Dunbar & Sullivan Dredging Co. v. Title Guaranty & Trust Co. of Scranton

Majority

p. 326

Dunbar and Sullivan Dredging Company, Respondent, v. The Title Guaranty and Trust Company of Scranton, Penna., Appellant.

Fourth Department,

September 25, 1907.

Headnote

Shipping — lease of boats — covenant to return in original condition r^- • • measure of damage.

When the lessee of boats and. dredging machinery has covenanted to return the same to the lessor in the same condition as when leased and'has failed to do so, -the rule of damage is that applied jin^admiralty cases, to wit, the lessor may - recover the- cost of repairs already made and those yet to he made necessary to - restore the boats to the condition in which they were when leased and for -the. idle time of the boats while the repairs were being made, together with.-interest on these - amount's, less the -depreciation resulting - from ordinary use) on the condition, however that the expense of repairing any boat does not exceed its original value or involve expense greatly disproportionate to the amount of, its • depreciation by reason of inj.uiy. ," ■ ' -

When, however,, the lessor, who has only partially repaired- the boats, has been ' once .allowed the expense of dry-docking, he should not. be-allowed, the cost of redocking in order to complete the repairs, if there he nothing tó show that the. repairs could not have been completed when the boats were first . docked.

KrusN,' j., dissented.'

Appeal by the defendant^ The Title Guaranty and Trust Company of Scranton,.Penna., from a, judgment of the. Supreme Court . in favor .of the plaintiff, entered in the office of the clerk of the ■county of Erie on the 28th day of January,, 19QI, upon the report of a referee.' -

Plaintiff’s action is based upon a breach of the covenants contained in a-bond, which defendant -gave to. plaintiff, .to secure tlie performance of certain agreements contained in a "contract, which plaintiff made.with the Donnelly Contracting. Company eontempo- . raneonsly with thet■execution and delivery of. the bond. By this contract,-plaintiff, the owner,, leased to the Donnelly Company tools and accessories, consisting of tugs, scows and a drédge, with spare " parts and' appliances, for use by the latter company. during-, the, dredging season of 1904. In addition to paying rent for the use of this property the Donnelly Company, among other' things' stated in the contract on its part to be performed, agreed to replace immedi

p. 327

ately parts, when broken, and make repairs, and do all things necessary to maintain the property in a condition equal to that" in which it .was when the lessee received it. It further .agreed to return the leased property to the lessor; the port of return to be that one of the two, designated in the contract, selected by the lessor; and the lessee was before return to cause the scows and dredge, called plant one, to be docked,, caulked and generally repaired .at its expense, so as to render. that plant in a condition equal to that in which it was received. It further in express .term's warranted the return of all and every part of the leased property in a condition equal to that in which it was received. The condition of the .plant was also particularly described and the value of each vessel forming a part of it agreed upon. A standard by which to gauge both the condition of the separate items of the plant, when the property should be returned and the value of such items, as the lessee by reason of loss . might be unable to return, was thus established. The property when it again came into the lessor’s possession required .extensive ’ ■ repairs to place it in the condition it was when the lessee received it. Meanwhile the lessee had become bankrupt and both the lessee- and the defendant, its 'surety, failed to restore by repair the property to the condition required by the contract. Plaintiff, after regaining possession of' the leased property, made partial' repairs upon, the plant; and thereafter began this action to recover of the surety company the damages, claimed to have been sustained by reason of the lessee’s defaults, for which defendant was liable as surety.. These items of damages included among other things the expense incurred by plaintiff in making partial repairs of the scows, tugs and dredge, forming, part of the leased plant, and also the amount, claimed to be necessary to complete these repairs. Defendant’s answer admits liability to plaintiff on its bond, and puts in issue only the amount of damages which plaintiff is entitled to recover, and on this appeal defendant assails the judgment appealed from only 'So far as it includes the sum of $20,200, allowed by the. referee , as the amount necessary to complete the repairs on these .vessels.

W. H. Cuddeback, for the appellant.

Frederick C. Slee, for the respondent.

In fixing the damages to be awarded plaintiff the referee adopted the rule- of damages applied in admiralty cases and allowed the cost of repairs already made by plaintiff, and those yet to. be. made to restore the boats to the condition they were when leased, for the idle time of boats while repairs were being made, together with interest on these amounts. We think that this rule, adopted by the referee, is correct, both because it is clearly within the terms of the 'agreement itself,-as embodied in the language of the contract,.and also, even if not so verbally expressed, it would, as matter of law, have been implied as the proper rule of damages to be applied in this case. (Auten v. Bennett, 183 N. Y. 496 .) Plaintiff’s loss for lay time of the boats while undergoing repairs, as-well as interest' upon the sums awarded for repairs and lay time, w.ere proper items for which plaintiff was entitled to allowance in fixing the amount of its damages. (Whitehall Transportation Co. v. N. J. Steamboat Co., 51 N. Y. 369 , 373; Mailler v . Express Propeller Line, 61 id., 312, 316.)

