Nitram, Inc. v. Cretan Life

• Citation: 599 F.2d 1359
• Decision Date: 03 August 1979
• Docket Number: No. 76-3234,76-3234
• Parties: NITRAM, INC., Plaintiff, v. Motor Vessel CRETAN LIFE, her engines, tackle, apparel, etc., in rem., et al., Defendants. SKOPI SHIPPING CO., LTD., in personam, Defendant-Third-Party-Plaintiff-Appellee, v. ITALMARE SHIPPING COMPANY et al., Third-Party-Defendants-Appellants-Cross-Appellees, v. MONTEDISON, S.p.A., Third-Party-Defendant-Appellee-Cross-Appellant, Eller and Company, Intervenor.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 1359

599 F.2d 1359

NITRAM, INC., Plaintiff, v. Motor Vessel CRETAN LIFE, her engines, tackle, apparel, etc., in rem., et al., Defendants.

SKOPI SHIPPING CO., LTD., in personam, Defendant-Third-Party-Plaintiff-Appellee, v. ITALMARE SHIPPING COMPANY et al., Third-Party-Defendants-Appellants-Cross-Appellees, v. MONTEDISON, S.p.A., Third-Party-Defendant-Appellee-Cross-Appellant, Eller and Company, Intervenor.

No. 76-3234.

United States Court of Appeals Fifth Circuit.

Aug. 3, 1979.

Paul D. Hardy, Tampa, Fla., for Italmare Shipping Co.

David G. Hanlon, Tampa, Fla., for Montedison.

Kirkby Ressler, New York City, Nathaniel G. W. Pieper, Tampa, Fla., for Skopi & Cretan Life.

Appeals from the United States District Court for the Middle District of Florida.

Before RONEY, TJOFLAT, AND HILL, Circuit Judges.

JAMES C. HILL, Circuit Judge:

This case revolves around the damage to, and the short delivery of, a cargo of calcium ammonium nitrate (CAN). The principal actors are the shipowners, the time charterer and the voyage charterer. Although the legal issues involved are too numerous to be susceptible of handy summation, suffice it to say that the ultimate issue before us is who will pay for the damaged cargo and its short delivery. Not surprisingly, each party unselfishly nominates the other for that honor. The resolution of this issue takes us along a tortuous path where we encounter novel questions of statutory construction and contract interpretation. In the end, we finish close to where we started, affirming in all but one aspect the judgment of the district court.

I. FACTS

Nitram, Inc. of Tampa, Florida, purchased a cargo of 13,503.18 short tons of CAN packaged in 245,000 bags of 50 kilograms each. The transaction was negotiated through a mineral trading firm in New York, which arranged to acquire the CAN from Montedison, S. p. A. (Montedison) of Milan, Italy.

Pursuant to its obligations under the contract, Montedison entered into a voyage charter with Navigation Transoceanique, S.A., (Transoceanique) for a vessel to transport the CAN to Tampa. The vessel supplied by Transoceanique, the Cretan Life, had been time chartered from Skopi Shipping Company (Skopi) by Italmare Shipping Company (Italmare), who in turn entered into an identical time charter of the vessel to Transoceanique, its wholly-owned subsidiary.

The time charter arrangements between Skopi and Italmare, and, in turn, between Italmare and Transoceanique, were in the form of a standard New York Produce Exchange Charter Party. These instruments contained the standard Clause 8 provision which requires the charterers to load, stow, trim and discharge the cargo at their expense under the supervision of the Captain. The voyage charter entered into by Montedison and Transoceanique was a FIOS (free in and out stowage) charter utilizing the printed GENCON (Geneva Conference) Form, with two additional pages of typed provisions. The typed provisions contained these two important clauses:

18. Vessel must be cargo battens fitted. If cargo battens missing, Owners to supply and laydown dunnage in lieu of cargo battens.

19. Cargo to be loaded and stowed free of risk and expenses to the vessel by Charterers' Stevedores at the average rate of 1250 metric tons per weather working day of 24 consecutive hours, Sundays and Holidays excluded, unless used. Stevedores and labour to load and stow cargo under Masters control, and direction and to be considered as Owners' servants. Any responsability (sic) whatsoever resulting from negligence, error and judgment and bad stowage to be for Owners' liability.

The vessel arrived at Porto Marghera on January 14, 1974, and docked at Montedison's pier in the morning. Montedison issued a formal acceptance of the vessel's Notice of Readiness. Italmare's ¹ agent asked the ship's Master, Captain Zabouinis, to insert in the ship's cargo holds wooden dunnage boards ² which were available on board, but the Master declined to do so because time did not permit the laying of the boards. Moreover, despite his request, the Master did not receive a copy of the voyage charter party until loading had already commenced.

