Albatross SS Co. v. Manning Bros.

• Decision Date: 10 January 1951
• Docket Number: No. 63-148.,63-148.
• Citation: 95 F. Supp. 459
• Parties: ALBATROSS S. S. CO., Inc. v. MANNING BROS., Inc.
• Court: U.S. District Court — Southern District of New York

95 F. Supp. 459

ALBATROSS S. S. CO., Inc. v. MANNING BROS., Inc.

No. 63-148.

United States District Court S. D. New York.

January 10, 1951.

Hunt, Hill & Betts, New York City (George Whitefield Betts, Jr., Helen Tuohy and George S. Bernhard, all of New York City, of counsel), for petitioner.

Kirlin, Campbell & Keating, New York City (Charles R. Hickox, James H. Herbert, New York City, of counsel), for respondent.

WEINFELD, District Judge.

Petitioner, Albatross Steamship Company, Inc., instituted this proceeding for an order directing Manning Brothers, Inc., the respondent, to proceed to arbitrate a dispute between the parties under a charter party. The petitioner, hereinafter referred to as Albatross, also seeks an order restraining said Manning Brothers, Inc., hereinafter referred to as Manning, from taking any steps to take possession of the vessel, SS Yankee Fighter, or interfering with the operation of said vessel under said charter party or the performance thereof until a decision of the arbitrators shall have been rendered.

Albatross is a New York corporation and Manning a Delaware corporation.

On June 5th, 1950, Albatross and Manning entered into a bareboat charter party whereby Manning, as owner, let to Albatross, the charterer, the SS Yankee Fighter for a period of about seven to about ten months from the date of delivery with an option to Albatross of continuing the charter for a further period of about three to about five months.

Delivery of the vessel was made by Manning to Albatross on June 10th, 1950, and thus Albatross was entitled to possession of the vessel for a period expiring no earlier than about January 10th, 1951, to about April 10th, 1951, and in the event it exercised its option, for a further period of about three to about five months thereafter. From the date of delivery to the present, the charterer has been engaged in carrying cargo between the United States and European ports.

Clause 29 of the charter party provides for its termination "in case of war involving the U.S.A." On August 15th, 1950, by written communication, Manning undertook to terminate the charter, contending, "war has been carried on in Korea since the latter part of June and has involved, and still involves, the U.S.A. * * *"

As was to be expected, Albatross denied that the United States was involved in war and contended that the President had officially declared that the action in Korea is merely a "police action" pursuant to the provisions of the United Nations' Charter. Albatross' resistance to the attempted termination of the charter party was set forth in a written response dated August 17th, 1950.

The charter party provides that should any dispute "arise between Owner and Charterer, the matter in dispute shall be referred to three (3) disinterested commercial men, one (1) to be appointed by each of the parties hereto and the third by the two (2) so chosen, and the decision of any two (2) of them shall be final." (Clause 19)

Although the charterer replied forthwith to Manning's attempt to terminate the contract, no immediate action was taken by Manning. It allowed the matter to rest for a period of more than three and one-half months, until November 30th, 1950, when it notified Albatross that it considered its letter of August 17th, 1950, a refusal to agree to its contention and, accordingly, sought arbitration under Clause 19, appointed its arbitrator and requested Albatross to do likewise so that the two could agree upon the third arbitrator. Three weeks thereafter, on December 22nd, 1950, in response to this demand, Albatross appointed one John F. Fitzsimmons.

Thereafter, and apparently without any contact between the parties and disregarding the designation by Albatross of its arbitrator, Manning notified Albatross that on the arrival of the vessel in the United States it would take possession of her. The purported basis for this contemplated action was that the charterer in disregard of Manning's claimed right of termination as set forth in its letter of August 15th, 1950, had sent the vessel to Germany with cargo and that she was to take a cargo of grain from U.S.N.H. to Italy. In addition, Manning notified a representative of the owners of the cargo, which the vessel was to load, that upon her expected arrival in the United States on or about January 8th, 1951, it would take possession. Thereupon the present proceeding was commenced, based upon a petition of Albatross, and an order to show cause containing a stay of action on the part of the respondent was granted on December 29th, 1950. The present motion was argued on January 5th, 1951, three days prior to the expected arrival date of the vessel. As of the writing of this opinion, no advice has been received as to whether or not in fact she has arrived.

Manning opposes the application in the main on the grounds that:

(1) The Arbitration Act of the United States, 9 U.S.C.A. § 1 et seq., does not contain any provision for the issuance of a stay where a suit or proceeding is not pending in a Court of the United States. As a corollary, it urges that the Court was without jurisdiction to grant the injunction contained in the order to show cause of December 29th, 1950, and is without jurisdiction to continue or grant a stay pending the arbitration.

(2) Assuming the Court had or has jurisdiction to issue a restraining order, Albatross is not entitled to such relief. Here the respondent's contention is that even if it should retake the vessel, Albatross' sole relief is a claim for money damages representing the difference between the charter rate under the contract of June 5th, 1950, and the market rate as of the date when the owner resumes possession.

(3) Finally, Manning contends that it has not committed any breach of its agreement to arbitrate and consequently there is no basis to compel arbitration under Section 4 or any other section of the Arbitration Act, and urges that on the contrary it is the petitioner who has not conformed to the requirements of the arbitration clause.

We consider the last contention first.

Although each of the parties has named its respective arbitrator, up to the present no action has been taken by them to name the third. The answering papers disclose the reason therefor.

The opposing affidavit of the Vice President of Manning Brothers, Inc. states on information and belief "that Mr. Fitzsimmons (Albatross' designee) is not a disinterested man to be appointed an arbitrator." The basis of this assertion is his employment by the Isbrandtsen Co., engaged in operating a vessel similar to the Yankee Fighter under a similar charter from a bareboat charterer; that a dispute involving the same clause as is in controversy in this proceeding has arisen between the owner and the Isbrandtsen Co., which has been submitted to arbitration. Manning contends because it is in the interests of the Isbrandtsen Co. to have the dispute decided so that its operation of the vessel would not be terminated under the so-called war clause, that consequently Fitzsimmons as an employee of Isbrandtsen "could not fairly be considered a disinterested person to act in a semi-judicial capacity in determining the question in dispute."

There has been submitted to the Court a statement by Fitzsimmons denying the claim so made upon information and belief, wherein he alleges, "I wish to unequivocally state that I consider myself a disinterested person qualified to act as arbitrator in the matter mentioned. Had I not done so, I would not have accepted the appointment" and further denying any financial interest of any kind in the Isbrandtsen Co.

It is to be noted that the dispute between the Isbrandtsen Co. and its charterer is in no respect directly related to the dispute between the parties hereto and the only suggested connection is that Clause 23 in the instant charter party is similar to the one which forms the basis of the Isbrandtsen arbitration.

It is interesting to note that the alleged lack of fairness or impartiality was made by respondent for the first time on December 29th, 1950, one day after it had notified the petitioner of its intention to seize possession of the vessel upon her arrival. The good faith of this...