177 F.2d 694 (2nd Cir. 1949), 30, L. N. Jackson & Co. v. Royal Norwegian Government

Docket Nº:30, 21391.
Citation:177 F.2d 694
Case Date:November 10, 1949
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 694

177 F.2d 694 (2nd Cir. 1949)

L. N. JACKSON & CO., Inc.



Nos. 30, 21391.

United States Court of Appeals, Second Circuit.

November 10, 1949

Argued Oct. 7, 1949.

Wharton Poor, of New York City (Haight, Deming, Gardner, Poor & Havens and James McKown, Jr., all of New York City, on the brief), for defendant-appellant.

Copal Mintz, of New York City, for plaintiff-appellee.

Before L. HAND, Chief Judge, and SWAN and CLARK, Circuit Judges.

CLARK, Circuit Judge.

This is an action for breach of a contract for the carriage of goods by sea, entered into on November 7, 1941. Federal jurisdiction rests upon the diverse citizenship

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of the parties. The defense for the conceded failure to transport the goods was based upon a contract direction of the United States Maritime Commission. A further defense, added by permission of the court after the parties were at issue, was that of res judicata based upon a state court judgment exonerating the defendant's berth agent from liability to the plaintiff on this contract. After a trial to the court below, Judge Goddard rejected both defenses in an opinion reported in 83 F.Supp. 486, and gave judgment for the plaintiff for its loss of profits, together with interest and costs, in the total sum of $91, 381.51. This appeal followed.

Although the action was brought against the Royal Norwegian Government's Director of Shipping, Oivind Lorentzen, the defense was assumed by the Government itself, which, during the period in question, operated and managed the Norwegian steamship 'Tropic Star.' This it had earlier requisitioned from the ship's owners. In November, 1941, the vessel was undergoing repairs at Durban, East Africa. The Seas Shipping Co., Inc., an American company, was acting as berth agent to book cargo for the vessel on its expected voyage from Beira, East Africa. On November 7, 1941, the berth agent sent a letter to plaintiff's agent acknowledging a letter of the previous day and confirming 'that we have booked 1, 000 tons Copra, in bags, for the SS 'Tropic Star, ' expected to be ready to load at Beira on November 25th, destination New York, rate $22.00 per 2240#, brokerage 1 1/4%.' This somewhat informal document-reproduced in full at 83 F.Supp. 488- is the contract here sued upon. It contained two further paragraphs, one that the agent was cabling its agents at Beira to arrange with the vendors for the delivery of the copra to the steamer and the other that it was understood that 'the freight is collect and will be paid by your principals, Messrs. L. N. Jackson & Co., Inc., upon cable advice that the cargo has been loaded.' And it showed that copies were going forward to 'Mr. A. E. King, Asst. Director, Emergency Shipping, Maritime Commission, Washington, D.C., ' as well as to representatives of defendant.

At this time there was in operation the system of ship warrants operated by the Maritime Commission pursuant to the Presidential Order of August 26, 1941, Executive Order 8871, 3 CFR, Cum. Supp., implementing the Ship Warrants Act of July 14, 1941, 55 Stat. 591, 50 U.S.C.A.Appendix, § 1281 et seq. This Act provided that the Maritime Commission might issue to American ships, and to such foreign ships as applied therefor, warrants entitling those ships to priority over merchant vessels not holding such warrants with respect to the use of facilities for loading, discharging, lighterage or storage of cargoes, the procurement of bunker fuel or coal, and the towing, overhauling, drydocking, or repair of such vessels. As a condition of these warrants, shipowners were required to file an undertaking accepting the orders of the Maritime Commission with respect to the trades in which a vessel might be employed, the voyages it should undertake, the class or classes of cargo or passengers to be carried, the fair and reasonable maximum rate of charter hire or equivalent, and such other matters as seemed necessary or expedient to the Maritime Commission. Disobedience of any order issued under the Ship Warrants Act entailed a fine of up to $5, 000 or two years' imprisonment or both.

