Lekas & Drivas, Inc. v. Goulandris

• Decision Date: 25 June 1962
• Docket Number: No. 346,Docket 27239.,346
• Citation: 306 F.2d 426
• Court: U.S. Court of Appeals — Second Circuit
• Parties: LEKAS & DRIVAS, INC., Pompeian Olive Oil Corporation, and Victor Cory, doing business as Victor Cory Company, Libelants-Appellees, v. Basil GOULANDRIS, Nicholas Goulandris and Leonidas Goulandris, doing business as "Goulandris Brothers," Respondents-Appellants.

306 F.2d 426 (1962)

LEKAS & DRIVAS, INC., Pompeian Olive Oil Corporation, and Victor Cory, doing business as Victor Cory Company, Libelants-Appellees, v. Basil GOULANDRIS, Nicholas Goulandris and Leonidas Goulandris, doing business as "Goulandris Brothers," Respondents-Appellants.

No. 346, Docket 27239.

United States Court of Appeals Second Circuit.

Argued May 1, 1962.

Decided June 25, 1962.

James E. Freehill (Hill, Betts, Yamaoka, Freehill & Longcope), New York City, for respondents-appellants.

John W. R. Zisgen, New York City (Bigham, Englar, Jones & Houston), New York City, for libelants-appellees.

Before WATERMAN, MOORE and FRIENDLY, Circuit Judges.

FRIENDLY, Circuit Judge.

Mussolini's unprovoked attack on Greece on October 28, 1940, touched off a modern Odyssey whose legal consequences have occupied the courts in this circuit for more than twenty years; hopefully, this decision may end the epic.

Having taken on cargo at Izmir, Cavalla and Salonica, principally tobacco, the SS. Ioannis P. Goulandris docked at Piraeus on October 26, 1940, before her intended voyage to the United States via Gibraltar, a crossing ordinarily taking 25 to 28 days. Two days later, Italy attacked. The Ioannis was first requisitioned by the Greek Government for a short military mission. Transit of the Mediterranean having become impracticable, she was then directed by her government to proceed to the United States via Suez and the Cape of Good Hope. She sailed from Piraeus on November 10, 1940; she arrived in the United States in May, 1941, her cargo badly damaged during the long, hot voyage.

We have previously affirmed Chief Judge Ryan's dismissal, 173 F.Supp. 140, of large claims for damage to the tobacco, 281 F.2d 179 (2 Cir. 1960). The instant appeals relate to much smaller claims allowed by the judge in the same opinion, 173 F.Supp. at 179-180, for damage to a shipment of 308 cases and 7 barrels of a soft cheese known as "Kefalotyri" by libelant Lekas & Drivas, Inc. as consignor and consignee, and of 500 and 350 drums of olive oil, respectively, consigned to libelants Victor Cory Company and Pompeian Olive Oil Corporation.

The voyage took place under the difficulties expectable in wartime. The Greek Government had ordered the Ioannis to sail in convoy to Port Said and thereafter to follow the instructions of the British Admiralty; because these orders were confidential, the vessel was unable throughout the voyage to communicate directly with her owners, although communication by way of an intermediary in London did occur during stops in ports along the way. On December 14, the convoy the Ioannis had finally joined, after waiting 16 days at Port Said and three days at Great Bitter Lake, reached Aden. The Ioannis, drawing water uncontrollably through her stern gland and suffering severe vibrations in her tailshaft, dropped out for repairs. Due to the needs of the British Navy, drydock facilities were unavailable, so the tailshaft had to be drawn for inspection while the ship was afloat. To facilitate this, much cargo, including the cheese here in question, had to be removed and stored on lighters, where it was covered with tarpaulins; according to the agreed summary of the master's deposition, "There were no warehouse facilities at Aden where the cargo could be taken." By the uncontradicted deposition of the chief officer, the cheese had not begun to spoil when it was so removed. Wartime conditions caused the repairs, normally taking some three days, to require 35. The chief officer observed that, when the cheese was reloaded, it was spoiling — "it was leaking through the cases and barrels and had begun to develop a certain odor." Thereafter the Ioannis stopped in Durban for 13 days to take on bunkers and to make some condenser repairs; later, after a fire in the tobacco, she was at Barbados for 23 days. The Ioannis finally arrived at Norfolk on May 3, 1941, and in New York on May 8. A surveyor found the cheese to be "Melted with a terrible stench, and worthless"; it was subsequently sold for about a sixth of what its sound value would have been. Seventeen drums of the Cory shipment of olive oil and five of the Pompeian were cut and leaking; also, the latter was one drum short.

On May 15, 1941, the owners of most of the tobacco filed libels in the Southern District of New York, alleging damage to their cargo in excess of a million dollars. Nearly a year later, on May 7, 1942, the owners of the cheese and the olive oil (along with one additional tobacco consignee no longer in the case), all acting through the same proctors as the earlier libelants, filed libels. Trial of the consolidated libels was destined to be long deferred — we must recount the highlights of this delay because of the question raised as to the interest award.