The application of this rule made by the referee in his decision of the case has, however, resulted, as we conceive, in error, which requires a reversal of the judgment entered on his report. When these vessels were returned in the condition already adverted to, the plaintiff was then entitled to recover all the expense necessarily and properly required in repairing them, so' that their condition should be equal to that in which they were, received, less, of ctiurse, the depreciation resulting from the ordinary use of the same during the term for which they were leased, and, of course, also providing as'a further condition that the expense of repairing any one of them -should not exceed its original value, and, further, should hot involve an expense greatly disproportionate to the amount of its depreciation by reason of its injury. (Petty v. Merrill, 9 Blatchf. 447 .)

It. does not appear that the amounts which the referee has allowed for present - repairs, actually made, and the additional repairs necessary to restore any one. of these vessels to its condition at the time the- lease took, effect either exceeded its actual value, or were greatly disproportionate to the amount of its depreciation by reason of its injury;' but it- does clearly appear that the referee, in determining the value of future repairs, included as a material item

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thereof a. charge, which, under the circumstances of the case dis•closed by the evidence, could not properly be considered in arriving at that amount. When the boats were returned to plaintiff the measure of defendant’s liability was, as we have, said, excluding for the present consideration of charges for lay, or idle, time while repairs were being made,' limited to the cost of repairs necessary to resiore them to their condition at the. time they were leased. Most of these vessels, in order that complete repairs could be made thereon, required either that they should be dry-docked, or in some way taken from the water. In making the partial-repairs, for which plaintiff has recovered, as one of the items of damages awarded by the referee is included the expense of dry-docking each of the scows included in the leased plant. Before the scows were placed on the dry-dock it was necessary to remove the heavy iron doors which closed the bottoms of' the pockets in these scows. This process was attended with considerable expense. The expense of dry-docking each of these scows, after it was prepared for placing on the dry-dock, is,, as we gather from the evidence' in the case, from $500 to $1,000. The expense of preparation of the scow for placing on the dock, and the expense, of dry-docking itself, are not necessary expenses of repairs, unless necessarily incident to the actual repairs themselves. The expense of preparing these scows for the dry-dock and also the expense of docking them áre included in the partial repairs to them, which plaintiff made, and for which it has recovered. Mo satisfactory reason appears why the whole repairs could not then have been completed, which would have subjected defendant to the expense of a single preparation for and docking of each scow, except that, as it is urged, defendant immediately required the boats for léase, or use, during the ensuing dredging season. "While this may be true, as to some of the scows, it certainly cannot .be urged as to the scows Monroe Doctrine and Reciprocity; for they were both laid up at plaintiff’s dock immediately after the partial repairs on them were completed and, so far as appears, so continued during the remainder of the season. . Notwithstanding this fact, and notwithstanding the further fact that the evidence does not disclose that the idle time, which would have ensued if gom'plete repairs. had been made upon the scows, which were put

p. 330

into actual service by defendant on completion of partial repairs thereon, would have offset the: charge for redocking, the referee appears to have allowed as a part of the estimated expense of making complete repairs the expehse of redocking at least three of, these scows. If the expense of a second docking can be allowed against defendant as a part of’ the expense of additional repairs^ when it appears that all repairs could have been completed when the scows were first docked, it would seem that the exjiense of a third, or even a fourth docking, could with equal justice be''charged •to it if plaintiff saw fit to continue at intervals to make only partial repairs. This additional and apparently unnecessary and unwarranted expense included in the damages awarded for future repairs is a considerable one, but we-are) unable from the evidence to determine with any degree of accuracy its amount. We are, therefore, constrained to direct a reversal of the judgment and grant a new trial, wit'll costs to the appellant to abidé the event.

All concurred, except Kruse, J., who dissented.

Judgment reversed -and new trial ordered,, with costs to the appellant to abide event:

Cases cited

Auten v. Bennett 183 N. Y. 496 N.Y. 1906-02-06 p. 327
Whitehall Transportation Co. v. New Jersey Steamboat Co. 51 N. Y. 369 N.Y. Comm'n App. at 373 p. 327