Case Name: VENORE TRANSPORTATION COMPANY, a corporation of the Republic of Liberia, Appellant, v. M/V STRUMA, her engines, her boilers, tackle, etc., and Bulk Transport Corporation, Appellee
Court: United States Court of Appeals for the Fourth Circuit
Jurisdiction: United States
Decision Date: 1978-10-05
Citations: 583 F.2d 708
Docket Number: No. 77-1935
Parties: VENORE TRANSPORTATION COMPANY, a corporation of the Republic of Liberia, Appellant, v. M/V STRUMA, her engines, her boilers, tackle, etc., and Bulk Transport Corporation, Appellee.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 583
Pages: 708–712

Head Matter:
VENORE TRANSPORTATION COMPANY, a corporation of the Republic of Liberia, Appellant, v. M/V STRUMA, her engines, her boilers, tackle, etc., and Bulk Transport Corporation, Appellee.
No. 77-1935.
United States Court of Appeals, Fourth Circuit.
Argued Sept. 13, 1978.
Decided Oct. 5, 1978.
Winter, Circuit Judge, filed a dissenting opinion.
H. M. McCormack (Donald A. Krach, Niles, Barton & Wilmer, Baltimore, Md., on brief), for appellant.
David R. Owen, Baltimore, Md. (Semmes, Bowen & Semmes, Baltimore, Md., Arthur J. Blank, Jr., Hill, Betts & Nash, New York City, on brief), for appellee.
Before HAYNSWORTH, Chief Judge, and WINTER and BUTZNER, Circuit Judges.

Opinion:
HAYNSWORTH, Chief Judge.
Venore Transportation Company, time charterer of the 55,000 ton S. S. OSWEGO LIBERTY, sought damages from the 60,000 ton M/V STRUMA and her owner, Bulk Transport Corporation, for loss of use of the OSWEGO LIBERTY after the two vessels had been in a collision. The district court entered summary judgment for the defendants, reasoning that the claim was foreclosed by the Supreme Court's decision in Robins Dry Dock and Repair Co. v. Flint, 275 U.S. 303, 48 S.Ct. 134, 72 L.Ed.2d 296. Because there was no suspension in the payment of charter hire while the OSWEGO LIBERTY was being repaired, we conclude that Robins is inapplicable and that recovery of charter hire should be allowed.
In January 1972 the Oswego Shipping Corporation let the OSWEGO LIBERTY to Venore Transportation Company for a term of thirteen and a half years. The time charter party fixed the charter hire at monthly rates of more than $90,000 subject to escalation for increases, and to declination for decreases, in the cost of manning the vessel, of insurance, of repairs, of stores, of subsistence costs and of tonnage taxes. The instrument gave Venore the right to complain to the owner of performances of the master, officers and the crew, and for their replacement if the owner found the complaints justified, and there was a provision that the matter would be under the orders and directions of Venore in performing the charter, but it specifically disclaimed any demise of the vessel to the charterer.
On November 27, 1974 the OSWEGO LIBERTY and the STRUMA were in a collision, and the OSWEGO LIBERTY was withdrawn from service and laid up for repairs until January 17, 1975. During the time she was under repair, escalated charter hire of $225,380.64 accrued, which Ve-nore has paid to the owner.
For the purpose of these proceedings, the STRUMA has conceded her fault, and the owner's claim against her has been settled. The owner's claim, however, consisted entirely of the expenses to which it was put to repair the physical damage sustained by the OSWEGO LIBERTY. It claimed nothing for its loss of use of the vessel. Indeed, it could not have made such a claim, for it had received the full charter hire for the period during which the vessel was under repair.
Robins Dry Dock was not a case arising out of a collision. The charter party there required that the vessel be dry docked periodically. While in dry dock, her propeller was negligently damaged and had to be replaced. That enlarged the time during which the vessel was out of service, and it was for the loss of use of the vessel during that period that the time charterer claimed. The Supreme Court reasoned that the dry dock's duty arose out of its contract with the owner, and that it had no such contractual duty to the time charterer. Since there had been no demise of the vessel, it was technically in the possession of the owner, and the time charterer had no property interest in it. Thus there was applica ble the principle that one who unintentionally but negligently damages the property of another is not liable to others who may suffer economic loss because the owner is unable to perform contractual commitments to those others.
It is essentially a principle of disallowance of damages because of remoteness, and because of the concern that the number and the amount of potential claims in a given instance may be staggering. The time charterer in Robins Dry Dock had not paid charter hire for the period during which the vessel was out of service. The claim was essentially one for loss of anticipated profits.
The principle has found expression in a variety of cases since Robins Dry Dock.
In this court, in Rederi A/B Soya v. Evergreen Marine Corporation, 1972 A.M.C. 538 (4th Cir. 1972), affirming 1972 A.M.C. 1555 (E.D.Va.1971), the damaged vessel was off-hire for six weeks. Both the owner and the time charterer claimed damages for loss of her use. The owner was held entitled to recover generally what it would have received in charter hire had the vessel not been out of service, but the time charterer was held to be entitled to recover nothing. What the time charterer claimed was a loss of anticipated profits, the amount it could have received in charter hire in excess of what it would have had to pay in charter hire if the vessel had been in service.
