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Amerada Hess Corp. v. S/T MOBIL APEX

decided: July 23, 1979.

AMERADA HESS CORPORATION (HESS OIL & CHEMICAL DIVISION), OCEAN TOWERS LTD. AND HESS OIL VIRGIN ISLANDS CORP., PLAINTIFFS-APPELLANTS,
v.
S/T MOBIL APEX, HER ENGINES, BOILERS, ETC. AND MOBIL TANKERS LIMITED, DEFENDANTS-APPELLEES AND CROSS-APPELLANTS.



Cross-appeals from judgment exonerating ship from liability and from amount of judgment in general average, in the United States District Court for the Southern District of New York, Marvin E. Frankel, Judge. Affirmed as to ship's liability. Remanded for recalculation of cargo's contribution in general average.

Before Smith, Mansfield and Mulligan, Circuit Judges.

Author: Smith

These are cross-appeals from a judgment entered in the United States District Court for the Southern District of New York, Marvin E. Frankel, Judge, exonerating Mobil Tankers Limited ("Mobil") and the S/T MOBIL APEX from liability for damage to a cargo of gasoline and naphtha, and awarding Mobil a general average contribution of $219,034.78 plus interest from Amerada Hess Corporation ("Amerada"). Amerada appeals the finding of no liability, while Mobil contests the omission from general average of $40,000 expended in settlement of a claim for salvage services. We affirm the finding as to liability but reverse the determination of the amount of the judgment.

On April 17, 1969, Amerada chartered the S/T MOBIL APEX, owned by Mobil, to carry a cargo of gasoline and naphtha from St. Croix, Virgin Islands, to New York. On April 29, shortly after loading of the cargo had begun, the crew discovered that naphtha was leaking into the engine room, through a bulkhead penetration through which the bilge pump shaft passed from the engine room to the pump room. Personnel on and off the ship were notified of the leak, and loading of the cargo ceased immediately. Nevertheless, sparks from machinery in the engine room ignited the leaking naphtha, causing an explosion and fire. Initial efforts to extinguish the fire were unsuccessful. With the consent of the ship's master, two tugs, owned by Ocean Towers Limited ("Ocean Towers") and chartered by Hess Oil Virgin Islands Corporation ("Hess V.I."), towed the MOBIL APEX away from the dock. Coast Guard personnel then were able to extinguish the fire.

In this admiralty action against Mobil and the MOBIL APEX, Amerada sought to recover damages for the loss of a portion of the gasoline and naphtha cargo, and Ocean Towers and Hess V.I. demanded payment for the salvage services provided by their tugs. Mobil denied liability and counterclaimed for a general average contribution under the terms of the charter party. Prior to trial, Mobil settled the claim for salvage services by paying $40,000 to Ocean Towers and Hess V.I., without prejudice to its claim that this amount should be included in general average.

The district court adopted the finding of the magistrate who heard the case as a special master, that Mobil did not breach the warranty of seaworthiness and thus should be exonerated from liability for damage to the cargo. The court also adopted the special master's recommendation that Mobil should recover in general average against Amerada, but the court, without explanation, excluded from general average the $40,000 paid in settlement of the salvage claim.

Amerada attacks the district court's conclusion that the MOBIL APEX was seaworthy. Amerada concedes that the naphtha initially flooded the pump room because of negligence of shipboard personnel, who were under its control as charterer. It contends, however, that the leakage of naphtha from the pump room to the engine room resulted from the unseaworthiness of the vessel.

Five pumps in the pump room of the MOBIL APEX were connected with their power sources in the engine room by means of rotating power shafts which penetrated the bulkhead between the two compartments. Each of these penetrations was sealed by a "stuffing box" (also called a "gland"). The ability of a stuffing box to provide a satisfactory seal depends on the type of packing material used and the tightness of this packing material around the shaft. The stuffing boxes that surrounded the four cargo pump shafts contained three rings of asbestos packing material. No naphtha leaked through these four shaft openings. The bilge pump shaft, however, was protected by a stuffing box which contained two turns of felt packing. It was through this bilge pump shaft opening that naphtha leaked into the engine room.

