Ramsay Scarlett & Co., Inc. v. SS Koh Eun

• Decision Date: 12 December 1978
• Docket Number: Civ. A. No. 77-699-N.
• Citation: 462 F. Supp. 277,1979 AMC 970
• Court: U.S. District Court — Eastern District of Virginia
• Parties: RAMSAY SCARLETT & CO., INC., Plaintiff, v. S. S. KOH EUN, her engines, tackle, apparel, etc., in rem, Defendant. EMPIRE STEVEDORING CO., LTD., Intervening Plaintiff, v. MCT SHIPPING CORPORATION for S. S. KOH EUN, her engines, tackle, apparel, etc., in rem, Claimant and Third-Party Plaintiff, v. WILFRED SCHADE & COMPANY, INC., Third-Party Defendant.

462 F. Supp. 277

1979 AMC 970

RAMSAY SCARLETT & CO., INC., Plaintiff, v. S. S. KOH EUN, her engines, tackle, apparel, etc., in rem, Defendant.

EMPIRE STEVEDORING CO., LTD., Intervening Plaintiff, v. MCT SHIPPING CORPORATION for S. S. KOH EUN, her engines, tackle, apparel, etc., in rem, Claimant and Third-Party Plaintiff, v. WILFRED SCHADE & COMPANY, INC., Third-Party Defendant.

Civ. A. No. 77-699-N.

United States District Court, E. D. Virginia, Norfolk Division.

December 12, 1978.

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Walkley E. Johnson, Jr., Crenshaw, Ware & Johnson, Norfolk, Va., for plaintiff.

Peter W. Rowe, Stackhouse, Rowe & Smith, John M. Ryan, Vandeventer, Black, Meredith & Martin, Norfolk, Va., John B. Bennett, Jones, Blechman, Woltz & Kelly, Newport News, Va., for defendant.

OPINION AND ORDER

CLARKE, District Judge.

This matter came to trial and is now before the Court on the parties' post-trial briefs. While relevant factual details are embodied throughout the Court's opinion, the basic facts brought out at trial or through stipulation among the parties follow.

At all times relevant to this matter, the plaintiff, Ramsay Scarlett & Co., Inc. (Ramsay) was engaged in the stevedoring, ship's agency and terminal business in the City of Baltimore, Maryland, and was engaged in the stevedoring and ship's agency business in the City of Norfolk, Virginia. Ramsay conducted its stevedoring business under the name of Baltimore Stevedoring Company, a division of Ramsay Scarlett & Co., Inc.

At all pertinent times, the Korean motor vessel KOH EUN was a large ocean-going vessel engaged in trade between various ports of the United States, Europe, Africa, and the Middle East. The KOH EUN was under time charter from its owner, Sam Ick, Lines Co., Ltd., to MCT Shipping Corporation (MCT), and under a time charter from MCT to Iran Ocean Shipping Company (IROSCO). IROSCO's general agent in the United States and in Canada was Peralta Shipping Corporation of New York, New York (Peralta), whose subagent was Atlantic Ship Agencies, Inc.

Similar to the IROSCO-Peralta-Atlantic Ship arrangement, there was a series of agency relationships involving Jeddah Overseas Industrial Sea Transport, Ltd. (JOIST), whose general agent was Netumar International, Incorporated, for which Ramsay acted as subagent.

It appears that both IROSCO and JOIST were established, at least in part, by International Maritime Planning and Commercial Technology, Inc. (IMPACT), which was in the business of shipping and operating agents and who became coordinating agent for JOIST and IROSCO.

At all relevant times, Empire Stevedoring Co., Ltd. (Empire) was a Canadian corporation engaged in the business of providing stevedoring service to vessels in Montreal. Additional parties or organizations related to this matter include: Shipping Aid International, an independent company in Connecticut that would perform various services for carriers such as solicit stevedoring bids and verify stevedoring invoices; Wilfred Schade & Company, Inc. (Schade), a freight forwarder representing, as relates to this action, a shipper, Griffin Pipe Products Company; and U.S.A. Steamship Agency, Inc., agents for MCT.

On October 31, 1977, and November 1, 1977, the vessel KOH EUN called at Montreal, Canada, and was provided stevedoring services by Empire. The reasonable value of such services and materials furnished the vessel at Montreal was $21,415.64. No portion of that sum has been paid and is presently due and owing to Empire.

In November, 1977 the KOH EUN called at Baltimore, Maryland, and at that time Ramsay furnished the vessel stevedoring and terminal services having a value of $29,519.37. Also, in November, 1977 the KOH EUN called at Norfolk, Virginia, and at that time Ramsay provided stevedoring services having a value of $43,788.33 and advanced certain monies and credit and provided certain agency services in the amount and value of $30,653.16. Ramsay attached the vessel in Norfolk in connection with services provided the KOH EUN at Baltimore and Norfolk. In connection with that attachment, Ramsay paid the United States Marshal $5,003.88, of which Empire has contributed $1,000.00. Ramsay has received $7,000.00 on its account from U.S.A. Steamship Company on behalf of MCT and it is stipulated that U.S.A. owes Ramsay an additional $1,058.98, thereby reducing the account for agency disbursements at Norfolk to $22,594.18.

