Goodpasture, Inc. v. M/V Pollux, 79-2507

• Decision Date: 10 September 1979
• Docket Number: No. 79-2507,79-2507
• Citation: 602 F.2d 84
• Parties: GOODPASTURE, INC., Plaintiff-Appellant Cross-Appellee, v. M/V POLLUX, etc., Defendant-Appellee Cross-Appellant, Negocios del Mar, S. A., Defendant-Third-Party Plaintiff-Appellee Cross-Appellant. EMPAC GRAIN CO., etc., Defendant-Appellee Cross-Appellant, v. A SHIPMENT OF WHEAT OF 19,067.949 METRIC TONS PRESENTLY ONBOARD the M/V POLLUX, in rem, Third-Party Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 84

602 F.2d 84

GOODPASTURE, INC., Plaintiff-Appellant Cross-Appellee, v. M/V POLLUX, etc., Defendant-Appellee Cross-Appellant,

Negocios del Mar, S. A., Defendant-Third-Party

Plaintiff-Appellee Cross-Appellant.

EMPAC GRAIN CO., etc., Defendant-Appellee Cross-Appellant, v. A SHIPMENT OF WHEAT OF 19,067.949 METRIC TONS PRESENTLY

ONBOARD the M/V POLLUX, in rem, Third-Party

Defendant-Appellee.

No. 79-2507.

United States Court of Appeals Fifth Circuit.

Sept. 10, 1979.

Michael D. Sydow, Houston, Tex., for plaintiff-appellant cross-appellee.

E. D. Vickery, Kenneth D. Kuykendall, Houston, Tex., for Negocios del Mar.

John R. Pearson, Houston, Tex., for Empac Grain Co.

Appeals from the United States District Court for the Southern District of Texas.

Before WISDOM, CLARK and GEE, Circuit Judges.

GEE, Circuit Judge:

The facts of this unfortunate case present a maritime version of the eternal triangle, one in which the difficulties arising between each of the three (or perhaps four or five) actors transcend their relationship to bedevil the others.

Plaintiff Goodpasture, Inc. is a Texas corporation that deals in wheat. Defendant M/V POLLUX, an oceangoing vessel engaged in commerce upon navigable waters of the United States, is owned by defendant Negocios del Mar, a foreign corporation. Negocios del Mar has no offices or permanent officials in the United States, no property there except the M/V POLLUX, and no employees in this jurisdiction other than the complement of the POLLUX.

Early this year Goodpasture contracted to sell a large quantity of wheat to Empac Grain Corporation, Inc. Under the terms of that sale, Empac was to set up in a major stateside bank an irrevocable letter of credit payable to Goodpasture for an amount sufficient to cover this wheat. The bank was to be instructed to pay Goodpasture upon presentation of various documents, one a bill of lading. After this original contract had been reached but before any performance by either side, Empac requested that the contract be renegotiated to permit, rather than a letter of credit in favor of Goodpasture, an assignment by Empac to Goodpasture of a portion of the letter of credit set up for Empac by its customer Idema, a Colombian entity. Payment under the Idema-Empac letter of credit was to be made against documents, including a freight prepaid bill of lading.

Shortly thereafter, such a new contract was agreed on between Empac and Goodpasture. The quantity and price terms remained the same, but the payment terms of the new contract provided for an irrevocable assignment to Goodpasture of so much of the Idema-Empac letter of credit as would be necessary to pay for the grain. For its part, Empac agreed to issue Goodpasture freight prepaid bills of lading upon the completion of loading. These bills would show Empac as the shipper, but Goodpasture would be entitled to possession of them until Goodpasture was paid under the Idema-Empac letter of credit. Under the terms of the sale, the grain was to be stowed and trimmed by Empac, a type of contract known in trade usage as an "ex spout" sale.

Under a further trade custom and usage, title to such grain does not pass until payment is made. Both Goodpasture and Empac were aware of this custom and usage in the grain trade, and each negotiated this contract pursuant to that custom and usage, which forms a part of and is a term of the contract between the parties. Both parties, therefore, understood that title to the grain was not to pass from Goodpasture to Empac until payment was made under the Idema-Empac letter of credit.

After the original sales contract but before its renegotiation, Empac entered a time charter party with Negocios del Mar for M/V POLLUX to carry this grain from Houston to Colombia. Clause 35 of the Empac-Negocios charter party reads, "master will authorize charterers or their agents to sign bills of lading in his behalf, but bills of lading to be in accordance with mates and tally clerks receipts." The charter party further provided that the vessel was to be delivered on or before March 30, 1979. Charter hire was payable at a daily rate beginning on the date the vessel was delivered at Houston, the first 24 days hire to be paid in advance by Empac. Empac assured Goodpasture that Empac was authorized by Negocios to sign freight prepaid bills of lading on behalf of the master. Receipt of this authority from Negocios was confirmed by Empac's Houston agent.

The vessel arrived at Houston about a week late, when Negocios tendered the vessel to Empac and demanded prepayment of the first 40 days charter hire. Between April 6 and April 11, 1979, Negocios repeatedly demanded payment of the charter hire. On April 11, 1979, Empac assured Negocios that the money had been transferred. On the basis of this assurance, Negocios did not withdraw the ship from the charter and permitted it to be loaded. When loading was completed, Goodpasture, in accordance with Empac's instructions, prepared a freight prepaid bill of lading showing the quantity of grain loaded and its condition in accordance with the mate's and tally clerk's receipts.

About 45 minutes after loading of M/V POLLUX was completed, Negocios notified Empac that Empac's authority to issue bills of lading was revoked and that only Negocios' agent or the master of the POLLUX could issue them. This was done in pursuance of the shipowner's plan to withhold issuance of such bills of lading until charter hire for the proposed voyage, plus the costs of bunkers, was paid in advance. The next day, Negocios informed Goodpasture that it would not issue freight prepaid bills of lading until it received payment in full for the proposed voyage, plus bunkers, port charges, and costs for passing the Panama Canal, suggesting that Goodpasture advance these funds. Goodpasture declined on the ground that it was not obliged to finance Negocios or Empac under either law or...