author: BARBOUR, District Judge.

text:
    Shirley M. TUCKER and Jim Tucker, Plaintiffs, v. AETNA CASUALTY & SURETY COMPANY, Defendant.
    Civ. A. No. J83-0624(B).
    United States District Court, S.D. Mississippi, Jackson Division.
    June 6, 1985.
    Wayne E. Ferrell, Jr., Jackson, Miss., for plaintiffs.
    David A. Barfield, Thomas L. Kirkland, Jr., Jackson, Miss., for defendant.
   FINDINGS OF FACT AND CONCLUSIONS OF LAW

BARBOUR, District Judge.

This cause came on for trial on the Amended Complaint of the Plaintiffs, Shirley M. Tucker and Jim Tucker, against Aetna Casualty & Surety Company on April 4, 1985, and continued thereafter to conclusion on April 9, 1985.

Plaintiff Shirley M. Tucker brought this action in the Circuit Court of the First Judicial District of Hinds County, Mississippi, against her automobile insurance carrier, Defendant, Aetna Casualty & Surety Company, seeking actual damages under her uninsured motorist coverage for personal injuries and medical expenses incurred, seeking to recover medical expenses under her medical payments coverage, and seeking punitive damages for Aetna’s bad faith refusal to honor Plaintiff's claim for injuries and damages, and intentional tort in using an undisputed claim to settle or reduce a disputed claim and in attempting to reduce statutory uninsured motorist coverages. Defendant removed the action to this Court. The complaint was subsequently amended to join as a Plaintiff Jim Tucker, the husband of Shirley M. Tucker, to assert an additional claim for damage to credit reputation occasioned by lawsuits filed against Jim Tucker due to Aetna’s failure to pay medical expenses under its policy.

FINDINGS OF FACT

Plaintiffs Shirley M. Tucker and Jim Tucker were insured under a policy of automobile insurance issued on July 21, 1982, by Aetna Casualty & Surety Company, Policy Number 87-SR-15237931 PCA, which provided, among other coverages, uninsured motorist coverage and medical payments coverage on two vehicles owned by Plaintiffs. This insurance policy was identical in every respect to the automobile insurance policies Aetna is selling here in Mississippi at the present time.

Plaintiffs purchased separate coverage with the Defendant, Aetna, on the two vehicles, and the policy provided uninsured motorist coverage on each vehicle in the amount of $10,000. Aetna’s writing agent, Horace M. McMurphy testified that a separate dollar amount was included in the total premium to provide uninsured motorist coverage. Although no separate dollar amount is set forth, the policy itself states that the premium for uninsured motorist coverage for each automobile is “included” in the total premium.

The policy provided medical payments coverage in the amount of $2,000. This coverage was excess to any other medical insurance covering the injured insured.

On January 8, 1983, Plaintiff Shirley M. Tucker was involved in an automobile accident with an uninsured motorist in which she received injuries for which she is entitled to compensation under medical payments and uninsured motorists coverages of the subject automobile insurance policy. The accident was entirely the fault of the driver of the other vehicle who was uninsured. Complicating the issue of damages in this case are the facts that the Plaintiff was involved in a second automobile accident on February 3 and that she had a prior medical history of psychological problems and a bad back. It appears from the conflicting evidence that the second accident on February 3 was somewhat less severe than the first accident. Shirley Tucker made a claim concerning this second accident to another insurance company and received a settlement for her injuries resulting from the second accident.

Plaintiff Shirley M. Tucker, by and through her counsel, initially submitted to Aetna for payment medical bills for treatment of injuries incurred as a result of the accident in question totalling $693.60. Included in the original bills submitted to Aetna were ambulance bills and other bills incurred as a result of the second accident. When presented with the claim for payment of medical expenses under the aforesaid policy, Aetna refused to pay Plaintiff unless and until its form agreement entitled “Auto-Rite Policy Medical Expense Agreement” was signed by Plaintiff Shirley M. Tucker. The Auto-Rite Policy Medical Expense Agreement provided that Shirley M. Tucker would agree that payments made under the medical payments coverage of the policy would be applied toward the settlement of “any claim” or the satisfaction of any judgment for damages entered in her favor which she had made or would thereafter make on account of the accident against any person or organization to whom the liability coverage provided by the automobile insurance policy applied.

It is undisputed that the policy Aetna issued to the Tuckers (and to all of the other Mississippians who purchased an Auto-Rite policy from Aetna) contains provisions which limit uninsured motorist coverage in a manner violative of settled Mississippi law. Under the endorsement styled “Protection Against Uninsured Motorists Insurance (Mississippi)” is found the following illegal provision in “III. Limits of Liability”:

(e) The Company shall not be obligated to pay under this insurance that part of the damages which an insured may be entitled to recover from the owner or operator of an uninsured highway vehicle which represents expenses for medical services paid or payable under the Medical Payments Coverage.

The Protection Against Uninsured Motorists Insurance (Mississippi) endorsement was revised in January, 1980. It is noted that this is the Mississippi endorsement drafted, edited and intended to be included in the Aetna Auto-Rite policies issued in the State of Mississippi. Aetna acknowledged in its testimony that it knew that the provision was illegal under Mississippi law. Despite its knowledge of the illegality of the provision, Aetna has intentionally incorporated the illegal provision into its policies as late as July 21, 1982.

It is clear to this Court that Aetna intended for its adjusters to abide by and enforce the aforesaid illegal provision of its policy, since it so instructs its adjusters in its Methods .and Procedures Claim Manual, Section 4275. Under the uninsured motorists (AU, AUP) section, the Methods and Procedures Claim Manual states “also, clearly show that the uninsured motorist payments was reduced by the amount of the medical payment.”

As a condition precedent to its payment of med-pay benefits, Aetna required that the Tuckers execute an agreement which would have had the necessary legal effect of binding the Tuckers to the illegal limitation embodied in the Aetna policy. When the Tuckers refused to execute the Aetna agreement, on the grounds that it was illegal under Mississippi law, Aetna flatly refused to pay the med-pay benefits and cited the Tuckers’ refusal as ground for denial of Mrs. Tucker’s legitimate claim under the policy. When Mrs. Tucker’s lawyer pointed out the illegality of the agreement, Aetna stood on the terms of its policy, and insisted upon execution of the agreement as a condition precedent to making payments under the policy.

Plaintiffs have alleged that the Defendant, Aetna Casualty & Surety Company, has attempted by its use of the Auto-Rite Agreement to reduce uninsured motorist coverage by any payment it makes under medical payments coverage. Plaintiffs’ position is supported by the language found in a supervisor’s memo to the adjuster in this case found in Aetna’s claim file:

Your position re the Auto-Rite Agreement is correct. Remember you don’t double pay the medical — once it is paid under med pay its not paid under AU [uninsured motorist],

Aetna contends, however, that Mrs. Tucker has not been harmed by these illegal provisions, since Aetna alleges it made no attempt to enforce these invalid terms in her ease. Aetna argues that its refusal to pay med-pay benefits without execution of the Auto-Rite Agreement was justified under the terms of Aetna’s policy. Indeed, Aetna has relied upon Mrs. Tucker’s refusal to execute the Auto-Rite Agreement as a breach of this insurance contract which it alleges is sufficiently egregious to relieve Aetna of any liability under the policy.

Aetna contends that its refusal to pay med-pay benefits without execution of the Auto-Rite agreement is authorized by the following policy provision:

MEDICAL EXPENSE COVERAGE
... provided that no such payment shall be made unless the person to whom such payment is made shall have executed a written agreement that the amount of such payment shall be applied toward the settlement of any claim, or the satisfaction of any judgment for damages entered in his favor against any Insured because of bodily injury arising out of any accident to which the Liability Coverage applies.

