Mare Schiffahrtskontor GmbH & Co., KG v. M/V Oceanhaven

• Decision Date: 05 June 1985
• Docket Number: No. 84-1305,84-1305
• Citation: 763 F.2d 633
• Parties: MARE SCHIFFAHRTSKONTOR GmbH & CO., KG, Appellant, v. M/V OCEANHAVEN, its engines, boilers, tackle, etc.; M/V Franco Express (formerly M/V Namrata), its engines, boilers, tackle, etc.; M/V Sherbo, its engines, boilers, tackle, etc.; Societe Navale Chargeurs Delmasvieljeux; Guinea Gulf Line, Ltd.; Franco Express Lines, S.A.; Franco Compania Naviera, S.A. and American International Shipping Lines, Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 633

763 F.2d 633

1986 A.M.C. 283

MARE SCHIFFAHRTSKONTOR GmbH & CO., KG, Appellant, v. M/V OCEANHAVEN, its engines, boilers, tackle, etc.; M/V Franco Express (formerly M/V Namrata), its engines, boilers tackle, etc.; M/V Sherbo, its engines, boilers, tackle etc.; Societe Navale Chargeurs Delmasvieljeux; Guinea Gulf Line, Ltd.; Franco Express Lines, S.A.; Franco Compania Naviera, S.A. and American International Shipping Lines, Appellees.

No. 84-1305.

United States Court of Appeals Fourth Circuit.

Argued March 5, 1985.

Decided June 5, 1985.

Robert P. O'Brien, Baltimore, Md. (Paul B. Lang, Niles, Barton & Wilmer, Baltimore, Md., on brief), for appellant.

Robert A. Henley, Glen Burnie, Md. (Lechowicz, Loney & Davis, Glen Burnie, Md., on brief), for appellees.

Before WINTER, Chief Judge, and SPROUSE and WILKINSON, Circuit Judges.

SPROUSE, Circuit Judge:

This is an action of maritime attachment and garnishment by Mare Schiffahrtskontor GmbH & Co., K.G. (Mare) against Trees Company (Trees), in which Mare seeks to garnish freight charges allegedly owed by Trees to Franco Express Lines, S.A. (Franco), the owner/operator of the oceangoing vessel M/V Ocean Haven. The complaints to which this garnishment is ancillary were filed by Mare against a variety of defendants, including Franco, in an effort to recover money allegedly due Mare for its services as a general agent for several ocean shipping lines, including Franco. These complaints have no bearing on this appeal. In this garnishment action, the basic issue is whether Trees has assets of Franco which may be garnished. Mare contends that Trees is indebted to Franco for freight charges pursuant to a contract for shipment of a cargo of logs. Trees owned the logs and contracted with Franco for their shipment from Baltimore to Antwerp on the M/V Ocean Haven. That vessel carried the logs only as far as Rotterdam, where it apparently was seized by creditors. The district court, after hearing argument and considering the pleadings and other materials, concluded sua sponte that Trees was not liable to Franco for the freight charges, on the ground that Franco failed to make delivery according to the contract, and so dismissed the garnishment. Because in our view there are genuine issues of material fact concerning the principal issue of whether Franco exercised "unreasoned judgment" in commencing and conducting the voyage and on the issue of possible unjust enrichment of either Trees or Franco, we reverse and remand for fuller development of the record.

I. Facts

Trees contracted with Franco for the shipment of three lots of redwood logs from Baltimore to Antwerp on Franco's M/V Ocean Haven. The contract was contained in two bills of lading, both dated November 8, 1982. One covered two lots of logs and listed freight charges of $15,055.71; the other covered one lot with freight charges of $7,768.57. The freight charges in issue thus total $22,824.28. Both bills of lading stated that the freight was "prepaid" and contained the following guaranteed freight clause:

Full freight hereunder to place of delivery named herein and advance charges (including on-Carriers) shall be considered completely earned on receipt of the goods by the Carrier, whether the freight be stated or intended to be prepaid or to be collected at destination, and the Carrier shall be entitled to all freight and charges, extra compensation, demurrage, detention, general average, claims and any other payments made and liability incurred with respect to the goods, whether actually paid or not, and to receive and retain them irrevocably under all circumstances whatsoever, vessel, conveyance and/or cargo lost, damaged or otherwise or the combined transport changed, frustrated or abandoned in case of forced abandonment or interruption of the combined transport for any cause, any forwarding of the goods or any part thereof shall be at the risk and expense of the goods.

No freight was ever paid by Trees.

The logs were delivered to the Port of Baltimore and loaded onto the M/V Ocean Haven. In the course of the voyage to Antwerp, the vessel put into port in Rotterdam. The parties concede and the district court found that this was a scheduled port of call and not an "unreasonable deviation" from the planned route. Sometime in the course of its call in Rotterdam, the vessel was seized for reasons not clear in the record. The district court found that the seizure was "apparently the result of proceedings arising out of financial problems of [Franco]." The record does not reveal the sequence of events, but the district court found that at some point Franco "repudiated any intent to forward the logs to Antwerp." The logs eventually arrived in Antwerp as a result of transshipment arranged by Trees and its customers. Mare reports in its brief that the distance by road from Rotterdam to Antwerp is seventy-five miles. The record does not reveal the method of transshipment, but Trees avers that it incurred expenses of $11,574.09 in effecting the delivery to Antwerp.

