Biehl & Co., Inc. v. Apollonia Holding, Inc., Civ. A. No. 87-2339

• Decision Date: 08 August 1988
• Docket Number: 87-3732.,Civ. A. No. 87-2339
• Parties: BIEHL & CO., INC. v. APOLLONIA HOLDING, INC., Good Faith Shipping Co., Matina Shipping Co., and Meridian Ship Agency, Inc. JAMES J. FLANAGAN STEVEDORES, DIVISION OF JAMES J. FLANAGAN SHIPPING CORP. v. M/V APOLLONIA in rem, Apollonia Holding, Inc., and Good Faith Shipping Co.
• Court: U.S. District Court — Eastern District of Louisiana

693 F. Supp. 457

BIEHL & CO., INC. v. APOLLONIA HOLDING, INC., Good Faith Shipping Co., Matina Shipping Co., and Meridian Ship Agency, Inc.

JAMES J. FLANAGAN STEVEDORES, DIVISION OF JAMES J. FLANAGAN SHIPPING CORP. v. M/V APOLLONIA in rem, Apollonia Holding, Inc., and Good Faith Shipping Co.

Civ. A. Nos. 87-2339, 87-3732.

United States District Court, E.D. Louisiana.

July 5, 1988.

As Amended August 8, 1988.

Charles F. Lozes, Terriberry, Carroll & Yancey, New Orleans, La., for Apollonia and Good Faith.

Richard A. Goins, Adams & Reese, New Orleans, La., for Meridian.

Rene S. Paysee, Leach & Paysee, New Orleans, La., for Flanagan.

AMENDING AND SUPERSEDING OPINION

CHARLES SCHWARTZ, Jr., District Judge.

Trial in these consolidated matters was held before the Court sitting without a jury on Friday, January 29, 1988. Having considered the stipulations made, the evidence presented, the record, and the applicable law, the Court rules as follows. To the extent any of the following findings of fact constitute conclusions of law, they are adopted as conclusions of law; to the extent any of the following conclusions of law constitute findings of fact, they are adopted as findings of fact.

This case began as an interpleader action in admiralty and concerns disputes over three cotton cargo loads that were shipped from Texas to Turkey. The time-charterer has paid no hire under its charter with the shipowner, has absconded with the freight paid to it by the shipper, and has not paid the stevedore that loaded the shipper's cargo; the charterer predictably has not appeared. The other three are left, each trying to recoup its losses from the absent charterer's breaches.

FINDINGS OF FACT

Stipulations between Apollonia and Meridian¹

The M/V APOLLONIA is an oceangoing vessel of Liberian registry; it is owned by Apollonia Holding Co., Ltd. and is managed by Good Faith Shipping Co., S.A. (together, referred to herein as "Apollonia").

On March 20, 1987, Apollonia entered into a timecharter with Matina Shipping Co. on a standard 1946 edition New York Produce Exchange charterparty form ("NYPE46 form"),² with some modifications added by the parties, at a rate of $5000 per day for the APOLLONIA. The timecharter contained the customary Clause 2, requiring the charterer to pay the various fuel, port, and other related charges and expenses,³ and Clause 8, concerning loading of cargo and signing of bills of lading.⁴ The parties modified the customary Clause 18, on reciprocal liens by the shipowner and the timecharterer, to insert the phrase "belonging to the charterers" so that the shipowner's lien was limited to "all cargoes, and all sub-freights belonging to the charterer."⁵

On March 23, 1987, by way of a telex, Matina and Meridian Ship Agency, Inc. entered into a contract of affreightment. The telex provided that freight was to be fully prepaid into "owner's" bank on signature and release of the bill of lading and that the conline, or liner, bill of lading form⁶ was to be used for the affreightment.

Pursuant to this affreightment contract, three liner bills of lading were issued: the first, CC-1, issued at Corpus Christi, Texas on April 10, 1987, for the shipment of 4626 bales of cotton to Mersin, Turkey; the second, CC-2, issued at Corpus Christi on April 9, 1987, for 3411 bales of cotton to Istanbul, Turkey; and the third, GA-1, issued at Galveston, Texas on April 19, 1987, for 16,711 bales of cotton to Mersin, Turkey. The first two bills were claused with the same remarks:

Approximately 60% cotton bales were found stained soiled in way of sampling cuts in protective coverings. These bales appear to have been sampled from two (2) sides with cuts being the full width, then delivered to the warehouse in that condition. The cotton in these bales has been soiled during handling due to the exposed cotton contacting the warehouse decking.

The third bill was claused with the same remarks as well as with the following additional remark:

3,231 bales of cotton stowed in No. 5 L.H. at shippers risk if contaminated with soya bean mills.

All three bills contained the boldfaced phrase "FREIGHT PREPAID." On instructions of Matina, the three bills were to remain in the custody of its local shipping agent, Biehl & Co., Inc., until Matina confirmed receipt of freight from Meridian.

Meridian and Apollonia did not enter into any charterparty or other contractual arrangement with each other. Specifically, Meridian did not agree to pay Apollonia charter hire or the cost of fueling and bunkering the APOLLONIA, and Apollonia did not agree to pay loading, discharge, or port expenses for Meridian's cargo.

