# Petition for Writ of Certiorari — Poysky v. Pacific Marine Insurance > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1160%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1988 - **Citation:** 484 U.S. 1066 ## Text 87 1107 No. IN THE Supreme Court of the United States OCTOBER TERM, 1987 GEORGE POyYSKY, doing business as ALASKA TOWING Co., and SAMOAN MARITIME, LTD., a corporation, Petitioners, Vv. PACIFIC MARINE INSURANCE CO., a corporation, and DILLINGHAM TUG & BARGE CORPORATION, In personam, and TUG MIKIALA II, in rem, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT JOHN F. MEADOWS Counsel of Record Meadows, Smith & Brown 425 California Street Suite 1700 San Francisco, California 94104 (415) 981-5277 Counsel for Petitioners December 30, 1987 CHAS. P. YOUNG CO. e 425 CALIFORNIA ST.¢ S.F., CA 94104 @ (415) 951-1300 QUESTIONS PRESENTED A. As to respondent Pacific Marine Insurance Company: 1. Whether there is a judicially established Federal admi- ralty rule creating an implied absolute warranty of seawor- thiness in a hull insurance policy, regardless as to whether it is voyage or time, which, on breach, will void the policy and deny the insured owner coverage for a constructive total loss, or is the decisional law of the State most involved in the insurance transaction, which declares such forfeitures to be against public interest, to be applied instead? 2. Whether, if there is such a judicially created Federal admiralty rule, the standard of seaworthiness imposed there- by is a relative one so that, when the insured vessel is a harbor lighter, it need only be able to withstand all ordinary perils in a harbor, 1.e., be “portworthy,” and therefore the perils of the sea against which it is insured will be such perils as would be extraordinary to a vessel of its type and other characteristics known to the insurer. 3. Whether the express waiver of any breach of warranty in the “Held Covered” clause of the hull insurance-policy is inapplicable where the breach is of an implied warranty of seaworthiness causing the constructive total loss of the vessel but applicable if the damage is less than major. 4. Whether, even if there is an applicable implied war- ranty of seaworthiness and its breach is not waived by the ‘““Held Covered” clause, does the Jnchmaree clause of a hull policy, expressly covering losses directly caused by a latent defect, waive the breach of the implied warranty if it also constitutes a latent defect? 5. Whether the insurer under a huil insurance policy may rescind the policy on receiving a constructive total loss claim without returning or at least tendering the premium paid by the insured for the policy. 6. Whether a claim under a marine insurance policy cover- ing the hull of an unmanned barge may be denied on the ground that the vessel’s damage was “ordinary wear and tear” on a deteriorated hull and therefore not covered as a a2 peril of the seas when the damage the vessel incurred during an ocean tow was enhanced by the elements. B. As to respondent Dillingham Tug & Barge Corporation: 1. Whether, under the implied warranty of workmanlike service owed by a professional tower to the owner of an unmanned barge, the barge’s owner has the burden of prov- ing negligent performance by the tower before it can recover for damage to the barge or its loss occurring during the tow. 2. Whether, under warranty law as applied to a profession- al tower, knowledge of the risks that an expert in the field would have is imputed to the warrantor (tower) and its only defense is that the warrantee (barge owner) hindered its performance of the tow. 3. Whether as a matter of law it is a breach of the tower’s warranty of workmanlike service not to head to a nearby port of refuge when it becomes or should be obvious to those on the tug that the unmanned barge is in danger, even if due to a latent, pre-existing unseaworthy condition which is now manifesting itself. 5 4. Whether a representation contained in the contract for the towing of a vessel (an ex-Navy WW-II harbor lighter) that the tow “‘shall be seaworthy and in all respects ready for and capable of making the specified voyage” can be inter- preted to require the tow’s absolute seaworthiness in any weather, regardless of the type of vessel involved, the due diligence of the tow’s owner to prepare it for sea, his lack of knowledge of any unseaworthy condition, the lack of re- liance by the tower as evidenced by its having inspected the vessel to verify compliance with the tow survey’s recom- mendations and subsequent events occurring at sea, such as an emergency requiring towing by other than the regular bridle. ill LIST OF PARTIES AND RULE 28.1 LIST z The following listed parties have an interest in the out- come of this case: Petitioners, insureds and additional insureds of YCV-9: George Poysky, dba Alaska Towing Co. Samoan Maritime Ltd. Max Rouse & Sons, Inc. Max Rouse & Sons, Northwest (Affiliate of Max Rouse & Sons, Inc.) Morton Marine, Inc. Dillingham Tug & Barge Corporation Those not having appeared filed ratifications pursuant to Rule 17(a), FRCivP. Respondents: Pacific Marine Insurance Company Dillingham Tug & Barge Corporation (a subsidiary of Dillingham Corporation) ary pee eer ae bene Minne aE SATER cree SPS ey ee eos PR TE OT ae et PR ar s v TABLE OF CONTENTS TITLE PAGE Fare ee, RE Bi ntkstincnnctanccesentsinscssesconananbuss 1 LIST OF PARTIES and RULE 28.1 LIST .......000000.... ill eI laiinctiN sass dconcihiotosdactandnniannidvonsdishsbibase l FAITE ccisncicnistndcinnianusatshesnsignibasenpinbinvesnpasnsins 2 STATUTORY PROVISIONS DISCUSSED................. 2 SEAR eee SO Oe GPR ish saiiininrcnsitcanecicnnecnes 2 REASONS FOR GRANTING THE PETITION........ 6 (a) State Law, Federal Law and The Policy Itself Precluded Forfeiture of The Benefits of The Policy Based on an Implied Absolute Warranty of Seaworthiness ..................ccccccceeee 9 (b) The Law Applying a Warranty of Workmanlike Service to the Professional Tower Does Not Require Proof of the Tower’s Negligence and, Where Such a Tower Has Complete Control of the Towed Vessel, as Where It is Unmanned, It Should be Strictly Liable Where Damage or Loss is Incurred by the Tow that was Avoidable ....... 19 (c) The District Court Interpreted the Representation of the Tow’s Owner that the Tow Shall Be Seaworthy and Ready For Sea as Equivalent to the Absolute Warranty of Seaworthiness, a Violation of the Rule of SPI ek iecincctset laaicao seccinadihiepbiiacchs scoeatiadnilabiianie dications ee CITI abssiiah ca na nodsSoeerncaebntte ccapigniasety secestiheccouiecadeh 25 PE srstcinssavnnsidilicnighsinncatisinshivabacneuatetieacbcincadaiibe la vi TABLE OF AUTHORITIES Cases PAGE Ahmed v. Amer. SS Owners Mut. P&I Assoc., 444 F.Supp. 569 [ND Calif. 1978] affd 640 F.2d 993 OD OO. PPE Sencsaciecssstopedninbeidaeasabintaiabinatbiiaitiasinaieies 14, 16 Avemco Ins. Co. v. Chung, 388 F.Supp. 142 GP FER OF Pe eccvccinconniavesiprataetletrdtactacinventecessscseseseses 13 Bd. of Com’rs v. FARNSUM, 574 F.2d 289 COE Ce, Re eitacernikce cent inletiamssbiatidibhditeesiasniecensen 20 Bisso v. Inland Waterways, 349 U.S. 85, 75 S.Ct. er Cte wennaicinsatacseeeaieceainiateasecilnidiiinns 8, 22, 24-25 Boston Metals v. SS WINDING GULF, 349 USS. Ee 0 6 ae Pivssneiinnsceichaneadialid ideal ialeeiRNiiaditinisseetnencese 24 CalMar SS Co. v. Scott, 345 U.S. 427, 1953 AMC Fas CEO ai icbcondeabasenda nee ainanntelntid ercsticmsedesicereeiees 13 Campbel! v. Hartford, 533 F.2d 496, 497-8 [9th Cir. PF FUME snicaussanahsinsseeinends cement redid tiatndbtasinlsieansnencens 16 Chemical Transporter, Inc. v. M. Turecamo, Inc., 290 we Me et A | een 20 Cia. de Navegacion v. Fireman’s Fund Inc. Co. (The WASH GRAY), 277 U.S. 66, 80 (1928) ......0..... 8, 10, 11 Crumady v. The J. H. FISSER, 358 U.S. 423, 428-9, FO BAN, Ge I eivickalacicecisthatbatentaitkcercesienes: 23 Dillingham Tug & Barge Corp. v. Collier Carbon & Chemical Corp., 707 F.2d 1086, 1091 (9th Cir. 1983). cert.den. 465 U.S. 1025, 104 S.Ct. 1280 (NA cihisliincsitciisantiabialte iain ae, 24, 24 Dixilyn Drill. Corp. v. Crescent Towing & Salvage, 372 U.S. 697, 698, 83 S.Ct. 967, 968 (1963)............ 24 Dunbar, Admx. v. H. Dubois Sons, 275 F.2d 304, SOG ANE USGS Ci Ge, Te cvecsccscescscscicccseccescccess: 19 East River SS Corp. v. Transamerica Delaval, USS. ERD BGG. SEI 0 BIE wntecsnecasccesecescconees 22 Eggers v. Nat’l Union Fire Ins. Co. (Texas No. 1) bee POE. ke | ERRATA 17 Fairmont Shipping Corp. v. Chevron Int'l Oil Co., 511 F.2d 1252 (2d Cir. 1975), cert. den. 423 U.S. 838 PF Is csicssivasathasianmichiaseccunnilespuiadianinaacaiginiaminnsiniieaes 19, 22, 23 Vii Cases PAGE Fluor Western v. G&H Offshore Towing, 447 F.2d 35 SO a ctueepeinanndanse 24 Frangos v. Sun Ins. Co., L.L.R., Vol. 49, p. 354......... 19 Gaymon v. Prud. Lines, 473 F.Supp. 161, 164 Se REGIE Sel ALCS ea 19 Greenock SS Co. v. Maritime Ins. Co., 1 K.B. 367 SR RE SRG SAC SS A ee 15 Gwynedd Corp. v. Chilula, U.S.A. 1979 AMC 531, ee TE Ue ID ‘eitattescettticencicnninccccencens 19 Healy Tibbitts Constr. Co. v. Foremost Ins. Co., 482 Fa ey. GP BME? CA. BTS sesescnsccsscascccccececes 14, 16 Henjes v. Aetna, 132 F.2d 715, 719 (2d Cir. 1943)..... 12 Hercules Inc. v. Stevens Shipping Co., 698 F.2d 726, ee Be A | ne Italia Soc. v. Oregon Steve. Co. 376 U.S. 315, 318, Be ee a eciciecchneieeintecinbiltpnnaiinabuasntisntin’ 22, 23 James McWilliams Blue Line, Inc. v. Esso Standard Oil Co., 245 F.2d 84, 1957 AMC 1213 (2d Cir. (5, ARES: SECTS SE REESE nae ners ope Tn re nee lt 19 Kalmbach v. Ins. Co. of Penn, 529 F.2d 552, 555-557 SUNT RII: “UITIIIIITIN is cicthetndoncelinteeenianshdiahidasbdisaiesdahpidiinicindeanisasibiinmiasensn 16 King Fisher Marine v. NP SUNBONNET, 724 F.2d 1181 (Sth Cir. Ei FE CS Si SE 22 Klein v. Globe & Rutgers Fire Ins. (The TORNADO), 2 F.2d 137 (3d Cir. 1924) wu... 11 Kossick v. United Fruit, 365 U.S. 731 733, 81 S.Ct. a saseunebiséuanctes 8 Luria Bros. v. Alliance Assur., 780 F.2d 1082, 1986 AMC 1539, 1549-1551 (2d Cir. 1986)...............00000.. 16 McDonough Marine Serv. v. M/V ROYAL STREET, SES FSU. FZG, FSS CED LB. TSTS) nnceccccsecccsccccccceee 21 Mellon v. Fed. Ins Co., 14 F.2d 997, 1002 (SDNY _____ RSME O05 baer OES a ar ees AI a nO 17 Moran Towing v. M.A. Garmino Constr. Co., 363 a EI, WII inc onan denisabcennntemsertennnsemnies 19 Vill Cases PAGE Morrison Grain Co. v. Utica Mut. Ins. Co., 632 F.2d vy me: £ F §. f» A Ret vn REGED eens 25 Offshore Co. v. G&H Offshore Towing, 262 F.Supp. 282, 287 (SD Tex. 1966) aff'd. 403 F.2d 715 (Sth i RR, i EE RS a ee 20 Pillsbury v. Delta B&R, 1979 AMC 1221, 1233 (ED By a atieadecdinnsadainisstadsavescacsaindsisnnsksbesinieoseniabetiane 21 PPG Ind. v. Ashland Oil Co., 592 F.2d 138 (3d Cir. 5 RRR REAR a 8. 26a I aac a 24 Queen Ins. Co. v. Globe & Rutgers Fire Ins. Co., 262 U.S. 487, 1924 AMC 107 (1924)..............cccceeeees 13 Redna Marine v. Poland, 46 FRD 81, 87 (SDNY BERRI 8 et ba A tenek Cea ip en Te 19 Russell Mining Co. v. Northwestern Fire & Marine Ins. Co., 207 F.Supp. 162, 166 (ED Tenn. 1967)..... 1] Ryan Stevedore v. Pan-Atlantic SS Co., 350 U.S. ee iaiiciticacattsnsteiesantabianeensensonns 8, 20 Seas Shipping Co. v. Sieraki, 328 U.S. 85, 66 S.Ct. i cueaaaans 22 Sorenson & Neilson v. Boston Ins. Co., 10 F.2d 563, ee Ne I cst teinscestnecenandiiandikecensectiiccinepstionse 12 South v. Moran Towing, 360 F.2d 1002 [2d Cir. Pe aiacactiiets aceite sila taliseneancepediiadiniibieeieitadinnaleiskinainpiias 20 Spooner v. Conn. Fire Ins. Co., 314 F.2d 753. 756 ee lcci ea ita lhl enietlaanetencainehiansianianenn 11 Standard Oil of N. J. v. U.S., 340 U.S. 54, 1950 Pe TERRI EC ik es Ee ae eo 13 Sternberg Dredging v. Moran Towing, 196 F.2d S.-C 20 Stevens v. THE WHITE CITY, 285 U.S. 195, 202 Lg 6 2 RRR AEE SEND EROS Ss SEIN 1 I eR 22 Tebbs v. Baker-Whitely Tow. Co., 407 F.2d 1055 - CI Mae een actienrtelat a lceieaistsensctenciceheneinensscnnsnieiattininnee 20 The ANTHONY D. NICHOLS, 49 F.2d 927 (SDNY NON 16 ix Cases PAGE The NATALIE, 1959 AMC 2379 (NY ARB).................... 12 The OSCEOLA, 189 U.S. 158, 23 S.Ct. 483 (1903)..... 22 The ROCONA v. Guy F. Atkinson Co., 173 F.2d ee ee a iicnettntininctgsaniscsncespacrnepneness 21 The Soerstad, 257 F. 130, 131 (SDNY 1919).............. 19 The SPOT PACK, 242 F.2d 385, 392 (Sth Cir. PI ee teienttachiciiiditadatiiched sskcndicdttatindedantidiistnctiambeshenanbntsntndes 17 The Steamer WEBB, 81 U.S. (14 Wall.) 406, 414 CE i cedicieletiineld tusetiiiacdaciabascdbitiedaianliiigbiiinasanesccresses 20 The XANTHO, 12 App. Cas. 503, 509(1887) ............ 11 Tropical Marine Prod. v. Birmingham Fire Ins. Co., 247 F.2d 116, 123 (Sth Cir. 1957) cert. den. pA, EAT aa eee ee 16, 17 Twenty Grand Offshore Inc. v. W. India Carriers, Be Te Ce a inchs nchctdicekscniatannceniens 24 U.S. v. Tug MANZANILLO, 310 F.2d 220 (9th Cir. RIND RET 52 iia ed yen ae ee Oe ee ee ee OT 20 USF&G v. Leong Dung Dye, 52 F.2d 567, 570-1 DO ay I idieictadidciadlacickcdsshiendnicdanscbadsnsberpdstccdanscese 16 Vella v. Ford Motor Co., 421 U.S. 1, 3, 95a S.Ct. SF ee Ce Ce Fe Be CTS cicestncnictcccccsasscccens 6 Wilburn Boat Co. v. Fireman’s Fund, 348 U.S. 310, 320- DF a By Oe i itiattncttncccessnnss 6, 8, 10, 13-15 Yacht DUET, 1967 AMC 1144 (D.Oreg. 1967)........... 19 Statutes a csssesitinnbiapapnonscess G SN I, a ceiansianisinisonnnnannnses eh Marine Insurance Act of 1906 (MIA), 6 I oc cuenicbonannans 2, 7, 10, 13 I Oe oi ssntenesinnnacnenniodetinnssnbnsinie 8 pT EE Sa eke 2 xX Texts PAGE 1 ARNOULD’S LAW OF MARINE INSURANCE AND AVERAGE (16th ed.) ...........ccceeeeeeeeeeeees 10, 17, 18 S AGUOE. TOs GE FI Bi. Bie BS wacscenccecccccncinceseccens 21 9 COUCH ON INSURANCE 24d, §37B:357, p. 271.... 10 16 C. Appleman, INSURANCE LAW OF PRACTICE, §9260 at p. 393 (1981)... eee 16 Buglass,s MARINE INSURANCE AND GENERAL AVERAGE IN THE UNITED STATES (2d ed.) pp. 36-7 sical iinedandiatinindaiieaadii dd matalsableKoiiedininens 12, 17 Gilmore & Black, THE LAW OF ADMIRALTY Ce 8 i, ee eaiktacikehiatetectatnneiectintiiciicinins 11, 14, 25 Keeton, “Insurance Rights at Variance with Policy Provisions’, Vol. 83 Harv. L.R. [March 1970] at i Sip iiscatcnicsenccenesttasibeaenisaaighadsiasaniiiens peteedancess 16 Parks, THE LAW OF TUG, TOW AND PILOTAGE (2B OER} Dir Seal peach ain ccertaciiictssorceinsneses 25 Parks, THE LAW AND PRACTICE OF MARINE INSURANCE AND AVERAGE (1987) at n. 846, p. RAEI ss cvnsnioncinionsbsvnielialiniidinipliiananibtibiaaseinbiieeiniansatasnanonrias 6, 14 Prosser, LAW OF TORTS (Sth ed.) §98 pp. 692-4...... 