Demsey & Associates v. SS Sea Star

• Decision Date: 16 May 1972
• Docket Number: 35356,341,35357.,340,342,Dockets 35354,No. 339,35355,339
• Citation: 461 F.2d 1009
• Parties: DEMSEY & ASSOCIATES, Inc. and Interstate Steel Company, Plaintiffs-Appellees, v. S.S. SEA STAR, her engines, boilers, etc., World Bulk Shipping Ltd., Atlantic Marine Enterprises, Inc., and Pittston Stevedoring Corp., Defendants-Appellants, v. The JORDAN INTERNATIONAL CO., Defendant-Impleaded-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

461 F.2d 1009 (1972)

DEMSEY & ASSOCIATES, Inc. and Interstate Steel Company, Plaintiffs-Appellees, v. S.S. SEA STAR, her engines, boilers, etc., World Bulk Shipping Ltd., Atlantic Marine Enterprises, Inc., and Pittston Stevedoring Corp., Defendants-Appellants, v. The JORDAN INTERNATIONAL CO., Defendant-Impleaded-Appellant.

Nos. 339, 340, 341, 342, Dockets 35354, 35355, 35356, 35357.

United States Court of Appeals, Second Circuit.

Argued January 11, 1972.

Decided May 16, 1972.

COPYRIGHT MATERIAL OMITTED

Alan S. Loesberg, New York City (Hill, Rivkins, Warburton, McGowan & Carey, New York City, on the brief), for plaintiffs-appellees.

Renato C. Giallorenzi, New York City, for defendant-appellant World Bulk Shipping Ltd.

Edwin K. Reid, New York City (Howard M. McCormack and Zock, Petrie, Sheneman & Reid, New York City, on the brief), for defendants-appellants S. S. Sea Star and Atlantic Marine Enterprises, Inc.

Paul Falick, New York City (John L. Quinlan and Bigham, Englar, Jones & Houston, New York City, on the brief), for defendant-appellant Pittston Stevedoring Corp.

Morris Rosoff, New York City (Rosoff & Rosoff, New York City, on the brief), for defendant-impleaded-appellant The Jordan International Co.

Before MEDINA, KAUFMAN and TIMBERS, Circuit Judges.

MEDINA, Circuit Judge:

The Jordan International Co. and The Eastern Steel & Metal Co., as joint venturers, were engaged in the business of soliciting, purchasing, selling and importing Mexican steel into the United States.

Demsey & Associates, Inc. ordered 463 secondary hot rolled steel coils from Eastern by purchase order dated July 3, 1963 and invoice dated August 15, 1963. Interstate Steel Company ordered 691 prime hot rolled steel coils from Eastern by purchase order dated May 2, 1963 and invoice dated August 15, 1963. Demsey and Interstate opened irrevocable letters of credit payable on presentation of clean-on-board bills of lading. The coils were obtained by Eastern from Altos Hornos de Mexico, S.A., of Monclova, Mexico.

To fulfill the purchase orders, Jordan (Eastern's joint venturer) sought to charter a vessel for the carriage of the coils from Tampico, Mexico to Cleveland for Demsey and to Chicago for Interstate. Accordingly, Jordan approached World Bulk Shipping Ltd., an operator of time chartered vessels.

On July 24, 1963, World Bulk time chartered the S. S. Sea Star from her owner, Atlantic Marine Enterprises, Inc., for the carriage of cargo from Tampico for a period of two-three months. On the same day, World Bulk voyage chartered the vessel to Jordan, from one safe berth Tampico to one safe berth Cleveland and Chicago, for a cargo of 5,000 tons of steel coils.

The time charter between Atlantic and World Bulk provided that upon the delivery of the vessel at Tampico, she was to be "tight, staunch, strong and in every way fitted for the service * * *." Clause 8 of the time charter provided:

The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to load, stow, and trim the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for cargo as presented, in conformity with Mate\'s or Tally Clerk\'s receipts.

World Bulk was to provide the necessary dunnage and shifting boards, and the time charter was subject to the "U.S.A. Clause Paramount."

The voyage charter between World Bulk and Jordan provided that the cargo was "to be loaded, stowed and discharged free of risk and expense to the vessel," and that the "U.S. Clause Paramount" and the "New York Produce Exchange Arbitration Clause" were to be incorporated therein.

The coils were shipped by rail from Mexico City and Monclova to Tampico, where the Sea Star was waiting, in August, 1963. At time of loading, the coils were properly and adequately strapped for the voyage, but they were in a rusted condition.

The stowage plan, prepared by Representaciones Maritimas, S. A., World Bulk's agent, provided that the coils consigned to Interstate were to be stowed in Nos. 1-5 lower holds, and the coils consigned to Demsey were to be stowed in Nos. 1-5 lower holds, above the Interstate coils, and in Nos. 1, 2, 4, 5 'tween deck. The 'tween deck hatch covers were old and dry, so the chief officer instructed the stevedores not to stow any coils on top of the hatch covers.