The Auto-Rite Agreement submitted for Mrs. Tucker’s signature provides:

that such payment [$2,000 med pay benefits] shall be applied toward the settlement of any claim, or the satisfaction of any judgment for damages entered in my favor which I have made or shall hereafter make or obtain on account of this accident against any person or organization to whom the Liability Coverage provided by this automobile insurance policy shall apply;

Although at first blush the Auto-Rite Agreement seems to be identical to the policy term in question, upon close consideration it is apparent that execution of the Auto-Rite Agreement would alter the legal relationship between Aetna and Mrs. Tucker in a manner which would be fundamentally different from the execution, of an agreement in conformity to the language of the policy. This fundamental difference arises because the terms of the policy only require that the med-pay payments be credited against the liability of “any insured” while the Auto-Rite Agreement requires that the med-pay payments be credited against the liability of “any person or organization to whom the Liability Coverage provided by this automobile insurance policy shall apply.” With respect to Mrs. Tucker’s claim, Aetna was in fact liable under the liability portion of its policy, specifically the uninsured motorist coverage required under Mississippi law. Execution of the Auto-Rite Agreement would have had the necessary legal effect of contractually binding Mrs. Tucker to apply the $2,000.00 med-pay benefit she was entitled to receive against Aetna’s liability under her uninsured motorist coverage. Since the Aetna policy affords only the statutory minimum in uninsured motorist coverage to begin with, requiring that Mrs. Tucker agree to this offset as a condition precedent to receiving her med-pay benefits is nothing more or less than a requirement that Mrs. Tucker give up her legal rights in order to obtain the med-pay benefits for which she paid her premiums. It is apparent that both the terms of the Aetna policy and the terms of the Auto-Rite Agreement contemplate and are consistent with the reduction in uninsured motorist coverage (especially when read with the methods and Procedures Claims Manual, Section 4275) specifically forbidden under Mississippi law.

What would be a clear case of bad faith failure to pay entitling the Plaintiffs to punitive damages is complicated in the case by the Plaintiff’s intransigence in refusing to provide narrative medical reports and a medical privilege waiver when requested by the Defendant as required by the policy. The Plaintiff failed and refused to produce documentation such as narrative medical reports, disclose the identity of her other medical insurance coverage and refused to provide the Defendant with a subrogation assignment. The Court further finds that the Plaintiff’s failure to timely waive the medical privilege was unreasonable and prevented the Defendant from attempting to learn what medical bills were actually related to the accident in question. The Plaintiff’s failure to timely waive the medical privilege prohibited the Defendant from undertaking discovery of the treating physicians; prohibited the Defendant from uncovering the Plaintiff’s pre-existing psychological and physical conditions; and prevented the Defendant from discovering the source of other insurance payments for the medical bills allegedly incurred by the Plaintiff, which would have enabled the Defendant to coordinate the benefits as provided by the policy of insurance in question. Approximately one week before the trial of this action the Plaintiff provided the Defendant a “limited medical authorization” which purported to allow the Defendant to contact the Plaintiff’s treating physicians but limited the Defendant’s attorneys to conversations and discussions regarding events that transpired since the accident in question. This action further prevented the Defendant from uncovering the Plaintiff’s pre-existing psychological and physical condition which is highly relevant to the case at bar.

Notwithstanding the Plaintiff’s breach of her obligation under the policy to provide sufficient medical information to enable the insurer to evaluate the claim, this breach is not so egregious as to deny the Plaintiff the right to recover such damages as she was able to establish at trial.

The proof at the trial of this case showed that the Plaintiff did have other medical insurance which had a $750.00 yearly deductible, and after the deductible was paid, the other insurance paid 80% of her medical bills. This testimony came from the Plaintiff, Shirley Tucker, and is undisputed.

The Court finds that Plaintiff, Shirley Tucker, suffered damages as a proximate result of the injuries she received in the January 8, 1983, accident including damages for medical expenses, lost earning capacity, pain and suffering and mental anguish. She is entitled to recover all of the medical expenses incurred between January 8, 1983, and February 3, 1983, the date of the second accident. (Although she testified that a Dr. Temple treated her during this period, no bill was introduced into evidence which would prove the amount of his charges). The second accident aggravated the pre-existing injuries caused by the first accident.

Plaintiff’s pre-existing psychological problems were aggravated by the first accident and were partly responsible for her treatment by Dr. Gray Hillman, a psychiatrist, and her St. Dominies Hospital hospitalization from April 16 to May 9, 1984.

Plaintiff’s pre-existing back problems were aggravated by the first accident and the aggravation was responsible for her treatment by Dr. Donald Humberg, a chiropractor, on January 25, 1983.

Plaintiff was rendered totally disabled for 27 weeks following the first accident as a direct and proximate result thereof. Her wage earning capacity immediately before the first accident was $200.00 per week as evidence by her draw from the family business. She accordingly suffered a total wage earning capacity loss of $5,400.00.

Plaintiff incurred medical bills after February 4, 1983, as itemized hereafter. Thirty-three percent of those expenses were a direct and proximate result of the first accident. The balance of those expenses were incurred as a result of the second accident and of her pre-existing psychological problems.

The Plaintiff has suffered no permanent disability, either physical or mental, as a result of the first accident. Although there was slight evidence of permanent impairment, that evidence was not credible.

Plaintiff is entitled to recover under the medical payments portion of her policy 80% of the total medical expenses attributable to the first accident less the $750.00 deductible. She is entitled to have all of those expenses attributable to the first accident considered as a part of her recoverable damages under the uninsured motorist provisions of her policy. Recoverable medical expenses may be charted as follows:

Medical Expenses incurred Jan. 8, 1983 to Feb. 3, 1983:

Hinds Genera] Hospital ' $151.60 Dr. Donald Humberg, Chiropractor, 135.00 Jackson Radiology Associates 38.00 Super D Drug bills 30.97 St. Dominic Emergency Room 40.00 Lakeland Orthapaedic Clinic 135.00 $530.57

Medical Expenses incurred after Feb. 3, 1983:

Dr. Edward T. James 535.00 St. Dominies (4/16/84 — 5/9/84) 3,524.50 Dr. Gray Hillman 3,090.00 Lakeland Radiologists 79.00 7,138.50 X .33 2,355.70
Total Medical Expenses attributable to January 8,1983 accident— 2,886.27 Less deductible under med-pay— 750.00 $2,136.27 X .80
Total Medical Expenses payable Under med-pay— $1,708.92

Accordingly, Shirley Tucker is entitled to recover the sum of $1708.92 under the medical payments provision. Under the uninsured motorist provision, she has suffered special damages of medical expenses totaling $2886.27 and lost wage earning capacity of $5400.00. Considering these special damages and her pain and suffering and mental anguish, the Court finds that she has sustained total damages as a result of the January 8, 1983, accident of $40,-000.00. However, due to the $20,000.00 limit obtained by stacking the uninsured motorists coverages, the recoverable damages under the policy are $20,000.00.

The Court finds that there was absolutely no testimony or evidence to support a cause of action for damages on behalf of Jim Tucker and, as a result thereof, the Defendant is entitled to a judgment of dismissal with prejudice as against the Plaintiff, Jim Tucker.

CONCLUSIONS OF LAW STACKING

In Government Employees Ins. Co. v. Brown, 446 So.2d 1002 (Miss.1984), The Mississippi Supreme Court held:

We reiterate from Bridges [Hartford Ace. & Indem. Co. v. Bridges, 350 So.2d 1379 (Miss.1977)] that a presumption arises that coverage of multi-vehicles in one policy, where separate premiums were paid for each endorsement of uninsured motorist coverage, is the same as if such coverage was provided in separate policies covering the same vehicles. Any language attempting to limit an insurer’s liability must fail when it deprives the insured of benefits for which a premium was paid.

Id. at 1006. In the case at bar the following language in Government Employees authorizes stacking of uninsured motorist coverage to provide $20,000 coverage:

First, uninsured motorist coverage contained in one policy of insurance insuring three vehicles, and for which a separate premium was paid, can be aggregated.