22 Schoenbaum, ADMIRALTY AND MARITIME LAW tee FR | rane eer ee 13, 24 Vol. 44, No. 10, Proceedings of The Marine Safety CET, ie atid attri ciictivcncseistnsectesinacsccssenenn 9 Ce ee: REC EN 25 No. IN THE rs Supreme Court of the United States OCTOBER TERM, 1987 GEORGE PoyskyY, doing business as ALASKA TOWING Co., and SAMOAN MARITIME, LTD., a corporation, Petitioners, V. PACIFIC MARINE INSURANCE CO., a corporation, and DILLINGHAM TUG & BARGE CORPORATION, in personam, and TUG MIKIALA II, in rem, Respondents. PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT The petitioners, George Poysky, dba Alaska Towing Co., and Samoan Maritime, Ltd., respectfully pray that a writ of certiorari issue to review the judgment and order of the United States Court of Appeals for the Ninth Circuit entered in this proceeding on May 1, 1987. OPINION BELOW The opinion of the Court of Appeals, marked “‘Not for Publication”, appears in App. A, infra. Findings of Fact and Conclusions of Law of the District Court for the District of Hawaii, not yet reported, appear in App. C, infra. \ 2 JURISDICTION The judgment of the Court of Appeals for the Ninth Circuit was entered on May 1, 1987. A petition for rehearing and sug- gestion for rehearing en banc was filed on May 15, 1987 and denied on October 7, 1987. App. B infra. This petition for certiorari was filed within 90 days of that date. This Court’s jurisdiction is invoked under 28 U.S.C. § 1254(1). STATUTORY PROVISIONS DISCUSSED Hawaii Rev. Stats. § 431-419. Marine Insurance Act of 1906 (MIA), 6 Edw. 7 ch. 41. (See App. F infra.) STATEMENT OF THE CASE This is a first party action by the insureds (plaintiffs and petitioners, hereinafter ‘““Poysky”) on a policy of marine insurance (hull) issued by defendant Pacific Marine Insur- ance Company (Pacmar) and covering two harbor lighters for $225.000 each while towed by Dillingham Tug & Barge Corporation (Dillingham) from Pearl Harbor, Hawaii to Seattle, “‘or held covered’’. Dillingham was joined as a de- fendant, one of the causes of action being for breach of the implied warranty of workmanlike service owed by a profes- sional tower in the circumstances of this case. Poysky paid Dillingham $75,000 in advance for the tandem tow. (Find- ing of Fact [FF] 14, App. C.) The insurance was placed from Honolulu (FF 24) and written by endorsement to an existing time policy covering another vessel owned by Samoan Mari- time, Ltd., a company with which Poysky is affiliated. (FF 25.) The endorsement for the two barges, which also covered Dillingham as an additional insured with waiver of subrogation, incorporated all terms of the original policy. (For the Policy and Endorsement 2, see App. E.) YCV-9, as the ““Y” in its designation indicates, was a “‘yard”’, or harbor lighter, 200 ft. long, 65 ft. in beam, 12 ft. deep at either rake (but only 9 ft. deep inboard of the rakes [RT 130:23-131:10, App. H]). (FF 5.) The “CV” stands for carrier vessel, mean- ing aircraft carrier (ferrying planes around Pearl Harbor). 3 (FF 6.) Poysky had, shortly before placing the insurance on the two barges, been the high bidder for them at auction conducted by the Navy. They had been moored at Pearl Harbor for an unknown length of time. Poysky, along with other potential buyers from the mainland, had surveyed them extensively before bidding. (FF 7-13.) Some of the surveys of YCV-9 included multiple ultra-sound readings of the steel thickness of the deck, sides and bottom. (FF 9, 12.) Poysky, however, used a surveyor’s hammer in all 18 of the barge’s compartments and did not know of the existence of the other surveys. (FF 10, RT 73:1-77:23, App. H.) The bottom of neither barge was surveyed, except by ultra-sound gauging, because they were afloat. (FF 10.) The written sur- vey of YCV-9 by Capt. Dickieson, made for an unsuccessful bidder, expressly stated that the condition of the bottom could not be determined without hauling it out. (FF 10.) According to another marine surveyor, Anderson, there was no way of determining the condition of the bottom without having the vessel drydocked. (FF 13.) Poysky was unable to ascertain the condition of the bottom of YCV-9, however, even after he was awarded the vessel, because there was no suitable drydock available in Hawaii. (FF 11.) Prior to commencement of the tow, a marine surveyor was hired (the same Capt. Dickieson [RT 101:3-12]) to conduct a pre-tow survey of the barges and to specify all preparations needed to make them “ready in all respects to be towed to the U.S. mainland.” (FF 18.) Dillingham’s port captain, Kapele, supervised the actual hook-up to the Dillingham tug MIKIALA II and verified that all Capt. Dickieson’s recom- mendations had indeed been carried out. (FF 21.) On depar- ture, visual inspection of YCV-9 did not disclose any condi- tion which might suggest that it was unsound or unfit for the tow. (FF 22, 30.) On the night of September 26, 1982, after two days of towing through rough seas at full towing speed and when wind velocity and wave height began to further increase, the lower leg of the “Y” shaped bridle, which acts as a shock absorber and is called the “surge chain” (composed of a 70-ft. length of stud-link chain each link of which was 4 formed by steel 1'/s to 15/s inches in diameter), broke. (FF 19, 30-33.) This occurred 270.3 miles out of Pearl Har- bor (and 2,151.5 mi. from Seattle [RT 1454:11-16]), but the tug, instead of returning to port to fix the bridle (the tug crew tried and failed to accomplish this at sea on October 2 when the weather eased up [RT 1397:7-1398:10]), chose to con- tinue to tow the rectangularly-shaped barge by its emergency tow line affixed to a corner of the vessel. (FF 34, 42.) How- ever, six davs later and 960.5 miles out from Pearl Harbor (and 1,459.1 mi. from Seattle [RT 1442:4-25]), YCV-9 for the first time showed damage — a crack in the leading corner, through which it then slowly began to fill. (FF 41.) The tug then moved the emergency tow ine and started towing YCV-9 from a corner of the stern. (FF 41.) Other damage developed during the tow which breached more compartments on one side than on the other, causing the barge to fill unevenly, so that it arrived in Seattle (eight days late) floating at a 20-30% angle (RT 103:1-19). It was a constructive total loss (CTL). The other WW-II barge, also a “Y°’?, towed in the usual fashion by its bridle, arrived undamaged. On the arrival of the barges in Seattle, Poysky sought to have the coverage continue on the barges but Pacmar denied the request. On being drydocked, according to the District Court’s findings based on the testimony of defendants’ ma- rine surveyors, the bottom and sides of YCV-9 were found to be “‘substantially wasted [up] to the wind and water line, especially at the turn of the bilge’. The Court found that this wastage pre-existed the voyage. (FF 49.) There was also a fracture in the hull similar to one which could have been made if the tug had come alongside in rough weather (it did). (FF 54, 42.) Damage caused by slamming was also observed as well as missing plates ‘tas to which there is only specula- tion as to the potential causes.” (FF 55, 56, 58.) On claim for a CTL being filed, Pacmar denied it on the basis (sustained by the District Court) that the hull policy as to YCV-9 was voided by the insured’s breach of an implied a) 5 ‘absolute warranty of seaworthiness contained in every voy- age policy”, because, though Pacmar admitted that the in- sured had no actual knowledge of any defects in the barge, the vessel was “not reasonably fit for its intended use” because of “severe wastage/deterioration” of its underwater hull and therefore unseaworthy. (FF 61, Conclusions of Law [CL] 21 and 22.) Pacmar’s rejection letter (App. G) was also based on a general allegation that the CTL was not due to any “‘peril’’ covered by the policy, which the District Court sustained through a “conclusion” that the damage resulting in the CTL was “ordinary wear and tear during the voyage” and therefore not a peril of the sea. (CL 24-27.) Judgment was entered for Pacmar and Dillingham, the latter on the basis that Poysky had breached what the District Court concluded was a representation of seaworthiness (called a “warranty” by the Court of Appeals) and because Poysky had failed to meet his burden of proof as to the tower’s negligence, even though the Court acknowledged that there is an implied warranty of workmanlike service contained in the towage contract. (CL 5-9.) Judgment was entered for Poysky for the amount of the premium paid for YCV-9’s coverage which had not been tendered back when Pacmar voided the policy. Dillingham’s claim for charges at the contract rate for the 8 days delay en route was denied because the “delay due to heavy weather and delay due to the unseaworthy character of the barge cannot be separat- ed’’, which is inconsistent with the causation findings else- where. (CL 10. See also FF 45, CL 21.) Poysky and Samoan Maritime, in their appeal to~the Ninth Circuit Court of Appeals from the judgment as to both defendants, attacked the Findings of Fact as being clearly erroneous and inconsistent but alternatively appealed as to prejudicial, material errors of law requiring reversal even if the findings were not clearly erroneous. The Court of Appeals panel, however, in their order for judgment, dealt only with the appeal as to Dillingham. 6 REASONS FOR GRANTING THE PETITION This petition concerns the law applicable to two highly specialized industries vital to the maritime commerce of the United States: marine insurance (termed “one of the great enterprises of the nation” by this Court in Wilburn Boat Co. v. Fireman’s Fund, 348 U.S. 310, 320-1, 75 S.Ct. 368, 374 [1955]) and the tug and barge industry. The case has already garnered a great deal of notoriety in these industries and is mentioned in Alex Parks’s new two volume text, 2 THE LAW AND PRACTICE OF MARINE INSURANCE AND AVERAGE (1987) at n. 846, p. 1039. The reference in Parks is to the effect that “[T]he courts found that there was no bad faith involved in the underwriter’s refusal to pay benefits under the policy and that the plaintiff/insured had breached the warranty of seaworthiness. The case is now on appeal.” Regardless of the “Not to be published”’ designa- tion,’ that there was an affirmance has already been pub- lished in the official reports. 817 F.2d 106 (9th Cir. 1987). Accordingly, in Park’s next supplement to the text, the find- ings and conclusions below and their affirmance will un- doubtedly be discussed whether the FF/CL are reported elsewhere or not. As a result of the decision and its affirmance, the so-called ‘*‘American Rule.”’ which is only mentioned in some Second and Fifth Circuit cases as dicta, has for the first time been '**An opinion is written primarily to tell the litigants why the case has come out as it has and to provide guidance to future litigants.” Vol. 64 ABA Journ. (August 1978), “The Enigma of Unpublished Opinions” by Herbert J. Stern, U.S. District Court Judge for District of N.J. The Ninth Circuit’s unpublished decision in our case is obviously premised on the mistaken idea that the determination of the controversy has no actual value to other litigants whose claims may be similar. Hopefully, we will be able to show that the issues in this case are indeed of vital concern to the two industries involved. And whether published or not, the Circuit Court's judgment affirming the decision below is going to impress the next District Court judge faced with any of these issues and presented with a copy of the FF/CL of Chief Judge Fong. In any event, this Court has reviewed and even reversed unpublished Circuit Court opinions. E.g., Vella v. Ford Motor Co., 421 U.S. 1, 3, 95a S.Ct. 1381, 1383, 1975 AMC 563 (1975). 7 made the basis for a decision, and as a result, owners claim- ing damage to their vessels under the hull policy, whether voyage or time (see § 25 MIA, App. F), will forfeit coverage on breach of an implied warranty of absolute seaworthiness (same thing: absolute implied warranty of seaworthiness). Even where, as in this case, the insurer had as much knowl- edge as the insured had of the vessel’s type, age and the dangers of the voyage to be made, the insured, contrary to his reasonable expectations, will find that by an implied exclusion he has become the insurer himself. And it will make no difference that the insured exercised due diligence to prepare the vessel for sea, or that the vessel was in an outport without facilities, such as a drydock, whereby the owner could discover if there was a breach, or that the unseaworthiness was a latent defect covered under the /nch- maree Clause. Also, the presence in the policy of an express ‘“‘Held Covered” Clause waiving breach of “‘any” warranty on payment of an “equitable”’ additional premium will avail the insured nothing, despite his reasonable expectations, against the implication of this warranty of absolute seawor- thiness if the loss is total, or a CTL, or the damages are major (exclusions not set out in the “Held Covered” Clause). Then, as to owners of vessels towed by professional towers, a clause in the towage agreement “warrant[ing] and represent[ing]” that the tow is seaworthy and ready for sea has become, through this decision (even though the District Court calls it a “representation’’), yet another warranty of absolute seaworthiness whereby the tower does not even need to inspect the vessel before undertaking the voyage nor need to go to a port of refuge when the barge becomes distressed. Then, if the tow’s owner, who may have had no witnesses to what happened at sea, can manage to dispute the Tower’s claim that the damage or loss was due to the barge’s unseaworthiness, he must, contrary to Second and Fourth Circuit law based on decisions of this Court, go on to prove the tower’s negligence. The distortion of the applicable law by the decision below, to the point that the rights of owners of insured vessels and owners of tows are returned to square one where they were eae 8 thirty years ago, i.e., before Wilburn Boat Co. v. Fireman’s Fund Ins. Co., 348 U.S. 310, 75 S.Ct. 318 (1955), before Ryan Stevedore v. Pan-Atlantic SS Co., 350 U.S. 124, 76 S.Ct. 232 (1956), before Bisso v. Inland Waterways, 349 U.S. 85, 75 S.Ct. 629 (1955) and even before Cia. de Navegacion v. Fireman’s Fund Inc. Co. (The WASH GRAY), 277 U.S. 66, 80 (1928), very much warrants, we respectfully suggest, this Court’s review and clarification of the questions presented. Because of the double appeal, we doubt if there will ever be a better vehicle coming before this Court for resolution of these questions. We submit, then, that the District Court and the Ninth Circuit have, in this matter, decided important questions of Federal law in a way conflicting with applicable decisions of this Court as well as with decisions of other Circuits and of the State of Hawaii. (Rule 17, Supreme Court Rules.) Addi- uonally, in relation to Pacmar, this case presents questions as to the interplay of State and maritime law as to which great confusion exists because of the resistance of text writers and various courts to this Court’s decision in Wilburn Boat, supra. (As to the propriety of this ground, see Kossick v. United Fruit, 365 U.S. 731, 733, 81 S.Ct. 886, 889 [1961]). We also submit that the Circuit Court’s judgment, obviously dealing with only one of the two appellees despite the discrete appeal as to the other appellee, has, in leaving only half of the case reviewed and decided, yet affirming the whole matter below, and in dealing with such important issues aS are involved here by an abbreviated “Not to be published” order, has “‘so far departed from the accepted a8 and usual course of judicial proceeding ... as to call for an exercise of this Court’s power of supervision.” (Rule 17, Supreme Court Rules.) We respectfully suggest that these compelling grounds, discussed in depth infra, exist for grant- ing a writ of certiorari as to the questions presented as set out above. ‘ton ve ote 9 (a) State Law, Federal Law and The Policy Itself Precluded Forfeiture of The Benefits of The Policy Based on an Implied Absolute Warranty of Seaworthiness. The principal danger portended by this case to insured vessel owners is the holding that both the implied warranty of seaworthiness and the perils of the sea which are covered risks in the policy are fixed and absolute, without regard to the type of vessel, the waters on which it was designed to be operated, the mode of tow for which it was designed, its age, the limitations existing in the particular port from which the voyage is to commence as to ascertainment of its true condi- tion, the insured’s diligence in readying the vessel for sea, and what the insured knew and communicated to the insur- er. True, the District Court, affirmed by the Ninth Circuit, held that such a warranty means that the vessel must be “reasonably fit for its intended use” (CL 21) but, after giving this principle no more than lip service, the District Court went on to ignore that YCV-9’s intended use was as a harbor lighter. The District Court was really implicitly determining that YCV-9 was unseaworthy because it was not able to withstand perils of the seas that any barge should, in the Court’s opinion, have been able to withstand and ignoring what, for a harbor lighter, were extraordinary perils both of the seas and the mode of towing, such as being towed with- out a bridle (including the surge chain, the shock absorber) and by a corner nearly all the way across the eastern Pacific. The District Court’s absolute standard of seaworthiness resulted in its ignoring the fact that the barge withstood without damage two days of being towed by its bridle in heavy weather and six more days of being towed by a corner. (See as to the effects experienced by inland waters barges in rough seas, Vol. 44, No. 10, Proceedings of The Marine Safety Council, pp. 264-266, a Government (USCG) publi- cation, which states, ““Complete failure of the hull can result from continuous pounding for even a short time. This dan- ger is particularly great for towed barges, since nobody is aboard to feel that the barge is pounding.”’ We submit that judicial notice may be taken of these USCG reported exam- ples even at this stage of the action. FRE 201(b)(2) and (f).) 10 This erroneous standard of seaworthiness is also manifested * in the District Court’s findings that the abstract vessel it assumed YCV-9 to be was not subjected to abnormal stresses by being towed by a corner and without a bridle (FF 40), that YCV-9’s plating had “offered no resistance to normal sea conditions” (FF 56), and that “Slamming the barge into seas would not cause loss of the structural members” (FF 55 and 58). For a barge designed for ocean towing, perhaps, but how about a harbor lighter? This Court made it crystal clear long before the Poysky case that, under an implied warranty of seaworthiness in a voyage policy, there is no fixed and positive standard of seaworthiness, i.e., that the term is relative. Chief Justice Taft, speaking for the Court, held in Compania de Navega- cion v. Fireman's Fund (The WASH GRAY), supra, 277 U.S. at 80, a case very similar to ours but preceding Wilburn Boat, that the implied warranty of seaworthiness has to accommodate what is “reasonably practicable in a particular case’’, 1.e., NO more is required than that her owner exercise due diligence before she leaves port to make her as sea- worthy “as reasonably practicable’. (See 9 COUCH ON INSURANCE 2d, § 37B:357, p. 271 and 1 ARNOULD’S LAW OF MARINE INSURANCE AND AVERAGE [16th ed.] §§ 110-111.) This Court, in The WASH GRAY, likewise held that “perils of the sea’”’ coverage is also relative, as, for a vessel of The WASH GRAY’s description (an inland tug being towed), winds of 25 mph, with occasional gusts, and waves of 4-5 ft., would constitute a covered peril. Justice Taft noted in The WASH GRAY that not every type of vessel can be put into that condition of seaworthiness requisite for the contemplated voyage, giving as an example a river boat to be sailed from this country to Calcutta or Odessa. Accord- ingly, even under §§ 33(3) and 39(1) of the English Marine Insurance Act of 1906 (MIA) (App. F), imposing, at com- mencement of the voyage, an absolute implied warranty of seaworthiness in voyage policies (but only a duty of due diligence if the policy is time), would not deny coverage in our case, even if, instead of State law under Wilburn Boat, English marine insurance law was applied as part of Federal yo 1] admiralty law on marine insurance. Chief Justice Taft added that “the underwriter must be informed of the peculiar nature of the risk’, i.e., it must be provided with “full information as to the class of vessel and the intended voy- ~ age”. If the underwriter has this knowledge, then, according to The WASH GRAY, should the insured vessel founder even though due diligence was exercised to make it ready for sea, the casualty will be ascribed to a peril of the sea rather than to the vessel’s unseaworthiness. Likewise here, Pacmar had full knowledge of the type of vessel involved, where it was stored and the intended voyage. (Poysky believed he had also sent Parks, the broker, a copy of the bid brochure. [RT 146:4-19].) Pacmar extended coverage nevertheless, and the decision below as to the implied warranty of seaworthiness and perils of the sea is totally erroneous and contrary to this Court’s decisions. Unless it is corrected by this Court, the decision will henceforih serve only to befuddle insured own- ers, practitioners and the Courts alike, to the great dis- advantage of the owners. See further Klein v. Globe & Rutgers Fire Ins. (The TORNADO), 2 F.2d 137 (3d Cir. 1924), Spooner v. Conn. Fire Ins. Co., 314 F.2d 753, 756 (2d Cir. 1963), Russell Mining Co. v. Northwestern Fire & Ma- rine Ins. Co., 207 F.Supp. 162, 166 (ED Tenn. 1967) and The XANTHO, 12 App. Cas. 503, 509 (1887). Another aspect of this case is that it represents an attempt, through the defendants’ attorneys, who, in the main, crafted the FF/CL (not to be unfair, we should say that we also proposed FF/CL pursuant to the District Court’s request of all parties), to breathe life into the so-called ““American Rule” and create precedent for its future use. According to the “‘American Rule”, there is an implied warranty of sea- worthiness imposed if a time policy incepts while the vessel is in port. As Gilmore & Black, THE LAW OF ADMIRAL- TY (2d ed.) state at pp. 63-67, that “rule” has so far been entirely based on dicta. ““No case has been found squarely basing decision on the so-called ‘American Rule’, and the guess is ventured that the Supreme Court, if the issue was even [ever?] tendered it, will not uphold this warranty.” /d., 12 p. 65. See also Parks, THE LAW OF TUG, TOW AND PILOTAGE (2d ed.) 548-560. Even under the “American Rule”’, if the port the vessel is in when the time policy commences is one without adequate repair facilities, there can be no implied warranty of seawor- thiness. The NATALIE, 1959 AMC 2379 (NY ARB). See discussion concerning this important arbitration case and criticizing the “American Rule” in Buglass, MARINE IN- SURANCE AND GENERAL AVERAGE IN THE UNIT- ED STATES (2d ed.) pp. 36-7. There are reasons why an implied warranty of seaworthi- ness is imposed in a voyage policy. The vessel is in port, about to leave on a voyage and the owner usually knows or has the means of knowing the condition of the ship in relation to the rigors of the voyage ahead, but under a time policy, when the policy expires and has to be renewed, the vessel may be at sea or in a port other than its home port and which may not have adequate repair facilities. Hence its owner will not have such knowledge or means of acquiring it. For further explanation, see Sorenson & Neilson v. Boston Ins. Co., 10 F.2d 563, 565-7 (D. Md 1925). YCV-9 being in Honolulu, which was not her home port and which is with- out a civilian drydock large enough to handle it, then, ac- cording to The NATALIE, supra, Sorenson & Neilson and the cases cited at p. 565, there can be no implied warranty of seaworthiness in the time policy. We ascribe the above-mentioned intent to opposing coun- sel because of the stated refusal in the FF/CL to decide whether the policy they call a voyage policy several times (FF 25, 26, 28) is a voyage.or a time policy. (CL 21.) But even if the endorsement covering the barges was time rather than voyage, because it was part of a time policy and ex- pressly incorporated the time policy’s express and implied terms, including warranties, and/or because the coverage of the barges could be and was asked to be extended (i.e., “held covered”) for longer than the voyage, the above cases show that the “American Rule” could only be implemented if the vessel was in its home port. See also Henjes v. Aetna, 132 13 F.2d 715, 719 (2d Cir. 1943). Under the “home port rule”, a vessel owner should not be made to suffer a forfeiture of coverage when the port in which the vessel lies does not provide facilities so that an adequate inspection to evaluate the vessel’s condition can be made. Hence, it is immaterial whether you call it due diligence under the English rule (where there is no implied warranty of seaworthiness in a time policy [§§ 33(5)], MIA, App. F) or an exception to an implied warranty under the so-called “American Rule”. It could only make sense if this same exception applied to a voyage policy as well. While the foregoing discussion is necessary to under- standing the District Court’s erroneous holdings, this Court’s decision in Wilburn Boat, supra, makes it academic. In Wilburn Boat, this Court reversed the two lower courts’ holdings that the express warranties in the hull policy were “‘absolute’’, determined that there was no “federal admiralty rule’ requiring literal compliance with warranties and held that, on remand, State law would have to be applied as to the effect to be given the warranties in the policy at hand. (Justice Reed dissented, noting that all prior decisions showed the necessity of a uniform rule in marine insurance cases and that American marine insurance law should be kept in harmony with Great Britain’s.*) The District Court in our case, however, turned to what it erroneously consid- ered (without citation) to be Federal law in regard “the existence of an implied warranty of seaworthiness in mari- time hull insurance policies” which voids the policy on breach (CL 19, 20), rather than to a Hawaii Statute (HRS § 431-419) by analogy and as amplified by Hawaii decisional law, which forbids voiding the policy on breach of warran- ties. Avemco Ins. Co. v. Chung, 388 F.Supp. 142 (D. HI *This court has several times stated that respect should be paid to “established doctrines of English Maritime Law”, particularly in the marine insurance field. Queen Ins. Co. v. Globe & Rutgers Fire Ins. Co., 262 U.S. 487, 1924 AMC 107 (1924), Standard Oil of N. J. v. U.S., 340 U.S. 54, 1950 AMC 365 (1950), Ca/Mar SS Co. v. Scott, 345 U.S. 427, 1953 AMC 952 (1953). See also Schoenbaum, ADMIRALTY AND MAR- ITIME LAW (1987) at p. 561.) ry 14 1975). (CL 30.) Hawaii is, of course, the State with the greatest interest in the coverage issues, it being from where the insurance was placed (FF 23-24), the subject of the insurance (the barges) were there, the tow commenced from there, Dillingham (required by the towage agreement to be made an additional insured) is a Hawaii corporation and Dillingham, in the towage contract, also required that suit be brought there. (See Art. 17-7, App. D. See also, as to choice of law, Healy Tibbitts Constr. Co. v. Foremost Ins. Co., 482 F.Supp. 830, 835 [ND Cal. 1979], Ahmed v. Amer. SS Own- ers Mut. P&I Assoc., 444 F.Supp. 569 [ND Calif. 1978] aff'd 640 F.2d 993 [9th Cir. 1981].) That the District Court found that Oregon had the “most significant interest in regulating [the] agency relationship” between Poysky and Parks (CL 16) had nothing to do with applying Hawaii law as to the effect to be given a warranty in a marine insurance policy. The District Court’s holding in this regard, we respectfully submit, exemplifies the “state of turmoil” in which the law of marine insurance has found itself, according to the com- mentators, since Wilburn Boat. Parks, THE LAW AND PRACTICE OF MARINE INSURANCE AND AVERAGE, p. 13. Gilmore & Black, THE LAW OF ADMIRALTY (2d Ed.) at p. 69, characterize the majority’s decision in Wilburn Boat as “nightmarish” and, at p. 68, state that the case as applied is “‘persistently problematic”. See also p. 71 n. 78a. In fact, these authors, at pp. 70-71, state that they must proceed in their text on the basis of pre-Wi/burn Boat cases, inasmuch as “It is utterly impossible to be at all sure, even yet, how the Supreme Court will at last resolve these perplexities and contradictions [referring to the preceding discussion in their text as to all the myriad possibilities under Wilburn). zk* The reader is sufficiently warned, however, of the incerti- tudes that case has introduced. The lower federal courts cannot authoritatively resolve those uncertainties; we will 15 not know what Wilburn Boat means unless and until the Supreme Court clarifies the position further.” It is time, we respectfully suggest, for a clarification of the situation. And if State statutes and regulations, plus judicial decisions amplifying them, are not to govern the application of warranties, then a new Federal admiralty rule implement- ing the views of the Court as set out in Wi/burn Boat should be created. This Court showed it does not favor absolute warranties, stating in Wilburn Boat (348 U.S. at 319-320, 75 S.Ct. at 373-374), “In this very case, should we attempt to fashion an admi- ralty rule governing policy provisions, we would at once be faced with the difficulty of determining what should be the consequences of breaches. We could adopt the old com- mon-law doctrine of forfeiting all right of recovery in the absence of strict and literal performance of warranties, but this is a harsh rule. Most States, deeming the old rule a breeder of wrong and injustice, have abandoned it in whole or in part.” Actually, there