Prior to the arrival of the KOH EUN at Norfolk, Atlantic Ship Agencies, Inc. was appointed subagent for IROSCO lines at Norfolk by Peralta. At the request of Schade, representing the shipper for the cargo to be loaded on this occasion, Atlantic Ship did not serve as subagent for the KOH EUN at Norfolk on this particular occasion whereupon Ramsay was appointed sub-agent.

A cargo of pipe and accessories shipped by Griffin Pipe as to which Schade was acting in the capacity of a freight forwarder was loaded aboard the KOH EUN during the period November 14-19, 1977. Schade prepared a bill of lading on the form of JOIST covering the Griffin Pipe shipment and indicating prepaid freight due in the amount of $104,892.25. Ramsay signed the bill of lading on November 14, 1977.

Thereafter Schade paid Ramsay $89,640.01 representing the freight due for the cargo of pipe less $15,252.24 allowed Schade as payment of brokerage due on the KOH EUN and two previous vessels. The money received by Ramsay was credited to the JOIST account with Ramsay.

Empire entered Ramsay's in rem action against the KOH EUN as Intervening Plaintiff asserting a lien in the amount of $21,415.64 for the stevedoring services provided the KOH EUN at Montreal.

MCT, as time charterer and disponent owner of the KOH EUN, entered the present suit to defend the vessel, counterclaimed against Ramsay and entered a third party complaint against Schade.

So far as possible, the Court will discuss the several issues as the events occurred chronologically.

Empire's Claim of Lien

Prior to the arrival of the KOH EUN in Montreal, Captain Jacobsen of Shipping Aid requested stevedoring rates from Ted Chodos, president of Empire. Thereafter, Chodos contacted Erik Murer, president of IMPACT, who told Chodos that Empire could stevedore the KOH EUN in Montreal and that Empire should invoice IROSCO for such services. Apparently, the matter of the actual ownership of the vessel was not mentioned in the dealings between Empire, Shipping Aid and IMPACT; and Chodos of Empire mistakenly believed that IROSCO was the owner of the vessel while in fact IROSCO was a time charterer. It is undisputed that Chodos was not advised nor did he inquire whether IROSCO was the record owner or time-charterer of the KOH EUN.

Empire claims that it provided stevedoring services to the KOH EUN in reliance on the vessel as security and thus has a lien on the vessel for the value of those services. Empire claims that it was justified in its belief that it was dealing with parties possessing apparent authority to bind the vessel and that there was no information to put Chodos on notice that Empire actually was dealing with a charterer under a prohibition of lien clause.

MCT argues that under Canadian law, Empire has the burden of showing an actual contract with the vessel owner before an in rem right against the vessel arises. MCT contends that Empire failed to prove such a contract between Empire and the record or disponent owner and thus Empire has no right in rem against the KOH EUN.

Both Empire and MCT rely on the same Canadian authorities, which the Court finds is the applicable law, for their positions. The first of these cases is Westcan Stevedoring Ltd. v. The ARMAR 1973 Can. Fed.Ct. 1232 (1973). In ARMAR a stevedoring company sued the vessel owner in rem to recover monies representing charges for stevedoring services provided the vessel while the vessel was under a time charter to a Cuban organization.

Initially, the ARMAR court relied on prior case law for the proposition that necessaries supplied to a vessel are prima facie presumed to have been supplied on the credit of the ship, but added that that presumption may be rebutted. Plaintiff stevedoring company admitted that it had relied on the credit of time charterer rather than the vessel owner. Nevertheless, plaintiff argued that the services were in reality for the benefit of the vessel or the economic success of the voyage and thus, plaintiff should be able to pursue the owner for the value of those services. In effect, the plaintiff would hold the presumption that necessary services are supplied on the credit of the vessel irrebuttable. The court held this to be too broad a proposition in light of situations wherein there are sound business reasons to look to the credit of others rather than that of the owner.

Secondly, the plaintiff in ARMAR argued that Canadian statutes create a liability in rem on the vessel and its owners regardless of what the in personam liability might be. The court held that the legislature, by enacting statutes permitting in rem enforcement of in personam liability, did not intend to create any new liability on the vessel or owner which did not exist prior to the passage of those statutes. The effect of these statutes was to give the right to enforce a liability in an in rem proceeding when there is personal liability on the vessel or owner. However, when there is otherwise no liability of a vessel or owner, the statute does not give a right to impose a liability in rem.

In the second major case relied upon by both MCT and Empire, Shell Oil Co. v. The LASTRIGONI, 3 Austl.Argus L.R. 399 (High Court of Australia 1974), the supplier furnished fuel bunkers for a vessel under a time charter. The contract under which the bunkers were supplied was between an agent for the time charterer and the plaintiff supplier. The owner of the vessel was not a party to that contract and had no contractual liability to the supplier. The...