Id. at 1006. Here, there is no question that there is included in each premium for each automobile an amount which provides for uninsured motorist coverage even though that amount is not expressly stated in dollars. The Court is of the opinion, and so finds, that as a result of having purchased separate uninsured motorist coverage on each of two vehicles, and having paid separate premiums for the uninsured motorist coverage on each of the two vehicles, Plaintiffs are entitled under Mississippi law to stack or combine the uninsured motorist coverages for a total of $20,000.00 uninsured motorist coverage. There is absolutely no legal authority cited by the Plaintiff or known to the Court, however, which would authorize the stacking of medical payments coverage in the insurance policy in question. The basis for stacking uninsured motorist coverage derives from the fact that the uninsured motorist statutes of the State of Mississippi rule and govern over the policy of insurance in question. There are no statutory provisions in Mississippi which effect medical payments coverage contained in insurance policies. Accordingly, stacking of medical payments coverage is not proper and the Plaintiff is entitled only to compensation within the policy limit of $2,000.00.

PUNITIVE DAMAGES

A. Medical Payments Claim.

It is the responsibility of the trial judge to determine whether or not there was an arguably reasonable basis, either legal or factual, for the defendant’s failure to pay the claim. Blue Cross and Blue Shield of Mississippi, Inc. v. William T. Campbell, 466 So. 833, on petition for rehearing, decided April 10, 1985, in the Supreme Court of Mississippi, Cause No. 54,-744. If the trial judge finds that there was a reasonably arguable basis to not pay the claim, whether such reasonably arguable basis be in fact or in law, then the plaintiff is not entitled to punitive damages. Id. “Any plaintiff asking for punitive damages or any special or extraordinary damages based upon ‘bad faith’ of an insurance company has a heavy burden.” Id. It is the opinion of this Court that the Defendant had a legal and factual basis for not paying the medical payments claim as presented.

Additionally, the Plaintiffs are not entitled to punitive damages in that an arguable basis to deny payment exists when there is a dispute as to whether the plaintiff has satisfied a condition of the policy. New Hampshire Insurance Co. v. Smith, 357 So.2d 119 (Miss.1978). In Smith, the Court held that the insurer was entitled to medical reports or an authorization to consult with the plaintiff’s physician. When the insured offered neither, the insurer was not wrong in refusing to pay the claim. The Smith case is directly on point with the case at bar and punitive damages are improper. See also O’Conner v. Equitable Life Assurance Society, 592 F.Supp. 595 (N.D.Miss.1984).

B. Uninsured Motorist Claim.

The question now before this Court is whether Aetna’s issuance of a policy of insurance in violation of settled Mississippi law and its insistence that Mrs. Tucker execute an agreement under which she would be bound to the illegal provision, coupled with Aetna’s refusal to pay benefits admittedly owed until the agreement was executed, constitutes bad faith on the part of Aetna as a matter of law with regard to the uninsured motorist coverage.

The policy provision in question violates the Mississippi rule of substantive law announced in Harthcock v. State Farm, 248 So.2d 456 (Miss.1971) and Talbot v. State Farm, 291 So.2d 699 (Miss.1974). Both Harthcock and Talbot were concerned with the interpretation of § 83-11-101, Mississippi Code Annotated (1972), mandating the inclusion of certain minimum amounts of uninsured motorist coverage in every automobile insurance policy issued in Mississippi.

In Harthcock, the court considered whether an insuror could rely upon an “other insurance” clause in an automobile policy to reduce the uninsured motorist coverage under its policy by the amounts the insured collected from “other insurance.” The court held that the insuror could not validly reduce uninsured motorist coverage below the statutory minimum by inserting a policy provision reducing its uninsured motorist coverage by the amount received from such “other insurance.” If this holding were not clear enough, in Talbot the court specifically held that a policy provision reducing uninsured motorist coverage by the amounts paid under the med-pay provisions of a single policy was invalid and a violation of § 83-11-101, Mississippi Code Annotated (1972), as amended.

Aetna, through the testimony of its adjuster, agreed that the provision of subsection (e) of “HI. Limits of Liability” was unlawful and that the provision clearly violated Mississippi law.

Aetna contends, however, that the presence of these illegal terms in its insurance policy does not indicate bad faith or gross negligence on its part, since it never attempted to enforce that provision, nor did it enforce subsection (a) of the Auto-Rite Agreement, which states that the insured:

agrees that such payment shall be applied toward the settlement of any claim, or the satisfaction of any judgment for damages entered in my favor which I have made or shall hereafter make or obtain on account of this accident against any person or organization to whom the Liability Coverage provided by this automobile insurance policy shall apply____

Aetna provided no written claim guideline or provision in any claim manual which superseded the policy language, the provision in its claims procedure manual, or any written guideline stating the waiver of the illegal provision in its policy or that it waived the provision of subsection (a) of the Auto-Rite Agreement. Aetna also failed to show that it provided an adequate procedure to prevent erroneous denial of claims.

The Fifth Circuit has specifically addressed the issues in this case in Richards v. Allstate Ins. Co., 693 F.2d 502 (5th Cir. 1982). In Richards, Larry Richards filed a diversity suit against Allstate Insurance Company, seeking actual damages for injuries sustained in an accident, as well as punitive damages for Allstate’s bad-faith refusal to honor his claim for those injuries. At trial, the jury awarded plaintiff $2,500.00 as compensatory damages and $750,000.00 as punitive damages. The district judge ordered a remittitur of punitive damages to $375,000.00, which Richards accepted. On appeal, the Fifth Circuit affirmed, stating:

Mississippi Law requires all automobile insurance policies to provide at least $10,000 coverage for personal injuries sustained in accidents caused by motorists who have no insurance. See Miss. Code Ann. § 83-11-101. The focal point of this litigation is Exclusion 2 of the policy issued by Allstate to Richards, which attempted to limit such coverage. This provision, which was for many years part of Allstate’s standard Mississippi automobile policy, totally excluded from uninsured motorist coverage injuries suffered by an insured while occupying a vehicle owned by him but not specified as insured under his policy.
Allstate retained Exclusion 2 in its standard policy until 1981 despite the fact that in 1973 the Mississippi Supreme Court struck down a similar exclusion in another company’s policy in Lowery v. State Farm Mutual Automobile Insurance Co., 285 So.2d 767 (Miss.1973). Allstate officials admittedly were aware of the Lowery decision and its fatal effect on Exclusion 2. They did not, however, delete the exclusion from their standard policy. Nor did they make any effort to inform their insureds or their sales agents of the effect of Lowery. Instead, mid-level claims personnel were instructed to honor claims that otherwise would have been denied in reliance on Exclusion 2. Unfortunately, as the result of a series of mistakes, this procedure failed in Mr. Richards’ case and his claim was denied.

Id. at 504. Richards goes on to review negotiations between Allstate’s adjusters and supervisors and Mr. Richards’ lawyers and those who worked for Mr. Richards’ lawyers and states:

Allstate contends first that this is not a proper case for an award of punitive damages. The leading Mississippi case on punitive damages in an insurance claim setting is Standard Life Ins. Co. of Indiana v. Veal, 354 So.2d 239 (Miss. 1978). There the court recognized that punitive damages are not to be awarded unless the breach of the insurance contract is attended by an intentional wrong or such gross negligence as to amount to an independent tort. But the court allowed punitive damages, finding that the company had denied a legitimate claim for a reason clearly contrary to the express provisions of the policy. The court equated gross negligence with a refusal to pay not based on a legitimate or arguable reason.
This circuit has recognized Veal’s two-part “legitimate or arguable reason” rule to mean that the absence of (1) a justifiable reason, or (2) an arguable basis under Mississippi law, for refusal to pay a valid claim creates a jury issue on punitive damages. Black v. Fidelity & Guaranty Insurance Underwriters, 582 F.2d 984, 990-91 (5th Cir.1978). In this case we conclude that under Veal submission of the punitive damages issue to the jury was compelled by the proof.
At trial Richards alleged that three separate but related actions of Allstate justified a punitive award: (1) retention of the invalid Exclusion 2 in the standard Allstate policy; (2) failure to provide an adequate procedure to prevent erroneous denials; and (3) denial of Richards’ claim itself. The jury was properly instructed on all three. We need go no further than the first allegation to uphold their verdict under the facts in this record.
As we have noted, the Lowery decision in 1973 invalidated Exclusion 2. Although aware of Lowery, Allstate decided not to delete the exclusion from its standard policy. Instead, a procedure was established within the claims department that Allstate thought would be adequate to prevent erroneous denial of claims that were valid but for Exclusion 2....
Allstate urges that its procedure was successful in every case except Richards’. Even accepting this as true, this procedure provided no remedy for those policy holders who read Exclusion 2, assumed their injuries were not covered, and failed to file claims. Failure to delete Exclusion 2 in effect represented a corporate decision by Allstate not to inform its policyholders of undisclosed coverage required by Mississippi law. Whether this conduct was sufficiently culpable to justify an award of punitive damages was a question for the jury. The jury obviously believed that it was.

