National Marine Service, Inc. v. C. J. Thibodeaux & Co.

• Decision Date: 20 September 1974
• Docket Number: No. 73-3584,73-3584
• Citation: 501 F.2d 940
• Parties: NATIONAL MARINE SERVICE, INC., Plaintiff-Appellee, v. C. J. THIBODEAUX AND COMPANY, Individually and as partner of the Prairie Co., D. J. Glenney, III and J. Franklin Morris, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 940

501 F.2d 940

NATIONAL MARINE SERVICE, INC., Plaintiff-Appellee, v. C. J. THIBODEAUX AND COMPANY, Individually and as partner of the Prairie Co., D. J. Glenney, III and J Franklin Morris, Defendants-Appellants.

No. 73-3584.

United States Court of Appeals, Fifth Circuit.

Sept. 20, 1974.

L. Glen Kratochvil, T. G. Schirmeyer, Houston, Tex., for defendants-appellants.

Larry D. Knippa, Houston, Tex., for plaintiff-appellee.

Before MOORE, ¹ AINSWORTH and RONEY, Circuit Judges.

MOORE, Circuit Judge:

This is an appeal from a judgment of the United States District Court for the Southern District of Texas, Houston Division, by Hon. Woodrow B. Seals, District Judge, finding for the plaintiff-appellee, National Marine Service, Inc., in the amount of $18,683.76 plus interest, that sum representing the fair value of repairs performed by National Marine Service, Inc., upon the vessel GRAND LAKE owned by defendants-appellants. The theory of recovery advanced by the District Court and disputed by appellants was that, although the GRAND LAKE was nominally chartered to River Gulf Corporation (hereafter 'River Gulf'), a corporate entity allegedly separate from appellants, appellants in fact ordered the repairs, the charterer being a mere corporate shell created by appellants. Looking beyond the corporate form and finding that the repairs were, in reality, ordered and performed for the benefit of appellants, the court required them to pay the fair cost in order to prevent a substantial injustice.

We affirm.

National Marine Service, Inc. (hereafter sometimes referred to as 'Shipyard'), is a Delaware corporation having its principal place of business in St. Louis, Missouri, and with a portion of its operations, a shipyard, in Illinois. The three defendants-appellants are a corporation, C. J. Thibodeaux and Company (hereinafter 'Thibodeaux'), individually and as a partner of The Prairie Company, and two individuals, D. J. Glenney III and J. Franklin Morris, also partners of The Prairie Company.

Thibodeaux wished to expand its business by starting a ship owning and operating subsidiary. However, it hesitated to do so openly since such an operation would have been in competition with Thibodeaux's ordinary customers. Therefore, The Prairie Company was incorporated to shield the parent company and act as its ship owning instrumentality. As part of The Prairie Company's operations, the GRAND LAKE, a tug boat, was purchased. Eventually, and prior to the events relevant to this case, The Prairie Company was dissolved as a corporation but, at all times relevant to this case, its activities were continued and its name assumed by a partnership (hereafter 'Prairie'), of which the three appellants are partners.

The GRAND LAKE was chartered, along with four barges also owned by appellants, to Coastal Barge Lines. However, in January, 1969, when Coastal failed to pay the charter hire, Prairie reclaimed the vessels. Thus, at that time, Thibodeaux and its partners were faced with the task of finding new employment for these assets.

Somewhat prior to this time, an employee of Thibodeaux, one Fred Thompson, had formed a corporation, River Gulf, with the intention of eventually using it to manage marine freight operations. However, for some time River Gulf was left uncapitalized and inactive. At the same time, when appellants found themselves forced to reclaim the GRAND LAKE and the barges from Coastal Barge Line, Thompson capitalized River Gulf at the minimum $1,000 required by Texas law, and offered River Gulf to James H. Chadwick, Jr., the president of Thibodeaux, as a potential medium for the operation of the GRAND LAKE.

This was agreed to, and the vessel and the barges were turned over to River Gulf. As part of the agreement, Thompson, who managed River Gulf from Thibodeaux's offices, hired one Mark Shurden, a long-time acquaintance of the president of Thibodeaux, to run the GRAND LAKE as an independent contractor. A six-months bareboat charter was prepared between The Prairie Company, the owner of the GRAND LAKE and River Gulf, requiring a monthly prepayment of the charter hire of $50 per day. This charter, however, was never signed by River Gulf. However, it was claimed that there was an oral agreement to this effect which, upon the expiration of the six months, was continued in force. According to the terms of the charter River Gulf and its operatives were not empowered to incur liens against the vessel except for crew's wages and salvage, and a notice to this effect was posted in the wheel-house of the GRAND LAKE.

In December, 1969, the GRAND LAKE put into the Shipyard and repairs on her crankshaft were ordered by Mark Shurden. These repairs were completed in February, 1970. One hundred days thereafter, Shipyard, still being unpaid, contacted Thompson the president of River Gulf. Thompson stated that he was expecting insurance payments in connection with the GRAND LAKE and asked Shipyard to write a letter concerning the repairs performed to the insurance carrier. After such a letter proved to be...