains that it was sold on an "as is" basis, without warranty. The record reflects that the used equipment was purchased by the seller in 1972 for $ 2346.64; that he was offered a tradein the winter of 1974 of $ 2103 on the purchase of larger equipment; and that he gave his customer a $ 2500 allowance against the price of the new equipment. The court finds that the seller was entitled to a reasonable profit on the transaction and that the fair market value of the used equipment in the winter of 1974 was $ 3000.

 (15) Since approximately mid November 1974 the vessel was tied up at the rear of plaintiff's dealership located on the west public dock west of State Street in Erie, Pennsylvania. The vessel was located in what is known as the west canal basin *fn2" and was tied up at the end of a T-dock. The water in this canal basin is normally not subject to freezing conditions, at least as long as the nearby electric generating plant discharges thermal wastewater into the basin. The general area where plaintiff's dealership was located would be considered as "isolated" during the winter months, and a likely area for thefts and acts of vandalism. During the preceding two or three year period, plaintiff itself had been subjected to various breakins, thefts, trespassing, as well as sundry acts of vandalism. Except where the rear of plaintiff's property adjoins the canal basin, access to the rear yard area in which the vessel was moored, was restricted somewhat either by 5' to 6' high anchor fencing or by the building structures themselves. It was the impression of the court, however, as gleaned from a view of the premises, that an agile person would have no difficulty gaining access to the rear yard area. Of course, access by water from the canal basin which opens into Presque Isle Bay would be open and unrestricted. Plaintiff's president acknowledged that on various occasions fishermen and other interlopers were observed to have surreptitiously gained entrance to the rear yard area. At night a single street light type of fixture erected on a pole in the rear yard provides general illumination of the rear yard area but there is no direct lighting on the T-dock where the vessel was moored. It was also observed by the court that an adjoining property owner had installed several strands of barbed wire above the normal height of fencing for the purpose of further impeding the entry of unauthorized persons but that a gate to the west was only 5 or 6 feet high and could easily be scaled.

 (16) Plaintiff's president testified that he did little, if anything, to winterize boats which were in the water at the rear of his facility because of the comparatively warm temperature of the water in the west canal basin. However, defendant's expert, together with the successor owner of plaintiff's dealership effective June 1, 1975, agreed that winterizing was a normal procedure even if the vessel was to stay in the warm water. In any event, it was open to snow, rain and ice storms.

 (17) By mid February 1975, plaintiff had made some progress in rigging and outfitting the vessel but there were several manufacturer supplied options which plaintiff had yet to order and few of the options to be supplied by the dealer which actually had been installed or were aboard the vessel. In anticipation of the vessel's being transported to an adjacent marine facility for installation of the used auxiliary generating equipment, plaintiff had arranged to have removed a 4 X 4 foot section of the center cockpit. Plaintiff was not expected to complete its performance until April of 1975, and thus at this time was somewhere in mid stream. The court specifically finds as a fact that plaintiff had not completed its agreed upon performance on February 16-17, 1975.

 (18) Between the hours of 7:00 p.m. on February 16 and 7:00 a.m. on February 17, 1975, the vessel for reasons unknown sank where it was tied up at the rear of plaintiff's facility. The condition of the vessel was discovered at approximately 7:00 a.m. by the same neighboring marine dealer who was scheduled to do the installation of the auxiliary generator, and plaintiff's president was advised by telephone of the problem. Plaintiff called the Erie Fire Department at approximately 8:00 a.m. and requested that they aid in raising the vessel by the use of large auxiliary pumps. The firemen responded promptly, and by approximately 9:30 a.m. the vessel was again afloat in the water. Three of the firemen who responded testified in the trial and confirmed that the water had entered the vessel through an open sea cock. An engine cooling hose was attached to the sea cock and the other end of the hose was disconnected from the engine and was observed to be flopping about before the sea cock was closed. The firemen were also in agreement that plaintiff's president had said that he had no portable pumps which were operable at the time. Plaintiff's president at the time uttered exclamations varying between blaming his employees for the sinking, to putting the responsibility upon vandals. There is some evidence that other acts of vandalism occurred at this time, but it is equally possible that they occurred at different times. Plaintiff's president also indicated that the padlock on the front gate may have been left unlocked. It was an ordinary padlock, and customers of plaintiff had access to the yard. No special precautions had been taken by plaintiff to safeguard the vessel during the approximate six week period that the cockpit sole was removed. Only a tarpaulin like cover had been placed over the gaping hole and tied down on one side. However, access to the engine compartment of the vessel could have been easily gained. Plaintiff did not employ any night watchmen or have installed in the rear yard any electronic warning aids. The court specifically finds that the precautions and safeguards undertaken by plaintiff to ...


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