Hellenic Lines Limited v. Gulf Oil Corporation

• Decision Date: 12 January 1965
• Docket Number: No. 49,Docket 28885.,49
• Citation: 340 F.2d 398
• Parties: HELLENIC LINES LIMITED, Plaintiff-Appellant, v. GULF OIL CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

340 F.2d 398 (1965)

HELLENIC LINES LIMITED, Plaintiff-Appellant, v. GULF OIL CORPORATION, Defendant-Appellee.

No. 49, Docket 28885.

United States Court of Appeals Second Circuit.

Argued October 6, 1964.

Decided January 12, 1965.

John F. Lang, New York City (Hill, Betts, Yamaoka, Freehill & Longcope, New York City, on the brief), for plaintiff-appellant.

Thomas M. Healy and Frederick L. Scofield, New York City (Robert J. Jackson, Philadelphia, Pa., on the brief), for defendant-appellee.

Before LUMBARD, Chief Judge, and HAYS and ANDERSON, Circuit Judges.

ANDERSON, Circuit Judge.

In this action, tried to the jury, the parties stipulated to try first the issue of liability. At the close of the plaintiff-appellant's (Hellenic's) case, the court dismissed the complaint for failure to prove a prima facie case and directed a verdict for the defendant-appellee (Gulf) on its counter-claims. Under these circumstances we are bound, on review, to consider the evidence and any reasonable inferences which may be drawn from it in the light most favorable to Hellenic.

It appears that negotiations commenced in the early summer of 1958 between representatives of Hellenic, an ocean carrier, and of Gulf, a producer and seller of petroleum products, for a mutually advantageous business relationship. Hellenic was a substantial user of petroleum products, particularly of Bunker C fuel oil for its ships; and Gulf was a substantial shipper by sea. Hellenic's evidence could be held to show that as a result of these negotiations reciprocal collateral agreements were entered into by the parties. One was a written contract under the terms of which Hellenic agreed to buy and Gulf agreed to sell, between January 9, 1959, the date of the contract, and the end of the calendar year 1959, 150,000 barrels of fuel oil, ten per cent more or less, at rates set out in a price schedule and totalling $354,750. The other was an oral contract of affreightment under the terms of which Gulf agreed to ship and Hellenic agreed to carry, during the remainder of calendar 1959, cargoes in sufficient quantities to produce freights totalling $354,750. It could also have been found that each contract was entered into on condition and with the understanding that the other contract would be entered into and become operative simultaneously.

In delivering to Gulf the written contract, fully executed by Hellenic, for the purchase and sale of fuel oil, Hellenic sent with it a letter specifically pointing out that it had signed the contract in reliance upon the existence of the collateral oral agreement pursuant to which Gulf would ship cargoes producing total freights equivalent to the value of the fuel purchased.¹ Gulf never disagreed with or took exception to the condition contained in this letter, and its reply implied approbation and accord.²

Between January 9, 1959 and April 9, 1959, Hellenic purchased fuel oil from Gulf at a total purchase price of $99,025.30. Thereafter Gulf refused to supply Hellenic any more. During this period Gulf had not shipped any cargoes on Hellenic, and, for the balance of 1959, it shipped cargoes producing freights of only $4,258.81, even though Hellenic was at all times ready, willing and able to ship the quantities agreed upon.

Hellenic sued for breach of the affreightment contract. Gulf denied the existence of such an agreement. It asserted the fuel oil contract for 150,000 barrels of Bunker C oil and pleaded the parol evidence rule and the Statute of Frauds to bar any evidence of any oral agreements which would affect the written fuel contract. It also counterclaimed for the $99,025.30 due to it for fuel delivered.

The trial court at the end of the plaintiff's case, concluded that the legal relations of the parties really constituted "a unilateral contract, imposing an obligation upon Hellenic only if Gulf ships freight aboard Hellenic Vessels." The court went on to say, "There is certainly no proof that this unilateral contract was breached by Gulf, since, of course, Hellenic purchased an amount of oil more than equal to the amount of shipments by Gulf."

In making this determination the trial court first decided that the letter of January 9, 1959 from Hellenic to Gulf, which accompanied the copies of the fuel oil contract which Hellenic had signed, was self-serving and inadmissible in evidence, that the parol evidence rule prevented Hellenic from showing that there was an oral contract collateral and reciprocal to the written fuel oil agreement and that "the so-called `oral contract of affreightment' was not a maritime contract but one `made on land, to be performed on land'" and that it, therefore, was invalid under the statute of frauds, § 33-c of the Personal Property Law of the State of New York, McKinney's Consol.Laws, c. 41. The trial court also, in the course of its decision, quoted portions of the testimony of Hellenic's general manager, Callimanopulos, and its traffic manager, Lee, which, in effect, said that Hellenic would buy from Gulf as much fuel and lubricants as Gulf would give freight to Hellenic. On the basis of this, the trial court found a fatal variance between the bilateral contract alleged in the complaint and what it called the unilateral contract shown by those portions of the evidence, and dismissed the complaint.

In reviewing the action taken below and the claims of the parties on appeal, we conclude that there was evidence to show the existence of two separate and enforceable contracts: one, the written contract for fuel oil and the other, the oral contract of affreightment and that they were collateral and reciprocal. They were both to become binding and operative at the same time and were to be performed approximately concurrently and over the same period of time, i. e., the remainder of the calendar year 1959. The making of each contract was the inducement for the making of the other.

Hellenic's covering letter of January 9, 1959 was competent evidence to show that the written fuel oil contract was not intended to become operative unless and until the separate oral contract of affreightment also became operative. It was proof that, while the fuel contract and the affreightment contracts each had within themselves explicit terms and mutuality of consideration, and in that sense were separate agreements, there was not integrated into the written fuel contract the reciprocity with the collateral affreightment contract, which was the only...