On October 4, 1941, more than one month previous to the booking in question, the Royal Norwegian Government had filed an application with the Maritime Commission for all of its ships which would or might come to United States ports. Although the actual warrants for the individual ships were not requested or issued until the ships were about to come within American jurisdiction, yet the trial court found defendant's intent to submit to the ship warrants system complete from the time of this application.

Due to war conditions the repairs to the steamer took longer than had been anticipated. The plaintiff was notified of the delays and continued to extend the time for loading at Beira. Meanwhile, on December 7, occurred the attack on Pearl Harbor and the precipitation of the United States into World War II. The combination of the delay in the repairs to the ship and these

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world events led to a re-evaluation of shipping conditions, and that, in turn, to the dislocation of this particular transshipment. On December 22, 1941, Mr. A. E. King, Assistant Director of the Division of Emergency Shipping of the United States Maritime Commission, telephones Mr. S. J. Maddock, vice-president of Seas Shipping Co., Inc., that the 1, 000 tons of copra, booked for the 'Tropic Star, ' would have to be cancelled and wool substituted. Maddock objected vigorously; but King was firm that the copra could not be moved, and later that day King sent Seas Shipping a confirmatory telegram to the same effect. Immediately upon receiving King's telegram ordering cancellation of the shipment of copra, Seas Shipping notified plaintiff's brokers by telephone, and wrote them a letter formally cancelling the booking. The shipper apparently tried unsuccessfully to have King rescind his order; and Seas Shipping, on December 31, 1941, sent King a telegram with the same purpose, but received a reply on January 2, 1942, reiterating King'k previous orders. 1 In consequence the 'Tropic Star' transported the wool, instead of the copra; and the plaintiff, not obtaining other shipping accommodations, has made claim for its loss.

The plaintiff first sued Seas Shipping Co., Inc., as the contracting party in the New York state court. The case was tried by Justice Irving L. Levey, sitting without a jury, in March, 1945; and his opinion dismissing the suit is reported as L. N. Jackson & Co. v. Seas Shipping Co., 185 Misc. 94, 56 N.Y.S.2d 501. Dismissal was on two grounds: (1) that the direct intervention of a governmental mandate worked such a frustration of the contract as to excuse without question nonperformance by the defendant; and (2) that Seas Shipping was the agent of a disclosed principal, and not therefore liable to the plaintiff. The judgment was affirmed by the Appellate Division, 270 A.D. 830, 61 N.Y.S.2d 371, and by the Court of Appeals, 296 N.Y. 529, 68 N.E.2d 605, without written opinion in either court. Then plaintiff sought a rehearing because of the decision just rendered by this court in Baker Castor Oil Co. v. Insurance Co. of North America, 2 Cir., 157 F.2d 3, certiorari denied 329 U.S. 800, 67 S.Ct. 494, 91 L.Ed. 684 (also relied on by the plaintiff and by the court below in this action); but the motion for reargument was denied without opinion. 296 N.Y. 635, 69 N.E.2d 483.

Thereafter plaintiff instituted this action and obtained the judgment from which this appeal is taken. Defendant here, as below, relies on the defenses that the order of the Maritime Commission cancelling the booking of copra excused performance, or alternatively that the findings, conclusions, and judgment of the New York Supreme Court, to the effect that the telegram from the Maritime Commission requiring the cancellation of the copra booking was a complete legal excuse for the noncarriage of that copra, are res judicata here. In rejecting these arguments, the district court awarded plaintiff damages based upon the difference between the sale price of the copra in East Africa, plus transportation charges, and its market value in New York in February, when the vessel should have arrived after a normal voyage. This was $64.19 a ton. Hence the shipper's loss of profits was $64, 190, which, together with interest and costs, made up the total judgment of $91, 381.51. On this appeal we shall direct our attention to the first contention.

With every succeeding war in which this nation has engaged, the impact of conflict upon the civilian populace has been more demanding and more complex. The 'total war' now affecting all citizens, even upon what is now significantly termed the 'home front, ' is...

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