should have been no reliance below on any warranty, much less an implied. one, inasmuch as the Samoan Maritime time policy, expressly incorporated by the endorsement bringing the barges into the policy, states: “11. Held covered in the event of any breach of warranty, or deviation from the conditions of this Policy, at an equitable premium to be arranged, notice to be given on receipt of advices.” (App. E.) The District Court, obviously relying on an old English case but not citing it, Greenock SS Co. v. Maritime Ins. Co., 1 K.B. 367 (1903), where the un- seaworthiness (lack of sufficient fuel aboard on departure to complete the voyage) was known to the owner, could have been prevented and certainly had to result in the loss (none of which conditions existed in our case [see Gilmore & Black, supra, at pp. 65-66]), concluded that Clause 11 is inapplicable because, “It is absurd to suggest that an insurer would consider charging an ‘equitable premium’ for the unseaworthiness present in this case, when such a premium would at least equal the face value of the coverage”. The 16 other side of the coin is that only minor breaches of warranty are excused under Clause 11, a distinction not set out in the policy or found in the cases (which predominate in the Ninth Circuit: Kalmbach v. Ins. Co. of Penn, 529 F.2d 552, 555- 557 [9th Cir. 1976] and Campbell v. Hartford, 533 F.2d 496, 497-8 [9th Cir. 1976]). Kalmbach holds that Clause 11 covers all warranties, express or implied, even as to seawor- thiness, and regardless as to whether the breach is a major or minor one. The decision below, by rewriting Clause 11, made the insured his own insurer by means of a judicially- imposed inequitable premium adjustment. The courts of the land nowadays do a certain amount of policy rewriting but only to effect coverage where such carries out the insured’s reasonable expectations as to coverage (see Kalmbach, supra, also Keeton, “Insurance Rights at Variance with Policy Pro- visions”, Vol. 83 Harv. L.R. [March 1970] at p. 968) — and the insured could never, obviously, expect to forfeit coverage through a condition precedent which is implied and not expressed and which is clearly contrary to Clause 11, the “Held Covered” Clause. Further in this regard, Pacmar failed to demand any “eq- uitable premium” of Poysky or Samoan Maritime, which constitutes a waiver. See Luria Bros. v. Alliance Assur., 780 F.2d 1082, 1986 AMC 1539, 1549-1551 (2d Cir. 1986}, The ANTHONY D. NICHOLS, 49 F.2d 927 (SDNY 1931), 16 C. Appleman, INSURANCE LAW OF PRACTICE, § 9260 at p. 393 (1981). (And Pacmar also failed to return or tender the premium with its denial of the claim on the ground that the policy was void. [RT 1665:19, App. H. CL 32.] Under Hawaii law, this defeats any attempt at rescission of the policy. USF&G v. Leong Dung Dye, 52 F.2d 567, 570-1 [9th Cir. 1931]. Hawaii law would govern interpretation of the policy. Ahmed, supra, 444 F.Supp at 571, Healy Tibbitts, supra, 482 F.Supp. at 835.) There is yet another express provision of the policy, the ‘Additional Perils” or Jnchmaree Clause, which negates the existence of an implied warranty of seaworthiness as to the additional perils set out. Tropical Marine Prod. v. Birmingham Fire Ins. Co., 247 F.2d 116, 123 (Sth Cir. 1957) ‘ saligebiiany Vid tasha sian? al 17 cert. den. 355 U.S. 903 (1957), The SPOT PACK, 242 F.2d 385, 392 (Sth Cir. 1957). Eggers v. Nat’l Union Fire Ins. Co. (Texas No. 1) 112 F.2d 541 (Sth Cir. 1940). That clause covers “cost of repairs or loss or damage to the subject matter insured directly caused by .. . any latent defect in the machinery or hull; ... or from other causes of whatsoever nature . . . howsoever, causing loss of or injury to the proper- ty hereby insured provided such loss or damage has not resulted from want of due diligence by the Assured . . .” (See App. E.) As Buglass, supra, pp. 64-5, and ARNOULD, supra, at § 826 (“The general intent of the clause is to extend the cover, in specified cases, to risk of damage to hull or machin- ery which cannot be said to be the direct consequence of a marine peril.’’), state and as pointed out by such cases as Tropical Marine, supra, 247 F.2d at 118-9, the covered perils were greatly extended by the “Additional Perils,” or Jnchma- ree Clause. The clause in our policy is even a broadened version of that clause, as a comparison of the clause on p. 65 of Buglass with ours shows.’ For one, the parenthetical phrase “(excluding the cost and expense of replacing or repairing the defective part)” qualifying the additional peril of a Aatent defect in the machinery or hull” has been omitted. While Buglass’s opinion is that the “directly caused by” language limits recovery for “bursting of boilers, breakage of shafts” and latent defects to consequential damage only (Buglass. supra, p. 127), he does not discuss what happens when the particular version of the Jnchmaree clause in- volved omits “(excluding the cost and expense of replacing the defective part)”, though it does contain “directly caused by”. While the reasonable expectations of the insured are *Even the original Perils Clause in the policy (* TOUCHING the Ad- ventures and Perils ...”) is an “all risk clause” requiring the insured only to prove “that the loss was due to a casualty and was caused by some event ... covered by the general expressions of the policy. ‘He is not bound to go further, and prove the exact nature of the accident or casualty whichever first occasioned his loss’ ’. Mellon v. Fed. Ins. Co., 14 F.2d 997, 1002 (SDNY 1926). 18 obviously affected by such a change to his advantage, Jropi- cal Marine allowed full recovery of the vessel’s insured value when the latent defect (deteriorated bottom in a wooden boat first discovered at sea) resulted in a total loss, even though the Jnchmaree clause there contained the parentheti- cal clause discussed above. The Fifth Circuit pointed out in Tropical Marine as follows: that a latent defect is a conditicn that is not known or discoverable by the owner or one in privity with him, that the defect is obviously latent where it manifests itself, as by a hull which starts to leak 3'/2 days after departing port (read 8 days in our case), and that, alternatively, the loss is a casualty due to peril of the seas if the sinking results from the action of the sea on an unsea- worthy hull. That Tropical Marine involved a time policy is not a valid distinction in view of the District Court’s refusal to conclude finally whether the policy in our case was time or voyage. (CL 21.)But even if a voyage policy is what is involved in our case, Vol. 2 ARNOULD, supra, § 829, states: “The cover in respect of ‘latent defect’ would be virtual- ly meaningless if this were not to be construed as applying even in cases of inherent vice. Where this part of the [Jnchmaree] clause applies, therefore, a defense of inher- ent vice 1s not open to underwriters. Similarly, the latent defect cover must, it is submitted, be regarded as overrid- ing the implied warranty of seaworthiness in voyage poli- cies, to the extent that there is a conflict between the implied warranty and this head of cover. The point has not been decided in this country, but the majority of the American cases proceed on the basis that unseaworthiness iS nO answer to a claim in respect of ‘latent defect.’ ” See also 2 ARNOULD § 710, stating: “It is submitted that in so far as unseaworthiness is covered by this [Jnchmaree] clause, the express coverage must prevail over the implied warranty and that an under- writer cannot therefore rely on a latent defect as a breach of the warranty of seaworthiness in a policy incorporating the Institute Voyage Clauses.” It is hoped that the Court will consider the need to clarify and settle at the highest level these issues implicit in every damage claim, total! loss or not, under a hull policy. Finally, there is the question as to what is “ordinary wear and tear” and whether it precludes, as the District Court concluded (CL 26, 27), application of a covered peril. Buglass, supra, pp. 83-4, discusses this very issue, conclud- ing that, while the underwriter is not liable for wear and tear from ordinary causes, it is liable where the effect of the risks insured on the vessel (e.g., heavy weather) are enhanced by this condition. ““This is sometimes called the ‘death blow’ theory but it is really a question of proximate cause; the question to be asked is ‘would this damage have occurred but for the operation of an insured peril?” (See FF 45 and CL 10, inseparably linking unseaworthiness and heavy weather to rule out delay charges. This is inconsistent with ascribing all damage to unseaworthiness.) See also Yacht DUET, 1967 AMC 1144 (D.Oreg. 1967), Moran Towing v. M.A. Garmino Constr. Co., 363 F.2d 108 (1st Cir. 1966), Redna Marine v. Poland, 46 FRD 81, 87 (SDNY 1969) and Frangos v. Sun Ins. Co., L.L.R., Vol. 49, p. 354. (b) The Law Applying a Warranty of Workmanlike Service to the Professional Tower Does Not Require Proof of the Tower’s. Negligence and, Where Such a Tower Has Complete Control of the Towed Vessel, as Where It is Unmanned, It Should be Strictly Liable Where Damage or Loss is Incurred by the Tow that was Avoidable. Turning to the subject of the implied warranty of workmanlike service in the performance of a towage agree- ment, the existence of such a warranty was noted in and followed in Second Circuit cases since The Soerstad, 257 F. 130, 131 (SDNY 1919). See also James McWilliams Blue Line, Inc. v. Esso Standard Oil Co., 245 F.2d 84, 1957 AMC 1213 (2d Cir. 1957), Fairmont Shipping Corp. v. Chevron Int'l Oil Co., 511 F.2d 1252 (2d Cir. 1975), cert.den. 423 U.S. 838 (1975), Dunbar, Admx. v. H. Dubois Sons, 275 F.2d 304, 1960 AMC 1393 (2d Cir. 1960), Gaymon v. Prud. Lines, 473 F.Supp. 161, 164 (SDNY 1919) and Gwynedd 20 Corp. v. Chilula, U.S.A. 1979 AMC 531, 542-3 (SDNY 1978) (N.O.R.). See further Tebbs v. Baker-Whitely Tow. Co., 407 F.2d 1055 (4th Cir. 1969), Dillingham Tug & Barge Corp. v. Collier Carbon & Chemical Corp., 707 F.2d 1086, 1091 (9th Cir. 1983), cert.den. 465 U.S. 1025, 104 S.Ct. 1280 (1984), U.S. v. Tug MANZANILLO, 310 F.2d 220 (9th Cir. 1962). (To the contrary, see Hercules Inc. v. Stevens Shipping Co., 698 F.2d 726, n. 25 at 737 [Sth Cir. 1983].) As Fairmont Shipping points out, this warranty is related to that created by this Court in Ryan Stevedore Co. v. Pan-Atl. SS Corp., 350 U.S. 124, 76 S.Ct. 232 (1956) but is not limited to cases where indemnity is sought as to liability to third parties. (See Fairmont, supra, 511 F.2d at 1259-1260.) The warranty is the answer to the problem faced by every owner of an unmanned barge, whose last sight of his vessel may well be that of its stern rake as it submissively trails after the tug on its way to sea. As stated in Fairmont, 511 F.2d at 1255-8, 1260-1, and in Jebbs, supra, 407 F.2d at 1058, the warranty is imposed because the warrantor is in the best position to adopt measures to prevent accidents and must do so if it can or be cast in damages, regardless of the tow’s seaworthiness or whether the tower merely brought a pre-existing unseaworthy condition into play. (This is noth- ing new, as the following negligence cases show: Chemical Transporter, Inc. v. M. Turecamo, Inc., 290 F.2d 496, 497 [2d Cir. 1961], Sternberg Dredging v. Moran Towing, 196 F.2d 1002, 1005-6 [2d Cir. 1953], South v. Moran Towing, 360 F.2d 1002 [2d Cir. 1966], Offshore Co. v. G&H Offshore Towing, 262 F.Supp. 282, 287 (SD Tex. 1966) aff'd. 403 F.2d 715 (Sth Cir. 1968). [This Court has held that circumstances alone may cast a duty of explanation on the tug. The Steamer WEBB, 81 U.S. (14 Wall.) 406, 414 (1871). See also Bd. of Com’rs v. FARNSUM, 574 F.2d 289 (Sth Cir. 1978)].) The extent of the warranty depends upon the circumstances relating to the degree of control in the tower and on its expertise. Jebbs at 1059. If the tower is a professional tower, then the full degree of expertise should be presumed. This is why, under warranty law, that knowledge of the risks that an expert in the field would have is imputed to the warrantor 21 and his only defense is that the warrantee actively hindered his performance. (Under negligence principles, on the other hand, a plaintiff must prove that the defendant acted un- reasonably in light of a known or constructively known risk.) (See discussion 3 Amer. Law of Prod. Lia. 3d § 33:5.) Obviously, in the case of an unmanned barge that runs into trouble at sea, there is nothing that the warrantee can be held to have done to hinder the tower’s performance because the warranty requires that the professional tower act to save the barge regardless of its pre-existing condition. If the barge could have been saved, according to the opinion testimony of an independent expert tug captain, the warranty is breached unless all steps were taken which should have been taken by a professional tower. (See The ROCONA v. Guy F. Atkinson Co., 173 F.2d 661, 665 [9th Cir. 1949].) (Note that the District Court accepted only the opinion of MIKIALA II’s master as to what he could or should have done.) The Ninth Circuit itself, in an earlier decision, followed this principle, determining that the tug’s failure to head for the nearest port “when it became obvious that the barge was in trouble” was, on its face, a breach of warranty, even though the barge was unseaworthy to begin with. Dillingham v. Collier, supra, 707 F.2d at 1091 and n. 3.4 *To the same effect even if the cause of action is based on negligence: McDonough Marine Serv. v. M/V ROYAL STREET, 465 F.Supp. 928, 935 (ED La. 1979), a case where plaintiff tow owner proceeded on the basis of the tug’s negligence and tug defended. claiming the tow was unseaworthy.- The District Court stated: “... The (tug) was negligent in failing to take reasonable steps to determine the exact condition of the tow and to correct the problem ... Instead, the tow proceeded on while the bow of the barge continued to lose its remaining freeboard and sink further. While the towing vessel is not liable for a loss occasioned by the unseaworthiness of the tow, if it continues to proceed when the unseaworthiness of the tow is disclosed or apparent, it is negligent. (Cite.) Allowing the barge to become so full of water that it is down by the bow was also negligence. (Cites.) This ts especially true in light of the available alternatives ...” (Emphasis added.) Additionally, see Pillsbury v. Delta B&R, 1979 AMC 1221, 1233 (ED La. 1978), where tug passed up chances to beach the sinking barge. Held: Tower is liable for negligence. ““The duty of a tug includes the obligation to (footnote continued on next page) 22 It is possible under warranty law for the warrantor to be held to be strictly liable if the unmanned barge comes to grief and the circumstances show that there were reasonable alternatives that an expert tower would have implemented but the particular tug crew involved failed to take. (Note that FF 39 did not set out what the “several options” were, according to independent expert Capt. De La Hunt. See RT 1567:18-1568:19, 1581:2-14.) Strict liability under warranty law is not unusual in admiralty, e.g., the shipowner’s duty to its crewmembers under its warranty to provide a seaworthy vessel (Seas Shipping Co. v. Sieraki, 328 U.S. 85, 66 S.Ct. 872 [1946] and The OSCEOLA, 189 U.S. 158, 23 S.Ct. 483 [1903]) and the manufacturer’s warranty as to the safety of his product. Fairmont, at 1256, citing Ryan Stevedoring, 350 U.S. at 133-4, 76 S.Ct. at 237. See also East River SS Corp. v. Transamerica Delaval, —U.S.