Cti Container Leasing Corp. v. Oceanic Operations Corp., CTI-CONTAINER

• Citation: 682 F.2d 377
• Decision Date: 28 June 1982
• Docket Number: No. 804,D,CTI-CONTAINER,804
• Parties: LEASING CORPORATION, Plaintiff-Appellee, v. OCEANIC OPERATIONS CORPORATION, Defendant-Appellant. ocket 81-7843.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 377

682 F.2d 377

CTI-CONTAINER LEASING CORPORATION, Plaintiff-Appellee, v. OCEANIC OPERATIONS CORPORATION, Defendant-Appellant.

No. 804, Docket 81-7843.

United States Court of Appeals, Second Circuit.

Argued March 17, 1982.

Decided June 28, 1982.

Kieron F. Quinn, Baltimore, Md. (Geoffrey S. Tobias, Baltimore, Md., Richard A. Schafrann, Ober, Grimes & Shriver, New York City, on the brief), for plaintiff-appellee.

Alfred F. Koller, Jr., New York City (Joseph F. DeMay, Jr., Cichanowicz & Callan, New York City, on the brief), for defendant-appellant.

Before TIMBERS, MESKILL and KEARSE, Circuit Judges.

KEARSE, Circuit Judge:

Defendant-appellant Oceanic Operations Corporation ("Oceanic") appeals from so much of an order of the United States District Court for the Southern District of New York, Leonard B. Sand, Judge, as denied Oceanic's motion to dismiss the present action for want of admiralty jurisdiction and granted summary judgment against Oceanic on the issue of its liability to plaintiff-appellee CTI-Container Leasing Corporation ("CTI"). The principal issue on appeal concerns the scope of the federal courts' admiralty jurisdiction. Specifically, we must decide whether a contract for the lease of cargo shipping containers is sufficiently "maritime" that a suit for its breach is properly within our admiralty jurisdiction. In the circumstances of this case we agree with the district court that the lease agreement was a maritime contract and that partial summary judgment was appropriate.

FACTS

The pertinent facts are not in dispute. CTI is in the business of leasing cargo shipping containers. Oceanic is an agent for several steamship lines. Neither party owns or operates ships. In November 1977, CTI and Oceanic entered into a written lease agreement pursuant to which CTI agreed to rent to Oceanic up to 170 forty-foot standard steel and aluminum containers. The containers were to be delivered by CTI in Norfolk, Virginia, and were to be returned to CTI by Oceanic in Manila, Philippines. Oceanic agreed to pay a per-container rental of $438 for the first 90 days plus $4.20 per day thereafter. Oceanic also agreed to pay $4,400 for any container lost or destroyed, and agreed to maintain the leased containers in good repair.

In accordance with the lease, CTI delivered 169 containers in Norfolk, Virginia in CTI commenced the present suit against Oceanic to recover unpaid rental for 1980 and 1981, plus repair charges resulting from Oceanic's alleged failure to return the containers in undamaged condition. CTI premised jurisdiction on 28 U.S.C. § 1333 (1976), which grants the district courts jurisdiction over suits in admiralty. ¹ Oceanic opposed the action principally on the grounds that the lease was not a maritime contract and the court therefore had no admiralty jurisdiction, and that in any event Oceanic had been acting solely as an agent for Ocean Transport and thus had no liability under the lease. CTI moved for summary judgment on its contract claim, contending that no material facts were genuinely in dispute, and Oceanic cross-moved for summary judgment dismissing the complaint for lack of subject matter jurisdiction. In an opinion dated October 30, 1981, reported unofficially at 1981 A.M.C. 2964, the district court denied Oceanic's motion to dismiss, ² granted partial summary judgment to CTI on the issue of liability, and referred the question of damages to a magistrate. This appeal followed. ³

late 1977. In July 1978 the containers, loaded with cargo, arrived in Manila aboard the KARATACHI MARU, a ship owned by Ocean Transport Line Inc. ("Ocean Transport"). In Manila, however, the Philippine consignee failed to pay customs duties, and the cargo-laden containers were seized by the Philippine government. Nearly three years passed before the duty was paid and the shipment released, and the containers were eventually redelivered to CTI in Manila in April 1981. During the Philippine government's retention of the containers, Oceanic paid the agreed rental only until May 1980.

DISCUSSION

On appeal, Oceanic renews its contention that the agreement sued upon is not a "maritime contract," and argues that there are disputed questions of material fact as to its liability. We find no merit in either contention.

