Cargo & Tankship Mgmt. Corp. v. India Supply Mission

• Decision Date: 28 August 1964
• Docket Number: Docket 28791.,No. 475,475
• Citation: 336 F.2d 416
• Parties: CARGO & TANKSHIP MANAGEMENT CORPORATION, as agents for American Tramp Shipping Development Corporation, bareboat owners of the S.S. MOUNT EVANS, Libelant-Appellee, v. INDIA SUPPLY MISSION and the President of India, Respondents-Appellants, v. UNITED STATES of America, Respondent-Impleaded-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

336 F.2d 416 (1964)

CARGO & TANKSHIP MANAGEMENT CORPORATION, as agents for American Tramp Shipping Development Corporation, bareboat owners of the S.S. MOUNT EVANS, Libelant-Appellee, v. INDIA SUPPLY MISSION and the President of India, Respondents-Appellants, v. UNITED STATES of America, Respondent-Impleaded-Appellee.

No. 475, Docket 28791.

United States Court of Appeals Second Circuit.

Argued May 27, 1964.

Decided August 28, 1964.

Healy, Baillie & Burke, New York City (Sirius C. Cook, New York City, of counsel), for libelant-appellee.

Webster, Sheffield, Fleischmann, Hitchcock & Chrystie, New York City (Carolinda Waters, Stephen C. Kaye, New York City, of counsel), for Theodore W. Kheel and Raymond J. Scully, Trustees of American Tramp Shipping Development Corp.

Baker, Nelson, Williams & Mitchell, New York City (O. Taft Nelson, Robert M. Atkinson, New York City, of counsel), for respondents-appellants.

John W. Douglas, Asst. Atty. Gen., Robert M. Morgenthau, U. S. Atty., Morton Hollander, Chief, Appellate Section, Civil Div., Louis E. Greco, Atty. in Charge, New York Office, William H. Postner, Atty., Admiralty & Shipping Section, Dept. of Justice, for respondent-impleaded-appellee.

Before LUMBARD, Chief Judge, and WATERMAN and HAYS, Circuit Judges.

WATERMAN, Circuit Judge:

This is an appeal from a final decree and judgment in admiralty, wherein the libelant, the Cargo & Tankship Management Corporation, sought to recover from the respondents, the India Supply Mission and the President of India, freight and demurrage alleged to be due libelant for having transported a cargo of wheat from the United States to India, and wherein the named respondents, who denied liability, impleaded the United States as a respondent on the theory that if it were found that they were indebted to the libelant for freight and demurrage they were entitled to an indemnification from the United States. The United States District Court for the Southern District of New York granted summary judgment in favor of libelant against the named respondents, but denied the respondents' motion for summary judgment against the impleaded respondent for an indemnification, and the respondents have appealed. The opinion below is reported at 221 F.Supp. 680.¹ We affirm the lower court's grant of summary judgment in favor of the libelant, but we reverse the denial of the respondents' motion for summary judgment against the impleaded respondent and remand for further proceedings.

On March 2, 1962, libelant and respondents entered into a voyage charter party, under which libelant's United States flag vessel, the S. S. Mount Evans,² was to carry a cargo of wheat from one safe United States gulf port to two safe ports in India at a freight rate of $28 per long ton. A cargo of 10,150 tons of wheat was subsequently loaded at Galveston, Texas, and on May 23, 1962, the Mount Evans set out on her voyage to India. Seven days later a crack which had developed in the ship's hull forced her to put into Hampton Roads, Virginia, for repairs. She set out again on June 2, 1962, but was forced to return to Newport News, Virginia, the following day because of a very serious leak in her hull and shaft alley. The Mount Evans was then removed to Norfolk, Virginia, where, all appearances being that it would require some time for necessary repairs, her officers and crew were signed off and her cargo of wheat bound for India was discharged between June 7 and June 25 into grain elevators.