—, 106 S.Ct. 2295 (1986), Italia Soc. v. Oregon Stev. Co., 376 U.S. 315, 318, 84 S.Ct. 748 (1964), Prosser, LAW OF TORTS (Sth Ed.) § 98 pp. 692-4. While the District Court adverted to the existence of the warranty (CL 6) (which the Circuit Court referred to as the ‘so-called implied warranty of workmanlike service’’), the District Court went on to state that, “Nevertheless . . . plain- tiffs must prove negligence by the tow (sic) to recover for any loss.” The District Court’s authority for this position, King Fisher Marine v. NP SUNBONNET, 724 F.2d 1181 (Sth Cir. 1984) and Stevens v. The WHITE CITY, 285 U.S. 195, 202 (1932), never held such in regard to this implied warranty; they are negligence cases. (In Stevens, “The tug [did] not have exclusive control over the tow” and the cause of the damage was known. 285 U.S. at 200. As for Stevens’ lan- guage concerning bailment, it should be noted that in the later case of Bisso v. Inland Waterways, supra, 349 U.S. at 90-91, this Court points out that release from negligence clauses are thrown out in bailor-bailee situations, which the Court then proceeded to do with the tug’s release from (footnote continued from preceding page) take such measures as are reasonably available to it to avert further damage once it is evident that the tow is in peril.” Adin Me sl a A seit Fe sa gh Wea en Ieee ha lla ts Winn seb WALA BIN Wir cAI eddie lea lade aN dae ate ne Sn ere Oa Tew ise ney 23 negligence clause in that particular case. Further, the law of this Court is to the contrary, it stating in Jtalia Soc. v. Oregon Stev. Co., supra, 376 U.S. at 323-4, 84 S.Ct. at 748, that the warranty of workmanlike performance “... may be breached by non-negligent as well as by negligent conduct.” See also Crumady v. The J.H. FISSER, 358 U.S. 423, 428-9, 79 S.Ct. 445, 448 (1958). The District Court thus erred as a matter of law in not considering that the tower’s only de- fense to a breach of warranty action was the active hin- drance of the tow. See Fairmont, supra, 511 F.2d at 1260-1. Not even having raised this defense, it was waived. Even if it had not been waived, Dillingham could not have proved it, because YCV-9, while deterioration in its bottom was found by the District Court, this condition was no hindrance to the tug’s performance of the tow for the first eight days of the voyage, as the FF/CL show. It would have not been a hindrance later if YCV-9 had been returned to port to recon- stitute the bridle or the simple precautions Capt. De La Hunt advised had been taken. (c) The District Court interpreted the representation of the Tow’s Owner that the Teg shall be seaworthy and ready for sea as equivalent to the absolute warranty of seawor- thiness, a violation of the rule of Bisso. Article 4 of the towage agreement prepared by Dillingham (FF 14) is to the effect that the tow’s owner “warrants and represents that the Tow, at the time it is tendered to the Tug for towage (i) shall be seaworthy and in all respects ready for and capable of making the specified voyage, ...” (FF. 16.) CL 4 is that Dillingham was entitled to rely on this “repre- sentation of seaworthiness” and “was under no duty to make a detailed inspection of [YCV-9’s] seaworthiness either before or during the voyage” (emphasis added) (which ignores FF 21 to the effect that there were no grounds for reliance on the representation, since Dillingham’s port cap- tain, Kapele, had actually “ascertained that all recommend- ed towing arrangements were in place, and supervised the hook-up”). CL 5 concludes that YCV-9’s pre-existing un- seaworthiness is a breach of Article 4. 24 Since the District Court failed to consider Poysky’s lack of knowledge as to the barge’s actual condition and his employ- ing Capt. Dickieson to make ’CV-9 ready for sea, and since it holds that the tug, without any inspection, may, without more, merely hook-up and depart and continue to tow with- out regard to a port of refuge nearby and the barge’s worsen- ing condition, the decision in effect imposes another abso- lute warranty (which is what the Circuit Court even said it was) achieving indirectly what the exculpatory clause as to negligence of the tow failed to do in Bisso. (Note the incor- rect quote from Dillingham in CL 7, tellingly omitting the “character of the tow” from what the tug must consider.) See also Boston Metals Co., v. SS WINDING GULF, 349 U.S. 122 (1955) (tower tried to make the tug’s crew employees of the tow) Dixilyn Drilling Corp. v. Crescent Towing & Salvage Co., 372 U.S. 697, 698, 83 S.Ct. 967, 968 (1963), on remand 324 F.2d 272 (Sth Cir. 1963), op.set aside on rehearing 329 F.3d 754 (Sth Cir. 1964) (towage agreement attempted to require tow to indemnify tug for any damage claims by third parties) Hercules, Inc. v. Stevens Shipping Co., supra, 698 F.2d at 738-9 (incorporating COGSA defenses in towage agreement failed) and Fluor Western, Inc. v. G&H Offshore Towing Co., 447 F.2d 35 (Sth Cir. 1971) (clause in towing contract upheld requiring owner of cargo on tow to fully insure with waiver of subrogation, reason for upholding being that right to proceed against tower would still be available if insurer did not pay the claim). Twenty Grand Offshore, Inc. v. West India Carriers, 492 F.2d 679 (Sth Cir. 1974) (same as Fluor), Dillingham Tug & Barge Corp. v. Collier, supra, 707 F.3d at 1089-1090 (same as Fi/uor) and PPG Industries v. Ashland Oil Co., 592 F.2d_.138 (3d Cir. 1978) (on rehearing, following Fluor). Sohoenbaum, ADMIRALTY & MARITIME LAW (1987) states, at 425, that there is “An unsettléd question [as to] the extent to which Bisso forbids clauses limiting liability for damages”. The above cases, however, show the limits drawn on the tug industry’s resourcefullness in attempting to get around Bisso. The absolute “representation” is the newest example and should be vitiated, leaving the tower with no 25 more than what the usual representation requires. As stated in Gilmore & Black, supra, at p. 63 n. 51, “[A] representa- tion need only be substantially true.” To same effect, 41 Tulane L. Rev. 245, 250 and Parks, THE LAW OF TUG, TOW AND PILOTAGE (2d ed.) p. 538 (A representation may “be equitably and substantially answered; ...”). The rule is the same whether the contract be an insurance policy or a towage contract. See Morrison Grain Co. v. Utica Mut. Ins. Co., 632 F.2d 424, 428 n.4 (Sth Cir. 1980). CONCLUSION The petition for a writ of certiorari should be granted. Respectfully submitted, MEADOWS, SMITH & BROWN JOHN F. MEADOWS John F. Meadows Attorneys for Petitioners wo > mo on eh = 0) APPENDICES Order and Judgment of the Court of Appeals Order Denying Petition for Rehearing and Suggestion for Rehearing En Banc Findings of Fact and Conclusions of Law, Order for Judgment Lump Sum Towage Agreement Pacmar Hull Policy (Time) and Endorsement 2 Thereto Hawaii Rev. Stats. 431-419 Marine Insurance Act of 1906 Pacmar’s Letter Denying Claim Reporter’s Transcript Excerpts j +4 a a y la APPENDIX A NOT FOR PUBLICATION United States Court of Appeals FOR THE NINTH CIRCUIT GEORGE POysky, dba ALASKA TOWING CO., and SAMOAN MARITIME, LTD., a corporation, Plaintiffs-Appellants, V. No. 85-2949 PACIFIC MARINE + D.C. No. 82-0731 HMF INSURANCE COMPANY, a ORDER* corporation, and DILLINGHAM TUG & BARGE CORPORATION, in rem, Defendants and Appellees. | BEFORE: POOLE, NORRIS, AND BRUNETTI, CIRCUIT JUDGES. The district court found that plaintiffs failed to establish negligence or any improper performance in connection with the towing operation; that the constructive total loss was not due to abnormal stresses on the YCV-9 barge during towing but was caused by substantial wastage to the wind and water line, a condition which pre-existed the voyage and was itself a breach of plaintiffs’ own warranty for seaworthiness. The district court further found that any slamming damage sus- tained by YCV-9 from the tug, from the other barge on tandem tow, and any pounding damage from the seas, were not sufficient to have caused the loss. These findings are not clearly erroneous. The district court further concluded that the so-called implied warranty of workmanlike service did not subject the * This order is not appropriate for publication and may not be cited to or by the courts of the circuit except as provided by 9th Cir. R. 21. 2a tug to absolute liability; that the burden of proof was not shifted to the defendants because of a “‘duty of explanation” and that plaintiffs were required to, but did not, prove negligent performance. These conclusions proximately flowed from the court’s extensive findings of fact which were supported by a preponderance of the evidence. The judgment in favor of defendants and against plaintiffs is AFFIRMED. Defendants are entitled to their costs on appeal. [File-stamped May 1, 1987] 3a United States Court of Appeals FOR THE NINTH CIRCUIT GEORGE Poysky, dba ALASKA TOWING CO., and SAMOAN MARITIME, LTD., a corporation, Plaintiffs-Appellants, 7” No. 85-2949 PACIFIC MARINE - D.C. No. 82-0731 HMF INSURANCE COMPANY, a ORDER corporation, and DILLINGHAM TUG & BARGE CORPORATION, in personam, and TUG MIKIALA II, in rem, Defendants and Appeilees. J APPEAL from the United States District Court for the District of Hawaii (Honolulu) THIS CAUSE came on to be heard on the Transcript of the Record from the United States District Court for the District of Hawaii (Honolulu) and was duly submitted. ON CONSIDERATION WHEREOF, It is now here ordered and adjudged by this Court, that the judgment of the said District Court in this Cause be, and hereby is afirmed COSTS TAXED Filed and entered May 01, 1987 [File-Stamped October 19, 1987] lb APPENDIX B IN THE United States Court of Appeals FOR THE NINTH CIRCUIT GEORGE PoyskyY, doing business | as ALASKA TOWING CO., and SAMOAN MARITIME, LTD., a corporation, eat clas No. 85-2949 . D.C. No. 82-0731 H-F PACIFIC MARINE INSURANCE CO., ORDER a corporation, and DILLINGHAM TUG & BARGE CORP., in personam, and TUG MIKIALA II, in rem, Defendants-Appellees. | BEFORE: POOLE, NORRIS, AND BRUNETTI, CIRCUIT JUDGES The panel has voted to deny the petition for rehearing and to reject the suggestion for rehearing en banc. The full court has been advised of the suggestion for rehearing en banc and no judge in active service has request- ed a vote to rehear the matter en banc. Pursuant to Rule 35(b) of the Federal Rules of Appellate Procedure, this petition for rehearing is denied and the suggestion for rehearing en banc is rejected. [File-Stamped October 7, 1987] Ic APPENDIX C IN THE United States District Court FOR THE DISTRICT OF HAWAII + GEORGE PoyYSsKY, dba ALASKA TOWING COMPANY, and SAMOAN MARITIME, LTD., a corporation, . Plaintiffs, vs. | CIivit No. 82-0731 PACIFIC MARINE INSURANCE IN ADMIRALTY COMPANY, a corporation, and DILLINGHAM TUG & BARGE CORPORATION, in personam and TUG MIKIALA II, in rem, Defendants. | FINDINGS OF FACT AND CONCLUSIONS OF LAW This matter having come on for trial before the Honorable Harold M. Fong, and the court having reviewed the pro- posed findings of fact and conclusions of law and being otherwise advised of the premises herein, finds as follows: FINDINGS OF FACT 1. Plaintiff George Poysky, Jr. (hereinafter “*Mr. Poysky’’). dba Alaska Towing Company, is a resident of the State of Oregon and maintains offices in Seattle, Washington. Plain- tiff Samoan Maritime Ltd., is a Washington corporation wholly owned by Mr. Poysky. 2. Defendant Pacific Marine Insurance Company (herein- after “‘Pacific Marine”) is an Alaska corporation with its principal place of business in Seattle, Washington. 3. Defendant Dillingham Tug & Barge Corporation (here- inafter ““Dillingham’’) is a Hawaii corporation with its prin- cipal place of business in Honolulu, Hawaii. Defendant Tug 2c Mikiala II is owned and operated by Dillingham. It is in custody of the court through a letter of undertaking given by Dillingham and accepted by plaintiffs. 4. Mr. Poysky is and has been, at all relevant times, engaged in the maritime industry. He has been involved in the operation of tugs in the Samoan and Alaskan trade. He has bought and sold government vessels on previous occasions. 5. The YCV-9 is a 200-foot long, open-decked, double square-ended steel barge with a raked bow and stern. It has a 65-foot beam and is about 12 feet deep. It is divided into eighteen compartments by two longitudinal bulkheads and four transverse bulkheads. The barge was built in 1944 at the Pearl Harbor Naval Shipyard. 6. The barge was stored for several years in the water at Pearl Harbor and was advertised for sale by the United States Navy as “Lighter, Aircraft Transportation” with the warning: “The hull of the YCV-9 is considered to be in poor condition ... each bidder is urged to inspect the craft and rely solely on his own inspection.” The invitation for bid also stated: “In water- used-poor-condition. Total cost $249,384.” (Plaintiffs’ Exhib- it 8). 7. Mr. Poysky spent three days making a detailed inspec- tion of the YCV-9 and several other vessels prior to bidding for the barge. 8. Mr. Poysky was high bidder on the YCV-9. Plaintiffs purchased an interest in it on June 22, 1982, from the United States Navy’s surplus reserve fleet at Pearl Harbor. Other part purchasers included Morton Marine Company, Seattle, Washington, and Max Rouse & Sons, Beverly Hills, California. 9. The barge was surveyed both before and after plaintiffs purchased it by R.W. Dickieson, Inc., Marine Surveying. In the spring of 1982, Captain Dickieson had conducted an in- water survey of the barge for Quigg Brothers McDonald of Aberdeen, Washington, which was considering buying the barge for use as a base for a heavy crawler-type crane. Robert —~a e,ChlUe ee eee eo eee ee W. Long, a naval architect for Quigg Brothers, asked Cap- tain Dickieson to have certain audio gauge tests performed on the barge to determine the thickness of the huil. These tests were performed by Richard A. Schnase, an ultrasonic technician for Coastal Marine, Inc., a subsidiary of the Dick- ieson firm. Only one audio gauge reading was taken of the bottom plating in each compartment (except in compart- ment !C where water prevented a reading). No readings were taken on the bottom plating at the turn of the bilge. None of the readings were performed on the sides of the barge at the wind and water line or below. Mr. Long request- ed the latter readings upon seeing pictures of the barge, but Mr. Schnase had no time to obtain them. Without these readings, Mr. Long concluded that the barge could be safely towed to Seattle and recommended its purchase to Quigg Brothers. 