A/S Dampskibsselskabet Torm v. Beaumont Oil Ltd.

• Decision Date: 11 March 1991
• Docket Number: 1052,Nos. 901,D,s. 901
• Citation: 927 F.2d 713
• Parties: , 59 USLW 2584, 14 UCC Rep.Serv.2d 620 A/S DAMPSKIBSSELSKABET TORM, Plaintiff-Appellee, Cross-Appellant, v. BEAUMONT OIL LTD. and Banque Paribas (Suisse) S.A., Geneva, Defendants, Banque Paribas (Suisse) S.A., Geneva, Defendant-Appellant, Cross-Appellee. ockets 90-7832, 90-7834.
• Court: U.S. Court of Appeals — Second Circuit

Page 713

927 F.2d 713

1991 A.M.C. 1573, 59 USLW 2584, 14

UCC Rep.Serv.2d 620

A/S DAMPSKIBSSELSKABET TORM, Plaintiff-Appellee, Cross-Appellant, v. BEAUMONT OIL LTD. and Banque Paribas (Suisse) S.A., Geneva, Defendants, Banque Paribas (Suisse) S.A., Geneva, Defendant-Appellant,

Cross-Appellee.

Nos. 901, 1052, Dockets 90-7832, 90-7834.

United States Court of Appeals, Second Circuit.

Argued Jan. 28, 1991.

Decided March 11, 1991.

Mark C. Flavin, New York City (Paul E. O'Brien, James H. Hohenstein, and Haight, Gardner, Poor & Havens, New York City, on brief), for plaintiff-appellee, cross-appellant A/S Dampskibsselskabet Torm.

Donald F. Luke, New York City (Stephen M. Lazare, Robert Penchina, and Rogers & Wells, New York City, on brief), for defendant-appellant, cross-appellee Banque Paribas (Suisse) S.A.

John J. Gill, Michael F. Crotty, Joanne Ames, Steven D. Rinaldi, Washington, D.C., filed a brief for amicus curiae American Bankers Ass'n.

Before TIMBERS, MESKILL and CARDAMONE, Circuit Judges.

TIMBERS, Circuit Judge:

Appellant Banque Paribas (Suisse) S.A., Geneva ("Paribas" or "the bank") appeals from an order and judgment against Paribas entered August 15, 1990 in the Southern District of New York, Vincent L. Broderick, District Judge.

Appellee A/S Dampskibsselskabet Torm ("Torm" or "the carrier") commenced this admiralty and maritime action on July 18, 1986, in the District of Oregon, seeking recovery of freight and related charges. In December 1986, the case was transferred to the Southern District of New York. On March 30, 1990, the district court entered a memorandum decision and order granting Torm's motion for summary judgment and denying Paribas' motion for summary judgment. On August 10, the court denied Paribas' motion for an order amending and adding to the court's findings of fact and memorandum, or for a new trial. Final judgment was entered August 15.

On appeal, Paribas contends that the court erred in imposing liability upon it because, absent an acceptance of goods or an agreement to pay, liability for shipping charges may not be imposed on a secured creditor who did not act as an owner of the goods. On cross-appeal, Torm contends that the court erred in holding that the bank neither entered into an agreement to pay transportation costs nor accepted delivery of the cargo.

For the reasons set forth below, we reverse the district court's imposition of liability on the bank. We find no merit in the carrier's cross-appeal.

I.

We shall set forth only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.

Defendant Beaumont Oil Ltd., a Bermuda corporation, and its affiliate, Beaumont Oil, Inc., a Texas corporation, (collectively, "Beaumont"), routinely used Paribas' financial services. In May 1986, Beaumont sought to purchase approximately 240,000 barrels of unleaded gasoline from Corpoven S.A. ("Corpoven"), the state oil corporation of Venezuela. Pursuant to a May 22, 1986 telex to Paribas, Beaumont sought to obtain financing from the bank, in the form of a letter of credit in favor of Corpoven. In the telex Beaumont granted a "first security interest" in the cargo to Paribas and specified the documents that Corpoven would have to present to the bank in order to obtain the funds. Among the documents required was the "presentation of original bills of lading, 3/3 full set, being originally signed issued to the order of ... Paribas ..., notify Beaumont Oil, Inc., Houston, Texas showing as destination New York harbor." Paribas issued a letter of credit on May 23, 1986, in the amount of approximately $5.2 million, for the account of Beaumont in favor of Corpoven.

Beaumont contracted with Torm to ship the cargo, entering into a charter party that obligated Beaumont to pay all freight and related transportation charges. The ship's master signed three bills of lading on Corpoven's standard bill of lading form, issued to the "order of ... Paribas ... notify Beaumont...." The bills of lading did not specify who was to pay freight charges.

