Dow Chemical Pacific v. Rascator Maritime SA, 79 Civ. 3131 (KTD)

• Decision Date: 09 October 1984
• Docket Number: No. 79 Civ. 3131 (KTD),80 Civ. 0359 (KTD).,79 Civ. 3131 (KTD)
• Parties: DOW CHEMICAL PACIFIC LTD., Plaintiff, v. RASCATOR MARITIME S.A.; Intra-Span, Inc.; Mahmud Ahmed, a/k/a Mahmud Sipra; Miles A. Galin, M.D.; the Sanko Steamship Co., Ltd.; Sanko Kisen (U.S.A.) Corp.; M/V OGDEN FRASER, her engines, boilers, etc. Ogden Fraser Transport, Inc., Defendants. MANUEL INTERNATIONAL INC., and Manuel International D.I.S.C., Inc., Plaintiffs, v. RASCATOR MARITIME S.A.; Intra-Span, Inc.; Mahmud Ahmed, a/k/a Mahmud Sipra; Miles A. Galin, M.D.; the Sanko Steamship Co., Ltd.; Sanko Kisen (U.S.A.) Corp.; M/V OGDEN FRASER, her engines, boilers, etc.; Ogden Fraser Transport, Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

594 F. Supp. 1490

1985 AMC 523

DOW CHEMICAL PACIFIC LTD., Plaintiff, v. RASCATOR MARITIME S.A.; Intra-Span, Inc.; Mahmud Ahmed, a/k/a Mahmud Sipra; Miles A. Galin, M.D.; the Sanko Steamship Co., Ltd.; Sanko Kisen (U.S.A.) Corp.; M/V OGDEN FRASER, her engines, boilers, etc. Ogden Fraser Transport, Inc., Defendants.

MANUEL INTERNATIONAL INC., and Manuel International D.I.S.C., Inc., Plaintiffs, v. RASCATOR MARITIME S.A.; Intra-Span, Inc.; Mahmud Ahmed, a/k/a Mahmud Sipra; Miles A. Galin, M.D.; the Sanko Steamship Co., Ltd.; Sanko Kisen (U.S.A.) Corp.; M/V OGDEN FRASER, her engines, boilers, etc.; Ogden Fraser Transport, Inc., Defendants.

Nos. 79 Civ. 3131 (KTD), 80 Civ. 0359 (KTD).

United States District Court, S.D. New York.

October 9, 1984.

Hill, Rivkins, Carey, Loesberg, O'Brien & Mulroy, New York City, for plaintiffs Dow Chemical Pacific Ltd., Manuel Intern., Inc. and Manuel D.I.S.C. Intern., Inc.; Raymond P. Hayden, Philip Keith Yachmetz, New York City, of counsel.

W. Shelby Coates, Jr., New York City, for defendants Rascator Maritime, S.A. and Miles A. Galin, M.D. Anderson, Russell, Kill & Olick, P.C., New York City, for defendants Intra-Span, Inc. and Mahmud Sipra; John H. Gross, New York City, of counsel.

Zock, Petrie & Curtin, New York City, for defendants Sanko Kisen (U.S.A.) Corp. and Sanko S.S. Co., Ltd.; Philip J. Curtin, New York City, of counsel.

Burlingham, Underwood & Lord, New York City, for defendants Ogden Fraser Transport Inc. and M/V Ogden Fraser; Michael Marks Cohen, G. Elizabeth Reese, New York City, of counsel.

OPINION

KEVIN THOMAS DUFFY, District Judge:

Old fashioned piracy on the high seas and overwhelming greed are at the heart of this case. What makes the case unusual, however, is that the leader of the pirates is not a swashbuckling Long John Silver, but a grasping avaricious New York ophthalmologist who used other people and corporate shells to work his nefarious schemes. Once placed in the position where he might have to face justice, like a story-book pirate, the villain has lied and hidden in his attempt to avoid the repayment of the damages he has caused. His contempt for the law is truly astounding. This is the unusual situation where simple fairness demands that villain repay not only the plaintiffs' damages ordinarily cognizable at law but also the expenses the plaintiffs and innocent third parties incurred by the prosecution of this case.

In this consolidated action, plaintiffs Dow Chemical Pacific Ltd. ("Dow" or "Dow Chemical") and Manuel International Inc. and Manuel International D.I.S.C., Inc. (referred to collectively as "Manuel") seek to recover the costs of the transshipment of their cargo between Cadiz, Spain and Bombay, India and for damage to their cargo. A three-day bench trial was held June 26, 1984 through June 28, 1984.¹ The following shall constitute my findings of fact and conclusions of law.

FACTS

In 1974, defendant Ogden Fraser Transport, Inc. ("Ogden"), owner of defendant in rem Liberian flag bulk carrier vessel the M/V Ogden Fraser ("Ogden Fraser"), entered into a contract of time charter with defendant Sanko Steamship Co., Ltd. ("Sanko") for a period of about six years. See Plaintiffs' Exh. A34. Sanko is a Japanese corporation with its principal place of business in Tokyo, Japan. It conducts business in the United States through defendant Sanko Kisen (U.S.A.) Corp. ("Sanko Kisen") which is incorporated in New York and has its principal office in New York City. See Sanko Exh. A(3) (agency agreement).

On November 17, 1978, Sanko, as disponent owner of the Ogden Fraser, sub-time chartered the vessel to defendant Rascator Maritime, S.A. ("Rascator"), a Liberian corporation. See Sanko Exh. A(1) (time charter party between Sanko and Rascator). Rascator was incorporated on February 17, 1978. See Court Exh. 1001. In October of 1978 Rascator opened a bank account at Sterling National Bank with an initial deposit of $483,926.53. See Plaintiffs' Exh. A3. Defendant Dr. Miles A. Galin, an ophthamologist who resides and maintains a practice in New York City, was the only individual who had signature rights for Rascator. Id. Defendant Intra-Span, Inc. ("Intra-Span") was assertedly Rascator's agent for conducting business in the United States. Defendant Mahmud Sipra was officer and director of Intra-Span.