10. Later, Ken Savaloja, representing Coast Marine Con- struction Company, which was interested in purchasing the barge from Mr. Poysky, requested Captain Dickieson to put his notes from the Quigg Brothers survey into the form of a report. The report, dated June 23, 1982, stated that the barge appeared to be sound, but noted that the bottom was not surveyed because the barge was then afloat. The report warned: “No statement, express or implied, is made con- cerning the condition of the bottom. This can only be deter- mined by hauling out the barge.” Mr. Poysky testified that he never knew of the existence of this report by Captain Dickieson. 11. Mr. Poysky did not ascertain the condition of the hull because there was no suitable drydock available to him in Hawaii. 12. Marine Power & Equipment Co., Seattle, Washington, competed with Mr. Poysky for high bidder on the barge. It sent Lloyd Anderson to inspect the vessel at Pearl Harbor. Mr. Anderson, who did not appear at trial but whose deposi- tion testimony was admitted into evidence, testified that he took six to eight ultrasonic readings per compartment, or a total of between 100 and 200 “‘shots.”’ He could not produce 4c any record of his readings. Assuming that the readings were as he remembered, those in the bilge strake portion of the bottom were as low as 0.240 to 0.260 inches. Because he had certain readings elsewhere close to 0.375, Mr. Anderson assumed that this had been the original thickness of the hull. Accepting it as the best available estimate, these readings show wastage in the spots measured of 36.0% and 30.6%, respectively. Both Captain Dickieson and Mr. Schnase testi- fied that, as a general rule, the American Bureau of Shipping requires replacement of plates which are 25% wasted. 13. Mr. Anderson did not see any large holes in the barge, such as would come from collision. He believed from his inspection that the barge was towable. He testified, however, that tropical marine growth, such as barnacles, would eat holes in the bottom plating of any barge, such as the YCV-9, whic’ has lain in tropical waters for a long period of time. Because of marine growth on the underwater portion of such a vessel, he would not consider the condition of its bottom in decicing whether and how to tow it. He testified that there was no way of determining the condition of the bottom plating on such a barge without having it drydocked, and that its buyer would run the risk that extensive repairs would be needed. Mr. Anderson’s testimony as to his barge survey- ing experience shows that he is amply qualified to testify on ultrasonic marine surveying and on the effect of tropical marine growth on the condition of a steel barge hull. 14. Mr. Poysky contacted several tow boat companies, including Sause Brothers, Crowley, and Dillingham, in an attempt to secure a tug to tow the YCV-9 and another barge he had just bought from the naval reserve fleet, the YFNB-6, from Pearl Harbor to Seattle. On September 21, 1982, Rey Jonsson of Dillingham advised that a tandem tow could be arranged for a negotiated price of $75,000. On September 23, 1982, Mr. Poysky appeared at Dillingham’s office in Honolulu, where he reviewed in detail the Lump Sum Tow- age Agreement prepared by Dillingham. He did not question or object to any provision of the agreement. Sc 15. Article 3 of the agreement provided that Dillingham was entitled to charges for delays in transit caused by the fault of the customer. 16. Article 4 provided that Mr. Poysky warranted and represented to Dillingham that the YCV-9 would be sea- worthy at the beginning of the voyage and was ready in all respects for tow to Seattle. 17. Article 12 provided that Mr. Poysky obtain insurance for the full value of the YCV-9 during the tow. Mr.Poysky testified that he understood that, for any loss or damage to the YCV-9 which was or would have been covered by hull insurance, he would look solely to that insurance for compensation. 18. Prior to commencement of the voyage, Captain Dick- ieson was asked to conduct a second survey of the barge to specify the preparations needed to ready the barge for the tow. Although there is some question as to whom Captain Dickieson was working at that time, Captain Dickieson testi- fied that he believed he was working on behalf of Mr. Poysky. He recommended to Mr. Poysky that six tasks be performed to render the barge “ready, in all respects, to be towed to the U.S. mainland.” Mr. Poysky engaged Kevin Moore, one of his employees, to carry out all of these recommendations. 19. Mr. Moore constructed the YCV-9 towing bridle, and surge chain or “pigtail” to the bridle, from used Navy stud link anchor chain which he and Mr. Poysky found in a storage locker on the barge YFNB-6. The age and prior use of the chain were unknown. The bridle chain was between one and one-fourth inches and one and five-eighths inches in diameter. 20. Mr. Poysky’s employees attached an emergency tow wire to a cleat just aft of the double bitt on the port forward side near the bow in accordance with Captain Dickieson’s instructions. This wire was about 200 feet long and one and onefourth inches in diameter. Captain Dickieson testified that the wire was surplus provided by the Navy and that its condition and prior use were unknown. | 6c 21. Due to a prior commitment, Captain Dickieson was unable to attend the hook-up of the YCV-9 to the tug Miki- ala II. Dillingham port Captain Frank Kapele did attend, ascertained that all recommended towing arrangements were in place, and supervised the hook-up. 22. At the commencement of the tow on September 24, 1982, Mr. Poysky gave no special instructions to Dillingham regarding the tow. Visual inspection of the YCV-9 afloat did not disclose any condition suggesting that the barge was unsound or unfit for tow to Seattle. 23. On or about August 2, 1982, Mr. Poysky telephoned his insurance agent, Douglas D. Parks of Gene Sause & Company, Insurance Brokers, Portland, Oregon, to obtain quotations on insurance for the YCV-9 and YFNB-6 during the tow. Mr. Parks obtained the requested quotations from Stan Ogden of Pacific Marine and relayed the information to Mr. Poysky. 24. On or about September 21, 1982, Mr. Poysky called Gene Sause & Company to request insurance on the YCV-9 for the tow. It is disputed whether Mr. Poysky made the call from Hawaii or Seattle; the court finds credible Mr. Poysky’s testimony that he was in Hawaii when he requested the insurance. 25. On September 22, 1982, via telex, Mr. Parks placed, through Pacific Marine, the insurance which Mr. Poysky had requested. This consisted of two forms of coverage for the voyage from Hawaii to Seattle: a protection and indemnity policy, and a hull policy. There was at the time already in effect a time policy for plaintiffs’ tug Eva F. placed by Mr. Parks with Pacific Marine. Mr. Poysky did not seek insur- ance to remain in force after the delivery of the barges at Seattle. He also did not seek or pay for insurance before-the commencement of the tow. He desired only a voyage policy because he had a contract for resale of the barges in Seattle. 26. The telex to Pacific Marine and the confirmation telex- es to Mr. Poysky and additional assureds Max Rouse & Sons and Dillingham each speak in terms of coverage for the voyage, not coverage for a period of time. 7c 27. Before agreeing to provide coverage, Pacific Marine did not possess the Dickieson survey report of June 23, 1982. Pacific Marine did not possess any other information which could reasonably have led it to question the condition of the hull. 28. The contract of insurance made in September was not reduced to writing until October 6, 1982. Mr. Parks then added the voyage policy for two barges as an endorsement to the existing time policy covering the Eva F. The endorse- ment stated: Insurances hereunder attach . . . for a voyage from Pearl Harbor, Hawaii to Seattle, Washington . . . Insurances hereunder commence with the making of the barges for the trip . . . and continue during the course of the voyage until the ““Mikiala II” releases the tow to the Assured at Seattle, Washington or held covered. 29. The YCV-9, in tow of the Mikiala and accompanied by the barge YFNB-6 on a separate tow wire, departed Pearl Harbor on September 24, 1982. 30. When the YCV-9 left Pearl Harbor on Sept- ember 24, 1982, none of the parties to this action knew the condition of the bottom of the hull. 31. During the first two days of the voyage, the tow expe- rienced rough seas. The YCV-9 appeared to be in good condition during and at the end of this period. It had not taken on so much water during the first two days of the voyage so as to begin to list or sink. 32. On the night of September 26, 1982, two days out of port, the tow wire to the YCV-9 parted. 33. Before the bridle broke, the tug’s chief mate, Francis McCummiskey, testified that he had reduced the tug’s speed due to increasing wind velocity and wave height. When the bridle parted, the tug was not traveling at an excessive speed for the prevailing conditions. 34. The next morning, the tug maneuvered to pick up the emergency pennant rigged from the port bow of the barge. 8c After successfully picking up the pennant and attaching a new tow wire, the tug proceeded with the tow to Seattle. 35. Captain Kapele testified that in his 30 years of experi- ence as a tug master it was customary for the tug captain to follow instructions given by the tow’s surveyors. When a surveyor attaches an emergency tow wire to the barge, the barge can be safely towed. Whether or not this towing ar- rangement may be considered “unorthodox,” as plaintiffs characterize it, plaintiffs have not sustained their burden of showing that towing the barge from the corner caused its internal scantlings and hull skin to experience stresses which they were not built to withstand, and that this caused the constructive total loss of the barge. Harold Coachman, mas- ter of the Mikiala, understood on this voyage that it was proper to tow by the emergency tow wire attached to the side cleat, and he did not have any reason to know or believe that towing the YCV-9 by the emergency wire would subject it to any harm. The weather forecast ahead was favorable and the barge did not appear damaged. 36. Plaintiffs’ expert, Thomas R. De La Hunt, testified that it was customary in the towing industry for the marine surveyor to determine the towing arrangements, including how the tow wires were to be secured to the tow. Captain De La Hunt admitted that he had never been told by any marine surveyor that an emergency tow wire was not intend- ed to be used for a long distance tow. 37. Captain Kapele testified that the Navy had established a maximum towing speed of not more than eight knots for the towage of its YCV barges. At no time during the voyage did the tow speed of the YCV-9 exceed eight knots. 38. Captain De La Hunt testified that in his opinion the tug was traveling at an excessive speed when the bridle parted. He could not state, however, what a proper speed would have been. Captain Kapele, Captain Coachman, and Chief Mate McCummiskey testified that they had reviewed the the entire log and had not located any instance of exces- sive speed. The court has also reviewed the log and finds by a preponderance of the evidence that the Mikiala was not 9c traveling at an excessive speed when the birdie broke or at any other time during the voyage. 39. Captain De La Hunt testified that when the bridle broke, the tug should have returned to Hawaii with the YCV-9. He also testified, however, that the captain had several options. Regarding the decision to proceed by towing the barge by its emergency tow wire, Captain De La Hunt testified that his main concern would have been whether the emergency wire would break if the tow were continued. The emergency tow wire did not break during the tow of the YCV-9. 40. The court finds by a preponderance of the evidence that the YCV-9 was not subjected to abnormal stresses caus- ing or contributing to the constructive total loss of the barge as a result of being towed by the corner on the emergency tow wire. Raymond Thurston, a marine surveyor who surveyed the barge on drydock in Seattle on October 19, 1982, testified that he saw no evidence of racking. hogging, or sagging stresses. Dennis Morrell, another marine surveyor who surveyed the barge on drydock in Seattle on October 20, 1982, testified similarly. Plaintiffs’ expert, Captain De La Hunt, did not view the YCV-9 on drydock and has never viewed the internal members of the barge. He is admittedly unfamiliar with how the barge is built and has never towed a similar barge. 41. On October 2, 1982, the barge was slightly down at the bow. Captain Coachman put a man aboard the barge in an attempt to reconstitute the bridle. During this operation, he noticed a crack in an old weld seam. To relieve pressure from that area, he began to tow the barge from the stern. 42. The next day, the tug came alongside the barge. Two crewmen went aboard the barge to move the emergency tow wire from the bow to the stern. They reconstituted the emergency tow wire to the starboard stern cleat in the same manner and configuration as Captain Dickieson had previ- ously secured the emergency tow wire to the port bow cleat. The tug came alongside the starboard side of the barge. The tug’s black rubber fenders were in place and provided a 10c cushion between the side of the barge and the side of the tug. Captain Coachman, Chief Mate McCummiskey, and crew member Francis C. Young testified that the tug did not strike or hit the barge during this operation. Captain Coachman and Mr. Young testified that if the barge and tug had struck each other with sufficient force to cause any damage to the barge, the fender would leave skid marks on the side of the barge. The photographs in evidence show no such skid marks. Captain Thurston testified that if the tug and barge had collided with each other with sufficient force to damage the barge, the tug would have been damaged as well. There is no evidence of any damage to the tug. 43. After the decision was made to complete the voyage to Seattle on the emergency tow wire, the crew exercised pru- dent seamanship during the remainder of the voyage. 