Source: https://goldfinchwinslow.com/when-is-a-tow-a-salvage-or-a-salvage-a-tow/
Timestamp: 2019-04-19 15:22:54+00:00

Document:
Of course, as a vessel owner issues never arise while your ship is on shore being repaired or in stowage. Problems occur on the water when you are just trying to get home after your run. You call for a tow and the tow company comes out and presents you with a contract to sign. Many times these contracts are for salvage, but all you wanted is a tow. Without assistance you are left adrift, so what is a vessel owner or captain to do?
When is it a salvage or a towage? That is what we hope to address in a clear, simplified manner. A simple understanding of the key terms and a cursory review of the application will provide the reader with a better understanding of this key distinction in the maritime law.
Towage differs from the carriage of goods in that under a towage situation one vessel which is self-propelled generally tows one or more vessels, usually barges that are not self-propelled.3 Towage is “[t]he supplying of power by a vessel . . . to draw another” vessel.4 The key determination between towing and salvage is whether a peril exists.5 Simply put, if the vessel is not in “peril” then it is not salvage. If a vessel is simply providing a service, i.e. fuel, tow, assistance, then it is likely a tow.
Service voluntarily rendered when not required as an existing duty or from a special contract.
Therefore, as described above a vessel must be in trouble, danger, or specifically “peril.” For example if it is a soft aground the danger may not be described as peril, however if it is hard aground then the danger may fall into the realm of “peril.” When a vessel is in this perilous state the salvager must be doing so voluntarily, not under a duty like the coast guard or other similar mechanism. Finally, the salvage must be successful.
As discussed, a salvage service implies that there was some degree of peril and assistance above towage that was provided. The peril does not have to be immediate. It is sufficient if the property is in danger, either presently or reasonably to be apprehended.24 The best way to understand the application of towage verse salvage is to review the common law.
“One evening, the vessel Neptune encountered a major storm and sought refuge in the Crescent City harbor. While in the harbor, the Neptune became disabled and grounded on a sandy shoal. The crew of the Neptune secured the barge alongside the disabled tug.
The question presented was whether a contract is one for towage or for salvage. The Court enumerated that this distinction has several consequences.
It was determined that the existence of a marine peril distinguishes a salvage contract from one for towage.26 Such a peril exists “when a vessel is exposed to any actual or apprehended danger which might result in her destruction.” Faneuil Advisors, Inc. v. O/S Sea Hawk, 50 F.3d 88, 92 (1st Cir.1995). Whether a marine peril exists is a question of fact reviewed for clear error. Clifford v. M/V Islander, 751 F.2d 1, 5 (1st Cir.1984). In this case it was determined that this was indeed a salvage action.
The Flottbek was a vessel caught in a rough storm about a quarter mile to a half mile from the rocks. While the peril was in dispute, the fact that the vessel was unable to pull out of the predicament on its own accord was not. Thus it anchored and called for help.
“In cases of simple towage, only a reasonable compensation is allowed, as upon a quantum meruit. In case of salvage, the award is upon a broader and more liberal scale, as we have before stated. In McConnochie v. Kerr (D.C.) 9 Fed. 50, 53, Judge Brown said: ‘A salvage service is a service which is voluntarily rendered to a vessel needing assistance, and is designed to relieve her from some distress or danger either present or to be reasonably apprehended. A towage service is one which is rendered for the mere purpose of expediting her voyage without reference to any circumstances of danger. ‘“ The Court found that the crew felt that they were in enough peril to call for assistance and to drop their anchors for an expedited departure. Therefore, this was a salvage.
The Appeals Court found that there was no salvage, as there was no peril: ‘’Salvage, in its simple character, is the service which volunteer adventurers spontaneously render to the owners in the recovery of property from loss or damage at sea, under the responsibility of making restitution, and with a lien for their reward.’ Macl. Shipp. 608. ‘Salvage is the compensation due to persons by whose voluntary assistance a ship or its lading has been saved to the owner from impending perils, or recovered after actual loss.’ Ben. Adm. Sec. 300. ‘Salvage consists of an adequate compensation for the actual outlay of labor and expense used in the enterprise, and of the reward as bounty allowed from motives of public policy as a means of encouraging extraordinary exertions in the saving of life and property in peril at sea.’” In this situation there was no finding of impending peril.
