Case Name: MICHAEL N. CAVALLIOTIS v. THE UNITED STATES
Court: United States Court of Claims
Jurisdiction: United States
Decision Date: 1955-01-11
Citations: 130 Ct. Cl. 615
Docket Number: No. 47324
Parties: MICHAEL N. CAVALLIOTIS v. THE UNITED STATES
Judges: Laramore, Judge; MadbeN, Judge; LittletoN Judge; and JoNes Chief Judge, concur.
Reporter: United States Court of Claims Reports
Volume: 130
Pages: 615–625

Head Matter:
MICHAEL N. CAVALLIOTIS v. THE UNITED STATES
[No. 47324.
Decided January 11, 1955]
Mr. ’William, B. Wolf for plaintiff. Messrs. Simon Fleish-man and William B. Wolf, Jr., were on the brief.
Mr. Thomas F. McGovern, with whom was Mr. Assistant Attorney General Warren E. Burger, for defendant.

Opinion:
Whitaker, Judge,
delivered the opinion of tbe court:
On October 17, 1942, defendant requisitioned the Louise, a wooden vessel of 298 net tons and 530.68 gross tons, the property of plaintiff. The vessel was lost in a storm off Cape Hatteras on December 16,1942.
The question presented is just compensation for her taking.
As is usual, the testimony of the expert witnesses on valuation varies widely, and we are again presented with the question of evaluating this testimony.
Plaintiff's witnesses were Harry Kane, Stephen J. Horkay, Constantine E. Mericas, and James Donald, not including plaintiff himself. The estimates of value even among these witnesses varies greatly. Mericas fixed the value at $200,000 plus an additional $50,000 if the ship was adapted to the carrying of explosives. Horkay fixed the value at $135,000; Kane fixed the value at between $200,000 and $250,000; and Donald fixed the value at $92,500. These values were on the assumption that the vessel was in class, or seaworthy.
None of plaintiff's witnesses had seen the vessel and they were not apprised of her actual condition before giving their estimate of her value. Donald, upon whose testimony the Commissioner chiefly relied in determining the value of $77,500, arrived at this figure by first estimating the ship's value in class at $92,500 and from this he deducted the amount of $15,000 as the amount he understood was necessary to be spent in order to put her in class. He, however, did not take into consideration the fact that after the Government requisitioned her it not only paid $15,000 to plaintiff for the work he was employed to do on the vessel, but it also paid the sum of $28,493.72 to the General Ship Repair Company for additional work they did on the vessel, the nature of which is not clearly apparent. If Donald had deducted not only the $15,000 but also the $23,493.72 from his value of the ship in class, $92,500, we have left a value of $54,006.28 at the time the ship was requisitioned by the defendant.
The testimony of these witnesses, who had not seen this vessel and who were not apprised of her actual condition, is not of great value. This ship had been laid up at a dock in Baltimore since 1928. She had been lying there without any protection for her engines or hull until plaintiff purchased her 14 years later for the sum of $20,000.
The testimony of defendant's witnesses, Frederick W. Schilpp, Francis R. Nichols, and Alfred W. Kabernagel, shows that she was in a deplorable condition, as might have been expected. Schilpp, who was a marine appraiser and surveyor employed by the Boston Insurance Company of Boston, Massachusetts, inspected this ship for certain Nova Scotia people who were interested in buying her. He said that he determined that she was a "dead ship," and he advised his clients to abandon any thought of purchasing her under any conditions. He says that "her timbers were rotten, her waterways were rotten, her housing sills had wasted away, the ceiling was so badly wasted that, in the past, somebody had put in cement over it to hide the soft place," and that "there wasn't any framing to support the ceiling and the planks that were on it." He said the vessel "could have been rebuilt, if you wanted to build a new vessel. You would have to go from the keel; her floors had to be timbered, and new beams and decking and sills, and everything else." He said it would have been necessary to "tear all of the planking off her, and put on new framing and possibly a new keel, new back-bone." "You would have had to start right at the keel, and I am definitely sure you would have found the keel doty. I would say about the engines, with no care, having been lying there for fifteen or sixteen years, the corrosion would have played havoc with her. That, again, would have been a gigantic job to put her on her feet." Again he said, when asked how much she was worth, "I hate to tell you. Anybody here may think I am crazy, but the only thing that you could recover for on her would have been for junk, her boilers and engines, and what you could get out of the auxiliaries and machinery; and if you could have gotten $5,000, you would have gotten too much."
