San Martine Compania de Nav. v. Saguenay Term. Ltd.

• Decision Date: 02 August 1961
• Docket Number: No. 16666.,16666.
• Citation: 293 F.2d 796
• Parties: SAN MARTINE COMPANIA DE NAVEGACION, S.A., Appellant, v. SAGUENAY TERMINALS LIMITED, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

293 F.2d 796 (1961)

SAN MARTINE COMPANIA DE NAVEGACION, S.A., Appellant, v. SAGUENAY TERMINALS LIMITED, Appellee.

No. 16666.

United States Court of Appeals Ninth Circuit.

August 2, 1961.

Dorr, Cooper & Hays and John Hays and W. K. Mordock, Jr., San Francisco, Cal., Chadbourne, O'Neill & Thomaon and John B. Whalen, New York City, Anderson, Wrenn & Jenks and Martin Anderson, Honolulu, Hawaii, for appellant.

Lillick, Geary, Wheat, Adams & Charles and Gilbert C. Wheat and Willard G. Gilson, San Francisco, Cal., and Haight, Gardner, Poor & Havens and William J. Junkerman, New York City, for appellee.

Before CHAMBERS, POPE and JERTBERG, Circuit Judges.

POPE, Circuit Judge.

In July, 1955, the appellee, here called Saguenay, as charterer, chartered the vessel Santa Ana from the appellant San Martine, owners, for portions of each of four ensuing years. The ship was operated under the charter until the owners, by notice dated November 9, 1956, invoked the clause of the charter party which provided that in the event that Canada, the United Kingdom, or the United States, became involved in hostil-mercantile marine by any of those ities leading to the requisition of their countries, the owners and the charterers should have the right to cancel the charter upon completion of the voyage upon which she was actually engaged. In serving a notice upon Saguenay, the owners relied upon the Suez Canal attack which commenced in October, 1956, as the hostilities which gave rise to the right to cancel.

Saguenay requested withdrawal of the notice; that however, was refused. It obtained a replacement for the vessel from others at a higher charter rate and brought suit against San Martine in the court below alleging breach of charter and seeking recovery of damages for the claimed ensuing loss. The Santa Ana was seized to obtain security for the damage claimed.

San Martine then invoked clause 17 of the charter party which provided for arbitration;¹ and the district court suspended the action and ordered the parties to proceed to arbitration.

During these proceedings, in order to induce the district court to set a low bond for the release of the Santa Ana, San Martine offered to tender the Santa Ana or another vessel to Saguenay. Another vessel, The Linda, was thus tendered and accepted for the 1957 period, and Saguenay paid hire therefor at the charter party rate.

The following year, an offer of tender of another vessel for the 1958 period was refused by Saguenay. The district court refused to instruct it to accept a vessel for this period, refused to exonerate the bond, and directed the parties to proceed with the arbitration.

This order was made April 11, 1958. Thereafter, under date of July 3, 1958, the parties made a supplemental arbitration agreement and thereafter arbitration proceeded under the order of the court and under this supplemental agreement. That agreement recited at considerable length in sundry "whereas" clauses various transactions between the parties up to that date: the execution of the charter party; its general provisions; the commencement of performance; the giving of the notice to cancel the charter; the dispute between the parties relating to notice; the invoking of the arbitration clause; the institution of libel against the owners with foreign attachment against the Santa Ana in the United States District Court for the District of Hawaii; the fixing of bond; the order to proceed to arbitration; the appointment of the arbitrators; the tender and use of "The Linda" in 1957; a recital that the parties disagreed as to the basis of such tender and as to its legal consequences; the reactivation of the district court proceedings; the direction of the court to proceed with arbitration; the dispute over the tender of another vessel for the 1958 period, and then proceeded as follows:

"Whereas, the parties are willing and desirous that all disputes between them arising out of all matters and events related above be decided by the arbitrators;

"Now, Therefore, the parties hereto mutually covenant and agree for themselves, their successors and assigns, as follows:

"1. The parties hereto submit to Messrs. Pattington, Boyle and Rees at Montreal, Quebec, all disputes between them arising out of the notice of November 9th, 1956, and all claims which they assert against each other as a result of such notice and of the actions and positions which they respectively took thereafter and do further agree that the decision and awards of said arbitrators or of any two of them shall be final and that such decision and awards shall be made an order of the United States District Court for the District of Hawaii.