“A barge adrift in a calm sea with running swells and a southwest wind of 18 to 20 MPH. As the Cherokee was rolling 15 to 20 degrees in the swells. The tug pulled beside the barge in order to get a mate on board. Thus commencing the tow and delivered the barge at a Pensacola dock three hours later.
For a derelict barge, like a derelict person, may be exposed to many perils, the least of which is foundering on an obvious shoal. Salvage at sea may and often does call for the performance of exciting acts of great bravery to rescue lives or property from the jaws of a near and certain doom. But it need not, for the aim of salvage is to save. To aid before it is a do-or-die wager with high risks, high stakes, and high rewards, assures the greatest likelihood of recovery at the least peril. Maritime salvage is not reserved for hero alone. Its generous but judicious liberality is to encourage mariners instinctively to respond to need – be it great or small, drab or spectacular – certain in the knowledge that the scale of The Blackwall, 10 Wall. 1, 77 U.S. 1, 19 L.Ed. 870, provides the means to find a balance.” Is a barge at drift, in peril? The Court thought so and therefore a salvage was found.
The tow is contracted to take on a barge. Which it was clearly the tug’s duty under the contract of towage to get the barge, Clinton, to a place of safety, if reasonably nearby and to be reached without danger to the rest of the tow, Henrico. As the barge begins to take on water and the tower repairs the tow in order to deliver the goods under contract, is it still a tow or a salvage?
“There is a principle that a tug is bound by the contract of towage not to abandon both tow and contract when the former gets into trouble, until the reasonable resources of good seamanship are exhausted. The tug’s engagement is usually, as here, to take the tow from one place to another in a skillful manner (The Thomas Purcell, Jr., 92 Fed. 406, 34 C.C.A. 419), and when danger arises, the tow cannot be abandoned until all reasonable efforts for its preservation have been exhausted (The Carbonero, 122 Fed. 753, 58 C.C.A. 553; The Geo. Hughes, 183 Fed. 211, 105 C.C.A. 643), and the burden of showing such efforts is on the tug (Re Cahill, 124 Fed. 63, 59 C.C.A. 519).
For services outside the contemplation of the parties in making the contract for towage, remuneration may be given, and, if they amount to salvage, a salvage award is due. The City of Haverhill (D.C.) 66 Fed. 159. What is salvage, as distinguished from mere towage, has been sometimes discussed (The Viola, 55 Fed. 829, 5 C.C.A. 283; United States v. Morgan, 99 Fed. 570, 39 C.C.A. 653) without advancing beyond the test for salvage laid down by Brown, J. (The Plymouth Rock (D.C.) 12 Fed. 634; McConnochie v. Kerr (D.C.) 9 Fed. 50); that is, a successful effort to rescue from an actual or apprehended danger.
As applied to a boat in tow, it is said, and truly, that promptly to deviate into a harbor of refuge is to guard against danger; and it is also true that volunteer towage is often a salvor’s effort, but the contract of towage, while not imposing the duty of deviation, established a relation which made a moderate charge for deviating sufficient. After reaching the destination the two would have sunk at her mooring, had it not been for the prompt and efficient labors of the Henrico’s engineers and the use of the tug’s syphon.” That rescue from imminent danger was beyond both the towage agreement and reasonable expectation except as a salvage service.
A storm arose and the vessel The San Jose has pushed up soft aground. It was scheduled to disembark with a load of cargo, but had to wait until high tide. The crew unloaded and reloaded another vessel, in the meantime The San Jose was freed from its muddy agrounding.