Orders were first entered staying trial until the end of the war because of inability to get needed testimony in Greece while hostilities persisted. The history of what happened between 1945 and March, 1958, when all the cargo damage claims came to trial before Chief Judge Ryan, largely concerns the tobacco claims — understandably so when it is remembered that the tobacco loss amounted to nearly fifty times as much as the cheese and olive oil damage. 1946 and 1947 were devoted to obtaining answers to interrogatories and taking depositions in Greece. In April, 1948, counsel turned their attention to the trial of a libel primarily concerning damage to tobacco shipped from Piraeus on the SS. Katingo Hadjipatera at the same time and by the same route as the Ioannis' voyage. This was decided in November, 1948, American Tobacco Co. v. The Katingo Hadjipatera, 81 F.Supp. 438 (S.D. N.Y.1948), modified and aff'd, 194 F.2d 449 (2 Cir. 1951), cert. denied, 343 U.S. 978, 72 S.Ct. 1076, 96 L.Ed. 1370 (1952). In the light of the District Court's decision in that case, libelants' proctor went to Greece and Turkey to see whether additional proof was available for the Ioannis litigation. For reasons not necessary to detail, the process of obtaining this proof lasted until September 1, 1955; all parties then filed notice of readiness for trial. However, counsel preferred to give their attention to still a third case involving similar facts, see Brown & Williamson Tobacco Corp. v. The S.S. Anghyra, 157 F.Supp. 737 (E.D.Va.1957), rev'd in part sub nom. Hellenic Lines Ltd. v. Brown & Williamson Tobacco Corp., 277 F.2d 9 (4 Cir.), cert. denied, 364 U.S. 879, 81 S.Ct. 168, 5 L.Ed.2d 102 (1960). In May, 1956, the libels were placed back on the calendar, on condition that an agreed summary of the depositions be prepared; this summary, itself 2000 pages, was not ready until the fall of 1957, and the trial began in March, 1958.

On April 9, 1959, Chief Judge Ryan filed a comprehensive opinion, 173 F. Supp. 140, denying the tobacco owners' claims, action which we subsequently affirmed, 281 F.2d 179, and granting those regarding the cheese and the olive oil. After referral of the latter to a Commissioner and dispute over the interest to be awarded, a resettled final decree was filed on July 25, 1961. Lekas & Drivas, Inc. recovered $24,780.21, plus interest at 4½% from May 7, 1945, amounting to $18,083.36. Pompeian Olive Oil Corp. was awarded $1,472.46, with interest, similiarly computed, totalling $1,074.53. Victor Cory Co. was allowed $1,089.82, with interest of $795.30. Respondents appeal from these awards, alleging error both as to liability (save as to the one drum missing from the Pompeian consignment) and as to the award of 16 years' interest.

We find no error in the granting of the claims as to the olive oil. Under the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1301 et seq., here applicable, a shipper makes out a prima facie case by proving that his goods were delivered to the carrier in good condition and were outturned damaged or not at all; the burden then falls upon the carrier to bring itself within an excepted cause or to prove it exercised due diligence to avoid and prevent the harm: Edmond Weil, Inc. v. American West African Line Inc., 147 F.2d 363, 366 (2 Cir. 1945); American Tobacco Co. v. The Katingo Hadjipatera, 194 F.2d 449, 450 (2 Cir. 1951), cert. denied, 343 U.S. 978, 72 S. Ct. 1076, 96 L.Ed. 1370 (1952); id., 81 F.Supp. 438, 445 (S.D.N.Y.1948); General Foods Corp. v. The Troubador, 98 F.Supp. 207, 209 (S.D.N.Y.1951); Gilmore & Black, Admiralty (1957) 162-163. Chief Judge Ryan found, 173 F. Supp. at 180, that although the olive oil drums were not new, they were sound and tight, and were suitable for the shipments. In fact, the surveyor "couldn't say with certainty" whether the drums were new or second-hand; Judge Ryan evidently took the possibility more favorable to respondents and relied on the same witness' testimony that the drums were "the usual type of drum" employed in the trade. This was entirely permissible; the judge was not bound to follow the testimony of another witness for libelants that used drums were unsafe. Neither was he bound to accept the surveyor's opinion that the leakage resulted from working and pressure of cargo, as meeting the carrier's burden, Hellenic Lines Ltd. v. Brown & Williamson Tobacco Corp., supra, 277 F.2d at 15-16.

We likewise see no reason for disturbing Chief Judge Ryan's award of interest. Although the discretion of the district court in allowing interest in admiralty is reviewable for abuse, The Wright, 109 F.2d 699, 702 (2 Cir. 1940), we find none. This is not a case where the libelants were alone responsible for delay in getting to trial. The delay was due in part to inherent difficulties in both sides' obtaining evidence regarded as necessary to the consolidated trial of all the Ioannis cargo claims, a consolidation that saved time and expense for everyone, and in part to an apparent agreement that, as the two other cases involving similar facts reached readiness for trial, it would be wise to postpone trial of the Ioannis libels until these...