A. Admiralty Jurisdiction

The precise categorization of the contracts that warrant invocation of the federal courts' admiralty jurisdiction has proven particularly elusive. "The boundaries of admiralty jurisdiction over contracts-as opposed to torts or crimes-being conceptual rather than spatial, have always been difficult to draw." Kossick v. United Fruit Co., 365 U.S. 731, 735, 81 S.Ct. 886, 890, 6 L.Ed.2d 56 (1961). If the contract is a "maritime contract," it is within the federal court's admiralty jurisdiction. See id. Traditional texts have defined a "maritime" contract as one that, for example, "relat(es) to a ship in its use as such, or to commerce or to navigation on navigable waters, or to transportation by sea or to maritime employment," 1 E. Benedict, Benedict on Admiralty § 183, 11-6 (7th ed. 1981), or as one "for the furnishing of services, supplies or facilities to vessels ... in maritime commerce or navigation." 7A J. Moore Federal Practice P .230(3), at 2773 (2d ed. 1948) (emphasis omitted). See also Kossick v. United Fruit Co., supra, 365 U.S. at 736, 81 S.Ct. at 890 (" 'The only question is whether the transaction relates to ships and vessels, masters and mariners, as the agents of commerce....' ") (quoting 1 E. Benedict, The Law of American Admiralty 131 (6th ed. 1940)).

The definitions have proved easier to state than to apply, as seemingly incompatible The question whether a contract for the acquisition of cargo shipping containers is a maritime contract has apparently provoked little comment. The use of such containers, which are portable receptacles in which large numbers of smaller packages may be transported, is a relatively recent development that "enables the use of two or more modes of transportation, marine, motor, rail, or air, to transport goods on a door-to-door basis." Tombari, Trends in Oceanborne Containerization and Its Implications for the U.S. Liner Industry, 10 J. Mar. L. & Com. 311, 311 (1979). Characterized by one commentator as "(o)ne of the most important technological developments in the transportation of goods by sea since steam replaced sail," Simon, The Law of Shipping Containers, 5 J. Mar. L. & Com. 507, 507 (1974), containerization has revolutionized maritime cargo-handling techniques. As the Supreme Court has described it,

                results abound.  4  In general we seek guidance from rulings in like or analogous situations in order to arrive at a reasoned decision in the circumstances at hand.  See Kossick v. United Fruit Co., supra, 365 U.S. at 735, 81 S.Ct. at 890 ("Precedent and usage are helpful insofar as they exclude or include certain common types of contract....")
                

containerization permits the time-consuming work of stowage and unstowage to be performed on land in the absence of the vessel. The use of containerized ships has reduced the costly time the vessel must be in port and the amount of manpower required to get the cargo onto the vessel.

Northeast Marine Terminal Co. v. Caputo, 432 U.S. 249, 270, 97 S.Ct. 2348, 2360, 53 L.Ed.2d 320 (1977) (footnote omitted). Consequently, in a variety of contexts, the container has been characterized as "a modern substitute for the hold of the vessel," id., and as " 'functionally a part of the ship,' " Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 443, 99 S.Ct. 1813, 1818, 60 L.Ed.2d 336 (1979) (quoting Leather's Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 815 (2d Cir. 1971)). ⁵

Given the function of the container and the growing dependence of the maritime industry on containerization, a shipowner's lease of containers has been held a maritime contract, Integrated Container Service, Inc. v. Starlines Container Shipping, Ltd., 476 F.Supp. 119 (S.D.N.Y.1979), much as other agreements for the acquisition of ship equipment have been viewed as maritime contracts, e.g., Radiomarine Corp. v. Gulf Northern Co., 394 F.Supp. 381 (E.D.Mo.1975) (radio and radar systems); Houston-New Orleans, Inc. v. Page Engineering Co., 353 F.Supp. 890 (E.D.La.1972) (control panel for crane mounted on ship). We concur in the view that a lease of cargo containers The case before us focuses principally on the antecedent question of whether the agreement between CTI and Oceanic leased containers for use on a ship. Since containers may be used not only in ocean transport, but also in overland transport by truck or train or in overseas transport by freighter airplane, see, e.g.,, Schmeltzer & Peavy, Prospects and Problems of the Container Revolution, 1 J. Mar. L. & Com. 203, 204-06 (1970); Tombari, Trends in Oceanborne Containerization and Its Implications for the U.S. Liner Industry, supra, Oceanic argues that the containers leased here could have been used for purposes other than ocean transport, and that the lease has no necessarily maritime flavor. ⁶ Our review of the record persuades us that the district court properly viewed the lease between CTI and Oceanic as indicating that the containers would be transported by ship.

for use on a ship is a maritime contract.

First, although the lease does not mention a ship or ships as such, it contains several provisions that point to shipping as the envisioned mode of use of CTI's containers. Since the containers were to be delivered by CTI in the United States and returned to CTI in the Philippines, overseas transport obviously was envisioned. Further, Clause 12 of the lease suggests that it was anticipated that transport to Manila would be by sea rather than by air, since that clause refers to the "point(s) or port(s)" of original delivery and redelivery, rather than to delivery at an air terminal. See Schmeltzer & Peavy, Prospects and Problems of the Container...