Argument for Petitioner.

287 U.S.

BROOKLYN EASTERN DISTRICT TERMINAL v. UNITED STATES.

CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.

No. 39. Argued October 21, 1932.-Decided November 14, 1932.

1. Where one of several tugboats, all acquired, maintained and used by their owners in a regular towing business, was laid up by collision and the owner provided no substitute but took care of the business by working the other tugboats overtime, held erroneous, in assessing damages, to allow as demurrage the market cost of hiring a substitute during the time of repairs. P. 174.

2. "Spare boat" doctrine considered and held inapplicable. P. 176. 3. An appeal to the Circuit Court of Appeals in admiralty cases is a trial de novo. Id.

4. An assessment of damages in admiralty may be corrected on appeal if erroneous in law or extravagant in fact. Id.

54 F. (2d) 978, affirmed.

CERTIORARI, 286 U. S. 538, to review an admiralty decree modifying an assessment of damages in a collision case.

Mr. Leonard J. Matteson, with whom Mr. Oscar R. Houston was on the brief, for petitioner.

If the petitioner had maintained the third tugboat as a spare " and had used it as a substitute in the emergency, there is no doubt that it would have been entitled to recover the reasonable hire of a boat of like capacity as the proper measure of damages for loss of use of the vessel injured. The Cayuga, 7 Blatchf. 385, affirmed, 14 Wall. 270; The Favorita, 18 Wall. 598, 603; The Providence, 98 Fed. 133; New Haven Steamboat Co. v. New York, 36 Fed. 716; The Emma Kate Ross, 50 Fed. 845; The Priscilla, 55 F. (2d) 32; The State of California, 54 Fed. 404; The Mediana, 1900 A. C. 113 (H. L.)

The principle is the same where, instead of maintaining two tugboats and a spare, three tugboats are kept work

170

Argument for the United States.

ing fewer hours. The investment, overhead and depreciation would be the same. The suggestion that the petitioner had no expense of this character is without merit. It was merely a matter of convenience which plan was adopted.

Distinguishing: Newtown Creek Towing Co. v. New York, 23 F. (2d) 486; The Glendola, 47 F. (2d) 206; The Conqueror, 166 U. S. 110.

Cf. The Potomac, 105 U. S. 630, 631.

Solicitor General Thacher, with whom Assistant Attorney General St. Lewis, and Messrs. Whitney North Seymour, J. Frank Staley, and Wm. H. Riley, Jr., were on the brief, for the United States.

Petitioner has been fully compensated for the cost of repairing its tugboat, and has failed to prove any other damage. Under settled principles, the disallowance of the item for demurrage was clearly correct. The Potomac, 105 U. S. 630.

Since the decision in The Conqueror, 166 U. S. 110, the federal courts have consistently held that, in order to recover demurrage for detention of vessels injured in a collision, it is necessary to show that loss has actually been sustained as a result of the detention. The North Star, 151 Fed. 168; The Winfield S. Cahill, 258 Fed. 318; The Wolsum, 14 F. (2d) 371; Cuyamel Fruit Co. v. Nedland, 19 F. (2d) 489; Newtown Creek Towing Co. v. New York, 23 F. (2d) 486; The Glendola, 47 F. (2d) 206, cert. den., 283 U. S. 857.

The basis of applications of the "spare boat" doctrine is that the owner of the injured vessel, anticipating a time when the vessel would not be available for regular service because of a collision or other causes, had acquired and maintained an additional vessel for such emergencies so that he would not be required to hire a boat at the regular market rate to take the place of the injured vessel.

Since he would have had to pay for such hire if he had not gone to the expense of maintaining the extra boat, it is thought proper that those who caused the regular boats to be retired from service because of collisions should bear a part of the cost, commensurate with their fault, of the spare boats maintained to do the work of the regular vessels during such repair periods. The damages usually allowed where a spare boat is used are based upon the market rate of hiring a boat during the period of repairs. These cases fall within the principles laid down in The Conqueror, 166 U. S. 110, that the loss arising from detention must be definitely shown, for the owner is actually out of pocket for the cost of acquiring and maintaining the spare boat used in such emergencies. Thus damages have been proved with reasonable certainty.

