Cargo & Tankship Management Corp. v. India Supply Mission

Decision Date24 September 1963
Citation221 F. Supp. 680
PartiesCARGO & TANKSHIP MANAGEMENT CORPORATION, as agents for American Tramp Shipping Development Corporation, bareboat owners of the S.S. MOUNT EVANS, Libelant, v. INDIA SUPPLY MISSION and the President of India, Respondents, v. UNITED STATES of America, Respondent-Impleaded.
CourtU.S. District Court — Southern District of New York

Healy, Baillie & Burke, New York City, for libelant.

Baker, Nelson, Williams & Mitchell, New York City, for respondents; Robert M. Atkinson, New York City, of counsel.

Robert M. Morgenthau, U. S. Atty., for respondent-impleaded, the United States; Louis E. Greco, Atty. in Charge, William H. Postner, Atty. Admiralty and Shipping Section, Dept. of Justice, of counsel.

WYATT, District Judge.

This controversy arises out of the ocean transportation of wheat from this country to India. The importation of the wheat into India, and its transportation there, were being financed by the United States under the authority of Congress granted in Title I of the Agricultural Trade Development and Assistance Act of 1954 ("the Act"), specifically Sections 101-109 thereof (7 U.S.C. §§ 1701-1709; the Act, passed in 1954 by the 83d Congress, is often referred to as Title I, Public Law 480). The Congressional policy, speaking broadly, was to use sales for foreign currencies of surplus agricultural commodities to expand trade with friendly nations, make efficient use of the commodities, facilitate currency convertibility, etc.

The functions of the President under the Act were by him delegated to the Secretary of Agriculture, who then made Regulations governing procedure (7 CFR 1.1 and following).

Libelant Cargo & Tankship Management Corporation ("Management" or "owner") is the owner (or agent of the owner) of a United States-flag vessel, the "Mount Evans", and is here suing for freight and demurrage. Respondent is for all practical purposes the Government of India, here represented by respondent India Supply Mission (the "Mission"). India made an agreement with the United States for wheat under the Act and the Mission made a voyage charter of the Mount Evans to carry a cargo of such wheat to India.

After this suit was commenced, India, claiming that the United States is obligated to reimburse it for the cost of transportation of the wheat, impleaded the United States and the United States is now a party to the suit as Respondent-Impleaded.

Libelant owner moves under Admiralty Rule 58 for summary judgment directing the Mission to pay it $287,377.50 as freight and demurrage under the voyage charter of the Mount Evans. Respondent Mission opposes this motion for summary judgment and at the same time makes a companion motion (also under Admiralty Rule 58) for a summary judgment against the United States for any amount which the Mission may be required to pay as freight (not demurrage) in any summary judgment in favor of the owner.

The agreement between India and the United States for purchase by India of wheat under the Act was dated May 4, 1960.

The Regulations (7 CFR 11.3, 11.4) require that under such an agreement "purchase authorizations" (PA) be obtained by the importing country.

India obtained from the Foreign Agricultural Service ("FAS", a division of the Department of Agriculture administering this program under the Act) two such purchase authorizations:

a. No. 10-58 (by assignment from Turkey), dated January 5, 1962, for $1,282,000 or about 20,000 tons of wheat; and
b. No. 39-65, dated January 29, 1962 (amended March 27, 1962) for $49,800,000 (as increased by the amendment) or about 800,000 tons of wheat.

Each PA contained a special provision that at least 50% of the wheat had to be shipped in United States bottoms, that advance approval of charters must be secured, and that for each vessel approved an "Advice of Vessel Approval" would be issued which would indicate whether Commodity Credit Corporation ("CCC", an agency of the United States within the Department of Agriculture, 15 U.S.C. § 714 and following) would finance ocean transportation and whether a "notice of arrival" would be required.