After plaintiff purchased the vessel, he asked the Coast Guard to survey her and indicate the work necessary to be done in order to put her in class.
Alfred W. Kabernagel, the marine inspector in charge at Baltimore, Maryland, said he sent two inspectors down there to see what was necessary to be done to place the vessel in a seaworthy condition. These inspectors marked many planks, more than 100, with yellow crayon indicating that these planks should be removed, and indicated other work to be done. The plaintiff then employed some Greek sailors to do the work pointed out by the surveyors. He testified that he spent about $70,000 in doing so, but he was not able to substantiate by checks and vouchers a substantial part of this sum. After plaintiff had made a showing of complying with the inspectors' requirements, Kabernagel says they finally decided to issue the vessel a provisional certificate, which was done. He said, however, that it should be borne in mind "that the country was at war, and while I had no direct orders from my superiors, it was the accepted policy to put everything in service that had the possibility of floating, because our losses from the submarines were colossal."
The vessel was then loaded with dynamite and other explosives, and put to sea as a part of a convoy. She commenced smoking very badly, however, just about the time the voyage started, and the officer in command of the convoy would not let her proceed further, but ordered her to return to port.
After the vessel had returned to port, Kabernagel personally gave her a very thorough inspection. He found that in some instances plaintiff had painted over the yellow crayon marks which the inspectors had placed on planks indicating that they should be removed, and in other instances had nailed a one-inch plank over the spots. He says that of the planking in the cargo hatch which had been designated for renewal, only 50 percent had been renewed, and only 25 percent of the rotten planking in other parts of the ship. He said his examination indicated that the work which would have to be done to put the vessel in a seaworthy condition would have cost approximately $90,000. He lifted the certificate until this work was satisfactorily done.
Francis E. Nichols, who was a marine inspector in the office of the Captain of the Port at Norfolk, also inspected the vessel. He said the planking on the forecastle deck was rotted and broken so that "you could see the cargo right through the deck." He said he took an iron stanchion, with a blunt end, to "probe around the guard rail, to determine the soundness of the wood hull, and at one particular point the stanchion went through the hull into the interior of the vessel." He also said, "a similar condition was found on the opposite side." He said she was definitely not in a seaworthy condition.
Alfred W. Young was a marine surveyor for the Fireman's Fund Insurance Company, and at the time of the requisition of this vessel was the vice president of the Inter-American Navigation Company, which was the governmental agency to which this vessel was turned over after it had been requisitioned. He said he made a survey of the vessel and found a lot of rot in the hold. He says, "and the minute I saw this rot I knew something was wrong with this vessel because I had seen hundreds of them the same way practically, and I just threw up my hands and I said, 'Mitchell-.' " He further says, "I took a knife out and jabbed it in a couple of frames and the knife went out of sight, and I put a finger in it, and some of it was so rotten my finger would go right in it." He says these places "were a material part of the structure of the ship," affecting her strength.
Defendant's witness Young testified: "At the time we looked at her, with all the dry rot in her, she didn't have— you couldn't sell it, I don't think." "She would have to be overhauled, as she ultimately was, and even then she wasn't too good." "a boat like that — she didn't have any value. I saw lots of other ones that were down in this Reedsport, and they were totally valueless. You couldn't give them away for scrap, and this one was just about the same thing, except the owner had put it together and had put new timbers in it and new wood that I saw, and therefore she had some value "I estimated at that time for the company's record that she was worth $80,000.00." He explains this valuation in this way: " as I say, the boat was no good'; it never was any good, and no matter how much money we spent on that boat, even then she wasn't any good, because you can't put a boat together and bring it up to any value, and I said — all I say she was worth was what they spent in performing the repairs, which was $30,000.00."
Another of defendant's witnesses, a man by the name of Edward N. Carman, Jr., an appraiser for Lloyd's, placed a value of $50,000 on the vessel.
Both Young and Carman had made a thorough inspection of the vessel. Their estimates of value were made by these men as a part of their regular commercial duties and not for the purpose of this litigation.
On the other hand, plaintiff's witnesses had not seen the vessels and when they were asked to give their estimate of her value, they were not apprised of these conditions. We cannot, therefore, give a great deal of weight to their testimony.
Plaintiff insured her for $50,000. After she had been requisitioned and some $48,000 had been spent on her, she was insured by the Inter-American Navigation Company for $80,000; and when she became a total loss, the insurance company paid this amount.
The Maritime Commission valued her for just compensation purposes at the sum of $45,000.