44. On October 15, 1982, the tug arrived at Shilsole Bay in Puget Sound, Washington, with the barges in tow. The tow- age time was 21 days. The normal time for a tandem tow is 13 days. 45. The delay in arrival was caused in part by rough weather. How much of the delay was due to weather and how much, if any, to the condition of the barge at the inception of the voyage cannot be determined from the record. rr 46. The barge’s running lights became inoperative during the trip. The Coast Guard would not allow the tug and barge to enter Puget Sound without proper navigation lights. Dil- lingham incurred assist tug charges of $990.00 for the instal- lation of navigation lights. 47. Dillingham incurred port charges of $72.32 for an agriculture inspection upon arrival. 48. On October 19, 1982, Captain Thurston conducted a survey of the YCV-9 while it was on drydock at Lockheed Shipbuilding Construction Company in Seattle. On October 20, 1982, Mr. Morrell, a surveyor with the Salvage Associa- tion, surveyed the barge at the Lockheed shipyard. The cost of the latter survey was $432.00. Te ee | lic 49. Mr. Morrell’s survey report, the trial testimony of Captain Thurston and Mr. Morrell, and the photographs of the YCV-9 establish that the bottom and side of the barge were substantially wasted to the wind and water line, es- pecially at the turn of the bilge. This wastage preexisted the voyage which began on September 24, 1982. 50. During the voyage, but after the barge had en- countered difficulty, Mr. Parks contacted Captain Thurston and asked him to survey the barge when it reached port. Mr. Parks appointed Captain Thurston on behalf of both Mr. Poysky and Pacific Marine, believing that the interests of the insured and the insurer would be identical in a possible adversary relationship to the tug. Captain Thurston believed he was appointed for Pacific Marine. 51. Mr. Poysky was unrepresented by his own surveyor when the barge arrived on October 15, 1982. This was not the fault of Pacific Marine, which did not learn of the loss until October 20, 1982, when it was so advised by telex from Mr Parks. By that time, Mr. Poysky had already retained counsel and the barge was already on the drydock. By the morning of October 21, both Mr, Poysky and his counsel, John Meadows, were aware that Captain Thurston believed he was working for Pacific Marine; Mr. Poysky and Mr. Meadows threatened a bad faith action. This occurred just | before the barge came off the drydock and less than a day after Pacific Marine learned of the loss. , 52. Captain Thurston testified that he was not consciously biased for or against any party in making his survey. Pacific Marine is one of the larger, but not one of the largest, surveying clients of M.A. Stram Associates, Inc., of which Captain Thurston is part owner. Captain Thurston’s brother is vice-president of Foss-Dillingham, a sister company to defendant Dillingham. Captain Thurston testified that they had never discussed this case. 53. Mr. Poysky was represented at the survey by his son and partner, George Poysky, III. 54. During inspection in Seattle, a fracture was found in the barge’s hull. If the tug came alongside in rough seas, it aay te el lt CN ll nay OT | @. 12c could cause a fracture similar to the one found. There is no evidence of rough seas when the tug came alongside the barge on October 3, 1982. Captain Thurston testified that a tear caused by the tug would be horizontal and not vertical, as was the tear in the barge. Mr. Morrell testified that the fracture could have been caused by a collision but he thought it was unlikely because there was metal missing from the area. There is no testimony that the tug was ever alongside the barge at the fracture site, which was about 93 feet from the bow. Captain Coachman testified that he brought the tow alongside the barge’s stern starboard side in changing the emergency tow wire from the bow to the stern. The tug is 91.8 feet long. 55. Damage caused by slamming the barge into heavy seas would be identified by indentations in the hull. Slamming the barge into seas would not cause the loss of the structural members. The metal surrounding the hole in the bow rake was wasted. The plate was missing from the bow rake. 56. The thin edges in areas where the hull plating had fallen out offered no resistance to normal sea conditions. There is no direct evidence that the damage to the bow rake and to the bottom of the barge where metal is missing from the hull was caused by slamming. There is only speculation as to the potential causes. 57. Lockheed and other firms estimated the cost of repairs to make the YCV-9 seaworthy to be far more than the market or insured value of the barge. Therefore, the YCV-9 is a constructive total loss. 58. The court finds by a preponderance of the evidence that the constructive total loss of the barge was caused by severely wasted, deteriorated metal in the bottom and sides of the hull up to the wind and water line. The wastage preexisted the tow’s departure from Pearl Harbor. Regard- less of whether the barge sustained any slamming damage from the tug or from the other barge on the tandem tow, or any pounding damage from the rough seas, any such damage would not have caused the constructive total loss of the barge. 13c 59. Mr. Poysky was represented by experienced maritime counsel from before the arrival of the tow in Puget Sound. Counsel was vigorously representing plaintiff's rights from the beginning, even to the point of threatening to bring a bad faith claim against Pacific marine less than a day after the latter had learned of the loss. 60. George Poysky, III, plaintiff's son, ordered Lockheed to make temporary repairs to the barge while it was on drydock which would be sufficient to keep the barge afloat until it could be beached. Captain Thurston advised him on what repairs were needed and supervised the work. The cost of these repairs, plus the cost of drydocking, was $16,804.00 61. On November 22, 1982, Pacific Marine declined Mr. Poysky’s claim for the insured value of the barge, $225,000, asserting that the assureds breached the absolute warranty of seaworthiness contained in every voyage policy. 62. Pacific Marine conducted a prompt and reasonably sufficient investigation of the matter before it denied the claim. Joseph Copeland, plaintiffs’ insurance expert, primar- ily found fault with the fact that Pacific Marine did not interview Captain Coachman before declining the claim. The reason for declining the claim, however, was that the vessel was unseaworthy at the inception of the voyage due to severe wastage. Thus, there would have been little value to interviewing Captain Coachman. Moreover, Pacific Marine reviewed the vessel’s log before it declined the claim. 63. Mr. Copeland also found fault because Pacific Marine did not review the Coast Guard report of vessel casualty. That report, however, shows no information of significance that was not Known to the insurer when it denied the claim. Dillingham prepared the report forms primarily from the tug’s log. 64. Any of the foregoing findings of fact which are proper- ly conclusions of !aw shall be considered conclusions of law. 14c CONCLUSIONS OF LAW 1. This action is a general maritime action pursuant to Rule 9(h) of the Federal Rules of Civil Procedure. 2. The court has subject matter jurisdiction under 28 U.S.C. 1333 (1982), and venue is properly laid in this district. 3. The tug Mikiala II is not liable for any loss occasioned by the unseaworthiness of the tow. 4. Dillingham was entitled to rely upon the tow owner’s representation of seaworthiness of the YCV-9 and was under no duty to make a detailed inspection of its seaworthiness either before or during the voyage. King Fisher Marine Serv- ice, Inc. v. NP Sunbonnet, 724 F.2d 1181, 1183 (5th Cir. 1984); Nat G. Harrison Overseas Corp. v. American Tug Titan, 516 F.2d 89, 94, modified on rehearing, 520 F.2d 1104 (Sth Cir. 1975). 5. The YCV-9 was unseaworthy at the inception of the voyage due to extreme wastage in the underwater portion of her hull which preexisted the voyage. This constitutes a breach of Article 4 of the Lump Sum Towage Agreement. 6. Towage contracts contain an implied warranty to per- form the required services in a workmanlike manner. Dil- lingham Tug & Barge Corp. v. Collier Carbon & Chemical Corp., 707 F.2d 1086, 1091 (9th Cir. 1983), cert. denied, 104 S. Ct. 1280 (1984). Nevertheless, a tug does not act as either bailee or insurer for the tow, and plaintiffs must prove negligence by the tow to recover for any loss. King Fisher, 724 F.2d at 1184; Stevens v. The White City, 285 U.S. 195, 202 (1932). 7. “The degree of care of the tug is measured with refer- ence to the character of the sea and weather.” Dillingham Tug & Barge v. Collier Carbon & Chemical Corp., 548 F. Supp. 691, 697 (N.D. Cal. 1981), affd in part, rev'd in part, 707 F.2d 1086 (9th Cir. 1983), cert. denied, 104 S. Ct. 1280 (1984). Plaintiffs have failed to sustain their burden of estab- lishing, by a preponderance of the evidence, that the crew of the tug did not exercise reasonable care and maritime skill in 15c towing the barge at the speed at which it was towed and in the sea and weather conditions prevailing. Further plaintiffs have not established that the tug was negligent in towing by the corners of the barge on the emergency tow line. King Fisher, 724 F.2d at 1184; Agrico Chemical Co. v. M/V Ben W. Martin, 664 F.2d 85, 90 (Sth Cir. 1981). 8. Absent proof of negligence by a preponderance of the credible evidence, this court will not second-guess the mas- ter’s judgment; similarly, the testimony of experts evaluating the master’s conduct in hindsight is attributed reduced weight. Esso Standard Oil S.A. v. SS Gasbras Sul, 387 F.2d 573 (2d Cir. 1968), cert. denied, 391 U.S. 914 (1968); Federal Insurance Co. v. SS Royalton, 328 F.2d 515 (6th Cir. 1964). 9. Article 12.6 of the towage agreement requires the owner “to look solely to the applicable underwriter or to any re- sponsible third party” to recover for any loss. Although contractual limitations on liability for a party’s own negli- gence are disfavored, Bisso v. Inland Waterways Corp., 349 U.S. 85, 90-92 (1955), Article 12.6 of the towage agreement is valid and enforceable on these facts because there has been no finding of negligence on the part of the party seeking to exculpate itself. See, e.g., Dillingham Tug, 707 F.2d at 1089-90; United States v. SS President Van Buren, 490 F.2d 504, 508-09 (9th Cir. 1973). 10. The delay provisions of Article 3 of the towage agree- ment are valid and enforceable. Dillingham, however, is not entitled to recover the negotiated price of $8,800 per day for eight days delay or any portion thereof. On the factual record, delay due to heavy weather and delay due to the unseaworthy character of the barge cannot be separated. Dillingham has not carried its burden of proof on the coun- terclaim of showing that the reduction in speed was due to the unseaworthy condition of the vessel, or of proving facts that would allow this court to allocate the delay, if any, due to unseaworthiness and the delay due to weather conditions. 11. Under Article 7 of the towage agreement, Dillingham is entitled to reimbursement for the additional expenses for tug assist of $990.00, the agricultural inspection of $72.32, ' l6c and the Morrell survey cost of $432.00. In sum, Dillingham is entitled to recover $1,494.32 from plaintiffs. 12. Plaintiffs are not entitled to recovery from Dillingham nor from the tug Mikiala II. Dillingham may retain the $75,000 towage fee. 13. Neither plaintiffs nor Dillingham are a “prevailing party” against each other in this action within the meaning of Article 17.7 of the towage agreement. Thus, neither may recover attorneys’ fees from the other. 14. Marine insurance brokers are technically agents of the assured, even though they are compensated by commissions deducted from the underwriters’ premiums. They act as intermediaries both in placing the risk and in handling claims. Lien Ho Hsing Steel Enterprise Co., Ltd. v. Weihtag, 738 F.2d 1455, 1458 (9th Cir. 1984). 15. Although it is the custom for marine underwriters to deal with insurance brokers as agents of the assured, a bro- ker’s agency status arises neither from statute nor from federal admiralty case law. Thus, the law of the state with the greatest interest in the issue controls. Wi/burn Boat Co. v. Fireman’s Fund Insurance Co., 348 U.S. 310 (1955); Lien Ho Hsing, 738 F.2d at 1458. 16. Because Mr. Poysky is a resident of Oregon. and because Mr. Poysky requested insurance through the Port- land offices of Gene Sause & Company, the state of Oregon has the most significant interest in regulating that agency relationship. 17. Under Oregon law, a broker, as distinguished from an agent, does not represent an insurance company but places insurance with whatever company he can induce to insure the risk. The broker therefore acts as the agent of the insured for the purpose of placing coverage. Lien Ho Hsing, 738 F.2d at 1458. 18. Sause was an agent of plaintiffs for purposes of placing the coverage. 19. Federal law governs the interpretation of a policy of marine insurance. Only in the absence of an applicable 2 nA PSN eRe Ld 17c federal rule would state law govern. Bohemia, Inc. v. Home Insurance Co., 725 F.2d 506, 509-10 (9th Cir. 1984); Ahmed v. American Steamship Mutual Protection & Indemnity Asso- ciation, 640 F.2d 993, 996 (9th Cir. 1981). 20. The existence of an implied warranty of seaworthiness in maritime hull insurance policies has long been recognized under federal law. See e.g., D.J. McDuffie, Inc. v. Old Reli- able Fire Insurance, Inc., 608 F.2d 145 (Sth Cir. 1979), cert. denied, 449 U.S. 830 (1980); Gulfstream Cargo Ltd. v. Re- liance Insurance Co., 409 F.2d 974 (Sth Cir. 1969). 21. The court need not determine whether the policy here is more properly considered a time policy or a voyage policy. Compare Gregoire v. Underwriters at Lloyds, 559 F. Supp. 596 (D. Alaska 1982) (discussing the differences between the American and English “rules” regarding time and voyage policies). Regardless of whether the policy is either a time or voyage policy, the constructive loss of the barge was proxi- mately caused by the unseaworthiness of the hull. Because the barge was not reasonably fit for its intended use, plain- tiffs’ breach of their implied warranty of seaworthiness precludes recovery under the policy. 22. This result is unchanged by the “held covered” clause. That clause provides: Held covered in the event of any breach of warranty, or deviation from the conditions of this Policy, at an equita- ble premium to be arranged, notice to be given on receipt of advices. Citing Kalmbach, Inc. v. Insurance Company of the State of Pennsylvania, 529 F.2d 552 (9th Cir. 1976), plaintiffs urge that the “held covered” clause negates the implied warranty of seaworthiness. Unlike in Kalmbach, however, the clause is completely inapposite to the facts in this case. The “equita- ble premium” to which the clause refers is that which the insurer would customarily have charged for the voyage in question had the actual condition of the vessel been known. It is absurd to suggesi that an insurer would consider charg- ing an “equitable premium” for the unseaworthiness present in this case, when such a premium would at least equal the 18 face value of the coverage. Kalmbach is consistent with the only reasonable conclusion: where a breach of the implied warranty of seaworthiness would proximately cause the con- structive total loss of the vessel, the “held covered” clause will not negate the breach. 