According to telex instructions from Meridian to Matina, the Mersin bills (CC-1 and GA-1) were to be released against full payment of the Mersin freights. On April 21, 1987, telex discussions between Matina and Meridian began on the freight payment structure for the bills of lading. On April 22, 1987, Matina made demand on Meridian for payment of the freights on the Mersin cargo; accordingly, on April 24, 1987, Meridian's bank in Baltimore, Maryland wired $358,735.23 to Matina's bank in London for full payment of the freight due on the Mersin cargo. Meridian, however, still owed $61,400.82 as the freight due on the Istanbul cargo.

Meanwhile, on April 23, 1987, charter hire of $72,187.50 from Matina to Apollonia became due but was not paid. On April 29, 1987, still not having received the charter hire payment yet, Apollonia gave Matina 48-hours notice of the withdrawal of the vessel from Matina's service under the charterparty.

On April 30, 1987, Apollonia telexed Biehl to instruct the APOLLONIA's master to sign the bills of lading with the term "FIOST" and not "liner terms."⁷ On instructions of Matina, Biehl then brought the three bills by courier to New Orleans, where the APOLLONIA was then in port. Signing the three bills on April 30, the master struck out the word "Liner" from the three bills and substituted the words "Free and Out" in its place.

That same day, the APOLLONIA set sail for Limassol, Cyprus with all of Meridian's cargo on board. Pursuant to Matina's and Apollonia's instructions, Biehl kept the three bills of lading in its custody.

On May 5, 1987, Apollonia advised Biehl by telex that Matina has breached the charterparty and that Apollonia was withdrawing the APOLLONIA from Matina's service; Apollonia further instructed Biehl not to release the three bills of lading in its possession.

On May 6, 1987, Apollonia's counsel telexed notice to Meridian of Apollonia's intention to exercise its lien on cargoes and freights; he requested that Meridian provide particulars on the status of all freights. Later that day, in a telex to Biehl, Meridian demanded release of the Mersin bills of lading (CC-1 and GA-1); Meridian further advised that it was awaiting instructions on the payment of freights for the Istanbul bill of lading (CC-2).

On May 13, 1987, after a dispute arose between Apollonia and Meridian over the change in clausing, Biehl commenced this interpleader action against Apollonia, Matina, and Meridian and placed the three bills of lading into the registry of this Court. Meridian wanted the three bills released on liner terms, while Apollonia wanted to exercise a lien on the entire cargo for the unpaid charter hire from Matina. Though served, Matina never appeared; on September 10, 1987, the Court entered a default judgment in favor of Biehl and against Matina.

After a hearing on May 21, 1987, the Court ordered as follows:

(1) Meridian Ship Agency, Inc. shall forthwith pay Apollonia the sum of $61,400.82 representing the unpaid subfreight on B/L CC-2 whereupon Meridian Ship Agency, Inc. shall be discharged from any further liability to pay freight under this bill of lading;

(2) Upon payment of the sum of $61,400.82 to Apollonia Holdings, Inc. B/L CC-2 shall be released from the Registry of the Court to Meridian Ship Agency, Inc.;

(3) B/L CC-1 and GA-1 shall be forthwith released from the Registry of the Court to Meridian Ship Agency, Inc.;

(4) Meridian Ship Agency, Inc. is ORDERED to pay all costs of discharging the cargo carried under B/L CC-1, CC-2 and GA-1;

(5) Biehl and Co. is discharged from any liability to Apollonia Holdings, Inc. and Meridian Ship Agency, Inc. in connection with the aforesaid bills of lading;

(6) Each party shall bear its own costs of Court.

Final judgment with these same six provisions was entered the following day, May 22, 1987. Accordingly, on May 22, 1987, the Clerk released the two Mersin bills of lading (CC-1 and GA-1) to Meridian's counsel.

Soon after, on May 25, 1987, the APOLLONIA arrived at Limassol to discharge some unrelated cargo. According to the vessel logs, the discharge was completed in the afternoon of May 28. From May 27 to June 1, 1987, for reasons not made known to the Court, the APOLLONIA was under arrest in Limassol. On the afternoon of June 2, 1987, the vessel sailed from the port of Limassol to drop anchor just outside the port, where the vessel remained until it set sail for Mersin on the afternoon of June 15, 1987. On June 3, 1987, upon learning that the arrest was lifted, Meridian paid Apollonia $61,400.82 for the Istanbul bill (CC-2).

Subsequent to the Court's order, a dispute arose between the parties as to the interpretation of the order's provision that Meridian pay all costs of discharging the cargo carried under the three bills of lading. As part of the dispute, Meridian filed a timely "motion for reconsideration" of the May 22nd judgment. On the one hand, Apollonia interpreted the order to require Meridian to prepay all port expenses and discharge costs. On the other hand, Meridian interpreted the order to require it to pay only discharge costs and further to permit it to obtain the discharge on credit terms instead of prepaid terms. Apollonia advised Meridian that the vessel would not be permitted into Mersin until the Turkish agents had funds in hand;...