Id. at 504-05. In Richards, Allstate had alleged several justifications for its illegal provision and alleged that all deficiencies were corrected in the policy. However, the Fifth Circuit commented on Allstate’s attempt to explain away the illegal provision:

This argument strains credibility. If it were accepted, Allstate could include in its policies any sort of invalid exclusion and then rely on change provision 5 when challenged. This would mean that policyholders, not insurance companies, would bear the burden of keeping abreast of changes in the law. Clearly this is not the intent of Mississippi’s insurance code.
Exclusion 2 as written and as retained in Allstate’s policies from 1973 until well after 1977 was invalid under Lowery. Under the court’s instructions, the jury necessarily found that Allstate’s failure to remove Exclusion 2 from its standard automobile policy until after this suit was filed was grossly negligent. This finding is supported by the proof.

Id. at 505.

Aetna retains an unlawful provision in its Auto-Rite policy despite the fact that in 1971 (Harthcock, supra), in 1973 (Lowery, supra), and in 1974 (Talbot, supra), the Mississippi Supreme Court has stricken down similar exclusions in the policies of other companies. Aetna continues to retain the provision in its policy, buttressed by a claims procedures manual which dictates that adjusters enforce the provision, and buttressed further by the requirement that its insureds sign the agreement to enforce the illegal provision as a condition precedent to payment of med-pay benefits. Aetna not only retains the provision in its policy, it continues to insist on enforcement of the provision, as supervisor Meek instructed claim representative Riddick, “No med pay Auto-Rite agreement — no pay medical,” and as district supervisor Johnny Dollar instructed claim representative Edwards, “Remember, you don’t double pay the medical — once it’s paid under med pay it’s not paid under AU.” Aetna officials admittedly were aware of Talbot and its effects on the exclusion (paragraph (e) under “HI. Limits of Liability”). Aetna not only failed to inform its insureds of the effect of Talbot, but continued to insist that its insureds participate in enforcement of the illegal provision, despite Talbot.

Aetna’s conduct evidences its total disregard for the laws of the State of Mississippi and its total disregard for the rights of its insureds under those laws.

It is the opinion and finding of this Court that the actions on the part of Aetna Casualty & Surety Company in maintaining the illegal provision in its policy for more than eleven years after the Mississippi Supreme Court had declared similar provisions to be invalid and in maintaining a procedure in its claims manual (which was being used in Mississippi at the time of the initial adjustment of this file) which instructs Aetna’s adjuster to enforce the illegal provision of its policy, constitutes gross and willful negligence on the part of Aetna and entitles Plaintiffs to punitive damages. It is further the opinion of this Court that the actions of Aetna were attempts to reduce the uninsured motorist coverage by amounts of payments made under the medical payments coverage of the policy in question. The actions of Aetna were in violation of Mississippi law, and constitute willful and gross negligence and constitute an intentional and independent tort. The Court is further of the opinion that the Defendant, Aetna, has acted in a careless and reckless manner with disregard for the rights of Plaintiffs as insureds under its own policy. In Richards, supra, the Fifth Circuit stated the policy on punitive damages as follows:

Punitive damages are awarded not as compensation to the plaintiff but as “punishment for the wrongdoing of the defendant and as an example so that others may be deterred from the commission of similar offenses____” Snowden v. Osborne, 269 So.2d 858, 860 (Miss. 1972) ... See Standard Life Ins. Co. of Indiana v. Veal, 354 So.2d at 249. An additional consideration in determining whether a punitive award is excessive is whether the plaintiff has performed a public service by bringing the wrongdoer to account. See Fowler Butane Gas Co. v. Varner, 244 Miss. 130, 151, 141 So.2d 226 (1962). Here Richards’ suit has benefited all Allstate policyholders by directly causing deletion of Exclusion 2 from the standard Mississippi policy

Id. at 505-06.

The Court concludes that the Plaintiff, Shirley M. Tucker is entitled to a judgment against Aetna in the amount of $1,708.92 under the medical payments coverage and in the amount of $20,000.00 under the uninsured motorist coverage.

Had Plaintiff and her counsel been more interested in submitting sufficient medical information to justify payment of her claim and less interested in building a punitive damage claim, the Court would have been inclined to award a substantial punitive damage sum. However, to do so in this case would unjustly enrich the Plaintiff. Notwithstanding the Plaintiff’s intransigence in this case, the Defendant has maintained an illegal policy provision in its policies and has sought to enforce it in this case. The Court is of the opinion that an award of punitive damages in twice the amount of actual damages would fulfill the public policy of deterring such wrongful conduct of the Defendant in the future without unduly rewarding the Plaintiff for her conduct which contributed to this result. Accordingly, the Plaintiff is entitled to $43,417.84 as punitive damages.

A separate judgment in the total amount of $65,126.76 pursuant to Rule 58 of the Federal Rules of Civil Procedure will be entered by this Court with this Order.

      . The Defendant takes the position that its medical payments coverage is excess to any other medical insurance coverage which the Plaintiff had at the time of the accident. The basis for this contention is Exclusion (n) which appears on page three of the policy. The Plaintiff has asserted that this provision has been replaced by the Mississippi Uninsured Motorist Endorsement contained in the policy. The policy in question is divided into two parts. Under Part One, the policy contains four separate coverages — liability coverage, medical expense coverage, uninsured motorist coverage, and accidental death benefit coverage. On pages two and three of the policy, the exclusions which are applicable to the various coverages are set forth. Exclusion (n) appears on Page 3 and relates to the medical expense coverage. Exclusion (n) applies only to medical expense coverage and not uninsured motorist coverage. Therefore, Exclusion (n) was not replaced by the Mississippi Uninsured Motorist Endorsement since it was never applicable to uninsured motorist coverage. The Mississippi Uninsured Motorist endorsement of the policy has no effect on the other coverages under Part One of the policy, such as liability coverage, medical expense coverage or accidental death benefit coverage, and has no effect on the exclusions and conditions imposed upon those other coverages. Accordingly, the coverage under the Medical Payments Coverage of the policy is excess to other medical insurance which the Plaintiff may have.


source: Caselaw Access Project

author: FAKE, District Judge.

license: Public Domain

text:
    RYERSON v. MORRIS & E. R. CO. et al.
    No. 1764.
    District Court, D. New Jersey.
    June 26, 1945.
    See, also, 53 F.Supp. 713.
    Stipulation
    This stipulation entered into this 16th day of May, 1945, between Haines & Chan-alis (by Patrick J. Maloney), representing the plaintiff, and John A. Laird, representing the defendants, is entered into to assist the Court in determining the issue of whether or not upon the admitted facts a tenancy in common exists between the parties.
    It is stipulated that neither the plaintiff nor her predecessor in title, Sarah E. Ryer-son, claim any actual physical possession of the premises in dispute.
    Plaintiff’s claim of title derives from a deed dated March 19, 1872, by Jonathan Dixon, Jr., one of the Masters of the Court of Chancery of New Jersey, under a sale in partition of the property of one Joseph Danielson.

