Gardner v. The Calvert

• Decision Date: 07 March 1958
• Docket Number: No. 12178,12179.,12178
• Citation: 253 F.2d 395
• Parties: Charles GARDNER v. THE CALVERT, Her Engines, Machinery, Tackle, Fittings, Equipment, etc., and Ernest E. Fuchs and Sound Steamship Lines, Inc., and All Other Persons Lawfully Intervening for Their Interests. Appeal of Charles GARDNER. Appeal of Ernest E. FUCHS and Sound Steamship Lines, Inc.
• Court: U.S. Court of Appeals — Third Circuit

253 F.2d 395 (1958)

Charles GARDNER v. THE CALVERT, Her Engines, Machinery, Tackle, Fittings, Equipment, etc., and Ernest E. Fuchs and Sound Steamship Lines, Inc., and All Other Persons Lawfully Intervening for Their Interests Appeal of Charles GARDNER Appeal of Ernest E. FUCHS and Sound Steamship Lines, Inc.

Nos. 12178, 12179.

United States Court of Appeals Third Circuit.

Argued October 10, 1957.

Decided March 7, 1958.

Writ of Certiorari Denied May 19, 1958.

Sidney M. Wittner, New York City (Lasser & Lasser, Newark, N. J., on the brief), for Gardner.

Corydon B. Dunham, New York City (Marcel Wagner, Jersey City, N. J., Curley C. Hoffpauir, New York City, on the brief), for Fuchs.

Curley C. Hoffpauir, New York City (Marcel Wagner, Jersey City, N. J., Corydon B. Dunham, New York City, on the brief), for Sound S. S. Lines.

Before BIGGS, Chief Judge, and MARIS and McLAUGHLIN, Circuit Judges.

Writ of Certiorari Denied May 19, 1958. See 78 S.Ct. 997.

MARIS, Circuit Judge.

These cross-appeals arise out of an admiralty suit brought by the libelant, Charles Gardner, in the District Court for the District of New Jersey against the Motor Vessel Calvert and her alleged owners, the respondents, Ernest E. Fuchs and the Sound Steamship Lines, Inc., following the alleged breach of an oral agreement to charter the Calvert. The libel asserted two causes of action. In the first, the libelant claimed the sum of $7900 for expenses incurred in hiring a crew and for the value of equipment furnished the Calvert and in the second, he claimed damages in the sum of $100,000 as a result of the respondents' breach of the charter party and withdrawal of the vessel. After a trial, the district court on October 3, 1956 filed findings of fact and conclusions of law as follows:

"Findings of Fact

"1. In July, 1951, respondent Sound Steamship Lines, Inc. was the owner of the Motor Vessel `Calvert', and respondent Ernest E. Fuchs was president of said corporation.

"2. Beginning on July 2, 1951, libellant negotiated with respondent Fuchs with a view toward chartering the `Calvert'. A parol charter resulted. Charter was for the purpose of transporting passengers from New York City to Atlantic Highlands en route to the Monmouth Park Race Track at Oceanport, New Jersey, for Sunday trips to Atlantic Highlands, and for other stated purposes at the end of the racing season.

"3. Libellant also delivered equipment to complete the outfitting of the `Calvert' to that ship on July 8, 1951, which respondent Fuchs took on board without protest, the evidence indicating to the court that the value of said equipment was $1,500.00.

"4. On July 8, 1951, libellant put a crew aboard the `Calvert' without protest from respondent Fuchs.

"5. On July 10, 1951, libellant appeared with $5,000.00 as an advance ready to proceed, but respondent Fuchs failed, neglected and refused to go through with the charter agreement.

"6. Respondent Fuchs removed the vessel from its berth in New York to another in Perth Amboy, refusing to carry out the charter agreement.

"7. The equipment delivered by libellant has remained aboard the `Calvert' and due demand for payment has been made.

"8. No attempt to pay for the equipment or to go through with the parol charter agreement has been made by respondent Fuchs, though duly demanded by libellant.

"Conclusions of Law

"1. This court has jurisdiction of the subject matter and the parties involved.

"2. A parol charter existed by virtue of the arrangement agreed upon by the parties.

"3. Respondent Fuchs accepted and agreed to pay for equipment furnished by libellant.

"4. Libellant is entitled to a decree against respondents for loss of profits from breach of charter, in the sum of $49,385.00, and for the equipment delivered by libellant aboard the `Calvert', in the sum of $1,500.00, with interest from July 12, 1951¹ and costs of court.

"The damages have been determined in accordance with the principles set down in Interchemical Corp. v. Uncas Printing and Finishing Co., 1956, 39 N. J.Super. 318, 120 A.2d 880, which adopts the rule set forth in Rynveld v. Depuis, 1930, 5 Cir., 39 F.2d 399, which latter case cites with approval a similar rule set forth in Eastman Kodak Co. v. Southern Photo Material Co., 1923, 5 Cir., 295 F. 98, where the court said at p. 102:

"`Damages are not rendered uncertain because they cannot be calculated with absolute exactness. It is sufficient if a reasonable basis of computation is afforded, although the result be only approximate. The defendant, whose wrongful act creates the difficulty, is not entitled to complain that the amount of the damages cannot be accurately fixed.'"

