Fidelity & Deposit Co. v. Sanford & Brooks Co.

Bond, 0. J., delivered the opinion of the Court! The Sandford & Brooks Company, owner of a marine dredge, sued the surety on a bond given to secure performance of a hirer’s contract, for loss from damage to the dredge while hired, and failure to return it. During the period of the hiring, the dredge was, because of bad condition of the hull and leaking, towed by the hirer into shallow water, grounded, and abandoned.

And the contentions in the suit raise a question of responsibility of the hirer for the leaking, and, quite apart from that, another question of its responsi ⁵³⁰ bility for the ultimate necessity of sinking and abandoning the dredge, given a leaky condition from any cause. The case was tried below before the court without a jury, and verdict and judgment were entered against the surety for the full amount of the bond. On the appeal, exceptions are presented to rulings on evidence, and to the prayers for instructions or declarations of law. The dredge was hired in April, 1925, for work of a Lago Oil and Transport Company, at the island of Aruba, of the Dutch West Indies, near the coast of Venezuela.

It was chosen by an agent of the Lago Company from several dredges of the Sanford & Brooks Company, then in the harbor of Charleston, South Carolina. And the contract of hiring, contained in a letter of the Lago Company to the owners under date of April 24th, 1925, provided for a charter for not less than five months, to start May 1st, 1925, at a specified monthly rental, to be re-delivered to the owners at Charleston in the same condition as when delivered, ordinary wear and tear excepted, or at the option of the hirer, to be purchased within a year for $65,000, and the hirer was to keep the dredge insured against marine risk. The bond, executed later, was one guaranteeing the terms of that contract. The dredge was put in dry dock at Charleston between three and four weeks for reconditioning and special fitting for the voyage, and was repaired and conditioned as desired by the agent of the hirer, except in one respect which is without importance in the case, and except that the agent suggested putting a galvanized iron sheathing on the hull for protection against worms, a measure which was not adopted as the owner did not think it necessary.

There was evidence that the agent, Mr. Salmons, inspected her before she went into dry dock, and his engineer inspected her at least once while in dry dock, and some one from Mr. Salmons’ office looked at her from time to time, every other day or every third day, while in dry dock, to see how the work was progressing. Mr. Salmons satisfied himself that she would make the trip to Aruba, stay there during the months they needed ⁵³¹ her, anti do the work required of her. For protection against injury from worms, the hull was sheathed under water with wood lined with tar paper or felt, and new sheathing was put on as desired by the hirer. Protection of that kind is temporary, in that it is not expected to resist entry of the worms entirely, but to take up their destructive action and be replaced, saving the planks of the hull proper from that action.

A survey was made by representatives of the United States Salvage Association, “in order” as the certificate of survey stated, “to determine for underwriting purposes the general condition and making such recommendations as necessary for voyage of dredge in tow from Charleston, S. 0. to Aruba, Dutch West Indies.” The recommendations were carried out, and thereafter a certificate of seaworthy condition was issued. The voyage was made successfully, and the dredge was put in continuous use thereafter at Aruba. On April 13th, 1926, the Lago Company notified the owner that it would not exercise its option to purchase, but expected to be able to return the dredge at Charleston during the month of May, 1926. But a letter of August 27th, 1926, from the hirer, notified the owner that use of the dredge had been abandoned, and surveyors had examined it and refused a certificate of seaworthiness for insurance for the return voyage, and the dredge had therefore been towed into shallow water and left there at the risk of the owner, and that the charter was terminated.

The dredge has since remained as thus left at Aruba. The owner, as plaintiff, adduced the evidence to prove that the dredge was in good seaworthy condition when delivered to the hirer, and the defendant surety adduced evidence to show that the hull became unseaworthy because of rotting of the planks and the inroads of worms, principally because of rotting, and to the charge of negligence adduced further proof of ordinary careful use of the dredge. The defendant contended that on the facts the damage by worms was not a factor of importance in the disablement of the dredge, and such repairs to the sheathing as were required ⁵³² had been, made by it. As to the rotting of the planks, there was evidence on the one hand that rotting is ordinarily a .slow process, a matter of several years, and evidence on the other hand of some possibility of rot from condensation of steam and consequent dampness in the hull from the operation of the dredge.