Mare acts as the general agent for a number of ocean shipping lines, arranging necessary port services and often advancing sums of money to pay for such services on behalf of a vessel. Apparently Franco failed to reimburse Mare for certain advances or fees, leading Mare to file a complaint against Franco accompanied by the instant garnishment proceeding against Trees as a putative debtor of Franco. Trees filed an answer and an amended answer confessing assets of Franco of $11,250.20, consisting of freight due on the two bills of lading less the expenses for transshipment from Rotterdam to Antwerp. Trees subsequently filed another amended answer denying any assets of Franco, on the ground that no freight was owed on the bills of lading because delivery had not taken place in accordance with the contract. The district court, after hearing argument and considering Mare's process of garnishment, Tree's answers thereto, copies of the relevant bills of lading covering the logs, affidavits of Trees as to nondelivery in Antwerp, and exhibits of Trees showing transshipment costs from Rotterdam to Antwerp, sua sponte concluded that Trees was not liable to Franco for freight because of the nondelivery and entered judgment for Trees dismissing the process of garnishment.

II. Unreasoned Judgment

The parties agree that under the American rule, in the absence of contractual modification, a shipper is not liable for freight for carriage of goods by sea until the goods have been delivered to the destination specified in the bill of lading which embodies the contract of carriage between the shipper and carrier. The Gracie D. Chambers, 253 Fed. 182, 183 (2d Cir.1918), aff'd sub nom. International Paper Co. v. Gracie D. Chambers, 248 U.S. 387, 39 S.Ct. 149, 63 L.Ed. 318 (1919). The parties may, however, agree to lay on the shipper the risk of the ocean voyage, by inserting in the bill of lading a guaranteed freight clause which provides that the freight is earned upon loading of the cargo onto the vessel. 253 Fed. at 183. In the instant case the passage from the two bills of lading quoted above clearly records the intent of the parties to modify the American rule to provide that Franco earned the freight upon delivery of the logs to the M/V Ocean Haven in Baltimore.

If that were the extent of this case, then plainly Mare would be entitled to prevail in its garnishment action against Trees. Even if the parties agree to insert a guaranteed freight clause into the bill of lading, however, the carrier's right to the freight is not absolute. "What the parties intend is that the carrier shall keep the freight, even if he does not deliver the cargo, unless the failure to deliver be due to the carrier's fault...." The Gracie D. Chambers, 253 Fed. at 183; The Malcolm Baxter, Jr. (Republic of France v. French Overseas Corporation), 277 U.S. 323, 332-34, 48 S.Ct. 516, 518-19, 72 L.Ed. 901 (1928); Amoco Transport Co. v. S/S Mason Lykes, 550 F.Supp. 1264, 1271 (S.D.Tex.1982). Carriers are bound, however, to exercise "reasoned judgment" in the commencement and abandonment of the voyage, that is, judgment "reasonable ... under the circumstances existing and reasonably foreseeable at the time the judgment is made." T.J. Stevenson & Co., Inc. v. 81,193 Bags of Flour, 629 F.2d 338, 376-77 (5th Cir.1980) (quoting Orient Mid-East Lines, Inc. v. Cooperative for American Relief Everywhere, Inc., 410 F.2d 1006, 1008 (D.C.Cir.1969)). Failure to exercise reasoned judgment will oust the contract of carriage, containing the guaranteed freight clause, and throw the parties back on the general American rule; that is, nondelivery deprives the carrier of the freight. The Gracie D. Chambers, 253 Fed. at 183. In appraising the reasonableness of a carrier's judgment to abandon a voyage and discharge the cargo prior to reaching the destination specified in the bill of lading, courts consider "which information was relayed to the carrier, which information it gathered, whether the carrier sought instruction from the shipper, and whether the shipper instructed the carrier." Amoco Transport Co. v. S/S Mason Lykes, 550 F.Supp. at 1270.

Unreasoned judgment sufficient to oust a guaranteed freight clause may be shown by a voluntary deviation in the planned course of the voyage, Hellenic Lines, Ltd. v. United States, 512 F.2d 1196, 1209 (2d Cir.1975), or by the unseaworthiness of the vessel that is known to the carrier and prevents the vessel from completing the voyage, The Louise, 58 F.Supp. 445, 449-50 (D.Md.1945), see The Malcolm Baxter, Jr., 277 U.S. at 331-32, 48 S.Ct. at 517-18, or by other circumstances in which the failure to deliver "be due to the carrier's fault," The Gracie D. Chambers, 253 Fed. at 183; Silva v. Bankers Commercial Corp., 163 F.2d 602, 607 (2d Cir.1947) (carrier at fault when voyage not undertaken even after cargo loaded because carrier unable "to obtain sufficient cargo and...