The opinion of the court was delivered by: WEINER
This action arises out of a collision between the SS EDGAR M. QUEENY (Queeny) and the ST CORINTHOS (Corinthos) which occurred on January 31, 1975 on the Delaware River near Marcus Hook, Pennsylvania. On February 7, 1975 the Queeny interests filed a petition pursuant to the Limitation of Liability Act, 46 U.S.C. § 183 et seq., seeking limitation of or exoneration from liability arising out of the collision. On July 18, 1980, after a trial on damages, we entered judgment in favor of BP/SOHIO and against the Queeny interests in the amount of $16,188,531.00. We denied BP/SOHIO prejudgment interest.
Presented to this court are the following issues for determination: (1) the time from which prejudgment interest at the rate of 10.5% should run; (2) the rate for postjudgment interest; and (3) the value of the Queeny and her freight then pending.
BP/SOHIO and Queeny have stipulated the dates from which interest should commence on each claim of BP/SOHIO. The parties agree that interest at 10.5% per year on every claim would total $8,606,556.
However, Queeny objects to the awarding of interest on the following items: II-6, II-7, II-8, II-9, II-10, II-12, and II-13. Those seven items total $4,278,747 in agreed damages, and the agreed interest on those items would be $2,266,666. Queeny therefore contends that the sum of $2,266,666 should be deducted from the sum of $8,606,556 (the interest on all items). Queeny argues that BP/SOHIO should be awarded $6,339,890 for prejudgment interest. We do not agree.
In admiralty cases, prejudgment interest serves ". . . to reimburse the claimant for the loss of use of its investment on its funds from the time of such loss until judgment is entered . . . ." Matter of Bankers Trust Co., 658 F.2d 103, 108 (3d Cir.1981). We entered judgment on July 18, 1980 in favor of BP/SOHIO and against the Queeny interests in the amount of $16,188,531.00, but denied prejudgment interest. The Court of Appeals, finding that BP/SOHIO is entitled to prejudgment interest, remanded the case to us "for a determination of the time from which such interest should run." Matter of Bankers Trust, 658 F.2d 103, 112 (3d Cir.1981). Our judgment was based on the total of the items set forth on Appendix A attached hereto. The Court of Appeals did not direct us to determine which items should be awarded interest and which items should not. Our task is to determine "the time from which such interest should run." Id.
Since the parties have stipulated to the dates from which prejudgment interest should run as to each item of damage claimed by BP/SOHIO, we award prejudgment interest to BP/SOHIO in the amount of $8,606,556.00.
BP/SOHIO argues that since its rate of return on investment has been 14.56% from the date of judgment on July 18, 1980, through the latter part of 1982, that it should be awarded postjudgment interest of 14.56% on the amount of $24,795,087, which amount includes the judgment of $16,188,531 plus the prejudgment interest of $8,606,556. BP/SOHIO contends that its claim of postjudgment interest at the rate of 14.56% is confirmed by the deposition testimony of Peter Stuart Hellman ("Hellman"), the manager of financial planning of Standard Oil Company, and treasurer of Sohio Pipeline, a wholly owned subsidiary of Standard Oil Company. Hellman testified that the total amount of interest that one million dollars, invested in July 1980, would have generated through August 31, 1982 is $308,815.49, which figure represents an annual return of investment of 14.56%. (Hellman Deposition, September 9, 1982, p. 13). Queeny does not disagree with Hellman's calculations, but Queeny argues that Hellman's sin is one of omission rather than commission. Queeny Interests Trial Memorandum In Support Of Its Requested Findings Of Fact And Conclusions Of Law On Prejudgment Interest, Postjudgment Interest And The Value Of The Limitation Fund, p. 6. Queeny claims that Hellman omitted the fact that both the judgment amount as well as the earned interest on that judgment are subject to taxes at the corporation's effective tax rate. Queeny submits the deposition of Richard R. Marmon ("Marmon"), assistant treasurer and manager of accounting for Chas. Kurtz & Co., Inc. Marmon used Hellman's calculations and applied the effective corporate tax rate derived from BP/SOHIO's annual reports.
