Opinion ID: 435010
Heading Depth: 2
Heading Rank: 5

Heading: Analysis of Law

Text: 24 The seminal--and perhaps only--judicial decision on the scope of a hull policy in a damaged cargo situation is Field v. Burr, [1899] 1 Q.B. 579. In that case an appeal panel of the Queen's Bench affirmed a trial court's conclusion that a hull underwriter was not liable for expenses incurred in removing cottonseed cargo which, having mixed with seawater after an accident where the vessel was holed, had become a putrid mass. The appellate court held for the underwriters, finding only damage to the shipowner in his business as carrier, not damage to the hull. Id. at 579. The Field court also discussed the hypothetical case of solidified cargo such as cement. Even as to this, the appellate court stated that only the last layer adhering to the fabric of the ship properly would be recoverable in particular average. Removal of the bulk of the cement would remain the shipowner's responsibility. Shipowners, underwriters and adjusters are all familiar with the Field case. Marine insurance commentators discuss it at length and view its holding as stating the basic contemporary practice in the field. See 2 Arnould on Marine Insurance Sec. 1125 (16th ed. 1981); L. Buglass, Marine Insurance & General Average in the United States, 156 (2d ed. 1981). 25 Leslie Buglass, a leading American commentator, describes the American adjusters' practice as follows: 26 In practice if, for example, the damaged cargo has solidified and has adhered to the structure of the vessel so that in effect the vessel has sustained damage, the cost of removing that part which has adhered to the vessel is recoverable from hull underwriters as part of the reasonable cost of repairs. This is necessarily an arbitrary division, but usually a percentage is allowed, depending on the width of the solidified mass. Similarly, if the cargo debris has entered places where cargo would not normally be (such as the engine room, pump room or double-bottom tanks) the cost of cleaning and removing such cargo is considered damage and therefore part of the reasonable cost of repairs. In all other circumstances, the cost of removing cargo debris from a vessel (whether or not such removal is necessary to effect repairs) is not considered to be part of the cost of repairs but rather a consequential loss or enhanced voyage expense. Such extra expenses may be recoverable from freight underwriters or Protection and Indemnity underwriters, depending on the circumstances in each individual case. 27 Apparently no court has confronted the problem of removal of solidified or adhering cargo since Field v. Burr. In 1968 the question whether solidified cargo can be damage to the vessel arose in an arbitration in San Francisco before Martin P. Detels, former chairman of the Association of Average Adjusters, as arbitrator. Barge J. Whitney, [1968] A.M.C. 995. In that case the owners of a barge contracted to carry asphalt from California to Alaska. The barge was equipped with special heating coils through which hot oil or steam could be forced to liquify the cargo at the port of discharge. During the process of loading, the heating coils fractured because of condensate which had remained in them; as the hot asphalt flowed into the coils it solidified and rendered the coil system inoperative. Not surprisingly, removal of the solidified asphalt was difficult and expensive, and the shipowner claimed that expense from the hull underwriter in particular average. The arbitrator resolved the difficult question (id. at 1003) in favor of the underwriters, and found Field v. Burr nearly indistinguishable. He ruled therefore that the underwriters were responsible only for damage done to the vessel during loading, for repairing the deck which had to be penetrated for the installation of new heating coils during discharge and for the last layer of asphalt adhering to the tanks after removal of the bulk of the cargo. 28 We conclude that cargo debris in a cargo tank at the port of destination does not constitute damage to the vessel within the parties' intended meaning of the Inchmaree Clause, and that the lower court's finding on this issue was clearly erroneous. Every merchant vessel requires repair work at some time or other and cargo often must be discharged to do that work. Once a voyage is completed, hull underwriters are not concerned with the cost of cargo discharge, no matter what its form. This view on the coverage of blue water hull policies has been prevalent in marine insurance law for 85 years. We think it must be well understood by now. The hardship to a shipowner arising from the extra expense for cargo removal may be protected against by insurance with Protection and Indemnity underwriters, but the parties to this hull and machinery policy obviously did not contemplate such added expense.