      Danielson’s title derives from deed of Selah Hill, dated August 2, 1852, recorded October 18, 1872 in Book 249, p. 66.
    Selah Hill’s title derives from the deed of Lorenza Jacquins, Sheriff, dated April 9, 1850, recorded in Book 15, p. 652, the Sheriff’s deed having been executed as the result of the foreclosure of a mortgage made by one Philip Smith to the Trustees of the Inhabitants of Township of Bergen, dated November 26, 1831. The premises in dispute (11.62 acres) were not mentioned in the bill filed to foreclose this mortgage, and it is accordingly stipulated that Hill had no legal title to convey to Danielson.
    The parties further stipulate that the deed from Jonathan Dixon, Jr., ran to Sarah E. Ryerson and Theodore F. Mer-seles and that plaintiff, Jessie L. Ryerson, is the administratrix of the estate of Sarah E. Ryerson, deceased, and her heir-at-law. By deed dated June 3, 1876, recorded Book 299, p. 133, Merseles conveyed his undivided one-half interest to John P. Sunder-land, and that by deed dated July 3, 1879, recorded Book 334, p. 66, Sunderland conveyed said one-half interest to Oscar O. Shackelton and that Shackelton, by deed dated March 31, 1883, recorded in Book 378, at p. 205, conveyed said undivided one-half interest to Julia F. Sunderland. By deed dated June 15, 1883, recorded Book 381, p. 208, John P. Sunderland and Julia F. Sunderland, executed a blanket deed to Morris and Essex Railroad Company, conveying a tract of land described as follows: “All those lands lying together in the Township of North Bergen, County of Hudson and State of New Jersey, being part of the Secaucus Patent, lying and being between the following general boundaries ; on the north by Division Ditch; on the east by a tract of 11 acres and 80/100, contained in two deeds from John P. Sun-derland and wife to Charles Siedler, and dated July 3, 1879, and the other dated May 20, 1880; on the south by the middle of Division Creek, and on the west by three tracts now or lately of Moses Taylor, and one tract now or formerly of the heirs of Abraham Sanier and a ditch or neck from the Sanier tract to Division Creek, being all of the lands lying within and between the said general boundaries and contained about 46 acres more or less.”
    The plaintiff claims that this description embraces the locus in quo, and the parties agree that Julia F. Sunderland never expressly conveyed “an undivided one-half interest” in the locus in quo to the Morris & Essex Railroad; but whatever interest she may have acquired by her deed from Shackelton (Book 378, p. 205) was subsequently conveyed to the Morris & Essex Railroad Company, in 1898, by blanket deed (Book 697, p. 533).
    The parties further stipulate and agree that the locus in quo, a tract of 11.62 acres, was, so far as the ascertainable records disclose, first conveyed by Philip R. Earle, guardian, to Philip Smith, by deed dated August 13, 1813, recorded in Book T 4, p. 333; that Philip Smith mortgage said premises (among other tracts) to the Trustees of the Inhabitants of the Township of Bergen, and that, as hereinabove stipulated, said tract was not foreclosed.
    The parties further stipulate that by deed dated August 14, 1879, recorded Book 371, at p. 483, Morris Smith and others, described as “the surviving children and heirs-at-law of Philip Smith, deceased”, conveyed a tract of 11.62 acres by metes and bounds description and using the same general courses used in the deed of Dixon to Ryerson and Merseles through which the plaintiff claims, to Julia F. Sunderland, and that by deed dated May 2, 1883, recorded in Book 378 at p. 421, Julia F. Sunderland by this same description conveyed this 11.62 acre tract to the Morris and Essex Railroad Company.
    The parties further stipulate that a search of the records indicates a number of other conveyances into the Sunderlands (and out of the Sunderlands to the Morris & Essex Railroad Company) of various other tracts in the neighborhood and on May 16, 1898, Julia F. Bunker (formerly Julia F. Sunderland) and others executed an all-inclusive deed to the Morris & Essex Railroad Company embracing all lands in the County of Hudson over which any railroad of the Morris & Essex runs or within one mile thereof, which deed is recorded in Book 697 page 533.
    The parties to this stipulation waive a trial by jury on the question of whether or not the paper title, as herein stipulated, discloses a tenancy in common between the parties, and agree that should the Court find that tenancy in common does not exist, that such determination will be dispositive against plaintiff’s right of recovery in this litigation and will be a final disposition of the controversy so as to be the subject of an appeal to the Circuit Court of Appeals.

      A trial by jury is waived only to the extent of having the Court determine on this stipulation the question of tenancy in common.
    Haines & Chanalis and Patrick J. Ma-loney, both of Newark, N. J., for plaintiff.
    John A. Laird, of Hoboken, N. J., for defendants.
   FAKE, District Judge.

This is an ejectment suit. The parties have waived the right of trial by jury and have stimilated the facts relating to the titles involved, which stipulation is filed herewith.

. The property involved consists of a rectangular tract containing 11.62 acres of land situate in the Town of Secaucus, formerly the Township of North Bergen, in the County of Hudson and State of New Jersey. Prior to the year 1870 when defendant’s railroad was constructed over the premises, it was an unenclosed piece of salt marsh or meadowland affected by the tides and contained no buildings or structures of any kind.

It appears that in the year 1813 a' deed was made by one Philip R. Earle, as Guardian, to Philip Smith, conveying five parcels of land, one of which parcels is the 11.62 acres with which we are here concerned. In 1831 the said Smith and his wife mortgaged this and other property to the Trustees of the Inhabitants of the Township of Bergen to secure the sum of $2,000. This mortgage was foreclosed, resulting in a sheriff’s deed to one Selah Hill in the year 1850, but for some unexplained reason the premises in question were omitted from the sheriff’s deed, thus leaving the title thereto still vested in Philip Smith after the foreclosure. In 1852, however, the said Selah Hill and his wife purported to convey the same to one Joseph Daniel-son. That deed was not recorded until October 18, 1872, and in the meantime Daniel-son had died and the premises became involved in a partition suit between his heirs, resulting in a deed dated March 19, 1872, by Jonathan Dixon, Jr., as a Master in Chancery, to Sarah E. Ryerson and Theodore F. Merseles, as tenants in common, recorded April 30, 1872. The alleged title of the plaintiff comes through the will of the said Sarah E. Ryerson. Nothing else appearing, we might stop here and find that plaintiff has no title upon which her ejectment suit can be based, but as we shall see, the problem is not quite so simple.

As noted above, Theodore F. Merseles is purported to have become a tenant in common with Sarah E. Ryerson in the year 1872, and thereafter in 1876 the said Merseles and his wife proceeded to convey an undivided one-half interest to John P. Sunderland, and in the year 1879 Sunder-land conveyed the same to Oscar O. Shack-elton, who, on March 31, 1883, conveyed the same to Julia F. Sunderland, a sister of John above mentioned. On June 15, 1883, John P. Sunderland and his wife and Julia F. Sunderland deeded a tract of land of about 46 acres, including the premises in question, to defendant Morris & Essex Railroad Company. Thereafter, in 1898, they delivered a confirmatory deed to said Railroad Company.

In 1879 Morris Smith et al., surviving children and heirs at law of Philip Smith, deceased, conveyed the premises to Julia F. Sunderland. On May 2, 1883, the said Julia F. Sunderland conveyed the same to Morris & Essex Railroad Company, one of the defendants herein. Thus it would appear from the record that the said defendant railroad company obtained title in fee simple to the premises, unless it can be made to appear that, by virtue of plaintiff’s alleged title as heretofore set up, the defendant’s purchase last above mentioned enures to the benefit of plaintiff as a tenant in common.

The question to be answered here is: Are the plaintiff and Morris & Essex Railroad Company, or were their predecessors in title, ever tenants in common of the property?