The defendant contended that rot from this source could not have disabled the dredge. There was a complete demise of the dredge, the owner divesting itself of possession and control, and the hirer taking her into its complete possession and control, (State v. Balto. & S. Steam Co., 13 Md. 181, 189 ; Leary v. United States, 14 Wall. 607) and the hirer was bound to return her in like order and condition unless injury or loss should be occasioned by some cause not attributable to a lack of care of the hirer in the performance of its obligations. Darby Candy Co. v. Hoffberger, 111 Md. 84 ; Security Storage Co. v. Martin, 144 Md. 536 ; The Carroll, 248 Fed. 475 ; White v. Upper Hudson Co., 148 Fed. 893 . Whether the owner should be held to warrant the seaworthy condition of the dredge, and was under an obligation to maintain that condition, we find it unnecessary to determine.

The preliminary inspection made on behalf of the hirer would have to be considered in the determination of that question. Sanford & Brooks Co. v. Columbia Dredging Co., 177 Fed. 878 ; The Transit, 250 Fed. 71 . The maintenance of wooden sheathing as a protection against worms could not, we think, be included within such an undertaking of the owner, in view of the temporary nature and purpose of the sheathing, and the expectation of the parties that it was to be renewed as needed. Such a protection would seem to be rather a matter of upkeep or running repairs, like the upkeep of the copper paint used on hulls in the waters of this state.

Story, Bailments, secs. 388 and 389; Sanford & Brooks Co. v. Columbia Dredging Co., 177 Fed. 878, 884; Williamson v. Phillipoff, 66 Fla. 549 . The defendant adduced evidence that it was customary for the owner to stand the burden of maintaining such sheathing, but the evidence seems to us to fall short of being sufficient to show ⁵³³ a general custom entering into all such hirings, even when the vessels are removed to foreign parts entirely ont of the hirers’ possession. On the contrary, it appears from the uncontradicted evidence that the hirer in this case did actually make repairs to keep np the sheathing, and the hnll too, without reference to the owner. Renewals and replacements of the sheathing would, we conclude, he within the undertakings and duties of the hirer.

The testimony presented by the parties was concerned almost altogether with the dispute on the cause of the deteri-. oration of the hull, whether by rotting or by worms, and the care exercised by the hirer with respect to possibilities of deterioration from these sources. Some questions were asked by the court, however, relative to further care to avoid Joss from the deterioration, and at the conclusion of all the evidence the court framed an instruction or ruling covering this point, too. And the objections to- that action are the first pressed in argument on the appeal. The instruction was, in effect, that when the hirer became aware of the fact, if it was a fact, that the use of the dredge by it was causing deterioration which if carried far enough would cause unseaworthiness of the hull, then it was its duty to stop the operation before unseaworthiness was reached, and notify the owner in time to enable it to forestall the loss by repairs.

All the other rulings of the court fixed due care as the measure of the hirer’s duty, and the instruction is in effect that due care absolutely required these actions before it was too late. It is earnestly objected that in this ruling the court acted upon a new theory of the case, which was not advanced by either party and which surprised the defendant, and, its witnesses having departed, left it without an opportunity to present testimony relevant to the determination of the facts supposed. Ko- application was made for a reopening of the testimony for that purpose. But the decisive answer to- the contention in this respect seems to lie in the fact that, hv the nature of the case, a question of care in discovering and averting the danger was to he anticipated.

The hirer of a boat, entrusted to its exclusive possession 1,300 miles from the ⁵³⁴ owner, has a duty to see that measures apparently needed to preserve it are taken, even when the particular measures should ultimately be at the expense of the owner. The peculiarity of the situation has legal effects. The owner could not, of course, be expected to watch over and maintain its property 1,300 miles away, out of its control, and the hirer could not expect to be free of any obligation of care for the property thus entrusted to it, and permitted to let it go to destruction without interference. 1 Parsons, Shipping, 309; Kimball v. Tucker, 10 Mass. 192 ; Higman v. Camody, 112 Ala. 267 ; Dunwoody v. Saunders, 50 Fla. 202, 204 ; Harrington v. Snyder, 3 Barb. (N. Y.) 380.

