M.W. Zack Metal Co. v. International Navigation Corp. of Monrovia

• Decision Date: 22 August 1985
• Citation: 493 N.Y.S.2d 145,112 A.D.2d 865
• Parties: M.W. ZACK METAL COMPANY, Plaintiff-Respondent, v. INTERNATIONAL NAVIGATION CORPORATION OF MONROVIA, Defendant, Newcastle Protection & Indemnity Association, et al., Defendants-Appellants, and Federal Insurance Company, Defendant-Respondent, and Contam Linie, et al., Defendants.
• Court: New York Supreme Court — Appellate Division

Page 145

493 N.Y.S.2d 145

112 A.D.2d 865

M.W. ZACK METAL COMPANY, Plaintiff-Respondent, v. INTERNATIONAL NAVIGATION CORPORATION OF MONROVIA, Defendant Newcastle Protection & Indemnity Association, et al Defendants-Appellants and Federal Insurance Company, Defendant-Respondent and Contam Linie, et al., Defendants.

Supreme Court, Appellate Division, First Department.

Aug. 22, 1985.

A.B. Cataldo, New York City, for plaintiff-respondent.

J.F. DeMay, Jr., New York City, for defendants-appellants.

Before SULLIVAN, J.P., and ASCH, BLOOM, FEIN, and MILONAS, JJ.

MEMORANDUM DECISION.

Order, Supreme Court, New York County, entered May 4, 1984, inter alia denying the motion by defendant The London Steamship Owner's Mutual Insurance Association Limited ("London"), Newcastle Protection & Indemnity Association ("Newcastle") and La Morte Burns & Co., Inc. ("La Morte") and the cross motion by defendant Federal Insurance Company ("Federal"), for dismissal for failure to state a cause of action, unanimously reversed on the law, and the complaint is dismissed against these defendants, with costs to London, Newcastle and La Morte only.

This 25-year old matter began in 1960 when plaintiff purchased a quantity of Austrian coiled steel for sale to a midwest company. The steel was to be shipped under a clean bill of lading from Antwerp to New York aboard the S.S. Severn River, a vessel owned by defendant International Navigation Corporation of Monrovia ("the owner"), a Liberian corporation, under charter to defendant Contam Linie ("the charterer"), a German partnership also known as Jansen & Co. Damaged in transit, the goods were refused by the buyer, forcing plaintiff to sell the shipment at salvage, at a loss of approximately $79,723.74.

Over the last 25 years no less than five damage actions have been commenced by plaintiff in different federal courts against the vessel owner and its charterer, several of which were dismissed for failure to prosecute. A similar action was commenced in 1961 in a German court in Hamburg. While that action was pending, plaintiff sued Federal, its own cargo underwriter, here in New York. After protracted trial and appellate litigation, this New York case was settled in 1968, Federal paying plaintiff $40,000 plus interest on the cargo damage claim, in exchange for 55% of any net recovery plaintiff might realize in the pending German litigation, in which plaintiff's attorney would continue to represent the interests of both of these parties. Plaintiff's attorney agreed to keep the cargo insurer informed of the status of that German litigation in semiannual reports. (According to Federal, plaintiff denounced this settlement two months later.)

Two years after this New York settlement, Federal assigned its interest in the outcome of the German litigation to defendants Newcastle and London, British indemnity insurers for the charterer and the vessel owner, respectively. ¹ Plaintiff then sued these indemnity insurers for $200,000 in damages, in one of its Federal actions, alleging fraud in so purchasing Federal's interest.

In 1971, after 10 years of litigation, plaintiff obtained a $64,000 judgment in the German action against the charterer and the owner. The latter's liability, however, was limited to execution upon the vessel, which unbeknownst to the court had foundered at sea three years earlier. Plaintiff thus turned to Newcastle, the charterer's indemnity insurer, which guaranteed satisfaction upon final resolution of all appeals and settlements in the German action. Four years later, the German appeals court dismissed plaintiff's claim against the ship owner and reduced the liability of the charterer to $33,000 plus interest and costs. Newcastle posted a bond for this amount, and also a lien to secure the indemnity insurers' 55% interest in plaintiff's recovery which they had purchased from Federal.

In 1978 plaintiff commenced its fifth Federal action by suing the owner, the...