As has been noted, the true or valid record title to the premises in question was vested in Philip Smith by deed in the year 1813, and the title remained in the said Smith and his heirs until the year 1879 when the heirs made a deed to Julia F. Sunderland. The premises in question having been omitted from the description in the sheriff’s deed to Selah Hill in 1850, the said Hill took no title thereto by virtue of that deed, and those who have since taken under Hill, including both plaintiff and defendant herein, did not become vested with the title by any of the transfers based on Hill’s title since these respective titles can rise no higher than the source from whence they flow. The public records in the County Clerk’s Office constituted statutory constructive notice to all persons, and these records disclose clearly that the only valid title was that which was acquired through the Smith heirs, and plaintiff took no interest therein whatever.

It cannot he said that because plaintiff’s predecessors in title and defendants’ predecessors in title appeared as grantees in deeds which purported to convey, but actually conveyed no title, they became tenants in common. To constitute a tenancy in common for present purposes there must be an estate upon which it operates. Here there is no estate either in law or in equity. True this is said in the absence of any New Jersey case directly in point. The logic, however, seems inescapable.

It appears that through mesne conveyances the defendant finally became vested with a good title in fee through conveyances out of the heirs of Smith; but it cannot be ruled that such purchase by defendant enures to the benefit of plaintiff because, so far as this record discloses, there was no privity of any kind between the defendants and plaintiff or their predecessors in title. Neither of the grantees owed any duty to the other in relation thereto.

There are numerous cases holding that under certain circumstances one tenant in common must permit his cotenant to share in any purchase he may make affecting the estate. In most, if not in all such cases, there is an estate in common to commence with. Speaking on the subject in 54 A.L.R., at page 882, the writer says: “The doctrine, moreover, is one of equitable cognizance, and is not applied by hard and fast rules, but so as to do justice among the tenants, considering the facts of the particular case.” Here it is quite impossible to discover any equitable basis upon which to conclude that the purchase by the defendant should enure to plaintiff’s benefit. Further, on the same page above cited, the writer says: “According to some courts, the rule applies only where there is a comity of interest in a ‘defective’ title, and it does not apply if the parties acquired no title whatever by the purchase upon which they rely as creating the relation of tenants in common; in the latter case, one of them may thereafter acquire the title to the property and’appropriate it for his own exclusive benefit.” I adopt this reasoning.

Neither in the briefs nor in an independent search has any New Jersey case been found bearing directly on such facts as those presented here. It is my view that in the absence of any title whatever between the parties hereto the defendant cannot be forced to share the benefits derived through its purchase of the Smith title.

Judgment will be entered for the defendants.


author: GIBSON, District Judge.

text:
    ZUBIK v. UNITED STATES.
    Civil Action No. 2815.
    District Court, W. D. Pennsylvania.
    June 22, 1945.
    Morris M. Berger, of Pittsburgh, Pa., for plaintiff.
    Charles F. Uhl, U. S. Atty., of Pittsburgh, Pa., and Allan B. Lutz, Sp. Asst. to Atty. Gen., for defendant.
   GIBSON, District Judge.

The court, after hearing and consideration, makes the following Findings of Fact and Conclusions of Law:

Findings of Fact

1. On and prior to February 27, 1943, Charles Zubik, the plaintiff, was the sole owner of a wharf boat, barge or screen boat known as the “Mariner,” Official No. 175020. On said date said “Mariner” was requisitioned by the United States of America.

2. Before the barge was requisitioned the Appraisal Committee of the War Shipping Administration had placed a value of $7,000 upon it, and this sum was offered to, and refused by, the plaintiff, when it was taken over as aforesaid.

3. Upon refusal of the plaintiff to accept $7,000 for the barge, the boat was requisitioned and three-fourths of said appraised value was delivered to plaintiff, the sum of $1,750 being reserved.

4. The “Mariner” was built in 1922 by the Midland Barge Company at a cost of $16,014. It had a length of 180 feet, a beam of 28 feet and a depth of 4 feet 8 inches. The hull was built of one-fourth inch steel plating. It had a house of thinner steel 160 feet long, 28 feet wide and 14 feet high. The roof was of wood and tarpaper. It had no means of propulsion and had no equipment on board when requisitioned.

5. The “Mariner” was used as a wharf boat at Wheeling in the Ohio River from 1922 to 1935. Having been acquired by the plaintiff in 1936, it was sold by him to the Pittsburgh Sand and Gravel Company for $10,000, and was used as a sand and gravel dredge boat.

6. In December, 1942, it was purchased from the Pittsburgh Sand and Gravel Company for the sum of $7,000 for the purpose of re-sale. After purchase the plaintiff spent $700 for the purpose of cleaning, etc., and for maintaining a watchman upon the boat.

7. The “Mariner” was located during its existence in the Ohio and Allegheny Rivers. The waters of each of these rivers contain a considerable quantity of acid which tends to reduce the service life of steel barges.

8. The “Mariner” as located and used, had a remaining service life of about eighteen years at the time it was taken over by the United States.

9. The fair market value of the “Mariner” when requisitioned was $10,000.

Conclusions of Law

I. This court has jurisdiction in the instant action.

II. Charles Zubik, the plaintiff, is entitled to a judgment in his favor for the sum of four thousand seven hundred fifty ($4,-750) dollars, with an additional sum to compensate him for delay in payment from February 27, 1943, to a date preceding the date of payment by not more than thirty (30) days. Said sum may be measured by the legal rate of interest.

The claim being for less than ten thousand dollars, this court is given jurisdiction by the Tucker Act, 28 U.S.C.A. § 41(20).

The plaintiff was the owner of the steel barge “Mariner” which the United States recmisitioned on February 27, 1943. On or about May 3, 1943, the Appraisal Committee of the War Shipping Administration appraised the “Mariner” at seven thousand dollars. The plaintiff refused to accept this sum, and thereupon the Government, under authority of the Merchant Marine Act of 1936, 46 U.S.C.A. § 1101 et seq., paid to the plaintiff the sum of $5,250, being seventy-five per centum of the appraised valuation.

The only matter before the court is the market value of the barge at the time it was requisitioned.

The testimony of neither plaintiff nor defendant was entirely satisfactory insofar as the determination of value is concerned. The plaintiff and his witnesses were experienced river men and had examined the barge and knew its condition, but they had no knowledge of any recent sales of any barges of the kind and age of the “Mariner.” Also they were disposed to attribute a longer future service to the barge than the court, in view of other credible testimony, is inclined to accept. Their testimony was to the general effect that the “Mariner” had a possibility of fifty years service. The plaintiff’s witnesses valued the barge at from $14,000 to $16,500.

The defendant’s witnesses were also open to some criticism. Several of those who undertook to testify as to value, while quite experienced in respect to buying and selling boats, undertook to place a market value upon the barge without ever having seen it. They were testifying entirely from the report of a Government agent. Their testimony was further weakened by the fact that their experience was not in this locality. Other witnesses were called who testified that use other than as a wharf boat, and that its service life, by reason of acid in the rivers, was not over twenty-five years. It was also testified that the barge was not strong enough in structure or so properly equipped as to make it a satisfactory sand dredger, which was its last use before its last purchase by plaintiff. However, one witness, called by the defendant, testified that he had several times examined the “Mariner” for the purpose of determining its capacity for insurance. When asked as to his opinion as to its market value, somewhat to the apparent surprise of the defendant’s counsel, he testified that its value was $12,000. Another witness, who came from the firm which had constructed the barge, testified that the cost of construction twenty years prior to the requisition, had been $16,014. This amount would be about the 1943 equivalent of $25,000, as testified by one witness.

One recent sale of the “Mariner” appears in the record, that to the plaintiff about two months prior to the requisition for $7,000. The defendant’s counsel very properly contend that this sale should be given great weight in determining market value. It should not be wholly controlling, however. The plaintiff had spent about $700 in repairs, etc. He was experienced in the purchase and sale of river boats. His purchase alone indicated his judgment of its actual value agreed with that of his witnesses, and was considerably greater than $7,000. He was buying it for sale, and this fact should be considered in passing upon his testimony.