In Bond v. A. H. Bull S.S. Co., D.C., 13 F.2d 893, 894, 1926 A.M.C. 1120, a vessel was stranded and unable to get off under her own power. “Under a contract of towage which stipulated that the service was not salvage, the ship was freed by a tug. Though the Court stated that ‘the ship cannot deprive the crew of their salvage rights,’ the crew of the tug was not allowed any salvage award. In Stone v. Tug Pejepscot, 1939 A.M.C. 316, a tug and barge went aground. The weather was good and the vessels were in no danger. Attempts to pull the tug off were successful and the barge finally managed to free itself.” The Court held that the service to the grounded vessels was high towage and not salvage.
In the instant case there was substantial evidence to support the conclusion of the District Court that the San Jose was not in danger, either imminent or reasonably to be apprehended. There was evidence that the San Jose was in a protected harbor, anchored so as to prevent her from being blown farther aground, and that she could have gotten off the mud bank unaided. Therefore, this was merely an act of towage.
“The Barryton used coal for fuel, and while she was at Aransas Pass, Tex., her master on November 9th notified the charterer that he could not go any farther without coal. The charterer replied that it would furnish coal at Tampico, and ordered the master to proceed to that place. In obedience to this order, the Barryton arrived on November 11th at Tampico, where great difficulty was encountered in procuring a supply of coal. On November 16th the charterer telegraphed the owner’s agent that the Barryton was unable to sail on account of shortage of fuel, and that it was sending 100 tons from Galveston.
Thereupon the captain of the Bolikow entered into negotiations with the master of the Greer for a tow of the Bolikow to Tampico. The master of the Greer demanded $20,000. The captain of the Bolikow refused to pay that amount, but stated he would pay anything within reason. Finally the master of the Greer stated that he would perform the service for the sum of $15,000, and that he was going to leave if the captain of the Bolikow did not agree to pay it. Under these circumstances the captain of the Bolikow signed an agreement to pay $15,000 to the owners of the Greer for towing the Bolikow to Tampico. The Bolikow was then made fast to Barge No. 7, and was towed by the Greer without incident back to Tampico. The weather was fine and the sea smooth from the time the Bolikow was anchored at sea until she was towed into port.
The Court supported the District Court in refusing to enforce the contract for salvage. The refusal of the master of the Greer to render assistance, and his threat to leave the Bolikow unless his exorbitant demand was acceded to, amounted to moral compulsion, and the contract, which he procured by the methods adopted, is not protected or made binding and valid by the rule laid down in The Elfrida, 172 U.S. 186, 19 Sup.Ct. 146, 43 L.Ed. 413. The only element of salvage present in this case was the apparent danger to the Bolikow and her crew. The Bolikow, because of her inability to trim cargo for lack of fresh water, and the consequent uselessness of her pumps, would have been in serious danger in case of heavy weather or a rough sea. The helpless condition of the Bolikow raised the assistance rendered from a towage to a salvage service. But the salvage service was of a low order, and the amount awarded therefore by the District Judge is, in our opinion, too liberal. The utmost time contended for is from 10:30 a.m. of November 25th to 2:30 p.m. of the next day, or a period of 28 hours, and includes 3 hours before the Bolikow was taken in tow. The greatest allowance for towage which could be justified would be $700. Double the towage rate, under the facts of this case, would be full compensation. The Catalina, 105 Fed. 633, 44 C.C.A. 638; The Colonel Moore (C.C.A.) 263 Fed. 868; The Jean L. Somerville (C.C.A.) 286 Fed. 35 (decided December 19, 1922). The time lost by the Greer did not exceed half a day, and was of the value of about $300. We are of opinion, therefore, that an award of $1,700 is amply sufficient.” Thus, while this was salvage, the Court clearly did not take kindly to the extortion attempted by the rescuing party.
“The steamship Kennebec grounded at the mouth of the Brazos river near the jetties, about 40 miles from Galveston. S. E. Paul, the agent of the owner of the vessel, from Brazos Port, a place on shore nearby, had a conversation over the long-distance telephone with Mr. Stoneburner, an officer of the owner of the steam tug, Senator Bailey, at Galveston, with reference to getting that tug to render the assistance required to get the Kennebec afloat. The result of that conversation was that Mr. Stoneburner, for his company, the libellant, agreed to furnish the services of the tug and equipment for $250 per day from the time she left Galveston until she returned. Following the making of that agreement the tug on the same day went to the mouth of the Brazos, reaching there after dark, and the next morning pulled the Kennebec from where it was aground.