We think the maximum amount to which plaintiff is entitled is the sum of $50,000, which is the highest valuation placed on the vessel by any of defendant's witnesses. As we stated above, this is about what the testimony of James Donald, plaintiff's witness, amounts to, when we take into consideration the fact that the Inter-American Navigation Company spent not only $15,000 on the boat, which Donald took into consideration, but also $23,493.72, which, he did not take into consideration. Taking this latter sum into consideration, plaintiff's witness Donald's valuation amounts to about $54,000.
As a part of just compensation, plaintiff is also entitled to interest at 4 percent per annum on $50,000 from the date of requisition on October 17,1942 until January 7, 1946, when defendant paid three-fourths of the award of $45,000 into the United States District Court in Baltimore, Maryland. From that date until December 29, 1948, the delay in payment seems to have been the fault of plaintiff, and no interest is allowed during this period. Plaintiff is, however, entitled to interest at the same rate from December 29, 1948, to the date of payment of the judgment, on $16,250, the difference between $50,000 and $33,750, the amount the defendant paid in the United States District Court in Baltimore, Maryland.
Judgment for $50,000, less the sum of $33,750, plus interest computed as above set out, will be entered in favor of plaintiff.
Laramore, Judge; MadbeN, Judge; LittletoN Judge; and JoNes Chief Judge, concur.
FINDINGS OF FACT
The court, having considered the evidence, the report of Commissioner Currell Vance, and the brief and argument of counsel, makes findings of fact as follows:
1. Plaintiff is a citizen of the United States, and was on October 17, 1942, the registered owner of a certain vessel known as the Louise.
2. The Louise was a wooden vessel 167 feet 3 inches long, 30-foot beam, 13 feet 8 inches draft, 298 net tons and 530.68 gross tons. She had one hatch. She had been built at Milford, Delaware, in 1922, but was not constructed to class. She had a 700 horsepower steam engine, a 3-furnace boiler, and fuel capacity of 650 barrels of off.
3. Plaintiff purchased the Louise on April 7, 1942, for the sum of $20,000 paid by check. The ship had been lying tied up at Renneburg's Dock in Baltimore Harbor for a number of years without proper protection of her engine and hull.
4. The Louise was a menhaden fishing trawler, and was not well adapted to the carriage of cargo. However, she had a cargo capacity of 20,500 cubic feet, and plaintiff anticipated securing lucrative cargoes during the war, between the United States and points in the Caribbean and Central America where the presence of submarines had largely destroyed competition.
5. Plaintiff drydocked the Louise in April 1942 and obtained an estimate from Bethlehem Shipyard of $150,000 to put the Louise in seaworthy condition. Thereafter, plaintiff determined to do the work himself by securing Greek seamen as laborers, and claims to have expended some $70,000 in rehabilitating the ship, but this is not substantiated in full.
Plaintiff produced a number of checks and invoices as substantiation of some of the expenditures, but checks or invoices for all items could not be produced. Plaintiff's counsel stated he would accept a $7,000 reduction. There is considerable question that the expenditure of all of the remaining $63,000 resulted in productive work, adding to the value of the ship.
Prior to the beginning of the work, at plaintiff's request, the Coast Guard inspected the vessel and drew up a list of requirements for making the ship seaworthy, so that she could obtain a new certificate of inspection in place of the certificate which had expired in 1928. In July plaintiff secured a temporary certificate of seaworthiness for his vessel, loaded a cargo of explosives and proceeded to Hampton Roads and there joined a convoy. While awaiting the convoy there was trouble with the crew, and plaintiff found it necessary to replace the captain.
6. The convoy left Norfolk on August 10, 1942. The Louise returned to Norfolk August 12, at the orders of the convoy commander because she was smoking excessively.
7. Upon the return of the Louise to Norfolk, the marine inspector at the port conducted an inspection of the vessel. He found that she was taking water and was not in a sea worthy condition; that her hull was in a state of progressive deterioration. Her condition was so bad that when the inspector hit each side of the hull with a stanchion, with a blunt end, it went right through the hull into the interior of the ship. In the hold one of the inspectors thrust his knife into one of the timbers and it went out of sight. At another place he was able to push his finger into one of the beams. He thereupon revoked her certificate. She returned to Baltimore under a limited certificate in order there to discharge her cargo. The crew had declined to sail the ship back to Baltimore until promised a $100-bonus each for this service.
8. An inspection at Baltimore disclosed many additional items of work to be done on the Louise in order to make her seaworthy, the cost of which the inspector estimated would be about $90,000.