In Henderson v. Arundel Corporation, 384 F.2d 998 (4th Cir. 1967), affirming 262 F.Supp. 152 (D.Md.1966), employees of a dredge sought to recover lost wages and subsistence from a ship which had collided with the dredge, putting it out of service for six weeks. The principle of Robins Dry Dock was held to foreclose the claim.
In General Foods Corporation v. United States, 448 F.Supp. 111 (D.Md.1978), it appeared that a ship had collided with and damaged a railroad bridge over the Chesapeake and Delaware Canal. The collision with the bridge required General Foods to ship by truck goods moving to and from one of its plants, and it sought to recover the additional costs imposed upon it. The claim, of course, was denied.
Similar claims have been denied in other circuits. See Dick Meyers Towing Service, Inc. v. United States, 577 F.2d 1023 (5th Cir. 1978); Kaiser Aluminum & Chemical Corporation v. Marshland Dreding Co., 455 F.2d 957 (5th Cir. 1972); Federal Commerce & Navigation Co. v. M/V Marathonian, 392 F.Supp. 908 (S.D.N.Y.), aff'd 528 F.2d 907 (2d Cir. 1975).
In Chargeurs Reunis Compagnie Fran-caise De Navigation A Vapeur and Others v. English & American Shipping Company, 9 Lloyds List L.R. 464 (1921), the English Court of Appeal held that the French government, as time charterer of a vessel, could not recover charter hire even though it had actually paid the charter hire for the period during which the vessel was out of service. It seems to have been enough for the English justices that the French government was neither the owner of the vessel nor in possession of her. We have found no American case reaching a similar conclusion, and we think that on principle we should not follow the early lead of the English Court of Appeal.
The principle of Robins Dry Dock is perfectly defensible, if pragmatic considerations require the foreclosure of remote damage claims. The tort feasor, having paid the owner for its loss of use of the vessel, should not be required to pay additionally for the time charterer's loss of anticipated profits. A pragmatic approach would require that the offending vessel pay for loss of use of the damaged vessel once, but no more. Unless the offending vessel is required to pay for the loss of use of the OSWEGO LIBERTY in this case, however, it would never be required to pay at all. The owner lost no charter hire. It could not claim a loss it had not suffered, and it did not do so. But payment for loss of use of the damaged vessel is a conventional item of recovery, and the fact that the charter party has transferred the risk of loss of use from the owner to the time charterer should not extinguish the right to a recovery of a traditional item of damages. There is nothing remote about these damages; the only objection is that they were suffered by the time charterer rather than by the owner.
It is only in a highly technical sense that the time charterer may be said not to be in possession of the vessel. It is a consequence of the distinction between a demise of a vessel under a bare boat charter and a time charter under which the owner furnishes the master, officers and crew, together with certain stores, supplies, insurance and taxes. But the time chartered vessel is under the direction of the charterer. The vessel sails when and where the charterer directs, carries what cargo the charterer provides, and the master is specifically required to comply with the orders of the charterer in such things as the selection and appointment of agents. The charterer is authorized to sub-charter the vessel, but as long as it is operating the vessel for its own account and profit, it is only in a highly technical sense that it may be said that the charterer has no possessory interest in the vessel. Its interest in the vessel is sufficient to give it standing to claim damages, measured by charter hire paid when the owner has no claim for loss of use because its receipts of charter hire have been uninterrupted.
We do not intend, however, to suggest that the time charterer is entitled to lost profits. That kind of claim is foreclosed by Robins Dry Dock. The traditional item of recoverable damage is the owner's claim for loss of use. When the vessel is under a time charter, the starting point for the measurement of those damages is lost charter hire. Our only holding is that when there has been no suspension in the payment of charter hire during the period when the vessel is out of service, the time charterer who has paid the charter hire is entitled to recover what the owner would have been entitled to recover had those payments been suspended.
In Robins Dry Dock, Mr. Justice Holmes wrote broadly, as he customarily did, but there is no inconsistency in our holding and that of the Supreme Court in Robins Dry Dock. Nor do we enlarge in any way the types of damages which have been traditionally recoverable, nor the offending vessel's obligation of recompense. Under our holding, the STRUMA and her owner will pay no more than they would have if the charter had provided for a suspension of charter hire while the vessel was laid up.
Thus we conclude that either the owner or the time charterer, but not both, may claim damages for loss of use depending upon the charter's placement of the risk of loss of use.
REVERSED AND REMANDED.
. Agwilines, Inc. v. Eagle Shipping Co., 153 F.2d 869 (2d Cir. 1946).
. See Paulsen, Provable Damages in Collision Cases, 51 Tul.L.Rev. 1047, 1062-63 (1977); James, Limitations on Liability for Economic Loss Caused by Negligence: A Pragmatic Appraisal, 25 Vand.L.Rev. 43 (1972); and see Note, Negligent Interference with Contract: Knowledge as a Standard for Recovery, 63 Va. L.Rev. 813, 818-829 (1977).