Motions were filed by the respondents for reconsideration, or for dismissal of the libel as to both respondents, or for dismissal of the libel as to the respondent Fuchs individually. These motions were denied by the district court which on December 6, 1956 entered a final judgment in favor of the libelant and against the respondents Fuchs and Sound Steamship Lines in the sum of $50,885 with interest at 4% per annum from October 3, 1956, the date on which the district court had filed its findings of fact and conclusions of law. These appeals by both parties followed.

On the respondents' appeal, Fuchs contends that the district court erred in refusing to dismiss the libel as to him individually and Sound Steamship Lines contends that the award of damages to the libelant is unsupported in the evidence. The libelant in his cross-appeal contends that the district court erred in awarding him interest at the reduced rate of 4% from October 3, 1956 only instead of at the rate of 6% from July 12, 1951, as directed in the court's amended conclusion of law No. 4. We will consider these issues seriatim viewing, as we must, the evidence as to each issue in the light most favorable to the appellee involved.

The respondent Fuchs argues that in the light of the district court's finding of fact No. 1 that "In July, 1951, respondent Sound Steamship Lines, Inc. was the owner of the Motor Vessel `Calvert', and respondent Ernest E. Fuchs was president of said corporation", the district court erred in refusing to dismiss the libel as to him. We think that he is right in this contention and that his motion to dismiss should have been granted. The libelant, however, argues that the respondent Fuchs should be held personally liable because he owned 100% of the stock. This, even if the premise were true, would not follow. It is a well settled rule that a corporation is for most purposes an entity distinct from its individual shareholders, Klein v. Board of Tax Supervisors, 1930, 282 U.S. 19, 24, 51 S.Ct. 15, 75 L.Ed. 140; New Colonial Co. v. Helvering, 1934, 292 U.S. 435, 442, 54 S.Ct. 788, 78 L.Ed. 1348, and only in exceptional instances may the separate corporate identity be disregarded. Furthermore it is normal for the president of a corporation to act as its chief executive officer and agent, and contracts made by a corporation's authorized agent within the scope of its legitimate purposes are binding on it. Bank of Columbia v. Patterson, 1813, 7 Cranch. 299, 11 U.S. 299, 3 L.Ed. 351; Chesapeake & Ohio Canal Co. v. Knapp, 1835, 9 Pet. 541, 34 U.S. 541, 9 L.Ed. 222; Restatement, Agency, §§ 4, 320, 328. In the present case there was no evidence that the respondent Fuchs intended to be bound personally, or that he acted beyond the scope of his authority as president. Accordingly he may not be held personally liable and the judgment must be reversed insofar as it holds him individually liable for the value of the equipment furnished the Calvert and for the damages flowing from the breach of contract.

The respondent Sound Steamship Lines' attack on the decree is threefold: Its first contention is that the district court erred in holding it liable in the sum of $1500 for equipment delivered to the Calvert. Little need be said in respect to this contention. Fuchs admitted in his testimony that equipment had been delivered aboard the Calvert and that it remained unpaid for. There is ample support in the record for the district court's conclusion that the respondent Sound Steamship Lines is liable for this equipment. The conclusion, accordingly, will not be disturbed.

The respondent Sound Steamship Lines' second contention is that the district court erred in finding that the parties had entered into an oral charter party. It argues that the negotiations between the parties were merely preliminary and tentative, that there was no meeting of the minds as to the terms of the contract and that they intended that the terms would finally be reduced to writing before becoming binding. The evidence discloses that on July 8, 1951, the day on which the libelant delivered equipment to the Calvert and put a crew aboard, Fuchs prepared and submitted to the libelant a form of charter party upon stationery of the respondent Sound Steamship Lines which the libelant rejected. This draft mentioned a performance bond, referred to a corporation instead of the libelant as charterer, and contained blank and unfilled spaces. Fuchs said he would redraw it to conform to their agreement. This he did not do. But the fact that the parties intended to put their agreement in writing is not necessarily inconsistent with the fact that they may have orally reached an agreement upon the terms of a contract. That parties may make a binding oral agreement is a well-settled principle in the law of admiralty. Union Fish Co. v. Erickson, 1919, 248 U.S. 308, 39 S.Ct. 112, 63 L.Ed. 261; American Hawaiian S. S. Co. v. Willifuehr, D.C. Md.1921, 274 F. 214, affirmed United States Fidelity & Guaranty Co. v. American Hawaiian S. S. Co., 4 Cir., 280 F. 1023; Tomkins Cove Stone Co. v. Bleakley Transp. Co., 3 Cir., 1930, 40 F.2d 249; Salmons Dredging Corporation v. Herma, 4 Cir., 1950, 180 F.2d 233. The essential prerequisite to the formation of such a contract is the intention to do so,...