In 1967, the container carrier SS Beauregard, proceeding into the harbour of Rio Hain, Dominican Republic, encountered serious difficulties approaching the entrance because of adverse weather and sea conditions. The vessel grounded while attempting to approach the harbour (Position A). The vessel's master, an experienced mariner, ordered full astern in an unsuccessful effort to release the vessel through its own power. The pilot blew a danger signal requesting assistance, and a tug was at the scene within ten minutes. The tug was directed to the starboard quarter, and a manila hawser was attached to the tug, which took up the slack and pulled while the vessel's engines were kept full astern at the same time. After ten minutes of pulling, as the vessel was beginning to move but before it left the strand, the towline broke. After the line broke, the vessel was pushed sideways to port by the winds and the waves, sustaining bottom damage (Position B). The vessel was eventually refloated and entered the harbour with its cargo and crew safe and sound.

The plaintiffs, the vessel's charterer and its underwriters, sought a general average contribution from the insurer of the cargo interests. The contribution sought was stipulated to be USD 478,816, representing bottom damage incurred during the salvage operation.

A consent judgment in favour of the plaintiff was entered, awarding them the sum of USD 54,231.17 for certain costs of towing and salvage, plus interest. The District Court for the Southern District of New York determined that the substantial bottom damage to the vessel was not a general average loss, which should be rateably shared by the cargo interests.

The plaintiffs appealed.

Held (Hays, Mulligan Cir JJ; Friendly Cir J dissenting): The District Court's judgment is affirmed.

Mulligan Cir J: Modern law and practice relating to the adjustment of general average is determined generally by the York-Antwerp Rules 1950. The plaintiff alleged that the bills of lading issued for the cargo carried on board the vessel provided that 'General Average shall be adjusted, stated and settled according to the York-Antwerp Rules 1950'.

Rule A of the York-Antwerp Rules 1950 defined a general average act as 'any extraordinary sacrifice or expenditure [which] is 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'. There was no dispute that the effort of the master of the vessel to free the vessel from the strand by the use of the tow was an act of general average. The cost of the tow had already been determined and stipulated on that basis. The vessel, the crew, and the cargo were in imminent peril, and the master acted promptly and reasonably for the common good. No negligence on the part of either the master or the pilot caused the stranding.

However, it did not follow that the damage to the bottom of the vessel was recoverable as general average. Rule C of the York-Antwerp Rules 1950 provided: 'Only such losses, damages or expenses which were the direct consequence of the general average act shall be allowed as general average …' [emphasis added]. Moreover, r E provided: 'The onus of proof is upon the party claiming in general average to show that the loss or expense claimed is properly allowable as general average.'

The plaintiffs did not shoulder the burden of establishing that the towing so moved the vessel that it became more vulnerable to natural forces, thereby rendering the bottom damage general average.

The findings of the District Court could not be characterised as clearly erroneous. They were based upon the eyewitness testimony of three experienced mariners (the vessel's master, the pilot, and the tug's master), two of whom were regularly employed in the harbour where the accident occurred. The District Court's challenged findings appeared to be reasonable in light of the evidence.

The plaintiffs warned that an affirmance in this case would encourage refusals to share in general average losses and would open a new line of litigation in an area where general average adjusters' opinions had been dispositive in the past. The general average adjuster, in this case, classified the bottom damage as general average. However, the adjuster's conclusion would probably have been different had the facts been as found by the District Court.

The plaintiff argued that the District Court applied an erroneous test in determining general average. If the breaking of the towline permitted a sideward movement that would not otherwise have occurred, the damage would be general average. The plaintiffs were unable to establish that the tow had permitted the vessel to be pulled free enough to permit a sideward motion that otherwise would not have occurred.

The plaintiffs urged that an affirmance in this case would promote appeals from general average adjustments and discourage masters from saving cargo. On the contrary, this case represented no departure at all from general average principles, and the plaintiffs have simply failed to sustain their burden of proof of direct damage as a result of the general average sacrifice as required by the York-Antwerp Rules 1950. The Court of Appeal had no ambition to encourage general average litigation. In this case, the adjuster accepted the version of the facts received from a person whose opinion was ultimately rejected by the District Court. There was no difference between the court and the adjuster as to the principles to be applied.

Friendly Cir J, dissenting: The majority did not dispute that if the vessel had sustained its burden of proving that the towing operation, with its hazard of a broken tow line, significantly enhanced the risk that the vessel would drift to port and scrape its bottom, the damage would have been a 'direct consequence' of the general average act under r C of the York Antwerp Rules 1950. However, the majority considered that the District Court found, and properly could find, that the manoeuvre did not significantly enhance the risk of what in fact occurred. Friendly Cir J did not read the findings that way.

The District Court shifted from the standard it enunciated at the end of the trial, namely, whether the towing 'materially increased the possibility of the shift from A to B' to the concept that general average would not lie if it was 'more likely than not that the vessel would have shifted roughly to 'Position B', regardless of whether the tow had been attempted.' Since the judges of the Court of Appeal agreed that the former was the correct standard, Friendly Cir J reversed and remanded for explicit findings in regard to it.