23. It is unnecessary to determine whether plaintiffs [sic] breached the implied covenant of dealing in utmost good faith. Because the court has found that plaintiffs did breach the implied warranty of seaworthiness, they may not recover for damages proximately caused by the unseaworthiness of the YCV-9. 24. Even if the warranty of unseaworthiness had not been breached, the underwriter would only be liable if the loss had been proximately caused by a peril covered by the policy. Under a marine policy, the assured has the burden of proving that the loss arose from a covered peril. Antilles Steamship Co., Ltd. v. Members Of American Hull Insurance Syndicate, 733 F.2d 195 (2d Cir. 1984); Darien Bank v. Travelers Indemnity Co.654 F.2d 1015 (Sth Cir.1981). 25. The “Perils of the Sea” clause provides: TOUCHING the Adventures and Perils which we, the said Assurers, are contented to bear and take upon us, they are of the Seas, Men-of-War, Fire, Lightning, Earthquake, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters of Mart and Countermart, Surprisals, Takings at Sea, Ar- rests, Restraints and Detainments of all Kings, Princes and Peoples, of what Nation, Condition or Quality soever, Barratry of the Master and Mariners, and all other Perils, Losses and Misfortunes that have or shall come to the Hurt, Detriment or Damage of the said Vessel, &c. or any part thereof. To recover under this clause, plaintiffs would have to show by a preponderance of the evidence that at least one of these perils proximately caused the loss. 26. Perils of the sea are those perils which are peculiar to the sea, and “not the inevitable result of the action of the elements on the fabric of the vessel or its cargo.”’ Darien Fo Neer Oa 19c Bank, 654 F.2d at 1021 (citations omitted). A loss is occa- sioned by a peril of the sea when it results from the unfore- seen action of the sea, and not when it is caused by the defective or deteriorated condition of the vessel. 27. The evidence clearly established that the constructive total loss of the YCV-9 was caused by its deteriorated un- derwater hull. The ordinary wear and tear of the voyage to Seattle is not covered by the Perils of the Sea clause. By’s Chartering Service, Inc. v. Interstate Insurance Co., 524 F.2d 1045, 1047 n.1 (ist Cir. 1975); Capital Coastal! Corp. v. Hartford Fire Insurance Co., 378 F. Supp. 163, 168-69 (E.D. Va. 1974). 28. Because the loss was caused by the unseaworthy char- acter of the YCV-9, the loss here was also not covered by either the additional vessels or additional perils clauses of the policy. 29. The drydocking and temporary repair expenses at Lockheed, and the expenses of beaching and maintaining the barge. the latter of which continue, have also been proxi- mately caused by the unseaworthy condition of the barge and, therefore, are not covered under the policy. 30. Although the forfeiture of insurance coverage it Strongly disfavored, Avemco Insurance Co. v. Chung, 388 F. S_pp. 142 (D. Hawaii 1975), the court concludes that plain- tiffs may not recover against Pacific Marine on the policy. 31. No bad faith was involved in Pacific Marine’s refusal to pay benefits under the policy. Plaintiffs’ claim for exem- plary damages therefore fails. 32. Pacific Marine must pay plaintiffs the sum of $2,250, the premium plaintiffs paid on the YCV-9. Because the entire premium 1s allocated to hull coverage, and no separate premium was paid for protection and indemnity coverage, the entire premium must be returned. 33. Neither plaintiffs nor defendants shall recover their attorneys’ fees or costs. 34. Any of the foregoing conclusions of law which are properly findings of facts shall be considered findings of fact. 20c IT IS SO ORDERED. DATED: Honolulu, Hawaii, October 25, 1985 /s/ Harold M. Fong UNITED STATES DISTRICT JUDGE GEORGE POYSKY, et al. v. PACIFIC MARINE INS. CO.., et al. CIVIL NO. 82-0731 — In Admiralty (Findings of Fact and Conclusions of Law) [File Stamped 10-25-85] Id APPENDIX D LUMP SUM TOWAGE AGREEMENT IT IS AGREED this 23rd day of SEPTEMBER, 1982, between DILLINGHAM TUG & BARGE CORPORA- TION, a Hawaii corporation and subsidiary of Dillingham Corporation, whose principal place of business and mailing address is Pier 21, P.O. Box 3288, Honolulu, Hawaii 96801, (“TUG OWNER”), and ALASKA TOWING, whose mailing address is 18627 First Avenue, South, Seattle, Washington 98148, (*“CUSTOMER’”’), as follows: ARTICLE 1. SERVICES TO BE FURNISHED. 1.1 TUG OWNER agrees to furnish tug MIKIALA II, Official Number 585509, (the “Tug’’), and to use reasonable efforts to tow barges YCV-9 and YFNB-13, (hereinafter col- lectively the ““Tow™). from Pearl Harbor, Oahu, Hawaii, to Seattle, Washington. The towage shall commence on or about September 24, 1982. 1.2 TUG OWNER shall not be required at any stage of performance of this Agreement to proceed to any location which the Tug and Tow cannot safely reach or at which the Tug and Tow cannot at all times of tide and weather safely lie afloat. TUG OWNER does not guarantee any particular speed during the voyage and does not warrant delivery of the Tow at destination at any particular date or time or to meet any particular market or in time for any particular use. 1.3 CUSTOMER shall not deliver or cause to be de- livered to TUG OWNER any cargo or substance for towage pursuant to this Agreement, nor shall the towage of any such cargo or substance be required by the terms of this Agree- ment, the possession or towage of which may result in sei- zure of the Tug or Tow by any governmental authority or other person, firm or corporation. 1.4 All documentation for the Tow shall be the sole re- sponsibility of CUSTOMER and TUG OWNER shall not be responsible for any consequence arising through any act or omission of CUSTOMER in connection with the export or entry declarations in respect of the tow. If TUG OWNER or 2d the Tug incurs a penalty or if the Tug or Tow is delayed as a result of CUSTOMER’s failure to satisfy its obligations in the preceding sentence, CUSTOMER shall reimburse TUG OWNER for any such penalty and shall pay TUG OWNER for any such penalty and shall pay TUG OWNER additional compensation at the rate set forth in Article 3 for any such delay. ARTICLE 2. LUMP SUM CHARGE. CUSTOMER shall pay towage charges to TUG OWNER for the towage service provided for in this Agreement in the lump sum of SEVENTY-FIVE THOUSAND AND NO/100 DOLLARS ($75,000.00), F.I.O., (plus applicable taxes and other charges referenced below in Article 7, PORT AND OTHER CHARGES). The towage charges specified above shall become fully and irrevocably earned by TUG OWNER upon commencement of the towage service regardless of whether or not the Tow or cargo aboard it, if any, is lost, disabled, or the Tow or cargo aboard it, if any, is unable or unfit to continue to destination. Payment of the towage charges (and other amounts required by Article 7 to be paid to TUG OWNER) shall be made by CUSTOMER to TUG OWNER without discount or setoff at TUG OWNER’s of- fice address first set out hereinabove on or before October 15, 1982. ARTICLE 3. DELAY CHARGES. If TUG OWNER is delayed in performing the towage service as a result of the Tow’s not being ready when the Tug arrives to commence towage or thereafter as a result of any cause attributable to the fault of CUSTOMER or to CUS- TOMER’s default in performing this Agreement, CUSTOM- ER shall pay to TUG OWNER for the period of any such delay, in addition to any other amounts required by the terms of this Agreement to be paid by CUSTOMER to TUG OWNER, the Tug’s daily rate of hire at the rate of EIGHT THOUSAND EIGHT HUNDRED AND NO/100 DOL- LARS ($8,800.00) per running (consecutive) day, or fraction of any such running (consecutive) day, payable upon invoic- ing by TUG OWNER; PROVIDED, HOWEVER, if the 3d - period of delay exceeds ten (10) running (consecutive) days, CUSTOMER shall, at TUG OWNER’s option, be liable to TUG OWNER for actual damages for detention at a rate not less than the Tug’s daily rate of hire specified above. ARTICLE 4. TOW WARRANTED SEAWORTHY; MULTIPLE TOWS. 4.1 CUSTOMER warrants and represents that the Tow, at the time it is tendered to the Tug and towage (i) shall be seaworthy and in all respects ready for and capable of mak- ing the specified voyage, and (ii) shall be properly and suf- ficiently equipped with navigation lights, towage shape, chain bridle and towing bitts. 4.2 TUG OWNER shall be responsible for making up the tow and for determining the method and position in which it shall be towed and the time of sailing. TUG OWNER shall have the absolute right to tow more than one towed vessel, whether in tandem or by any other method which TUG OWNER deems proper. 4.3 TUG OWNER is under no obligation to inspect the Tow for seaworthiness. ARTICLE 5. CONDITION OF THE TUG; SURVEY. 5.1 While nothing contained in this Agreement shall be construed as a warranty of seaworthiness of the Tug, TUG OWNER covenants that the Tug, at the time of commence- ment of the towage service under this Agreement, shall be in a seaworthy and serviceable condition to the extent due diligence can make it so and shall be provided with all certificates, licenses and documents required by the United States Coast Guard and the American Bureau of Shipping to perform the specified towage service. 5.2 Prior to the commencement of the towage service a survey of the Tow (and Tug, if required) shall be conducted by a mutually agreeable surveyor at the sole cost and expense of CUSTOMER to enable CUSTOMER and its underwriters to obtain a certificate of surveyors approving the Tug, the Tow and the towing arrangement for the intended voyage. If the surveyor shall recommend a specific voyage route or Ba limitation in speed or anything else which will delay delivery of the Tow and cargo aboard it, if any, at the designated destination or otherwise materially change the scope of per- formance upon which the towage charge in Article 2 above was determined by TUG OWNER, TUG OWNER shall be entitled to receive and CUSTOMER shall pay an additional charge for such delay or change in scope of performance computed at the Tug’s daily rate of hire set forth in Article 3, DELAY CHARGES. ARTICLE 6. VESSEL SUBSTITUTION; DELEGATION. TUG OWNER shall have the right (but not the obligation) without restriction as to number of times to substitute another tug for the Tug, provided the substituted tug shall be equivalent in capacity and capability to the Tug. Any such substitution shall not alter the terms, covenants or condi- tions of this Agreement. TUG OWNER shall have the right to delegate any of its duties under this Agreement, whether by subcontract or otherwise, and to assign this Agreement to an afhliate or successor in interest, provided that no such delegation or assignment shall diminish TUG OWNER’s responsibility to CUSTOMER. ARTICLE 7. PORT AND OTHER CHARGES. CUSTOMER shall be liable for the direct payment, or reimbursement to TUG OWNER if such shall be paid by TUG OWNER, of (i) that portion of all prot charges, pilot- age fees, dockage, wharfage, harbor entrance fees, agency fees, and similar fees for services or use Of facilities, and all taxes (except net income taxes) incurred or accruing as a result of or in connection with services rendered under this Agreement, (ii) all fees. taxes and due levied, assessed or accruing against the cargo or the Tow, and (iii) ramp rental charges, additional tug assistance or barge shifting costs necessitated by CUSTOMER’s instructions or directions or otherwise deemed prudent by TUG OWNER. ARTICLE 8. LIBERTIES. The Tug shall have liberty to said with or without pilots, to tow or be towed, and to deviate for the purpose of repair, 5d assisting vessels in distress, saving life or property, landing any ill or injured person on board or taking on fuel, supplies or other necessaries. ARTICLE 9. CARGO HANDLING. If cargo is to be carried aboard the Tow, CUSTOMER shall be responsible for all cost, risk and expense of loading, stowage, trimming and discharge of cargo on and discharg- ing of cargo from the Tow. In the event that CUSTOMER requests and TUG OWNER consents to use the services of the master and/or crew of the Tug to load cargo aboard or discharge cargo from the Tow, CUSTOMER shall pay TUG OWNER for such services at the cargo handling rate set forth in TUG OWNER’s applicable collective bargaining agreement plus an additional charge of twenty-one percent (21%) to cover handling and administration costs. ARTICLE 10. LIMITATIONS OF AND EXEMPTIONS FROM LIABILITY. — 10.1 TUG OWNER, the Tug and its owners, operators, agents and charterers shall be entitled to assert by way of limitation of or exemption from liability any principle of law or any provision of any statute or regulation of the United States, or other applicable jurisdiction, that affords a vessel and its owners (or a carrier if cargo is carried aboard the Tow) a limitation of or exemption from its liability. The provisions of any such principle of law, statute or regulation, including, without limitation, the Limitation of Liability Statutes of the United States are incorporated into this Agreement by this reference as though fully set forth in this Article. Nothing contained in this Agreement shall be con- strued to deprive TUG OWNER of any other right to limit its liability. CUSTOMER waives any claim that this is a personal contract of TUG OWNER. 10.2 TUG OWNER, the Tug and its owners, operators, agents and charterers shall not be responsible for any loss, damage, injury, death, or delay or failure in performing this Agreement, arising or resulting from acts of God, force majeure, perils of the sea, ice, saving or attempting to save 6d life or property at sea, latent defects in the Tug not discoverable by due diligence, public or proprietary acts of any governmenal authority (whether executive, legislative, judicial or otherwise), labor disputes of whatsoever nature not attributable to a violation of law by TUG OWNER, criminal acts by third parties, war or other hostilities, acts of terrorism, riot or civil commotion, acts or omissions of CUSTOMER or cargo owner or the agents or representatives of either, or any other cause of any nature whatsoever to the extent it is beyond the control and without the fault of TUG OWNER. Regardless of whether or not the same have been [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1160%3A1. Public record. Not legal advice.