The opinion of the court was delivered by: LANE
The above matter comes to this court by way of the original and exclusive admiralty jurisdiction provided under 28 U.S.C. § 1333.
The relevant facts are clear on the record and, for the most part, uncontroverted. On or about March 6, 1962, the Clayton Hardtop Skiff known as Skipton, owned by respondent Piperata, was lost from her winter storage at Beach Haven during a severe coastal storm. On March 20, Piperata executed a proof of loss to libelant Continental Insurance Company, requesting total reimbursement in the amount of $ 10,000 as per the terms of his yacht policy.
Respondent was subsequently contacted by one Douglas McNitt, a marine surveyor and adjuster for Continental. Via a letter of April 2, 1962, McNitt among other things informed Piperata that he would have to abandon the then lost skiff to the Corps of Army Engineers. This procedure met with compliance when respondent did so notify the Army Engineers in a letter the following day.
On April 9, Continental's Marine Office of America requested its local representative, The Thomson Agency, to advise Piperata 'that we reject and disclaim any ownership or interest in the vessel either in part or in whole.' Concerning this practice, Dudley Blond, Hull Claims Manager of the Marine Office of America, testified that the purpose of abandonment was to minimize the liability of both owner and insurer. This measure is taken as a matter of routine, according to Blond, when the insurer is satisfied 'there is a constructive loss or total loss of the vessel.' On April 25, The Thomson Agency forwarded a $ 10,000 check to respondent from the Marine Office of America. At that time, acting pursuant to the April 9 letter and a second letter of April 24, Thomson, in Continental's behalf, apprised Piperata of the insurer's intent to reject and disclaim all ownership interest.
During or about the third or fourth week of May 1962, respondent received information that a boat answering the description of the lost vessel had been discovered in a mainland tributary creek about 25 miles from the point of storage. Shortly thereafter Raymond E. Hosbach, an employee of respondent, identified the craft as the Skipton.
Respecting the situation and condition of the boat as found, Piperata testified that the inside hull, including the motors, was covered with sand and rested in approximately five feet of water. He averred also that the top was completely off, the back pushed in, several bottom ribs broken, and the craft stripped of all accessory equipment and furnishings. Hosbach described the wreckage as 'a hull sitting in mud.' He testified that he characterized the boat remains as 'junk' in a telephone conversation with respondent. Louis Nasife, a fleet sales representative for Sun Oil who had originally discovered the hull, corroborated the testimony of Piperata and Hosbach in substantial detail concerning the Skipton's condition.
Because of respondent's mechanical background and the availability of his similarly-skilled employees, and for, in his words, 'sentimental value,' an effort was launched to salvage the Skipton. Respondent, on May 30, 1962, wrote the Corps of Army Engineers, informing them of this intention. He did not then notify Continental of this endeavor, however, nor did he ever apprise the insurer of discovery and salvage.
After patching the punctured hull, and pumping out the encased sand and water, Piperata and his men attempted to tow the Skipton to Toms River for repair. Despite the operation of a gas line pump and two auxiliary bilge pumps, the vessel began to take in considerable amounts of water after some 25 or 30 miles of towing. Since at this juncture only one of two engines was running, and it in a sporadic manner, and the rudders were severely bent, Piperata drydocked the skiff at Waretown, from which place it was hauled to Toms River by employees of the Silver Bay Marina, Inc., the salvaging boatyard.
The record shows that between May 31, 1962, and July 6, 1963, approximately $ 2,650 was spent in repairing the Skipton. Most of this work came during the period May 31 to July 8, 1962, as indicated by the bills in evidence. Regarding the overall time and effort required for salvage, Piperata testified that he and Nasife worked four, and one-and-a-half days, respectively, in order to float and tow the vessel to Waretown. Hosbach estimated that his part in the salvage operation amounted to about four or five days. Piperata stated also that he worked for some two weeks tearing down and overhauling the motors at Toms River. In addition, he noted that another ten or twelve days were consumed by his personal search for the lost skiff.
The general condition of the Skipton when first returned to the water in October 1962 was 'fair,' according to respondent. He testified that much of the major work at the Silver Bay Marina was of a repair rather than a replacement nature. According to Piperata, he wanted the job done as cheaply as possible, safety being the basic concern. Specifically concerning the motors, respondent testified that the hydraulic system in October 1962 and at the time of trial was water-filled and still contained sand. Respondent also testified he and his wife had used his boat on about six occasions since October 1962. He stated that due to various alleged structural and mechanical difficulties, his longest run during this period was restricted to less than two miles.
It further appears that on October 13, 1962, respondent secured a new yacht policy in the amount of $ 10,000 with the Royal Insurance Company, Limited. The application form for that insurance contained answers advising that Skipton had never been altered, repaired, or rebuilt; that its present market value was $ 12,000, and present replacement value $ 16,000; and that no vessel owned by respondent had sustained accident or loss within the past five years. In arranging this policy, Piperata testified that he proceeded through his local insurance agent, Edward P. Reilly, a representative of Royal. Continental Insurance was not contacted, Piperata said, because Clayton Boat Works, the Skipton's builder, which had set up the original policy, had since gone out of business.
Respecting the Royal application, respondent said that he had signed it in blank and thereafter transferred it to his wife for completion. Reilly, in his testimony, stated that he had given the form to Mrs. Piperata with instructions that she fill it out, have Mr. Piperata affix his signature, then return it to him for forwarding to the insurer. Reilly further testified that at no time did respondent make any representations to him concerning the value of the craft.