When it appeared that the letter of credit arranged by Interstate in favor of Eastern would expire, Jordan asked World Bulk to issue clean-on-board bills of lading in return for indemnity against any consequences arising from the issuance of such bills. Accordingly, on August 16, 1963, Representaciones, World Bulk's agent, issued three bills of lading (two with respect to the coils ordered by Interstate and one with respect to the coils ordered by Demsey). Each bill of lading was signed by Representaciones, "for the Master," and stated that the coils were shipped at Tampico "in apparent good order and condition" and were "received on board — clean on board." This was done in spite of the fact that the coils were in a rusted condition. Moreover, neither World Bulk nor Representaciones had the authority to sign bills of lading on behalf of the Master.

After the issuing of the bills of lading, Jordan wrote World Bulk a letter, dated August 19, 1963, stating that Jordan agreed to

be fully responsible for all consequences arising out of the release of clean onboard Bills of Lading by you to us, notwithstanding:

a) any rust which may be on the outside and on the inside of the coils b) the premature release of these Bills of Lading inasmuch as loading is expected to be completed only on August 20th or 21st.

The plaintiffs were unaware of the rusted condition of the coils at the time of loading.

The Sea Star sailed from Tampico on August 21, 1963, and arrived in Cleveland on September 27, 1963. When the hatches were opened, substantial damage to the Demsey coils was found, such as crimping, bending, telescoping and the breaking and loosening of the bands in both the 'tween deck and the lower hold. An inspection by a marine surveyor revealed that improper chocking and stowing caused the coils to shift during the voyage, and that much of the damage was caused by coils rolling into one another. Further damage was caused by one or more coils falling through the defective 'tween deck hatch covers into the hold below. There was improper stowage in several respects. While the coils in the 'tween deck were placed in the wings and not on top of the defective hatch covers, there was a failure to chock and shore these coils with the plainly foreseeable result that during the voyage from Tampico the heavy coils started to roll around in the 'tween deck, hitting one another, and one or more of them rolled over the defective hatch covers and broke through, falling upon the other coils stowed in the hold below. In addition, there was a failure properly to stow the entire batch of coils in the hold, with resulting extensive damage caused by the shifting of the coils. While Judge Bonsal made proper findings on this subject, he erroneously concluded, as we shall see, that a broad distinction with respect to liability could be made between the damage in the 'tween deck and the damage in the hold. As will be explained in more detail later, it is clear to us that all the injury to the coils, except rust and the damage caused by the discharge of cargo at Chicago by Pittston, was caused by improper stowage in the 'tween deck and in the hold. Whether there should be some additional indemnity or contribution between some of the parties with respect to the specific damage caused by the falling of one or two coils through the defective hatch covers into the hold by reason of the unseaworthiness of the defective hatch covers must be left to the remand. We have nothing before us to warrant a definitive ruling on this point. It may prove so difficult to ascertain the extent of this particular damage or it may be of so minor a character that the parties may decide to overlook it. Following the survey, the Demsey coils were discharged and the vessel proceeded to Chicago.

Upon the arrival of the Sea Star in Chicago, on October 1, 1963, the coils were inspected prior to discharge. This inspection revealed that the Interstate coils suffered damage similar to that suffered by the Demsey coils. In addition, sixty-four of the Interstate coils were found to be excessively rusted and pitted.

The coils were discharged by Pittston Stevedoring Corp., which used bare wire slings without spreader bars or other protective devices. As many as three coils were included in one lift, causing the edges of the coils to cut into one another. In addition, some coils were dropped on other coils, and some were dropped onto the cement pier. Complaints were made about the way the coils were being discharged, but Pittston took no corrective action.

Demsey and Interstate sued in admiralty in the United States District Court for the Southern District of New York to recover damages against Sea Star (in rem), World Bulk, Atlantic and Pittston. Jordan was impleaded by Atlantic and World Bulk, and Jordan, in turn, filed cross-claims against World Bulk, Atlantic and Pittston. Atlantic and World Bulk, moreover, asserted cross-claims against each other and against Pittston. In an interlocutory order, reported at 321 F.Supp. 663 (S.D. NY.1970), Judge Bonsal held:

1. Plaintiffs are entitled to recover from World Bulk and Sea Star (in rem) for all the damage to the coils, with the exception of normal atmospheric rust.

2. Interstate is entitled to recover from Pittston for the damage to the coils suffered during discharge in Chicago.

3. World Bulk is entitled to indemnity from Atlantic for any damages it must pay Demsey as a result of the harm suffered by the coils stowed in the \'tween deck.

4. Atlantic is entitled to indemnity from World Bulk for any

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