The Regulations provide (7 CFR 11.4(d) (8) (vi)) that every PA is "deemed" to include a provision that when a "notice of arrival" is required, it must be furnished promptly by the importing country or its agent and must give the vessel name, the PA number, the first discharge port and the date of arrival. The Regulations further provide (7 CFR 11.9(b) (2)) that "if required by the related CCC Form 106-2" there must be furnished to the CCC "a notice of arrival at the first port of discharge of the vessel named in the CCC Form 106-2". The same part of the Regulations makes a limited exception to this, however, in that a notice of arrival will not be required if a vessel is "lost or unable to proceed to destination * * * because of damage caused by perils of the sea * * * and other force majeure conditions * * * without the fault of the supplier of the ocean transportation * * * provided the owner * * * supplies evidence satisfactory" to CCC.

India also obtained from FAS two "ocean transportation authorizations", each dated the same day as, and numbered to correspond with, the PAs. These authorized the procurement of ocean transportation "subject to the Regulations". They further stated that CCC would reimburse India for the cost of transportation of wheat covered by "Forms CCC-106" and "which is shipped on the vessels named in such forms". Reimbursement was to be made upon submission of the documents required by the Regulations plus an "Additional Documentation", namely, a certificate by the "supplier" of transportation as follows:

"The undersigned hereby certifies that the vessel named herein and for which the cost of ocean freight is claimed, qualifies as a privately owned United States flag commercial vessel within the requirements of Public Law 87-266 and is an eligible U.S. flag vessel for the purpose of Public Law 664".

Public Law 664 (of the 83d Congress) added to Section 901 of the Merchant Marine Act, 1936 (46 U.S.C. § 1241) a provision, in relevant part, that whenever the United States shall advance funds or credits in connection with furnishing commodities to a foreign nation, at least 50% of the tonnage thereof must be carried on "privately owned United States-flag commercial vessels" (46 U.S.C. § 1241(b)). Public Law 87-266 is an amendment to 46 U.S.C. § 1241(b) and in relevant part deals with requirements for inclusion within the term "privately owned United States-flag commercial vessels".

Having obtained the authorizations in January 1962 as described, India then made a voyage charter party, dated March 2, 1962, with Management for a voyage of the Mount Evans ("owner's option substitute Roxanne") to India with approximately 10,000 tons of wheat for freight of $28 per ton "to be payable on the vessel's arrival at the first port of discharge". The vessel is stated to be "tight, staunch and strong, and in every way fitted for the voyage to India". It is also stated that the charter party is "subject to" all of the provisions of Public Law 480 and the Regulations thereunder.

The charter party was then submitted to CCC. This was required by the Regulations (7 CFR 11.12(a)) which state that approval will be given on "Form 106", elsewhere defined as "Advice of Vessel Approval" and designated "106-2" for ocean carriers. In this instance three Advices of Vessel Approval were issued, each for a different quantity of grain but aggregating about 10,000 tons. They recited the Mount Evans as the vessel, that it was under the United States flag, and that the freight rate was $28 per ton. Each Advice of Vessel Approval stated an "ocean freight differential", in amount $18.27 for 1,000 tons, $15.84 for 4,370 tons, and $16.20 for 4,970 tons. This differential is that between the foreign-flag freight rate and the United States-flag freight rate and is important because when (as here) it is required that shipment be made in a United States-flag ship, the Regulations are so drawn that the added expense of the differential is not borne by the importing country but by the United States. Each Advice of Vessel Approval also carried this statement:

"Ocean freight to be financed by CCC. Notice of arrival is required."

The Mount Evans loaded a cargo of 10,150 tons of wheat at Galveston, Texas, from which she left for India on May 23, 1962.

On May 30, there was a crack in the hull in the engine room and the ship put into Newport News for repairs.

On June 2, she sailed again but on June 3 there was a leak in the hull plate, much water was taken on, the pumps were unable to keep up, water got into some of the grain, an emergency existed and preparations were made to abandon ship. The Master managed to bring her back to Newport News.

The cargo was then discharged into grain elevators at Norfolk, Virginia. It appeared that some time would be required to make the necessary repairs. The officers and crew were signed off.

Management as owner and the Mission as charterer then made a written agreement, undated but said by libelant to have been made on or about June 29, 1962.

This agreement recites that "the Owners plan to forward the cargo on the S.S. `Christitsa', or Owners' option similar substitute" and that this would be done "without the...

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