Here the additional cost of overtime operation has not been proven. And to extend the "spare boat" doctrine to such cases would be to destroy its basis, namely, that recoverable loss must be proven with reasonable certainty. Even if damages for detention were recoverable on any theory the award was grossly excessive.

MR. JUSTICE CARDOZO delivered the opinion of the Court.

On September 30, 1920, the dredge Raritan, belonging to the United States, collided in New York harbor with the steam tug Integrity, belonging to the petitioner. A libel in admiralty to recover the damages to the tug was filed by the petitioner in conformity with an act of Congress whereby the United States consented to be sued. Act of February 16, 1925; c. 241, 43 Stat. 1566. A crosslibel for damages to the dredge was filed by the government. The trial court held both vessels at fault, and determined that the damages to each should be equally apportioned between the owners. A Special Commissioner was appointed to ascertain the damages and report.

The controversy hinges upon an item of demurrage. As to the repair bills ($26,114.57 for the Integrity and $2,230 for the Raritan), as well as some other items, the parties are now at one. The conflict between them, once waged along a wider front, has narrowed to a single point. The District Court, confirming the Commissioner's report, allowed demurrage to the petitioner at the rate of $150 a day, the market hire of another tug, during the seventy-eight days when the Integrity was withdrawn for repairs. This item ($11,700) the Circuit Court of Appeals excluded. 54 F. (2d) 978. A writ of certiorari has brought the case here.

The petitioner was in the business of towing car-floats for railroads between points in New York harbor. It did not use its boats for hire generally. Its business was sufficient to occupy three tugs during regular working hours in the transfer of railroad cars from one point to another. When the Integrity was laid up, the petitioner did not hire an extra tug as a substitute for the one disabled. Instead, it used its two other tugs overtime, and thus kept down the cost while doing business as before. The same crews were employed; but if extra wages were paid, the amount has not been proved. Extra wear and tear there may have been; but there is nothing in the record to indicate how much. Indeed, the witness for the petitioner frankly stated that the loss, if any, from that cause was too uncertain to be measured. The award for demurrage allowed by the District Court and disallowed by the Court of Appeals was not made upon the basis of depreciation of the boats in use. It is measured by expenses that in fact never were incurred, but that might have been incurred and charged to the respondent if the necessities of the business had been something other than they were.

Our decision may not overleap the limitations of the record. To dispose of the case before us we do not need to hold that through the use of the other vessels the pos

sibility of all demurrage has been excluded by an inexorable rule of law. Other courts have held in situations not dissimilar that demurrage may be measured by the interest on the capital value tied up in the disabled boat during the term of disability and thus unfruitfully employed. The Susquehanna, [1926] A. C. 655, 663, 664; cf. The Greta Holme, [1897] A. C. 596. To approve or disapprove that measure is unnecessary here, for the record does not contain the figures that would enable us to apply it. Even now the petitioner is not seeking for a judgment upon that basis, nor indeed upon any other basis than the one adopted at the trial. The question narrows itself to this, whether the full-time hire of an extra boat must be charged to the respondent as damage flowing from the collision when there was no need of such a boat to keep the business going, and none in fact was used or paid for. Is an award upon that basis either erroneous in law or extravagant in fact?

Erroneous and extravagant we think it must be held to be. The Conqueror, 166 U. S. 110, 125, 134; The Susquehanna, supra; cf. The North Star, 151 Fed. 168; The Wolsum, 14 F. (2d) 371; Cuyamel Fruit Co. v. Nedland, 19 F. (2d) 489; Newtown Creek Towing Co. v. New York City, 23 F. (2d) 486; The Glendola, 47 F. (2d) 206. The disability of a vessel will not sustain demurrage at the rate of the value of her hire unless an award at such a rate can be seen to be reasonable when the disability is viewed in the setting of the circumstances. The Conqueror, supra. Only when thus enlightened can we choose the yardstick most nicely adjusted to be a measure of reparation, in some instances, no doubt, the hire of another vessel, in other instances, it may be, a return upon the idle capital (The Susquehanna, supra), in others something else. Only then indeed can we know whether the interference with profit or enjoyment is to be ranked