ST. IOANNIS SHIPPING CORPORATION v. Zidell Explorations, Inc.

• Decision Date: 01 October 1963
• Docket Number: Civ. No. 61-537.
• Citation: 222 F. Supp. 299
• Parties: ST. IOANNIS SHIPPING CORPORATION, a corporation, Libelant, v. ZIDELL EXPLORATIONS, INC., a corporation, Respondent.
• Court: U.S. District Court — District of Oregon

222 F. Supp. 299

ST. IOANNIS SHIPPING CORPORATION, a corporation, Libelant, v. ZIDELL EXPLORATIONS, INC., a corporation, Respondent.

Civ. No. 61-537.

United States District Court D. Oregon.

August 23, 1963.

Motion for Reconsideration Denied October 1, 1963.

Lofton L. Tatum, of Wood, Wood, Tatum, Mosser & Brooke, Portland, Or., for libelant.

Robert F. Maguire, of Maguire, Shields, Morrison, Bailey & Kester, Portland, Or., for respondent.

KILKENNY, District Judge.

Libelant prosecutes this libel in personam against respondent for demurrage and other expenses in connection with a shipment of scrap metal from the West Coast to Japan. Libelant was the owner of the cargo vessel in question. Respondent is a corporation operating a scrap metal yard in Portland, Oregon.

The parties, on May 12, 1961, executed a contract, the legal significance of which is in dispute. The parties agree, however, that the scrap metal was carried under this contract.¹

The vessel was a Liberty-type with a capacity of 10,900 pounds. Libelant first booked a partial cargo of 5,000 metric tons of dry powdered milk in bags to be loaded at Vancouver, Portland and Seattle in that order. The remainder of the cargo space in the vessel was contracted to respondent by the mentioned agreement.

The voyage commenced at Vancouver, Washington on May 29, 1961, when a portion of the milk cargo was loaded. From there the vessel proceeded to the libelant's dock in Portland to load part of the scrap. Thereafter, additional milk cargo was loaded at Portland and the vessel then proceeded to the libelant's dock at Tacoma for the balance of the scrap. The vessel sailed from Seattle to Japan on June 18, 1961, after loading the balance of the milk at that port.

Yokohama was the first port of call, at which port the vessel arrived on July 9th, immediately went into berth and completed a discharge of milk on July 14th, from which port it moved to Kobe on the same day and completed the discharge of the milk cargo in Kobe on July 21st. The vessel arrived at Osaka, a short distance from Kobe, on the same day, but was compelled to wait until August 10th before discharging the scrap cargo. The Osaka scrap was completely discharged on August 29th. The vessel arrived in Tokyo on September 1st. The discharge of scrap at that port did not commence until September 15th and was completed on September 23rd.

A chronology of the events, of particular significance, is set forth in the margin.²

The principal questions raised by the Pre-Trial Order are:

I.

(a) Is deviation, as understood in admiralty law, a defense in a suit for demurrage?

(b) Were the delays in unloading the scrap occasioned by a deviation, or a breach of the contract, by the vessel?

II.

Under the contract in question, must the vessel be in berth or unloading place, as distinguished from being in port, before lay days and the law of demurrage are applicable?

III.

Did libelant give respondent, or its consignees, the notices of readiness as required by the contract?

DEVIATION

Respondent urges that libelant breached its contract by proceeding first to Yokohama rather than Osaka and then to Kobe rather than Tokyo, all in claimed violation of the express language of the contract.

"2.

* * * * * *

"Loading at Portland and Tacoma to Tokyo and Osaka; rotation at owner's option."

"Owner to advise shipper five days prior to loading of rotation * *"

Respondent envisions a perfect result without inconvenience, damage or delay to anyone if the libelant had notified respondent of its intent to proceed to Yokohama first, in which case, it is debated, the Tokyo cargo could and would have been loaded on top of the Osaka cargo and discharged at Yokohama, since Tokyo and Yokohama are essentially the one port.

