A contract was concluded to transport a cargo of rice from the United States to Vietnam on the SS Orient Transporter. The vessel was warranted to be 'tight, staunch, and strong, and in every way fitted for the voyage'. The charterparty incorporated the Carriage of Goods by Sea Act, 46 USCA § 1300 (COGSA) and contained a Jason clause. Any general average contribution was to be payable according to the York-Antwerp Rules 1950.

The vessel sustained damage in two incidents. While loading rice at Mobile, Alabama, and Beaumont, Texas, only partial boiler repairs were made. To complete repairs, the ship was grounded in the Neches River, but the soft riverbed caused mechanical issues, requiring tug assistance and incurring costs.

The vessel left the pier on 14 June 1970. The engine crew was understaffed, and an untrained 17-year-old wiper, Fetaxidis, was promoted to fireman. Firemen were responsible for regulating boiler water levels - an essential and sensitive task. On June 21, Fetaxidis could not determine the water level and improperly opened an extra feed line. An engineer, unaware of this, also added water, fearing low levels. In reality, the boiler was already overfilled, causing water to carry over into the turbines and destroy the high-pressure turbine.

The vessel became inoperable, and was towed to the Panama Canal, and eventually returned to Beaumont. The cargo was transferred, and due to the high repair cost, the vessel was scrapped.

The shipowner filed an action in rem against the cargo interests, seeking general average contribution for damage sustained by the vessel in both incidents. The cargo interests counterclaimed for expenses incurred in unloading, storing, inspecting, fumigating, and reshipping the cargo after the vessel lost its propulsion system through destruction of the high-pressure turbine, and also counterclaimed for recovery of the deposit paid as the cargo’s general average share of salvage expenses incurred in towing the vessel back to port.

The District Court for the Eastern District of Texas held that under COGSA general average did not apply to damage sustained by the vessel caused by unseaworthiness, and the shipowner in neither instance exercised due diligence to make the ship seaworthy. The Court also held that the cargo interests were entitled to recover the salvage deposit and that their other claims were barred by the COGSA's one-year statute of limitations, s 1303(6) [based on art 3.6 of the Hague Rules].

The shipowner appealed.

Held: The District Court's judgment is affirmed.

General average concepts are not free-floating maxims of admiralty law. They have been made subject to COGSA, and the York-Antwerp Rules are typically incorporated in charter parties and bills of lading.

According to s 1303(1) COGSA [based on art 3.1 of the Hague Rules], if the carrier fails to provide a seaworthy ship due to a lack of due diligence, the carrier may not recover in general average for damage proximately caused by the unseaworthiness. The record in this case supports the Court's finding that the vessel's port boiler was in an unseaworthy condition during the Neches River difficulties. The attempt to repair the vessel in this river, consequently making the vessel seaworthy, caused the damage and loss.

According to s 1304 COGSA [based on art 4 of the Hague Rules], when unseaworthiness of the vessel has been proved, the carrier may nonetheless avoid the adverse consequences that would otherwise flow by showing that it exercised due diligence to make the ship seaworthy before the incident. The shipowner made little attempt to offer proof on this point at the trial below. In fact, such a showing could hardly have been made; it was during an attempt to make the ship seaworthy that the damage and loss for which general average contribution was sought occurred.

Recovery was foreclosed here by more than the unseaworthiness of the vessel; the damage and loss complained of did not in any event warrant general average contribution. General average concepts apply only to actions taken for the common safety when the ship and its cargo are in peril. The shipowner's contention that the York-Antwerp Rules 1950 have done away with this requirement was rejected.

First, the York-Antwerp Rules were intended to achieve international uniformity in the adjustment of general average, not to create a new species of general average act. Second, general average act is defined in r A as 'any extraordinary sacrifice or expenditure intentionally and reasonably made or incurred for the common safety for the purpose of preserving from peril the property involved in a common maritime adventure'. It was true that the lettered rules were intended to provide guidance only where the numbered rules did not apply. But the Court was not persuaded that any numbered rules do away with the requirement that the vessel be in a position of peril before the law of general average applies. Rules 10 and 11 concerned expenses incurred at a port of refuge entered as a general average act. Those rules were not applicable to the present situation. Furthermore, even rr 10 and 11 were not limited to actions taken 'for the common safety', a phrase closely related to removal from peril. Finally, it would appear that the shipowner's interpretation of the York-Antwerp Rules would run afoul of s 1303(8) [based on art 3.8 of the Hague Rules] and COGSA s 1303(5) [based on art 3.5 of the Hague Rules].

The vessel was not in a position of peril when resting on the bottom of the river. The decision to ground the vessel was persuasive evidence that the bottom of the river was considered a safe anchorage.

Regarding the second incident, an inadequate crew may create an unseaworthy condition. An inadequate crew may be due either to insufficient manning or to an incompetent crew. Here, there was convincing evidence of both.

The inexperience of a crew member does not, of course, necessarily create an unseaworthy condition. Properly supervised, an inexperienced, untrained individual may learn to become competent. Although it is possible that the incompetence of the fireman or the lack of an oiler might not, standing alone, have had significant adverse consequences, combined they amounted to an inadequate crew and an unseaworthy condition.

In conclusion, seaworthiness was a question of fact. The facts led to the conclusion that the district court's findings were not erroneous.

Under s 1304(2)(a) COGSA [based on art 4.2.a of the Hague Rules], the carrier is not liable for loss or damage to the cargo resulting from negligent management. Negligent management would not foreclose a general average recovery by the shipowner, as would unseaworthiness. The shipowner argued that the destruction of the boiler resulted from the engineer's negligence, not from any unseaworthiness condition. The engineer's action formed the immediate cause of the accident; however, it did not reduce the significance of the inadequacies of the engine room crew. The unseaworthiness was a substantial factor in the accident. It formed a crucial link in the chain of causation, continued unbroken by the response of the engineer.

At best, the engineer's action, and perhaps negligence, was a concurrent cause of the catastrophe; this was insufficient to establish a right of recovery here. When there was more than one effective cause, the fact that one cause was exempted under COGSA did not eliminate the carrier's responsibility for unseaworthiness. The burden of showing that damage was due to a cause other than unseaworthiness fell on the shipowner. Furthermore, when there are concurring causes, the burden is on the shipowner to show how much of the damage resulted from a cause entitled to exemption under COGSA. Because the shipowner had not met these burdens, it must bear the entire loss.

It was not until 3 February 1972, almost 18 months after the vessel had discharged her cargo, that the cargo interests filed any pleadings in this case. The cargo interests argued that the one-year statute of limitation under s 1304(3)(6) COGSA [based on art 3.6 of the Hague Rules] did not apply. The one-year limit did not apply to the claim for reimbursement of the salvage deposit: States Steamship Co v American Smelting & Refining Co 339 F 2d 66 (9th Cir 1964). The other claims were the sort intended to be included within the COGSA time limit. The one-year period applies when the cause of action arose within a year from delivery.