In this case, extraordinary repairs which might 'have been needed to the hull could have been arranged for and provided by the owner itself upon notice from the hirer, if such was the owner’s obligation. But if the hirer was charged with notice of the danger in time, it was under an obligation to notify the owner, and so enable it to take action. Higman v. Camody, supra; International Contr. Co. v. Walsh, 115 Fed. 851 .

And if a cessation of operations with the dredge was a measure necessary to avoid an apparent danger, the hirer was under an obligation to cease. He was in a position analgous to that of the hirer of a horse which has become sick or disabled during use by the hirer. Higman v. Camody, supra; Thompson v. Harlow, 31 Ga. 275 . “But if the horse falls sick, or becomes exhausted, the hirer is bound not to use it. And if he does pursue his journey and use it when reasonable care and attention would forbid, he would make himself responsible to the owner for that act.” Leach v. French, 69 Me. 389, 392 .

These were duties on the hirer which were likely to come into question in the present suit, upon the taking of evidence on what had occurred at Aruba, and so constituted an important part of the case to be anticipated at the outset; and we find no impropriety in the court’s making with reference to them the ruling of law it did make. There is nothing found in the declaration so restricting the ground of liability as to exclude this inquiry. ⁵³⁵ It is next objected that this instruction imposed absolute-duties upon the hirer to take action when the ordinary care which was the limit of its duty may not have dictated the action. The instruction ruled, not that the hirer was required to stop using the dredge- upon the appearance of progressive rot due to use, as is argued, but that the hirer should not thereafter have continued the damaging use until the vessel became so unseaworthy that it could not he moved for repairs. And in the opinion of this court it was not improper to rule that there wras an absolute duty to stop short of that extreme.

The second part of the instruction likewise ruled that if the hirer had knowledge that the dredge was being made unseaworthy by continuation of the use of it, a duty devolved upon the hirer not to carry the process so far as to disable the dredge from being moved for repairs, without notifying the owner in time to permit it to make the repairs. It may he said that the instruction allows no latitude for honest mistake in judging when the time to stop or notify the owner has arrived, but it fixes only the limit beyond which the decay should not be allowed to run on without action; and that would seem to he an ascertainable limit, and one which the hirer should, in the exercise of care, not exceed in any event. These objections seem to the court not substantial ones. The defendant filed special exceptions to the instruction, several of them on the ground of lack of evidence to support its hypotheses of fact.

And on these it must be bo-mo in mind that the court had before it evidence from which it could find that there wTas no considerable rot in the hull when hired, and that the vessel was in a condition to- make the voyage to- Aruba and stand the use intended. The dredge had been put in dry dock between three and four weeks, inspected by both parties and by surveyors for the underwriters, and worked over. And both parties were satisfied of the condition as stated. Both parties, too, gave testimony that rot is ordinarily a slow process, covering several years of time.

Yet the court, if it found those facts, was confronted with the further facts of some deterioration by rot or worms ⁵³⁶ within six months, necessitating repairs by the hirer in four .spots to stop leaks, and final abandonment of the dredge as unseaworthy seven months later. And the witnesses agreed that there had been no accident and injury from outside. Accepting these facts, as the evidence permitted, an inference of a cause or acceleration in the use by the hirer would seem to need slight evidence, if any, to support it. And there was testimony of three witnesses for the defendant, Stein, Walker, and Captain Eoger, and of one Craig, for the owner, that drying and cooling of escaped steam in the hull causes decay, and that this action goes on all the time in a dredge in use, at least if the machinery is not well packed.

The'witness Captain Eoger said he knew nothing that contributed to' the rotting of wood more than condensation, and that well-packed machinery should not cause that. Good ventilation, it was testified, was the only thing that would ■ slow down the action of decay from this source. An unusual .amount of leaking was first observed in December, 1925, as has been stated, and it was found necessary to make repairs in four spots. And the superintendent of the hirer, Captain Eoger, gave it as his opinion that the dredge could have been taken back to Charleston at that time.

In February, 1928, a letter was written by the captain of the dredge to Mr. Salmons, saying: “The machine is in good condition and I think that she would go back to the States all right if the insurance would let her and if the inspector doesn’t look too •close inside. But it would be a good thing to put her in dry dock