National Oil Transport Co. v. United States

• Decision Date: 02 February 1927
• Docket Number: No. 16513.,16513.
• Citation: 18 F.2d 305
• Parties: NATIONAL OIL TRANSPORT CO., Inc., v. UNITED STATES et al.
• Court: U.S. District Court — Eastern District of Louisiana

18 F.2d 305 (1927)

NATIONAL OIL TRANSPORT CO., Inc., v. UNITED STATES et al.

No. 16513.

District Court, E. D. Louisiana.

February 2, 1927.

Eugie V. Parham, of New Orleans, La., and Bigham, Englar & Jones, of New York City (T. Catesby Jones and James W. Ryan, both of New York City, of counsel), for libelant.

E. F. Henriques, Sp. Asst. U. S. Atty., of New Orleans, La.

Kirlin, Woolsey, Campbell, Hickox & Keating, of New York City (W. H. McGrann, of New York City, and Lemle, Moreno & Lemle, of New Orleans, La., of counsel), for W. G. Coyle & Co., Inc.

BURNS, District Judge.

Libelant, the National Oil Transport Company, Inc., a Maine corporation, as owner, prays for recovery of the full value of the oil barge Barugo from the United States, as owner of the tug Barryton. The tug and tow had left Galveston, Tex., September 18, 1920, bound for Tampico, Mexico, and were stranded on September 20th at or near Laguna de Madre, on the Mexican coast, about 100 miles north of Tampico, some 30 miles west of a correct course, as a result of which the Barugo became a total loss.

Libelant contends that the stranding resulted from the unseaworthiness of the tug which was not equipped with proper and suitable nautical instruments to make observations, was not properly manned, and was negligently operated.

The respondent United States denies liability for the alleged negligence, specially denies the right of libelant to sue as owner of the lost barge, and impleads W. G. Coyle and Company, Inc., of New Orleans, under the fifty-sixth admiralty rule, claiming that the latter had assumed all liability as ship's husband for the tug Barryton under its managing and operating agreement with the United States Shipping Board Emergency Fleet Corporation, an agency of the government, dated February 3, 1921, by which it was bound to equip, man, and otherwise keep the tug seaworthy; that this operating agent had made the charter party with libelant for two towage trips, including that on which the Barugo was lost, and should therefore stand in judgment in the place of its principal.

The Coyle Company filed answers, generally denying negligence, and specially denying any liability arising either out of the charter party or out of its managing and operating agreement with the Shipping Board. It also denied specially the right of libelant to sue or stand in judgment as owner.

In view of the voluminous record now finally submitted, it seems unfortunate that the issue of libelant's ownership was not disposed of in limine litis. An effort was made to do so upon a joint rule filed by respondents in the third year (1923) of the pendency of this suit before the then District Judge (Hon. Rufus E. Foster), but sufficient evidence upon that point seems not to have been available then, and the rule was dismissed.

The oil barge Barugo was included with four other hulls, together with the boilers, fittings, etc., intended for their completion, which were conditionally agreed to be sold by the government for $55,000 each through the agency of the United States Shipping Board and the Emergency Fleet Corporation under a contract dated April 9, 1920, to the National Oil Company of New Jersey (not the National Oil Transport Company of Maine, libelant herein). By this agreement of conditional sale it was expressly stipulated that title to said hulls, boilers, fittings, etc., should remain in the vendor, until the same should be completed, documented, and until the buyer should have executed the mortgages and notes stipulated for therein.

The National Oil Company of New Jersey proceeded with the completion of these hulls through the National Shipbuilding Company of Texas, a corporation referred to as one of its subsidiaries, owned and controlled by substantially the same shareholders, directors, and officers as itself. When the oil barge Barugo was completed, on or about August 16, 1920, one Charles Tutschulte made registry thereof with the collector of customs at Beaumont, Tex., upon his oath that the National Oil Transport Company of Maine was the sole owner. This corporation was also a similar subsidiary of the National Oil Company of New Jersey. The assistant collector of customs, being deceived by Tutschulte's oath, issued the certificate of registry in error, not noticing the discrepancy in the names of the two companies; i. e., the name "National Oil Company," in the copy of the agreement of sale of April 9, 1920, exhibited to him, and the name "National Oil Transport Company" in Tutschulte's oath. This Mr. Tutschulte in Texas was the attorney in fact for the National Oil Transport Company, Inc., of Maine, and also general manager of the National Shipbuilding Company. He testified that in doing so he acted on instructions from the New York office. Other evidence shows that all of these companies were directed from one office in the Woolworth Building in New York City.