9. Plaintiff was unable to pay the crew their wages upon the vessel's arrival in Baltimore, and they filed a libel against the vessel. Another libel was filed against the ship in the United States District Court for the District of Maryland, in order to assert other maritime liens aggregating some $90,000.
While in the custody of the United States marshal, the Louise was requisitioned by the United States on October 17, 1942 and turned over to the Inter-American Navigation Company, an agency of the United States, to be used in supplying foodstuffs to people in the Caribbean who were suffering because of the lack of shipping.
10. Inter-American Navigation Company had the ship inspected by surveyors to determine the work necessary to obtaining a certificate, and employed the plaintiff at a cost of $15,000 to perform some of the work. Thereafter, Inter-American Company paid the General Ship Repair Company an additional $23,493.72 for work done on the vessel. The vessel was changed to Panamanian registry, and sailed with a cargo of rubber tires in December 1942. On December 16, 1942, she was caught in a storm off Cape Hatteras, broke up, and became a total loss, together with a number of the crew.
11. Plaintiff had placed port insurance of $50,000 on the Louise while she was lying at the dock in Baltimore Harbor undergoing repairs prior to her first voyage. The Inter-American Navigation Company obtained an open binder on the Louise after her requisition, and collected $80,000 for her loss.
12. The testimony of the witnesses for the respective parties as to just compensation for the Louise on October 17, 1942, varies widely. The valuation of the vessel in a seaworthy condition by plaintiff's witnesses varies from $250,000 to $92,500. None of them, however, had seen the vessel, and they had not been fully apprised of her condition before being asked to put a valuation on her. Plaintiff's witness, James Donald, deducted from his figure of $92,500, his valuation of her in a seaworthy condition, the sum of $15,000 as being the amount necessary to be spent in order to put her in class, but he did not take into consideration the $28,493.72 paid to the General Ship Bepair Company for work on the vessel.
The valuation of defendant's witnesses varies from zero to $50,000. Each of them had inspected the vessel, and were qualified surveyors and appraisers.
The Maritime Commission placed a value of $45,000 on the vessel.
It is found that $50,000 is just compensation for her taking.
13. Subsequent to the requisition, the Government valued the Louise at $45,000, and pursuant to the order of the United States District Court in Baltimore, of January 7, 1946, paid into said Court three-fourths of said amount, or $33,750. The parties to said suit in Baltimore, on January 22,19.52, filed their motion to intervene in this case, exhibiting therewith a copy of the order of the United States District Court for the District of Maryland of January 7, 1946. Said motion was allowed on April 30, 1952. The order of the District Court provides, among other things, as follows:
should the United States of America be proceeded against on or before the 1st day of September 1946, as aforesaid and a recovery be obtained against the United States of America, the United States of America, United States Maritime Commission, War Shipping Administration, War Shipping Administrator shall pay said recovery in whatever amount in to the registry of this Court subject to this Court's further orders in the matter of the further payment and satisfaction of said final decree of February 1, 1945, or for other distribution.
14. By order entered February 12,1946, the District Court in Baltimore gave plaintiff until September 1, 1946, to commence suit in the Court of Claims for just compensation. This suit was commenced on August 30, 1946. The first hearing was set for March 12 and 13,1948. Over the objection of defendant, this hearing was put off at plaintiff's request, who desired to seek a compromise with the Baltimore creditors who have maritime liens against the vessel in excess of $90,000 principal, plus interest. The case was again set for September 14,1948, and plaintiff on September 13,1948, moved to dismiss without prejudice so as to permit him to buy up the Baltimore liens. On September 17, 1948, the defendant objected and requested the dismissal with prejudice. Oral argument on these motions was heard on November 1,1948, and this court ordered plaintiff to proceed within thirty days, and reset the dismissal date to January 3, 1949. Plaintiff finally commenced proof on December 29, 1948.
CONCLUSION OE LAW
Upon the foregoing findings of fact, which are made a part of the judgment herein, the court concludes that as a matter of law the plaintiff is entitled to recover, and it is adjudged and ordered that he'recover of and from the United States the sum of fifty thousand dollars ($50,000), less the sum of thirty-three thousand seven hundred fifty dollars ($33,750) which defendant paid into the United States District Court in Baltimore, Maryland, together with interest at 4 percent per annum on $50,000 from the date of requisition on October 17,1942, until January 7,1946; and interest at the same rate on $16,250 from December 29, 1948, to the date of payment of the judgment, not as interest but as a part of just compensation.