"2. Any amount or amounts payable under the terms of such order shall be paid in currency of the United States of America within fifteen days from the date of such order with interest at the rate of five per centum (5%) per annum from such date or dates as may be fixed by the decision and awards of the arbitrators. Failing payment within such delay, the party entitled to receive payment under the terms of such order shall have the right to apply to any Court having jurisdiction over the other party or its assets to enforce such order.

"3. The arbitration shall be divided into two parts. The first part shall deal with the dispute as to the rights of the Owners in the light of the circumstances then existing to give their notice of November 9, 1956, and the second part shall deal with all other matters including such damages, if any, recoverable by the parties or either of them as a result of the giving of such notice and of their actions thereafter."

The first part of the decision or award of the arbitrators was to the effect that San Martine was within its rights in cancelling the charter by its notice of cancellation. This portion of the award is not disputed or involved in this suit; — what is involved is the ruling of the arbitrators with respect to the second part of the arbitration.

In this part the arbitrators ruled "that Saguenay should pay to the owners * * * the sum of $26,360, being the profit that Saguenay admit having made on the operation of the S/S `Linda' during the 1957 season." The arbitrators also held that the owners were entitled to compensation "for the loss of time to their ship and expenses in connection with the detention at Hawaii amounting to $30,984.52, details of which are stated in our statement No. 1 attached hereto."

The statement referred to itemized losses for detention at Honolulu for nine days; expenses incident thereto; running expenses; fuel consumed, and miscellaneous out of pocket expenses, all totaling the sum previously mentioned.

The determination respecting the right of San Martine to give the notice was confirmed by the court without contest, but upon motion of Saguenay the other items of the award, namely, the damages of $26,360, and the item of $30,984.52, were ordered deleted from the award and the award was modified accordingly. The motion which this order granted was based "upon the ground and for the reason that said items of award are not in accordance with law and beyond the scope of the arbitrators' authority." The order found the objections well taken; that the arbitrators in the respects mentioned "exceeded their jurisdiction and that the award of damages in the above amount was beyond the scope of the arbitrators' authority."²

Upon this appeal, in which appellant assigns error in the court's modification of the arbitrators' award, it may be assumed that the reasons for the trial court's action in this respect were substantially the same as those now presented by the appellee in support of the trial court's decision. Presumably the same argument was made in the court below.

Appellee's argument in support of the action of the trial court is substantially this: The appellee, Saguenay, is not charged, and cannot be charged, with any acts constituting breaches of the charter party; its receipt of the tender of The Linda amounted to no more than an acquiescence in that which San Martine, the owner, voluntarily offered; the libeling of the Santa Ana at Honolulu and its detention there rather than at Tampa, Florida, could not be asserted to be a violation of any provision of the charter party. (Appellant concedes that as a general proposition an aggrieved party may proceed by admiralty attachment despite a provision for arbitration.) What the arbitrators found was: "We consider that Saguenay acted arbitrarily and unreasonably in not taking action (to which they were clearly entitled) of arresting the S/S `Santa Ana' at Tampa, Florida."

Appellee's argument is therefore that since none of the things done by Saguenay for which damages were awarded constituted a breach or violation of the charter party, the arbitrators had no authority to award the damages here in question. In short, the contention is that the arbitrators before awarding damages must first have found that Saguenay had breached or violated the charter party, and since the arbitrators did not and could not make any such finding, the award of these sums was in excess of their authority.

We find it unnecessary to consider whether this argument as to the finding of breach of the charter party as a necessary prerequisite to an award of damages would be a valid one if the arbitration here took place pursuant to the provisions of Sec. 17 of the charter party quoted in footnote 1, supra. It is plain that the arbitration here involved was not made solely according to that provision but proceeded under and pursuant to the supplemental agreement for arbitration of July 3, 1958, the terms of which we have previously described.

A reference to that agreement discloses that after reciting at considerable length all the preceding dealings and negotiations between the parties, and the acts and things done by them, the parties agreed to submit to arbitration "all disputes between them arising out of the notice...