If the contract made by Mr. Stoneburner and Mr. Paul was a binding one, and the service mentioned was rendered in pursuance of it, though it was a salvage service, the only compensation recoverable for it is the one which was stipulated for, $250 per day, which was awarded by the decree appealed from. A valid contract by one party to pay at all events, and by the other to receive a fixed compensation for a salvage service, is as conclusive as any other valid contract. The Elfrida, 172 U.S. 186, 19 Sup.Ct. 146, 43 L.Ed. 413; Elphicke v. White Line Towing Company, 106 Fed. 945, 46 C.C.A. 56.” Therefore, this was a contracted salvage at a fixed price and the contract held.
The vessel owners call in a mayday as they are practically aground and pounding on the shoal lumps in the vicinity, a tow was sent out to help. However, whatever may have been the Davenport’s condition the night before or when her first call for assistance was sent out, at the time the Weems arrived the Davenport was afloat, and, although in a dangerous position, needed nothing but towage services to take her out of danger into safe waters.
Thus the Court found that the services actually rendered, by reason of the call for assistance, the dangerous waters navigated, and the skillful pilotage required, were extraordinary towage services, and not salvage as the conditions had changed over time.
The importance of whether it is a tow or salvage is not important on the front end, as the work must be done either to save the vessel or to transport to the vessel, but on the back end where the compensation is measured. However, the distinction between salvage and towage is an important one to the crew of the salving ship because the crew has no interest or rights in a contract for towage, but if the owners of the respective vessels contract for towage when in fact the services are salvage services, the crew of the salving ship is entitled to salvage and can look either to the salved vessel27 or, if the owner of the salving ship – that is, the salving crew’s employer – has received it, to the money paid under the contract, for its share of a salvage award.28 Simply, there is no maritime lien if it is purely a tow.
The salvor who has earned the right to a salvage award through successful, voluntary salvage services to a vessel in peril has a high-priority possessory, preferred maritime lien on the vessel.29 However, it is improper for the salvor to deny the owner or his agents’ access to his vessel or property to inspect or preserve it.30 The salvor must rely on his lien and seek enforcement by an action against the vessel or its owner.31 Thus, the distinction between a tow and a salvage not only affects the amount of payment it may also affect whether you have priority to receive payment. At the end of the day, the real difference between towage and salvage is how big a hole in the water your vessel has created into which to throw money down.
1 _Univ. of Texas Med Branch v. United States, 557 F.2d 438, 444 (5th Cir. 1977).
2 http://www.hhlaw.com/News/Fact%20Sheet%20RJB%20Wreck%20Act%20 longer%201110%20%28H0680316%29.PDF (last visited April 30, 2014).
3_ Mississippi Val. Barge Line Co. v. T. L. James & Co., 244 F.2d 263, 1957 A.M.C. 1647 (5th Cir. 1957).
4_ Stevens v. The WHITE CITY, 285 U.S. 195, 200 (1932).
5_ Vickey L. Quinn, Hard Aground: A Primer on the Salvage of Recreational Vessels, 19 U.S.F. Mar. L.J. 321, 332 (2007).
6_ The Law of Seamen § 9:8 (5th ed.), citing The “Sabine”, 101 U.S. 384, 25 L. Ed. 982 (1879); see also Larue v. United Fruit Co., 1950 A.M.C. 161 (D.Md.1949), affd, 181 F.2d 895, 1950 A.M.C. 1312 (4th Cir. 1950), regarding lack of peril or distress; West Coast Shipping Brokers Corp., M/V “Cebu I” v. Ferry “Chuchequero“, 582 F.2d 959 (5th Cir. 1978).
7_ The Sabine, 101 U.S. 384, 384 (1879).