In addition to the conflicting testimony of the witnesses who testified as to their opinion as to market value, and to those who discussed its condition and uses, which have led us to the conclusion that the fair market value of the “Mariner” was $10,000 when it was taken over, we have endeavored to consider the matter from the standpoint of reproduction value, less depreciation, based upon a service life of about forty years with 2% per centum depreciation. The result of such a method of valuation would be practically the same sum as the $10,000 valuation at which we have arrived.

The plaintiff has been paid $5,250 of the amount of $7,000, determined to be the value of the barge át the time of seizure. Assuming the total value to be $10,000, the plaintiff is entitled to receive the sum of $1,750, withheld by defendant under the authority of the Merchant Marine Act of 1936, and an additional sum of $3,000, with interest on said sums from February 27, 1943, by reason of delay in payment.


author: BYERS, District Judge.

text:
    ALCOA S. S. CO., Inc., v. ELMHURST CONTRACTING CO., Inc. ELMHURST CONTRACTING CO., Inc., v. ALCOA S. S. CO., Inc.
    Nos. A-17168, A-17400.
    District Court, E. D. New York.
    June 14, 1945.

      Kirlin, Campbell, Hickox & Keating, of New York City (Clement C. Rinehart, of New York City, of counsel), for libelant.
    T. Vincent Quinn, U. S. Atty., of Brooklyn, N. Y. (Clarence S. Eastham, Sp. Asst. to Atty. Gen., of counsel), for Elmhurst Contracting Co., Inc.
   BYERS, District Judge.

In the first cause, libelant, described as chartered owner (to be called owner) of the Norwegian S. S. MARPESIA, sues to recover additional freight moneys from respondent under a voyage charter or contract of affreightment from Mobile, Alabama, to Georgetown, British Guiana, dated April 30, 1942, concerning a voyage as to which the ship was expected to be ready on May 3, 1942.

The second cause is asserted in a cross-libel filed by respondent to recover an alleged overpayment of freight moneys in connection with the same voyage, and un-liquidated damages; the cross-libel was filed when it became known to proctors that such affirmative claims are available in the Admiralty only as an offset.

It was stated at the hearing that the United States appears for the respondent by virtue of a cost-plus contract which it had with the latter, but there is nothing of record on the subject.

The facts are not in dispute; are stipulated in part, and may be summarized thus:

The voyage charter provided a lump sum freight payment for the carriage of a cargo of cement from Mobile to Georgetown, and lay days were stipulated; loading and discharge were to be within a total of eight running days, and demurrage was at a stipulated rate, under conditions not requiring recital. The following provisions are to be noticed:

“12. The rate of freight or lump sum freight charge hereinbefore provided is calculated on the basis of a port to port voyage of 12 running days, commencing from time of Vessel’s normal readiness to sail from loading port until time of arrival at port of discharge, and it is hereby mutually agreed that for all time consumed by the Vessel on such voyage in excess of 13 running days the Charterer shall pay Owner $875 United States Currency per day or pro rata for part of a day; it being understood, however, that any delay to Vessel or loss of time during the period provided for above caused by deficiency of men or stores, breakdown, damages to or defect in hull, machinery or equipment, fire, grounding, detention by average accidents to ship or cargo, or by any other cause preventing the full working of the Vessel for which the Owner is responsible or caused by damages resulting from enemy action against the Vessel, shall be excepted.”
“17. The Vessel shall have the liberty to sail with or without pilots, to tow and to be towed, to assist vessels in distress, and to deviate for the purpose of saving life and property. The Vessel to have the privilege of bunkering before and/or after loading, also enroute. Should the Vessel put into a port of distress, or be under average, Vessel shall be consigned to an agent designated by Charterer, Owner paying said agent the customary fee for attending to the Vessel’s business.”
“21. The Vessel to have liberty to comply with any orders or directions as to departure, arrival, routes, ports of call, stoppages, destination, delivery or in any other wise whatsoever given by the Government of the nation under whose flag the Vessel sails or any other Government or any person (or body) acting or purporting to act with the authority of such Government or by any committee or person having under the terms of the war risk insurance on the Vessel the right to give any such orders or directions.
“If in compliance with the provisions of this clause anything is done or is not done, such not to be deemed a deviation.”
“22. This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936 [46 U.S. C.A. § 1300 et seq.], which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act. If any term of this bill of lading be repugnant to said Act to any extent, such term shall be void to that extent, but no further.”
“23. This Agreement is subject to approval of the United States Maritime Commission and any conditions imposed by said Commission pursuant to the Ship Warrants Act (Public Law 173, 77th Congress) [50 U.S.C.A.Appendix, § 1281 et seq.].”

The ship arrived in Mobile on Saturday, May 2, 1942; started loading this cargo on the following Monday, May 4th, and completed the operation on May 5th at 2:10 P.M. She was seaworthy in all physical respects, but lacked a chief engineer who had been taken ill and removed to a hospital on May 2nd.

The master promptly telephoned to the Norwegian Consul in Mobile, and a shipping office in New Orleans, in an effort to procure a chief engineer of Norwegian certification as required by the registration of the ship. These efforts were unsuccessful, and he then telephoned or telegraphed to the Norwegian Shipping and Trade Mission in New York, and through that agency a qualified chief engineer was found in Baltimore, who traveled by plane to Mobile where he arrived on the morning of May 8th.

Application for naval clearance at Mobile was granted on May 7th at 4:30 P.M., and a half hour later was rescinded as to this and all other vessels then in port, because of the presence of enemy submarines in the Gulf of Mexico.

This restriction was removed and all vessels in that port were permitted to sail on May 13th at 11:40 A.M., at which hour departure for Georgetown was had.

On May 28th at 3:50 A.M. the vessel arrived at Georgetown and anchored, awaiting orders.

Twenty hours were lost on May 24th and 25th by reason of the ship’s putting in to Port of Spain, Trinidad, with two sailors who had been rescued at sea from a torpedoed American merchantman.

The libelant Alcoa asserts that the vessel’s “normal readiness to sail from loading port” (paragraph 12 above) was 9:30 A.M., May 8, 1942 (when the new chief engineer arrived on board); that it was delayed until 11:40 A.M., May 13th, because of the action of the Naval Authorities above stated, and that 19 days, 18 hours and 30 minutes were consumed in the voyage which terminated May 28th at 4:00 A.M., which was 6 days, 18 hours and 30 minutes in excess of the 13 running days stipulated in said paragraph 12, which, computed at $875 per day, amounted to $5,924.63, of which but $1,032.99 was paid, leaving the balance sued for of $4,891.64 now due.

The cross-libel asserts that the said $1,-032.99 was paid “in ignorance of the true facts and circumstances surrounding the delay and dispatch of the Marpesia and the prosecution of her voyage” and in effect that the illness of the original chief engineer and the consequent delay in filling his post were faults and neglects on the part of the libelant, resulting in the failure to provide a seaworthy ship properly manned, etc., upon the completion of loading (on May 5th at 2:10 P.M.) whereby the vessel did not sail and prosecute her voyage with reasonable dispatch after loading; that this caused additional expense in hiring skilled labor “pending the arrival of the Marpesia’s cargo”, and other losses and damages which on March 26, 1945, the date of filing the cross-libel, had not been “presently ascertained”, as to which leave to amend and specify is sought.

The time, in addition to nearly two years already elapsed, required for perfecting this calculation is not specified.

It will be seen that the question for decision is whether the cost of the delays at Mobile, and at sea in saving life, are to be visited upon the owner or the charterer. Apparently no prior decision is available which is factually comparable to this controversy.

For convenience in examining the contractual obligations here presented, the following seem to be appropriate considerations :

1. If the vessel had not been hampered by the absence of a chief engineer on May 5th when loading had been completed, her “readiness to sail” would have occurred at 2:10 P.M., and the 12 running days contemplated by paragraph 12 would have started.

2. Since there was no chief engineer on board at that time, she suffered from a “deficiency of men”, which continued until May 8, 1942, at 9:30 A.M., and consequently the voyage could not be undertaken until the latter day and hour.