(Marmon Deposition, November 29, 1983, pp. 8, 12, 13). Marmon testified that if BP/SOHIO had received a million dollars in July 1980, invested that fund at the interest rates set forth in their schedule, and had paid all taxes on that fund plus the interest derived, BP/SOHIO would have left on August 31, 1983 the sum of $548,606.67 in cash. (Marmon Deposition, pp. 20, 21). Marmon calculated that the simple interest figure on a million dollars to give BP/SOHIO that amount of net case is 6.74%. (Marmon Deposition, p. 24). Based on Marmon's testimony, Queeny now argues that postjudgment interest should be 6.74% rather than the 14.56% requested by BP/SOHIO. Interestingly, Queeny had previously argued, in a Memorandum filed with this court on August 11, 1983, that we should award postjudgment interest at a rate of 8.05%. (See Memorandum of Law in Opposition to the Motion of BP/SOHIO for an award of Prejudgment Interest in the Amount of $8,606,556 and Postjudgment Interest at 14.39% and in Support of the Queeny Interests' Motion for an Award of Prejudgment Interest in the Amount of $6,339,890 and Postjudgment Interest at 8.05%). In that memorandum, Queeny proposes that we adopt the approach toward postjudgment interest which was to become effective in the October 1, 1982 amendments to the Federal Statute on Postjudgment Interest, 28 U.S.C. § 1961. Queeny contends that under those amendments, the postjudgment interest rate would be determined to be 8.05%. (Memorandum pp. 7, 8). Queeny however recognized that this court is not bound by that statute since it was not in effect on the date judgment was entered in this case. Further, in light of the opinion of the Court of Appeals in this case, Queeny recognizes that there is a question whether this court will be bound even after the effective date of the amendments. (Memorandum, p. 8).
Each party has filed a convincing memorandum in support of its position, and the court is faced with the difficult task of determining the proper rate of postjudgment interest in this case. We recognize that 28 U.S.C. § 1961, which sets postjudgment interest in civil cases at the legal rate of interest in the state in which the district court sits, does not apply to admiralty cases. Matter of Bankers Trust Co., 658 F.2d 103, 112 (3d Cir.1981). The rate of postjudgment interest in an admiralty case rests within the sound discretion of the district court. Id., citing Sound Steamship Lines, Inc. v. Gardner, 356 U.S. 960, 78 S. Ct. 997, 2 L. Ed. 2d 1067 (1958). In reconsidering our previous award of postjudgment interest at the rate of 6%, we find that we must increase that interest rate in order to properly compensate BP/SOHIO fully for its demonstrated loss.
The percentages for interest advanced by the witnesses for each party, 14.56% by BP/SOHIO and 6.74% by Queeny, reflect rates based solely on mathematical hypotheticals. We recognize that if each event theorized by each witness occurred, the rate proposed by each witness would probably be correct. However, there are always factors which cause theoretical equations to change. In our discretion we feel that a postjudgment interest rate of 10% will adequately compensate BP/SOHIO. We will enter judgment in favor of BP/SOHIO for postjudgment interest at the rate of 10% on the amount of $24,795,087, which amount includes the judgment of $16,188,531 plus the prejudgment interest of $8,606,566.
When the Queeny interests filed their petition for limitation of liability on February 7, 1975, they alleged that the value of the Queeny was not more than $11,000,000 plus pending freight of $269,501. At the trial, the Queeny interests called as their witness Robert Pierot who testified that the fair market value of the Queeny prior to collision was $11,000,000. Documentary evidence introduced at trial indicated that the Queeny had suffered damages as a result of the collision in the amount of $1,305,804 (Exhibit C-121). Since the limitation value is the value after the casualty, Norwich & New York Transp. Co. v. Wright, 80 U.S. 104, 20 L. Ed. 585 (1871); Petition of Bloomfield S.S. Co., 422 F.2d 728 (2d Cir.1970), the Queeny interests claim that the net value of the Queeny was $9,694,196, plus the pending freight of $269,501, or a total value of $9,963,697.
BP/SOHIO begins its argument with the rule of law for the measure of damages in the case of the total loss of a vessel. The rule is that damages are measured by the market value, if it has a market value, at the time of destruction. Standard Oil of New Jersey v. Southern Pacific Co., 268 U.S. 146, 155, 45 S. Ct. 465, 466, 69 L. Ed. 890 (1925). "Contemporary sales of like property in the way of ordinary business, as in the case of merchandise bought and sold," is a means of measuring market ...