The cargo left Venezuela aboard Torm's ship, the TORM ROTNA, on May 27, 1986, headed for New York harbor. Beaumont exercised its right, however, to redirect the ship. The TORM ROTNA ultimately discharged the cargo at Portland, Oregon, pursuant to Beaumont's directions. As the cargo approached Portland, Beaumont entered into a storage contract with Time Oil Co. ("Time" or "the warehouse"), in which Beaumont warranted that it was the "sole legal and beneficial owner" of the cargo and that Paribas was a lienor.

After Beaumont advised Paribas that it intended to store the cargo at Time, the bank sought financial information about the warehouse. Paribas also obtained information from its own sources that Time "is not very professional in their dealings". The bank subsequently instructed Beaumont "to take all necessary steps to send M/T 'Torm Rotna' for discharge of the product at any GATX terminal on the west coast." After Beaumont advised Paribas that no alternate storage was available and that demurrage aboard the TORM ROTNA was $9,000 per day, Paribas ultimately "released" the cargo and it was stored at Time.

On June 17, 1986, when the cargo arrived at Portland, Beaumont did not yet have in its possession the bills of lading that would have permitted discharge of the cargo. The charter party between Torm and Beaumont, however, provided that the cargo could be off-loaded if Beaumont issued a "letter of indemnity" to Torm, which would be voided upon presentation to Torm of the full sets of original bills of lading. The letter of indemnity, which was joined in by Paribas, provided that Beaumont and Paribas agreed to indemnify Torm "and hold you harmless in respect of any liability, loss or damage of whatsoever nature which you may sustain by reason of delivering the cargo to receivers in accordance with our request." In accordance with the terms of the parties' agreement, the agreement to indemnify ceased upon presentation of the bills of lading.

Torm discharged the cargo into Time's storage tanks. Paribas instructed Time to issue a warehouse receipt to Paribas and not to remove the gasoline without authorization from Paribas. Beaumont arranged sales. Paribas reviewed and approved the release of the gasoline to third party purchasers, received the purchase price of various parcels of the gasoline, and applied all proceeds of the sales to reduce Beaumont's indebtedness to the bank.

On June 24, Time requested permission from Paribas to regrade a portion of the gasoline as "leaded." This involved the addition of lead to the gasoline and was intended to make the product more marketable. Paribas authorized the regrade. Several other lots of gasoline likewise were regraded with the bank's authorization.

The proceeds of the gasoline sales were insufficient to repay Paribas for the sum collected by Corpoven pursuant to the letter of credit, so that Paribas had to execute on a fiduciary deposit maintained by Beaumont at the bank in order to ensure that the debt was paid in full. No transportation expenses were ever paid to Torm.

In July 1986, Torm commenced this action to recover shipping charges, which action ultimately was transferred to the Southern District of New York. Both Beaumont and Paribas were named as defendants. Beaumont, however, did not appear, and the record does not reflect any efforts by Torm to recover from Beaumont. Rather, Torm has directed its efforts to recovering from the bank. In 1988, both Torm and the bank moved for summary judgment. The parties entered into a stipulation providing that "the parties deem this case to have been tried to the court based upon the present record and that this matter should be considered submitted to the Court for decision on all factual and legal issues."

The court heard oral argument and ultimately granted summary judgment to Torm. Although the court found that the bank did not enter into an agreement by which it became obligated to pay for the shipping costs, and found further that the bank did not "accept" the cargo, it found that Paribas exercised "dominion and control" over the cargo so that a promise to pay the freight charges could be implied. The court relied on the following factors in reaching its decision: that Paribas (1) required that it be named as consignee on the bill of lading; (2) co-signed the letter of indemnity; (3) imposed conditions on the storage of the cargo at Time; (4) authorized the sale of gasoline and applied the proceeds to reduce Beaumont's debt; (5) authorized Time to regrade the gasoline; and (6) benefited from Torm's services.

This appeal followed. The American Bankers Association filed an amicus curiae brief, arguing that the court's imposition of shipping costs on a mere secured creditor would wreak havoc in the international banking community.

II.

As a threshold matter, we address the propriety of exercising jurisdiction and set forth the relevant standard of review.

We hold that we have jurisdiction over the instant appeal in that the order and judgment appealed from are final within the meaning of 28 U.S.C. Sec. 1291 (1988).

In evaluating the claims raised, we start with the proposition that the district court's findings of fact should not be set aside unless clearly erroneous. Fed.R.Civ.P. 52(a); Amadeo v. Zant, 486 U.S. 214, 223, 108 S.Ct. 1771, 1777, 100 L.Ed.2d 249 (1988); Anderson v. Bessemer City, 470 U.S. 564, 573, 105 S.Ct. 1504, 1511, 84 L.Ed.2d 518 (1985). On the other hand, the court's use of facts to determine that Paribas was liable for shipping costs involves conclusions of law that are subject to de novo review. See Lever Bros. v. American Bakeries Co., 693 F.2d 251, 255 n. 4 (2 Cir.1982).

III.

With the foregoing in mind, we believe it is necessary and appropriate, at this stage, briefly to set forth the guiding norms relevant to the imposition of freight charges. It has long been established that...