On June 29, 1962, libelant and respondents entered into a second written agreement, under which they agreed, after reciting the unfortunate travails of the Mount Evans, that "to save expenses" the libelant would forward the cargo of wheat on the S. S. Christitsa, a foreign flag vessel, with libelant to bear the cost of discharging the cargo from the Mount Evans, and with "the forwarding to be done without the charging of additional freight." Respondents agreed to make certain concessions with respect to the General Average claim, and the written agreement concluded with a statement that it "shall not be construed as an admission of liability or as a waiver of any of the rights of the parties hereto under the original Contract of Affreightment." Pursuant to the agreement, the cargo of wheat, now amounting to only 9,950 tons due to handling loss, water damage, and the leaving of a small quantity in the Norfolk grain elevators, was loaded into the Christitsa, the chartering of which cost libelant a modest $80,985, and the vessel departed Norfolk on July 12. Arriving at its first India port on August 28, she duly discharged the 9,950 tons of wheat. When respondents refused to pay libelant the freight and demurrage claimed to be due, libelant brought this action below and recovered a judgment of $286,273.07, a sum representing freight charges calculated at $28 per ton, plus $12,633.07 for demurrage and less an agreed credit for late arrival of $4,960.

The involvement of the United States in these proceedings stems from the fact that the wheat transported was United States surplus grain which India had purchased from this country under the provisions and regulations of Title I of the Agricultural Trade Development and Assistance Act of 1954, 7 U.S.C. §§ 1701-1709, commonly known as Public Law 480, a statute designed to facilitate trade with friendly nations through the sale of quantities of this country's surplus agricultural products to those nations, payment to be made in the purchasing nations' own currencies. Broadly speaking, Public Law 480 and the regulations thereunder provide that the United States will reimburse a purchasing country, if there is a compliance with the applicable regulations, for any additional ocean freight charges the purchasing country has incurred in shipping the purchased products in American flag vessels instead of in less expensive foreign flag vessels. Here, although transportation arrangements as originally made contemplated shipment of the purchased wheat from a United States Gulf of Mexico port to India on an American flag vessel, the wheat was carried from Norfolk, Virginia to India in a foreign flag vessel without the knowledge or express consent of the United States.

Prior to making arrangements for the ocean transportation of the wheat, India procured from a division of the United States Department of Agriculture "ocean transportation authorizations" which provided for the procurement of ocean transportation, and for reimbursement therefor by the Agriculture Commodity Credit Corporation (CCC) if the wheat were shipped in an American flag vessel and if the supplier of transportation certified that such a vessel was to be used. Respondents then entered into the above described voyage charter party with libelant, it being stated in the charter party that the contract was subject to all the regulations and provisions of Public Law 480, and then the agreement was approved by the CCC in three "Advices of Vessel Approval," which, after naming the S. S. Mount Evans as the vessel approved, recited the following statement: "Ocean freight to be financed by CCC. Notice of arrival is required." Various other regulations issued pursuant to Public Law 480 also provided for the giving of a notice of arrival by the purchasing country; admittedly respondents gave none in the present case because the approved vessel, the S. S. Mount Evans, never arrived, the wheat being transshipped from Norfolk, Virginia, to India in the foreign flag vessel S. S. Christitsa. The applicable regulations also provided, in 7 C.F.R. § 11.12(c) (2), that: "In the case of transshipment from a United States-flag vessel to a foreign-flag vessel, the cost of ocean freight from the port of transshipment to the importing country will not be financed by CCC."

We first consider libelant's claim against respondents for freight charges at the rate of $28 per ton plus demurrage, and we agree with the court below that the undisputed material facts which were established upon the summary judgment motion confirm that respondents are liable to libelant for such charges. Respondents' contention that the S. S. Mount Evans was so unseaworthy when she began her ill-fated voyage that the docking at Norfolk for repairs was a voluntary deviation from her intended course, while admittedly presenting issues which can be...