Hellenic Lines, Limited v. Embassy of Pakistan

• Decision Date: 11 September 1972
• Docket Number: 35436.,No. 755,756,Dockets 35353,755
• Citation: 467 F.2d 1150
• Parties: HELLENIC LINES, LIMITED, Plaintiff-Appellee-Appellant, v. The EMBASSY OF PAKISTAN, Defendant-Appellant-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

467 F.2d 1150 (1972)

HELLENIC LINES, LIMITED, Plaintiff-Appellee-Appellant, v. The EMBASSY OF PAKISTAN, Defendant-Appellant-Appellee.

Nos. 755, 756, Dockets 35353, 35436.

United States Court of Appeals, Second Circuit.

Argued May 24, 1972.

Decided September 11, 1972.

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Robert V. Corbett, New York City (Christophil B. Costas and Cardillo & Corbett, New York City, on the brief), for plaintiff-appellee-appellant Hellenic Lines, Limited.

Morton Zuckerman, New York City (Dunn & Zuckerman, New York City, on the brief), for defendant-appellant-appellee Embassy of Pakistan.

Before LEVENTHAL,^* FEINBERG and TIMBERS, Circuit Judges.

TIMBERS, Circuit Judge:

These appeals present somewhat difficult questions of construction of certain technical terms of contracts of affreightment entered into between Hellenic Lines, Limited, and the Embassy of Pakistan.

Pursuant to such contracts, Hellenic's vessels between 1958 and 1963 carried twenty-four shipments of grain from ports in the United States to ports in Pakistan and what was then East Pakistan. In March of 1964, Hellenic filed a libel seeking damages for delays in berthing its vessels and discharging the cargoes.¹ After a trial in the District Court for the Southern District of New York, Judge Bonsal, 307 F.Supp. 947, held that the Embassy was liable for the detention of Hellenic's vessels on those voyages (IX through XXIV) governed by American law and was not liable for detention on those voyages (II through VIII) governed by English law.² For the reasons stated below, we affirm in part and reverse in part on the appeal of the Embassy and affirm on the cross-appeal of Hellenic.

I.

Each of the contracts covering the twenty-four shipments of grain to Pakistan consisted of a booking note or a freight contract and a negotiable bill of lading issued by Hellenic when the cargo was loaded on board one of its vessels. The booking notes or freight contracts were entered into by the parties in Washington, D.C. or New York City sometime prior to the respective shipments. These documents were skeletal memoranda, setting forth only the barest terms of a contract of affreightment. Each booking note or freight contract generally stated the name of a vessel, the place of loading, dates within which loading would occur, port of discharge, the commodity and its quantity and the freight rate. All of the documents, with the exception of one, also indicated that cargo would be discharged free of risk and expense to the vessel and that "otherwise regular berth terms apply". Seven of these booking notes also added "no demurrage".

The negotiable bill of lading issued for each shipment was a standardized printed form with the terms of the applicable freight contract typewritten onto the form. A typewritten clause in each bill of lading also specifically provided that the bill of lading was "subject to all other terms, conditions and exceptions of the" relevant freight contract. The bills of lading for voyages II through VIII stated that "all disputes arising under this bill of lading shall be decided according to English law." The bills of lading for the last sixteen voyages did not contain a choice-of-law provision. The district court correctly held, however, as the parties conceded, that the general maritime law of the United States was applicable to disputes arising out of these voyages.

The cargo on each of the twenty-four voyages was discharged at one of three ports—Karachi in Pakistan or Chittagong or Chalna in what was then East Pakistan. Congestion at these ports caused substantial delays in berthing or mooring Hellenic's vessels. Judge Bonsal also found that additional delays in discharging the cargo were attributable in large measure to the absence of modern facilities and a shortage of existing equipment. In particular, at Karachi and Chittagong, bagged wheat had to be loaded onto railway freight cars, and substantial delays resulted from the critical shortage of such cars. At Chalna, cargo was unloaded at moorings in the anchorage into lighters by means of the ship's derricks. Tugs were then required to transport the lighters, and a shortage of tugs caused substantial delays. In all three ports, a shortage of stevedores, power failures, breakdown of equipment, labor strikes and bad weather also hampered the effort to unload the vessels in a timely fashion. Taken together, Hellenic claimed that the delays in discharging the cargoes for all twenty-four shipments amounted to approximately 134 days.

