COMPANIE DE NAV. ALMIRANTE SAP v. CERTAIN P. OF CARGO
| Decision Date | 15 December 1967 |
| Docket Number | No. 64-1750.,64-1750. |
| Court | U.S. District Court — Central District of California |
| Parties | COMPANIA DE NAVEGACIONE ALMIRANTE S. A. PANAMA, Libelant, v. CERTAIN PROCEEDS OF CARGO, etc., of the vessel S. S. SEARAVEN; Kenray, Inc., a corporation; and Beverly Hills National Bank & Trust Company, a national banking association, Respondents. |
Lillick, McHose, Wheat, Adams & Charles, by, David Brice Toy, Los Angeles, Cal., for libelant.
Loeb & Loeb, by, Jerome Goldberg, Los Angeles, Cal., for respondent Beverly Hills National Bank.
In this action Libelant, a Panamanian corporation and owner of the vessel S.S. SEARAVEN, by its complaint seeks to libel the proceeds of cargo, freights and subfreights of the S.S. SEARAVEN. Kenray, Inc., a corporation, one of the Respondents whose default has been entered herein, was charterer of the SEARAVEN under a voyage party entered into with Libelant on September 30, 1964; the charter party in a standard Gencon form let the SEARAVEN to Kenray for a voyage from one or two safe California ports to one or two discharging ports in Japan or Formosa. Under the terms of the charter party the charter hire, which remains unpaid, was in the sum of $96,750.00. The charter party called for payment of 90% of the charter hire within seven days after delivery of signed bills of lading, signed by the owner and delivered to Kenray.
Under the terms of the charter party Libelant has an express lien upon cargo for freight.
The vessel was delivered to Kenray and thereupon was loaded with approximately 10,000 tons of scrap and thereafter proceeded to Taiwan, Formosa.
For some time prior to the charter of the SEARAVEN, Kenray and Respondent Beverly Hills National Bank & Trust Company, hereinafter "Bank," had been discussing means whereby the large indebtedness of Kenray to the Bank could be fully or at least largely satisfied. An investigation was made to determine where the scrap then in Kenray's hands could best be marketed and it was decided that Japan or Formosa provided the most advantageous market. Thereupon the question of the charter of a ship for carriage of scrap occurred and it was determined that additional scrap should be purchased with funds to be supplied by the Bank to fully utilize the capacity of a chartered ship of the type being considered. The Bank agreed to and did give Kenray also a bill of credit to cover the cost of stevedore services for the loading of cargo on the SEARAVEN. Kenray, during the course of these discussions, indicated that it could probably procure a ship from Libelant without the issuance of a bill of credit by the Bank for charter hire in view of past favorable business relationships between Kenray and Libelant concerning charter hire, and the Bank requested that Kenray attempt such course in order that the Bank's financial position would not be further affected by the issuance of a letter of credit for charter hire. Thereafter the charter party was entered into between Libelant and Kenray without any letter of credit being issued to Libelant for charter hire.
During October and early November 1964, Libelant's duly authorized agent executed and delivered to Kenray bills of lading covering all of the cargo. Kenray was named as shipper in all bills of lading other than one in which Purdy International Corporation is named as shipper of 999.86 tons of scrap. Kenray delivered all of its said bills of lading to the Bank and drew and delivered to the Bank drafts on all the foreign letters of credit furnished by consignees of the cargo of which Kenray was designated shipper, in favor of Respondent Bank; prior to the commencement of this action and in late November 1964, Respondent Bank collected all of the drafts drawn by Kenray in the total amount of $535,371.21. At the time that Kenray delivered the bills of lading and drafts to the Bank, Kenray was indebted to the Bank in the sum of approximately $742,203.81, and legal title to the scrap on the SEARAVEN, other than the scrap owned by Purdy International Corporation, was in the name of the Bank to secure monies owed to it by Kenray.1
When the proceeds of the drafts were received by the Bank, the Bank then asserted its banker's lien against all of such proceeds. The Bank, on December 2, 1964, also asserted its banker's lien against the commercial account of Kenray in said Bank for the sum of $16,387.46; in such commercial account at that time was subfreight paid by Purdy International Corporation to Kenray in the sum of $9,998.60, such subfreight being for the carriage of Purdy's cargo on the SEARAVEN.
It was not until after Kenray had delivered to the Bank all of the bills of lading, together with the drafts for collection, that the Bank representative stated that "Kenray will pay for the freight"; however, no representative of the Bank told Kenray that the Bank would not permit the proceeds of the foreign letters of credit to be used to pay for the ocean freight.
Before the delivery of any of the cargo of the SEARAVEN to any of the consignees Libelant filed its libel, and prior to such delivery of any of the cargo the Court, upon Libelant's motion, ordered that proceeds of cargo, freights and subfreights be brought into Court to answer the libel. Thereupon and also before the delivery of any of the cargo, the parties stipulated that the amount to be deposited pursuant to Court's order was in the principal sum of $145,000.00 without prejudice to the right of the Bank to contend that in fact the order of Court ordering the deposit of proceeds of cargo, freights and subfreights was improper.
This Court had jurisdiction to require Respondent Bank to deposit the funds ordered deposited to the extent necessary to satisfy charter hire. The freight earned by the cargo represents the sum to be paid for the use of the ship and a lien on cargo when the vessel has not been paid its hire is a lien on the sum earned by the cargo. N. H. Shipping Corp. v. Freights of the S/S Jackie Hause, 181 F.Supp. 165, 170 (S. D.N.Y.1960); Jebsen v. A Cargo of Hemp, 228 F. 143 (D.C.Mass.1915).
Where freights have been collected by the charterer and the freights are within the territorial jurisdiction of the Court, the Court has jurisdiction in rem over such freights. Lathrop v. Freights of the John Ena, 212 F. 560 (N.D.Cal.1914).
Wherever a lien exists and attaches upon proceeds, an Admiralty Court may exert its jurisdiction over such proceeds by way of monition addressed to the party holding them. See Sheppard v. Taylor, 5 Peters 675, 8 L. Ed. 269 (1831).
Respondent Bank contends that Libelant shipowner lost its lien on cargo by failing to libel the cargo for charter hire prior to delivery of the cargo to the consignees. This Court considers such contention without merit. Here Libelant attached the proceeds or freight earned by the cargo in the hands of Respondent Bank while the cargo was still in the possession of the ship. It would seem that the rule announced in N. H. Shipping Corp. v. Freights of the S/S Jackie Hause, supra, 181 F.Supp. at p. 171 of the opinion, is here applicable. In the Freights of the S/S Jackie Hause the Court stated: ...
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Beverly Hills Nat. Bk. & Tr. Co. v. Compania de Nav. Almirante
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