8 Conolly v. S.S. KARINA II, 302 F. Supp. 675, 679, 1969 AMC 319 (E.D.N.Y. 1969).
9 McNabb v. O.S. BOWFIN, 565 F. Supp. 22, 23, 1984 AMC 177 (W.D. Wash. 1983).
10 McConnochie v. Kerr, 9 F. 50, 53 (S.D.N.Y. 1881).
11 Neptune Maritime Co. of Monrovia v. ESSI CAMILLA, 714 F.2d 132, 1984 AMC 2983 (4th Cir. 1983).
12 _Flagship Marine Servs., Inc., 966 F.2d at 605 (quoting The CAMANCHE, 75 U.S. 448, 477 (1869)).
13_ Sobonis v. Steam Tanker NAT’l DEFENDER, 298 F. Supp 631, 637-38, 1969 AMC 1219 (S.D.N.Y. 1969). See also The CAMANCHE, 75 U.S. 448, 2003 AMC 2979 (1869); Smith v. Union Oil Co. of Cal., 274 F. Supp 248, 251, 1967 AMC 1097 (N.D. Cal. 1966).
14_ http://www.offshorerisk.com/definitions/salvage.html(last visited April 30, 2014).
15 The BLACKWALL, 77 U.S. 1 at 12 (1869).
16 Reynolds Leasing Corp. v. Tug PATRICE MCALLISTER, 572 F. Supp 1131 at 1134, 1984 AMC 1303 (S.D.N.Y. 1983).
17_ Donald A. Kerr, The Past and Future of “No Cure-No Pay,” 23 J. Mar. L. & Com. 411, 411-17 (1992); Martin J. Norris, The Law of Salvage (1958); 3A Benedict on Admiralty, § 1-129; Gilmore and Black, The Law of Admiralty, § 8-1.
18_ The ELFRIDA, 172 U.S. 186 at 196 (1989).
19 Southernmost Marine Servs., 250 F. Supp. 2d 1367; Smit Americas, Inc. v. M/V MANTINIA, 259 F. Supp. 2d 118, 2003 AMC 1096 (D.P.R. 2003).
20 Vickey L. Quinn, Hard Aground: A Primer on the Salvage of Recreational Vessels, 19 U.S.F. Mar. L.J. 321, 339 (2007).
21 Martin J. Norris, The Law of Salvage (1958); 3A Benedict on Admiralty, §§ 1-129; Donald A. Kerr, The Past and Future of “No Cure-No Pay,” 23 J. Mar. Law & Com. 411, 411-17; Gilmore and Black, The Law of Admiralty, § 8-1 and accompanying notes (2d ed. 1975).
22_ Gilmore and Black, The Law of Admiralty, § 8-2 and accompanying notes (2d ed. 1975).
23 The ANGIE & FLORENCE, 77 F. Supp. 404 (D. Mass. 1948).
24 3A Benedict on Admiralty, §§ 1-185.
25 The Camanche, 75 U.S. (8 Wall.) 448, 477, 19 L.Ed. 397 (1869).
26 The Flottbek, 118 F. 954, 960 (9th Cir.1902).
27_ The Olockson, 281 F. 690 (C.C.A. 5th Cir. 1922); Evanow v. M/V Neptune, 163 F.3d 1108 (9th Cir. 1998); Bergher v. General Petroleum Co., 242 F. 967 (N.D. Cal. 1917); Rauch v. Gulf Refining Co., 129 F. Supp. 843 (E.D. La. 1955); Squires v. The Ionian Leader, 100 F. Supp. 829 (D.N.J. 1951).
28 _Force and Norris, The Law of Seamen § 9:47 (5th ed.).
29 46 U.S.C. § 31301(5)(F) (1993); The FAIRFIELD, 30 F. 700 (D. Ga. 1887).
30 ALCAZAR, 227 F. 633 (D.N.Y. 1915).
31 Albion Lumber Co. v. Inter-Ocean Transp. Co., 240 F. 1017 (D. Cal. 1914).

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