The district court specifically rejected the claim, however, that the Embassy was at fault for the delays in discharging the cargoes. It found that the delays "were due to the usual custom and prevailing circumstances at the ports and reasonable under the circumstances", and it also concluded that the delays "were within the contemplation of the parties". The court then held that the bills of lading governed by English law merely required the consignee to discharge the cargo within a reasonable time and that, in view of the circumstances existing at the ports, the Embassy had not breached this duty. Accordingly, the court absolved the Embassy of any liability for detention arising out of voyages II through VIII. On those voyages governed by American law, however, the court held that the bills of lading imposed an absolute duty on the consignee to discharge the cargo continuously, regardless of the prevailing circumstances at the ports. The court therefore held the Embassy liable for detention arising out of voyages IX through XXIV.

II.

On its cross-appeal, Hellenic contends that the district court erred in denying it damages for detention arising out of those voyages controlled by English law. We disagree.

The bills of lading covering these voyages contained the following printed clause:³

"If the vessel\'s loading or discharge is delayed through failure of shipper to supply cargo or to furnish literage or use of craft in discharging or to receive or remove the goods so that the vessel may load and discharge as fast as she can, the shipper will pay for the detention of the vessel at the current rate in U.S. currency of charter per net register ton of the vessel every day."

If no fixed time for unloading is stipulated, the law implies an agreement on the part of the consignee to discharge the cargo within a reasonable time. Carver, Carriage by Sea 1245 (11th ed. 1963); Scrutton on Charterparties and Bills of Lading, Arts. 135, 136 (17th ed. 1964). Moreover, under English law, the time is unfixed whenever there is not a definite time expressed or implied. Thus, the obligation to discharge in a reasonable time is the same whether the bill of lading is silent as to the time, or stipulates for "customary dispatch" or "as fast as steamer can deliver". Scrutton on Charterparties and Bills of Lading, Arts. 135, 136 n. g. (17th ed. 1964). Furthermore, under English law, a reasonable time means "reasonable under the circumstances then existing other than self-imposed inabilities of either shipowner or charterer and should be estimated with reference to the means and facilities then available at the port, and the character of the port with regard to tides and otherwise". Scrutton on Charterparties and Bills of Lading, Arts. 135, 136 (17th ed. 1964). In short, the question is whether the consignee did what could be reasonably expected of it.

After reviewing the entire record, we cannot say that the district court's finding that the delays were reasonable under the prevailing circumstances of the ports is clearly erroneous. The congestion at these ports, the inadequacy of existing facilities and the shortage of stevedores were conditions which were well known to the shipping industry. These conditions produced substantial delays in discharging the cargoes from all vessels, not just Hellenic's. Even assuming, as Hellenic contends, that the Embassy had the burden of showing that it did all it could under the circumstances, we hold that the Embassy sustained that burden. We therefore agree with the district court's conclusion that the delays were "reasonable and due to the custom and prevailing circumstances of the ports" and that the Embassy is not liable for the delays on those voyages governed by English law.

III.

Both parties concede that the maritime law of the United States applies to voyages IX through XXIV. The bills of lading covering these voyages provided that the cargoes would be discharged "continuously" by the consignee. Under American law, as the district court correctly pointed out, a provision that a consignee shall discharge "continuously" is an express covenant to do precisely that and is binding regardless of prevailing circumstances or customs of the port. See Steamship Co. of 1912 v. C. H. Pearson & Son Hardwood Co., 30 F.2d 770, 773 (2 Cir. 1929); Tweedie Trading Co. v. Strong & Trowbridge Co., 195 F. 929, 930 (2 Cir. 1912). Accordingly, the court held that the Embassy was liable for the delay in discharging the cargoes on these voyages.

On appeal, the Embassy contends that several provisions of the booking notes or freight contracts negate the duty to discharge continuously and that the district court erred in not holding that the terms of the freight contracts prevail over inconsistent terms of the bills of lading. The district court rejected this argument, concluding that the typewritten clause in each bill of lading which provided that the bill of lading was "subject to all other terms . . ." of its respective freight contract meant that the terms of the bill of lading must control if there were any inconsistency between its provisions and those of the applicable freight contract. We cannot accept the court's analysis of the relationship between the freight contracts and the bills of lading.

To hold that language in the bill of lading prevails over inconsistent language in the freight contract would permit Hellenic to change...