The SS William S Halsted collided with the tank steamship Esso Camden in Chesapeake Bay, US. The Halsted had just commenced a voyage to ports on the Baltic Sea, and the Camden was en route to Baltimore, Maryland, from Baytown, Texas, under a charterparty entered into between Camden's owner and its subsidiary.

As a result of the collision, the Halsted was laid up for 17 days, after which it resumed its scheduled run to the Baltic. Upon its return, the season for Baltic trade being over, the Halsted turned to a South American cruise. The Camden, previously scheduled for a two-day lay-off for repairs, was detained for nearly 16 days because of the collision.

An action was brought for damages resulting from the collision by the charterer in possession of the Halsted (the appellant) against the Camden and its owner (the appellee). Both ships were held to be at fault for the collision. A commissioner awarded damages. The District Court for the Southern District of New York approved the commissioner's report with two minor modifications. The final award was as follows:

Damages to the Halsted (by stipulation) USD 41,017.31; detention damages USD 20,342.28 (loss of 17 days profit) plus USD 687.24 (detention maintenance expenses); general average disbursements USD 6,194.83; total USD 68,241.66; recovery of one half, or USD 34,120.83. Damages to the Camden (by stipulation) USD 43,402.38; detention damages USD 20,573.10; cargo damages (by stipulation) USD 1,392.75; total USD 65,368.23; recovery of one half, or USD 33,691.92. The Halsted’s recovery exceeded the Camden's. Accordingly, the appellant was awarded the USD 428.91 difference.

The parties appealed.

Held: The Halsted's damages were reduced to USD 62,494.90. The Camden's damages were increased to USD 72,895.40. Since both parties were at fault, each is entitled to recover one half of its damages from the other. Direction for judgment in favour of the appellee for the difference: USD 5,200.22.

One of the disputed items concerned the commissioner's award to the appellant of USD 6,194.83 for general average disbursements made by the Halsted as a result of the collision, consisting of 6 per cent interest, 2 per cent commission, and 2.5 per cent settling agent's commission.

General average disbursements made by the owner of a ship are funds advanced to meet the extraordinary expenses necessary to keep the ship going after a collision for the benefit of both hull and cargo owners. These funds, in effect, constitute a loan, and the owner is therefore allowed interest on money advanced for the common purpose: r 22 of the York-Antwerp Rules 1924.

The appellee opposed interest on the general average disbursements. It argued that since these disbursements included an amount for repairs to the Halsted, it had been allowed to recover interest on its own collision damages. This was alleged to be contrary to the Court's previous decision that no interest was to be allowed on damages where there was a 'both to blame' collision. The Court's previous decision, however, disallowed interest on the final award for damages before decree; no question of use of money for general average disbursements was involved. The award allowed by the commissioner could not be considered interest on damages. It was payment for the use of money which was necessary to keep the ship underway, and the fact that repairs to the ship were included was immaterial. The 2 per cent commission awarded on Halsted's general average disbursements was expressly provided for in r 21 of the York-Antwerp Rules 1924. The 2.5 per cent settling agent's commission was also a well-established item of recovery.

The Court also affirmed the commissioner's report and the District Court's holdings regarding the use of the charterparty rate as a proper measure of Camden's detention damages and the use of the stipulation as to the deductions necessary to determine Camden's lost profits.

In estimating the loss from 17-day delay, the commissioner used an average of the daily profit for the Halsted's collision and pre-collision voyages to the Baltic, USD 1,227.06 and USD 1,156.36 respectively, and ignored the post-collision voyages to South America which netted the Halsted only USD 413.25 daily profits. A fairer measure of lost profits was the average daily earnings over the entire period of three voyages in evidence. Halsted's damages from detention were reduced from USD 20,342.28 to USD 14,595.52.

The Camden's owner also claimed damages for USD 7,527.17 which it actually expended for maintenance of the Camden during the detention period. The commissioner ruled against the owner. The commissioner's ruling was followed by the District Court on the ground that allowing the expenses 'would involve duplication'. The commissioner was clearly wrong. The holding on this issue was also reversed, and detention maintenance expenses were awarded to the Camden.