If the libelant were seeking to recover for any excess freight charge during that period, it could not succeed according to the provisions of paragraph 12; but that is not the purpose, since Article Sixth of the libel alleges that the loading had been completed on May 8th at 9:30 A.M., when the vessel was in readiness to sail from Mobile.

Thus it appears that for the period from May 5th at 2:10 P.M. until May 8th at 9:30 A.M. the readiness to sail was deferred for the reason stated; also that from May 7th at 5:00 P.M. the vessel could not have sailed by reason of the action of the Naval Authorities in closing the port, so that there were two disabilities for the period of I8V2 hours next ensuing, for the second of which no display of diligence by the owner would have availed to initiate the voyage, since it is assumed that the brief interval between 4:30 and 5 :00 P.M. (the time of rescission of clearance) on May 7th would have been insufficient to enable the Marpesia to put to sea.

The respondent argues that there was a default on the owner’s part, within paragraph 12, because of the failure to provide a chief engineer by the time that loading of cargo had been completed on May 5th, but I do not think the proviso which excludes liability for excess freight should be so construed. It has to do with conditions under which such liability shall not arise, namely, a deficiency of men or stores traceable to “any delay to Vessel or loss of time during the period provided for above (italics supplied) * * namely, “commencing from time of Vessel’s normal readiness to sail from loading port * *

Since the readiness to sail on the part of the Marpesia did not occur until the morn--'ng of May 8th, the delay in procuring the chief engineer did not arise during any period of time which was set in motion by readiness to sail.

There can be no criticism of the promptness with which this deficiency was sought to be remedied, nor can it be argued that the loading should not have started on May 4th after the chief engineer had been removed to the hospital, for until the effort was made to replace him, no one could know that it would fail prior to the completion of the loading operation. To have delayed the latter in anticipation of the failure promptly to obtain a qualified engineer, would have revealed a complete lack of understanding of the necessities of the business at hand.

Thus far it seems clear that the libel-ant’s cause must be judged upon the basis of the obstacle which had been interposed by the Naval Authorities at Mobile, to the commencement of the voyage on May 8, 1942, at 9:30 A.M., for at that hour the vessel was in a condition of readiness to sail, within the terms of this voyage charter.

3. The vessel then was unable to proceed to sea, and that condition continued until May 13th at 11:40 A.M., by reason of the said action of the Naval Authorities.

There is an element of hardship involved, wherever the loss so occasioned is directed to fall, since neither party was responsible for the cause, and resort must be had to the contract to ascertain whether it can be fairly interpreted to have contemplated such a possibility.

Paragraph 21, which provides that the vessel has. liberty to comply with any directions “as to departure * * * given by any * * * Government * * * having * * * the right to give any such orders or directions”, seems to indicate that siich an intervention as happened was envisaged by the contracting parties; in an independent clause, so far as punctuation is concerned, it is stipulated that action or inaction pursuant to the foregoing is not to be deemed a deviation.

Is it equally apparent that such action or inaction, if it occurs after readiness to sail, shall not postpone the incidence of the freight charge for the purpose of computing the duration of the voyage?

An answer to this question lies in the terms which specify the exceptions to the charterer’s obligations to pay extra freight as set forth in paragraph 12: “deficiency of men or stores, breakdown, damages to or defect in hull, machinery or equipment, fire, grounding, detention by average accidents to ship or cargo, or by any other cause preventing the full working of the Vessel for which the Owner is responsible or caused by damages resulting from enemy action against the Vessel”.

Since the calculation of extra freight moneys is not excused as to the charterer by any of the foregoing exceptions, it would seem to follow, as a matter of logic, that they must be included in computing its liability for a voyage that was extended after the readiness to sail, by the intervention of Governmental Authority. The owner was under its own expense for maintaining the vessel and crew during this period of enforced idleness; to that extent the vessel was deprived of its earning capacity although all operating expenses except for fuel consumption were being incurred; since delays which extended the voyage beyond the period of 13 running days, not attributable to fault on the part of the owner, were contracted to be paid by the charterer, it would seem that these charges must take that course, unless the cases hold otherwise.

4. The 20-hour delay, in saving the two sailors who were adrift in the open sea on a life-raft, is thought to be governed by even more precise agreement. In paragraph 17 it is provided in terms that the vessel is to be permitted to deviate “for the purpose of saving life and property”.

This clearly implies that the voyage may be prolonged, i.e., extra freight money may be incurred under such circumstances. The proof is that an extension of 47 miles was involved through putting into Port of Spain with these two survivors of the torpedoing of an American merchant ship.

The 20 hours so occupied may be thought of as having inured to the benefit of the United States, which is defending this cause.

It now becomes necessary to ascertain if the cases relied upon by the respondent point to a construction of the contract obligations assumed by these parties, other than that above suggested:

The Henry W. Cramp, 3 Cir., 20 F.2d 320. Here a vessel which had deviated was held not excused for failure to comply with the terms of her charter-party, because of an embargo which became operative (in 1917) after she had reached the port of Norfolk to which she was held to have deviated.

That decision does not bear on a case in 'which no breach of the voyage charter has been shown.

M. O. H. of West Indies, Inc., v. Chris-toffer Hannevig, Inc., 2 Cir., 264 F. 311. Action at law to recover for demurrage alleged to be due because of charterer’s default whereby the vessel was detained at San Domingo beyond the 15 lay days provided in the charter for loading. The vessel was shown to have been denied clearance (after loading had been completed within the stipulated time) by the United States authorities.

The owner was denied recovery because the charterer was protected by the terms' of the charter against the restraint of princes, etc., and additionally because no liability for demurrage could have arisen, on the ground of vis major.

In that case the plaintiff undertook to prove that the charterer was in default whereby demurrage was incurred, and failed in the effort. Here there is no default alleged in the sense that liquidated damages for delay are sought to be exacted. The libelant’s theory is that the extra freight was incurred because the voyage proved to be of greater duration than the parties expected it to be, but there is no assumption of burden of proof that the result is to be traced to anything resembling default in performance on the part of the charterer.

Crossman v. Burrill, 179 U.S. 100, 21 S. Ct. 38, 45 L.Ed. 106. Here again the charterer was exempt from demurrage since the discharge of cargo in Rio de Janeiro in 1893 was rendered impossible through vis major, i.e. bombardment of forts in the port by hostile ships of war.

Berwind-White Coal Mining Co. v. Soll-eveld, etc., 4 Cir., 11 F.2d 80. Here demur-rage as claimed was allowed, it appearing that the vessel was already in default, i.e., “on demurrage”, when the orders of the Coal Administrator (1919) prevented her from taking her cargo as contracted for.

.The possible bearing of this case in support of respondent’s position is not understood.

Thomas Bell & Co. v. Stewart, 5 Cir., 31 F.2d 44, is equally remote, and involves the recovery of demurrage in view of default by charterer and the consignee of the cargo.

Varagnolo v. Partola Manufacturing Co., 209 App.Div. 347, 204 N.Y.S. 577. Action to recover damages by purchaser of caustic soda, wherein it appeared that the seller was in continuing default, which was held not to have been waived by the purchaser, and therefore that the complaint should not have been dismissed. Defendant’s inability to perform, through interdiction by the government in refusing an export license, did not arise until months after the default occurred. Again it is not seen what bearing the case has upon this controversy.

It thus appears that there is no obstacle to the decision of this controversy which is thought to be required by the terms of this charter, residing in any case which has been cited or discussed for the respondent.

Reference to the alleged immunity of respondent by reason of the provisions of the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1304, touching “loss or damage sustained by the carrier”, incorporated by reference into paragraph 22 of this charter, seems not to be apposite. This is not a claim for loss or damage.

The respondent’s cross-libel is entirely unsupported by evidence tendered on its behalf, and will therefore be dismissed.

The libelant may have a decree with interest and costs as prayed, to be settled on notice.