Minex v. International Trading Company of Virginia

• Decision Date: 11 August 1969
• Docket Number: Civ. A. No. 5725.
• Citation: 303 F. Supp. 205
• Parties: MINEX, a Polish Corporation, Plaintiff, v. INTERNATIONAL TRADING COMPANY OF VIRGINIA, a Virginia Corporation, Defendant and Third-Party Plaintiff, v. SS EIRINI, ex SS Aegina, her engines, etc., in rem, Augusta Shipping Corporation and N. J. Goulandris, Ltd., owner and agent respectively of the SS Aegina, in personam, and Islamorada Compania Naviera, S.A., a Panamanian corporation, in personam, Third-Party Defendants.
• Court: U.S. District Court — Eastern District of Virginia

303 F. Supp. 205

MINEX, a Polish Corporation, Plaintiff, v. INTERNATIONAL TRADING COMPANY OF VIRGINIA, a Virginia Corporation, Defendant and Third-Party Plaintiff, v. SS EIRINI, ex SS Aegina, her engines, etc., in rem, Augusta Shipping Corporation and N. J. Goulandris, Ltd., owner and agent respectively of the SS Aegina, in personam, and Islamorada Compania Naviera, S.A., a Panamanian corporation, in personam, Third-Party Defendants.

Civ. A. No. 5725.

United States District Court E. D. Virginia, Norfolk Division.

August 11, 1969.

Leonard B. Sachs, H. Lee Kanter, Norfolk, Va., for plaintiff.

Allan Zaleski, Norfolk, Va., for ITCOV.

Braden Vandeventer, Norfolk, Va., for EIRINI and others.

MEMORANDUM

WALTER E. HOFFMAN, Chief Judge.

This case stands on a motion for summary judgment filed by Minex against International Trading Company of Virginia (ITCOV) as to the principal claim, and a like motion filed by the third-party defendants against ITCOV on the indemnity claim asserted by ITCOV. For reasons stated herein, both motions must be sustained.¹

Minex caused its complaint against ITCOV to be filed on August 9, 1966. On November 26, 1966, ITCOV filed its third-party complaint against the vessel, the SS EIRINI, ex SS AEGINA, in rem, Augusta Shipping Corporation, a Liberian corporation, and the vessel's agent, N. J. Goulandris, Ltd., an English corporation, in personam. Subsequently, on July 24, 1967, ITCOV was granted leave to file an amended third-party complaint naming Islamorada Compania Naviera, S. A., a Panamanian corporation, as an additional in personam third-party defendant.

Minex, the Polish corporation, and ITCOV, the Virginia corporation, commenced doing business in 1956 or 1957 with Minex selling Polish cement to ITCOV, and the latter importing same into the United States. In 1961, Minex and ITCOV entered into an agreement entitled "Arrangement for 1961" setting forth the terms, conditions and quantities of sales by Minex to ITCOV for shipment of cement during that year. Since the agreement in question applied to all sales and shipments during 1961, it was unnecessary to execute separate contracts for each sale and shipment.

The established procedure was that ITCOV would direct its orders for cement to ITCOV's agents in Poland who, in turn, would notify Minex that a vessel had been chartered by ITCOV for the movement of cement, that the port of loading would be at a stated location, and that a certain quantity of cement was to be shipped. Upon receipt of these orders, Minex transported the cement in the quantity desired to the port in Poland designated by ITCOV or the shipowner's agent. The designated ports of discharge were of no interest to Minex because these details formed the basis of the charter between ITCOV, as trip charterer, and the shipowner's agent.

Various sales were made by Minex to ITCOV during 1961 and the first half of 1962, all pursuant to the document entitled "Arrangement for 1961."

Spencer, the president of ITCOV, admitted in answers to interrogatories that he ordered, by cablegram dated May 20, 1962, cement aggregating 227,907 bags, the equivalent of 9,458 tons, for an agreed consideration of $113,193.82. By cable dated May 18, 1962, ITCOV advised Minex that the former was in the process of chartering a vessel to transport said order to the United States. The chartering of the vessel was later confirmed by another cablegram to Minex with the AEGINA being designated as the chartered vessel. A series of cablegrams were thereafter exchanged between Minex and ITCOV in order to complete all necessary details. From these cablegrams and the "Arrangement for 1961," the cement was to be loaded aboard the AEGINA at the port of Gdansk, Poland. The trip charter, to which Minex was not a party, was under the provisions of a Uniform General Charter (GENCON) between Minex and Goulandris, the latter being the agents of the owners of the vessel, Augusta Shipping Corporation.²