Loading commenced at 5:30 p. m. on January 14, 1974, in hatches number two and five. Loading was accomplished by the use of a conveyor belt system which moved the bags rapidly into the vessel's holds, allowing them to drop onto the stow from a height of two to three meters with the result that many bags were broken. On January 15, the Master protested the manner of stowage to Italmare's agent.

Due to the rapidity of the mechanical loading process, the district court found that it was not reasonably possible for the ship's personnel to make an accurate tally of the number of bags stowed. The only count made during loading was through the use of a photoelectric counting device supplied by Montedison. ³ In reliance on the count supplied by Montedison, the Master signed a clean bill of lading indicating that the vessel had on board 245,000 bags; the bill of lading expressly incorporated all the terms of the voyage charter.

The Cretan Life sailed for Tampa on January 22, 1974, and arrived on February 12, 1974, where discharging operations commenced at approximately 10:00 a. m. When the hatches were opened, it was discovered that there was widespread rupturing of bags, causing spillage throughout all six holds of the ship. The expert testimony was to the effect and the district court so found that the cause of the damage to the cargo was negligent stowage and the absence of dunnage and cargo battens. The discharging stevedore, Eller and Company counted 240,508 bags at discharge in addition to 267.48 short tons in bulk of CAN removed from the holds of the vessel. The spillage of CAN throughout the ship prolonged the discharging operations and made them more expensive than they would have been had the cargo arrived in good condition. In addition to extraordinary discharging expenses, Nitram was forced to acquire enclosed storage for the entire cargo since much of the cargo was discharged in bulk and in broken bags and could not be exposed to the weather.

The discharged cargo was placed in several warehouses; eventually, most of it was removed from the bags and loaded into railroad cars in bulk. According to Nitram's records, it received only 13,143.39 short tons of CAN, 359.8 short tons less than the 13,503.18 short tons it had purchased. Moreover, because of the delay in discharging caused by the damage to the cargo, discharging operations did not end until 5:45 p. m. on March 1, 1974. The voyage charter specified that the cargo was to be discharged at the rate of 2,000 tons per day; therefore, Italmare claimed demurrage from 4:30 p. m. on February 21, 1974, through the completion of discharging. Calculated at the rate of $4,000 per day as set forth in the voyage charter, the claim for demurrage totalled $32,083.34.

Nitram filed suit against Skopi in the district court for the Middle District of Florida, seeking damages for short delivery of cargo and extraordinary discharging expenses incurred as a result of the damage to the cargo. Skopi in turn filed a third party complaint against Italmare and Montedison seeking indemnity for any damages awarded against it in favor of Nitram. ⁴

Italmare cross-claimed against Montedison for indemnity from any sums they might be obligated to pay Skopi and also for demurrage resulting from the delay in discharging at Tampa. In addition, Italmare filed a counterclaim against Skopi for damages incurred as a result of Skopi's breach of the time charter. Montedison also filed a cross-claim against Italmare for indemnity.

Nitram's motion for summary judgment against Skopi on the issue of liability was granted on October 18, 1974, reserving the issue of damages for trial. The issues of the damages Nitram was entitled to receive from Skopi and the liability of the third party defendants to Skopi and to each other were tried before the court on May 27, 28 and 29, 1975.

On February 3, 1976, the district court entered final judgment in the case. Nitram was granted damages against Skopi for extraordinary discharging expenses and for cargo shortage. ⁵ The judgment resolved the issues of third-party liability in the following manner: Skopi was granted full indemnity against Italmare and Montedison for all damages owed to Nitram, thus denying Italmare's counterclaim against Skopi; Montedison was granted recovery on its cross-claim against Italmare for liability resulting from extraordinary discharging expenses; Italmare's cross-claim against Montedison was granted for that portion of the damages relating to the cargo shortage. Finally, Skopi was awarded attorney's fees and costs against Montedison and Italmare for having to defend against Nitram's claims; the costs and attorney's fees owed Skopi were to be borne "in proportion to the final application of ultimate responsibility for the loss between Montedison and (Italmare)." This appeal ensued. ⁶

II. SKOPI'S CLAIM AGAINST ITALMARE

Italmare contends that it should not be liable over to Skopi for any damages owed Nitram because Skopi breached certain duties running to Italmare under the time charter. Specifically, Italmare complains of the Master's failure to place available dunnage in the ship's cargo holds and his failure to supervise the stowage carefully.

Relying on Clauses ⁷ 2, 8 and 57 of the time charter, Italmare argues that Skopi breached its duty to provide assistance in placing dunnage in the cargo holds when the Master refused Italmare's request for the crew's help in doing so. Furthermore, Italmare maintains that the Master breached his duty carefully to supervise loading and stowing by failing to slow the mechanical loading process and take corrective measures in the cargo holds to prevent further damage to the cargo. Loading at Porto Marghera was completed approximately three days ahead of the schedule time allotted by the...