Section 3(1)(a) of the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. ยง 1303(1)(a), imposes on a shipowner a duty to exercise due diligence to make the vessel seaworthy. The standard of seaworthiness requires that the ship be reasonably fit for the use intended. The Silvia, 171 U.S. 462, 464, 19 S. Ct. 7, 43 L. Ed. 241 (1898); Nichimen Co. v. M. V. Farland, 462 F.2d 319, 332 (2d Cir. 1972). When a vessel is chartered to carry a liquid cargo, it must be equipped to store and transport the fluid safely. Coca Cola Co. v. SS Norholt, 333 F. Supp. 946, 948-49 (S.D.N.Y.1971).

Experts testified that it is impossible to design a usable stuffing box that would be liquidtight at all times. Such a seal would require the packing to be so tightly compressed that it would interfere with the rotation of the pump shaft. It is possible, however, to construct a stuffing box that is gastight at all times and that may be adjusted, I. e., tightened, to become liquidtight when the pump is not in operation. The district court concluded that application of the seaworthiness standard to this case required that the stuffing boxes possess this "latent liquidtight integrity." The court reasoned that when the pumps are in operation, a watchful crew will be present in the pump room to detect any leaks and take steps to prevent seepage into the engine room. But when the pumps are not operating and crew members are most likely to be away from the pump room, the stuffing boxes should be capable of being tightened to prevent an unnoticed leak. The parties, despite some quibbling over the wording of the standard, do not contest its applicability, and we agree that it represents the proper test for seaworthiness in these circumstances. Amerada contends, however, that the special master and the district court erred in concluding that the standard had been met.

Amerada's primary argument is that testimony by the chief engineer, that he attempted unsuccessfully to stop the flow of naphtha by adjusting the stuffing box, demonstrates conclusively that the stuffing box lacked latent liquidtight integrity. Mobil responds that the engineer did not attempt this adjustment until after the naphtha had begun leaking through the untightened stuffing box, at which time the packing already had become saturated, thus making the attempted adjustment fruitless. Amerada retorts that Mobil's assertion that the packing had become saturated is "sheer speculation" and that, in any event, a stuffing box which cannot be adjusted after being saturated cannot be termed liquidtight.

The evidence presented as to the design of the stuffing box supports a logical inference that the naphtha flowing through the untightened stuffing box had saturated the packing by the time the leak was discovered and the adjustment attempted. We cannot agree with Amerada's contention that a stuffing box that loses its ability to be effectively tightened once it is saturated must be held to lack latent liquidtight integrity. As we stated above, the purpose for the requirement of latent liquidtightness is to prevent leakage when the pumps are inoperative and the crew is away from the pump room. This can be accomplished if the crew tightens the stuffing box before leaving the pump room unattended. The standard of seaworthiness does not require that the stuffing box be designed to prevent leakage where the crew fails to take this precaution, if in fact such a design would be possible.

The remainder of Amerada's argument on appeal consists of disagreements as to the credibility of witnesses and the weight that their testimony should be accorded. There is no doubt that the testimony offered was in sharp conflict as to the utility of felt as a packing material and the ability of the bilge pump stuffing box to be adjusted. But there was substantial credible evidence from which the court could conclude that the stuffing box possessed latent liquidtight integrity. Although much of the testimony in this case was in the form of deposition transcripts, a number of the depositions were taken in the presence of the special master, who therefore had an opportunity to observe the demeanor of the witnesses. After giving due regard to our equal ability to appraise testimony of other witnesses whom the special master did not observe, we see no reason to reject the conclusion reached by the special master and the district court that the MOBIL APEX was seaworthy.

Mobil's cross-appeal presents the question whether an expenditure incurred for salvage services performed without a written contract, but with the consent of the ship's master, should be included in general average. The concept of general average "is simply stated when one who partakes in a maritime venture incurs loss for the common benefit, it should be shared ratably by all who participate in the venture." Sea-Land Service, Inc. v. Aetna Insurance Co., 545 F.2d 1313, 1315 (2d Cir. ...


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