Upon arrival of the cement at Gdansk, Poland, Minex employed and paid Polish stevedores to load and stow the cargo aboard the AEGINA, all in accordance with the "Arrangement for 1961" which provided that the sale was "FOB stowed Polish port." Two bills of lading were issued for a total of 111,631 bags of cement, each being signed by the master of the vessel, and demonstrating on their face that the cargo was shipped "in apparent good order and condition." The bills of lading incorporated all of the "terms, conditions, liberties and exceptions of the Charter Party." Under paragraph 19 of the addendum to the charter, it is provided: "Vessel's holds to be thoroughly swept, cleaned and dried before commencement of loading * * *" The owner's responsibility clause, set forth in paragraph 2 of the charter, provides for liability "only in case the loss, damage or delay has been caused by the improper or negligent stowage of the goods (unless stowage performed by shippers or their stevedores or servants) or by personal want of due diligence on the part of the owners or their manager to make the vessel in all respects seaworthy and to secure that she is properly manned, equipped and supplied or by the personal act or default of the owners or their manager." Paragraph 30 of the charter terminates the liability of the shipper as soon as the cargo is shipped.

As heretofore noted, Minex was not a party to the charter.

The bills of lading were attached to a bill of exchange in the form of a sight draft dated June 29, 1962, payable 45 days after sight to the order of Minex, drawn in the amount of the cement as shipped. ITCOV accepted the bill of exchange on July 30, 1962, by endorsing the face thereof.

Prior to ITCOV's acceptance of the bill of exchange, Minex had been notified by ITCOV that the initial discharge would be at the port of Fall River, Massachusetts. The AEGINA docked at said port and unloading commenced on or about July 16, with it being completed by July 31, 1962.

On November 2, 1962 — more than three months after the completion of the unloading — a marine surveyor notified ITCOV that soybeans had in some manner showered down from the deck beams onto the bags of cement during the course of the voyage, thereby contaminating the cement which was readily discernible when the cement bags were opened and dumped into bulk bins.

Prior to this discovery, ITCOV had apparently encountered some financial difficulties. Although ITCOV had accepted the draft and had taken possession of the shipping documents and cargo at Fall River, the draft was not paid. ITCOV ordered that the draft be dishonored in September 1962. Over a period of several months, continuing into January 1963, a number of cablegrams were exchanged between Minex and ITCOV, with ITCOV requesting and Minex granting extensions of time within which the draft could be honored. The draft was ultimately protested in proper form by Minex at a bank in Providence, Rhode Island, and subsequently the Manufacturer's Hanover Trust Company mailed the dishonered draft to the Polish bank in Warsaw but the bill of exchange was lost in transit.

Despite repeated demands by Minex for payment of the shipment, ITCOV has failed and refused to pay any amount on account, notwithstanding the fact that the cargo in question was delivered aboard the AEGINA "in apparent good order and condition" and that ITCOV accepted and used the cement for its own purposes. We are of the opinion that, upon these uncontroverted facts, Minex is entitled to summary judgment against ITCOV in the sum of $113,193.82, plus interest at 6% per annum from August 1, 1962 — this interest being fixed in accordance with an exchange of cablegrams wherein the parties agreed that interest would be added after the acceptance of the cargo.

It is ITCOV's contention that Minex had a duty to make certain that the holds of the AEGINA were clean and fit for the reception of the cargo, and that Minex failed in this duty. Further, ITCOV says, the terms of the shipment "FOB stowed Polish port" are ambiguous, thus permitting parole evidence to determine the true meaning of the contract. We disagree.

Under the agreement between ITCOV and Minex, it was ITCOV's responsibility to provide the vessel for the shipment of cargo. True, ITCOV could pass to Islamorada the responsibility for sweeping, cleaning and drying the holds by any charter party, but this in no way places that duty and responsibility upon Minex. Minex had the duty to load and stow, but not the duty to clean, sweep and dry the holds, deck beams, etc. ITCOV does not suggest that the cement shipment may have been contaminated prior to the loading by Minex. Indeed, assuming arguendo the contamination of the cement, it apparently occurred during the voyage to the United States.

We believe that the term "FOB stowed Polish port" is not subject to interpolation and, therefore, the affidavit of ITCOV's president is of no consequence. One of the leading authorities on the subject is Lawson v. Hobbs, 120 Va. 690, 91 S.E. 750 (1917). Applying the reasoning of that case, we conclude, as a matter of law, that the words "FOB stowed Polish port" mean that the cement was to be placed in the holds of the vessel for shipment without any expense or act on the part of ITCOV, and that when so placed (or stowed) the title passed to ITCOV with the resulting risk of ownership. See also: Geoghegan Sons & Co. v. Arbuckle Bros., 139 Va. 92, 123 S.E. 387, 36 A.L.R. 399 (1924); Fulton v. W. R. Grace & Co., 143 Va. 12, 129 S.E. 374 (1925). Cf. Aspegren & Co. v. Wallerstein Produce Co., 111 Va. 570, 69 S.E. 957 (1911), where the shipment was "F. O....