Likewise, respondent argues that our present problems would never have been presented, if libelant had notified respondent of its intent to proceed to Kobe before Osaka in that the Osaka cargo could have been discharged at Kobe, Kobe and Osaka being essentially the one port. Historically, the doctrine of deviation has been applied only to cases where there has been damage to, or a loss of, the goods and in such cases the extent of the deviation is of little, if any, significance. The Law of Admiralty, Gilmore and Black, 156. It has been said that "deviation" as recognized in Admiralty Law, substitutes an insurer's liability for the narrower liability as stipulated in the contract. The Willdomino v. Citro Chemical Co., 272 U. S. 718, 725, 47 S.Ct. 261, 71 L.Ed. 491 (3 Cir. 1927); Niles-Bement-Pond Co. v. Dampkiesaktieselskabet Balto, 282 F. 235 (2 Cir., 1922). The Carriage of Goods by Sea Act has certainly modified, and probably eliminated, this dogmatic feature of deviation law and, substituted therefor a liability for the damage actually caused by the deviation. The Law of Admiralty, Gilmore and Black, p. 156. Be that as it may, no authority has been found, by proctors or by the Court, which permits the use of the doctrine of deviation as a defense in a suit in admiralty for demurrage. In my opinion, the doctrine does not apply, and, I so hold. The doctrine has been applied only in cases where the goods were damaged. What remains of the doctrine should be applied in those cases only.

My decision on the issue of deviation does not, in itself, dispose of the first point. The issue encompasses an alleged breach of contract which is a field much broader than the rather limited field of the law of deviation. The route, insofar as one is specified in the contract, shows loadings at Portland and Tacoma, thence to Tokyo and Osaka, for discharge, with rotation at the owner's option. It must be remembered that this contract was between libelant and respondent only. Libelant had full and complete knowledge of the fact that other cargo was to be carried on the vessel and must be charged with knowledge that the other cargo might be unloaded at ports other than those mentioned in the agreement. Milk was the first cargo loaded in Vancouver. Libelant's scrap was then loaded in Portland, more milk was loaded in the same city, scrap was then loaded in Tacoma and the cargo was finished by loading milk in Seattle. There is nothing in the agreement as to when, where or under what circumstances the milk would be discharged. Any reasonable approach to a solution drives me to the conclusion that the milk being on top, the parties knew that the milk would first be unloaded. All agreements must be read and construed in the light of the existing situation and the knowledge of the parties at the time of the loading and the practical interpretation as placed on the provisions of the contract by the parties. In view of the method of loading of the particular cargo, common sense prevents an interpretation of the contract which would require the libelant to discharge and reload the milk in order to permit respondent to remove its cargo at a port other than designated in the contract. Business contracts must be construed as businessmen would interpret them. A businessman's approach would be a practical one. He would recognize he was dealing with a vessel carrying two types of cargo for two distinct shippers with four separate and distinct ports for discharge of cargo. The practical interpretation placed on the transaction, by the parties, as businessmen is of importance. Respondent had full knowledge of the milk cargo and knew it was stored on top of the scrap metal. Under ordinary circumstances it might seem strange for a vessel to discharge cargo at Yokohama, thence go south to Kobe for discharge there and at Osaka, and then return north for final discharge at the Port of Tokyo, a short distance from the original discharge at Yokohama. I cannot say here, however, that the libelant, in the exercise of reasonable prudence, could not have arrived at the conclusion that it would be sound maritime practice to first unload the milk at the inside ports of Yokohama and Osaka and then unload the scrap at Kobe, the most southerly port, and Tokyo, the most northerly port. There is no creditable evidence in the record that such action on the part of libelant in any way inconvenienced the respondent or in any way caused or tended to cause a delay in unloading the scrap cargo. Considering the stowage of the cargo and the ports of discharge, the route taken by the libelant does not seem unreasonable, and certainly it does not breach the agreement between these particular parties.

Cases such as Sheldon & Co. v. Hamburg Amerikanische Packetfahrt-Actien-Gesellschaft, 28 F.2d 249 (3 Cir., 1928); W. R. Grace & Co. v. Toyo Kisen Kabushiki Kaisha, 7 F.2d 889 (N.D.D.C.Cal. 1925), are principally concerned with the law of deviation, and even that if law was applicable to the facts in this case, the decisions in those cases would not in any way change or alter my finding on the subject.

If respondent, well knowing that the milk cargo was stored on top of the scrap metal, felt that it should have preference in the discharge of its scrap cargo, it should have incorporated such a requirement in the agreement. I find that respondent has failed to produce any substantial evidence that it could have discharged or the Tokyo cargo at Yokohama, or the Osaka cargo at Kobe, with less delay than was later encountered at the other ports. I had the opportunity to see and observe the live witnesses. The testimony of Rosenfeld to the contrary notwithstanding, I do not believe it was feasible to unload the Tokyo scrap at the milk berth in Yokohama. Nor is there any substantial evidence that the Osaka scrap could have been unloaded at the Kobe milk berth. To the contrary, it would seem that such a procedure would be highly unusual.

Proctors for respondent make an able, and under a different state of facts what would be a convincing, argument that the failure of the vessel to follow the geographical order of ports caused delay and that there is nothing in the record to...