The sub-time charter party between Rascator and Sanko provided for a "time charter trip via safe ports ... with redelivery D.O.P. Japan-Singapore Range." Sanko Exh. A(1). The charter hire was $5,400.00 per day to be paid "semi-monthly in advance in U.S. dollars via telegraphic transfer to Owner's bank account." Id. As partial security for the charter hire, Sanko procured an irrevocable commercial letter of credit in the amount of $167,400.00. Plaintiffs' Exh. A1. The letter of credit was dated December 21, 1978 and would expire if it was not presented for payment at Sterling National Bank on or before March 19, 1979. Id. The letter of credit was "by order of Rascator Maritime, S.A. c/o M. Galin, 180 East End Avenue, New York, N.Y." Id. By letter dated December 29, 1979 the letter of credit expiration date was extended until April 19, 1979. Id.

The Ogden Fraser was delivered to Rascator at the port of Seven Islands in Canada on November 19, 1978. She proceeded to Montreal, Canada, where Dow's cargo of approximately 2,440,066 pounds of bagged high density polyethelyene resin was loaded aboard the Ogden Fraser. See Plaintiffs' Exhs. A38 (cargo manifest); B1 at 1 (survey report, January 13, 1979). Clean-on-board bills of lading stamped December 30, 1978 were issued for Dow's cargo. Plaintiffs' Exh. A21 (nineteen bills of lading numbered 7 through 25). The booking note dated December 28, 1978 provided for freight of $110.00 per metric ton prepaid plus wharfage. Plaintiffs' Exhs. A18, A44. The booking note provided that Dow's cargo would be shipped from Montreal, Canada to Bombay, India and that transshipment was not allowed but it incorporated the terms of the bill of lading. Id. Although the booking note disallowed transshipment, the bills of lading provided:

whether expressly arranged beforehand or otherwise, the Carrier shall be at liberty to carry the goods to their port of destination by the said or other vessel or vessels either belonging to the carrier or others, or by other means of transport, proceeding either directly or indirectly to such port and to carry the goods or part of them beyond their port of destination, and to transship, land and shore the goods either on shore or afloat and re-ship and forward the same at Carrier's expense but at Merchant's risk.

See, e.g., Plaintiffs' Exh. A106.

Sanko had no involvement with the negotiations for the shipment of the chemical and steel cargoes or any cargo on the voyage. It did, however, direct the master of the Ogden Fraser to authorize Rascator to issue bills of lading against mate's receipts. See Sanko Exh. A(12). The "conline" bills of lading were signed by Rascator's Canadian agent, Colley Motorships Ltd. "as agents."

After departing Montreal, the Ogden Fraser proceeded to Quebec where additional cargo was loaded and a "loading, stowing, securing and lashing" survey was performed. See Plaintiffs' Exh. B1. Thereafter, the vessel proceeded to New Orleans where approximately 1,487 metric tons of plaintiff Manuel's steel was loaded. See Consent Pretrial Order ("PTO") ¶ 13. Manuel's steel cargo was bound also for Bombay, India. Cymeon Shipping Corporation, on behalf of freight forwarders Black & Geddes, Inc., arranged the shipment of Manuel's cargo. See Plaintiffs' Exh. A42 (Manuel's complete file) (December 26, 1978 letter from Benjamin F. Butler confirming terms of shipment). Manuel's steel cargo was to be shipped pursuant to fourteen bills of lading. Transcript ("Tr.") 80.

The Ogden Fraser was late arriving in New Orleans and Manuel wanted to draw down on a letter of credit but was unable to do so until its cargo was loaded and bills of lading were issued. See Tr. 74, 77 (testimony of Manuel Feingold). Ogden Exh. 3. Thus, Manuel procured from Rascator the premature issuance of four of the fourteen bills of lading. Id. The four bills are dated December 31, 1978 and stamped "on board," yet the vessel did not arrive in New Orleans until January. Tr. 71, 74, 77.

After Manuel's cargo was loaded, a check for freight and ten bills of lading obtained from the freight forwarders were presented to Rascator through Sipra and W. Shelby Coates, Esq., attorney for Rascator and Dr. Galin, and ultimately were sent to Rascator's agent in New Orleans but the bills of lading were returned unsigned to plaintiff on February 12, 1979. See Plaintiffs' Exh. X9 (transcript of hearing before Judge Goettel on February 14, 1979), at 13. Apparently, underlying Rascator's refusal to sign the bills of lading was a dispute between Manuel and the Rascator group concerning "deadfreight." The booking arrangements initially called for a shipment of approximately 6,000 metric tons of steel. See Plaintiffs' Exh. A44. Manuel, however, had only 1,487 metric tons of steel available for shipment in New Orleans. See Tr. 65. Thus, Rascator refused to issue the remaining ten bills of lading based on a claim of outstanding deadfreight. See id. at 17. I note that the Ogden Fraser had sailed from New Orleans on February 3, 1979 with Manuel's cargo on board and the dispute over the issuance of the bills of lading did not occur until February 7, 1979. See id. at 14; Plaintiffs' Exh. A36.² In effect Rascator was holding the cargo for ransom and tripling the cost to Manuel of the shipment after it was loaded and at sea.

On February 13, 1979, Manuel commenced an action against Rascator (among others) and at the same time moved by Order to Show Cause to compel the issuance of the ten bills of lading and the acceptance of the tendered freight. See Complaint, 79 Civ. 0795 (GLG). The following day, Judge Goettel directed the defendants to...