The Barugo was then put in commission for voyages to Mexico and return, although no title, such as the agreement of conditional sale contemplated, or any other, had passed from the United States. On September 15, 1920, the National Oil Company entered into a charter party for the hire of the tug Barryton with W. G. Coyle & Co., Inc., as managing and operating agent of the Fleet Corporation, stipulating for two trips, totaling about 25 days, to be employed in towing the ferris type barge Barugo and/or another, called the Pyramus, between New Orleans, La., and/or Galveston, Tex., and Tampico, Mexico. This contract or charter party for the tug was put in the name of the "National Oil Company, for National Oil Transport Company, a corporation of Maine." It was under this charter party that the tug and tow began the voyage on September 18, 1920, that ended in the stranding and loss on September 20th.

Beyond the use of libelant's name in this contract, there was nothing at this time to indicate that the National Oil Transport Company had or claimed ownership of the Barugo, except the registry made under the circumstances hereinabove described. The insurance on the Barugo had been negotiated by and taken out in the name of the National Oil Company as owner, with the necessary clause in favor of its vendor to cover its interest as it might appear.

Subsequent to the loss, the National Oil Company negotiated for payment from the underwriters of the total loss. Under date of December 16, 1920, its president had made the oath required in support of its proof of claim and swore that the National Oil Company of New Jersey was the owner. While these insurance claims were pending, the National Oil Company, through its president, on January 28, 1921, executed the mortgage as stipulated for in the agreement of conditional sale to be effective nunc pro tunc as of date August 16, 1920, the date on which the Barugo had been completed and put in commission, thus antedating the loss. In this act of mortgage, the National Oil Company stipulated not to "make any sale or other transfer of the vessel or any interest therein without the written consent of the mortgagee first obtained."

Subsequently, on or about January 30, 1922, the National Oil Company collected the insurance, which was for the full insured value of the Barugo, and which was far in excess of the amount of the purchase price represented by the mortgage. At or about this time the mortgage was paid. Nowhere in any of these transactions did the libelant, National Oil Transport Company of Maine, appear or claim any right, title, or interest therein, notwithstanding this suit had been filed on March 21, 1921, in its name, as owner, praying for recovery of the full value.

Upon final hearing, the claim to ownership by title seems to have been abandoned, and by oral argument and brief the contention is made in its behalf that it has the right to sue as the "beneficial owner" for its equitable interest as the assignee of the National Oil Company of New Jersey, in support of which the customhouse certificate of registry and the minute books of the National Oil Company of New Jersey and the National Oil Transport Company of Maine were produced, from which a witness, Robert T. Crouch, who described himself as "secretary of the National Oil Company of New Jersey and of certain of its subsidiaries," read into the record the minutes of two meetings held on August 17 and on September 24, 1920, respectively.¹

Assuming, arguendo, these resolutions to have been adopted in good faith and for legitimate purposes, it seems conclusive that they were entirely executory; that the first, adopted by the National Oil Transport Company of Maine, which was dated August 17th, one day after the registry of the Barugo had been made at the customhouse, did not accept the mere registry of the vessel as being declaratory of title in its favor, and that it was simply declaratory of an intention to acquire the property described by some future acts or instruments, which the corporation officers were authorized to make, sign and deliver. The second resolution, by the National Oil Company of New Jersey, is likewise merely executory. It contemplates the doing of certain acts and the happening of certain events in futuro as conditions precedent to the ultimate execution thereof, including an actual transfer and delivery of the Barugo, which had then been stranded some four days in a precarious position subject to the total loss which followed.

During the taking of the testimony Secretary Crouch, who was intimately concerned officially with and participated in all the corporate acts relating to the affairs of both companies, was repeatedly called upon by respondents to produce some evidence to show that the government or the Shipping Board or the Emergency Fleet Corporation, as agents of the government, had ever given a written consent to a sale or transfer of title from the National Oil Company to the libelant Transport Company, or to produce some evidence that these...