States Marine Intern., Inc. v. Seattle-First Nat. Bank, SEATTLE-FIRST

• Decision Date: 16 October 1975
• Docket Number: No. 74-2010,SEATTLE-FIRST,74-2010
• Citation: 524 F.2d 245
• Parties: STATES MARINE INTERNATIONAL, INC., Plaintiff-Appellant, v.NATIONAL BANK, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 245

524 F.2d 245

STATES MARINE INTERNATIONAL, INC., Plaintiff-Appellant, v. SEATTLE-FIRST NATIONAL BANK, Defendant-Appellee.

No. 74-2010.

United States Court of Appeals Ninth Circuit.

Oct. 16, 1975.

David M. Salentine (argued), Bogle, Gates, Dobrin, Wakefield & Long, Seattle, Wash., for plaintiff-appellant.

Douglas W. McQuaid (argued), Aiken, St. Louis & Siljeg, Seattle, Wash., for defendant-appellee.

OPINION

Before CHAMBERS and KENNEDY, Circuit Judges, and JAMESON, ^* District Judge.

JAMESON, District Judge:

This is a suit in admiralty seeking recovery of shipping charges. The carrier, States Marine International, Inc. (States Marine) brought suit against the shipper, Royal Red Seafoods, Inc. (Royal), its president, Harold Daubenspeck, and Seattle-First National Bank. The freight charges resulted from two shipments of canned salmon from Bristol Bay, Alaska, to Seattle and Bellingham, Washington, on vessels operated by States Marine. The Bank held a security interest in the salmon and was named as consignee by Royal. A counterclaim for damages to the cargo was asserted by the defendants. Following a nonjury trial the district court entered a judgment for $30,960, the amount of the charges, in favor of States Marine and against Royal and denied recovery against the Bank. The action was dismissed as to Daubenspeck, as was the counterclaim for damages. This appeal is limited to that portion of the judgment denying recovery against the Bank.

Royal entered into a security agreement and general pledge with the Bank in May, 1970, to finance its canning operations for the 1970 fishing season. Under this agreement the Bank acquired a security interest in all of Royal's property, including canned salmon. Financing statements were filed in Washington and Alaska. The Bank commenced making loans to Royal on July 8, 1970, and during 1970 Royal borrowed in excess of $700,000. ¹

On July 26, 1970 States Marine accepted a cargo of canned salmon from Royal for shipment to Seattle. A straight bill of lading was prepared by an employee of Royal on a form supplied by States Marine. Following the printed words "Consigned to", there was inserted, "Seattle First National Bank c/o Royal Red Seafoods, Inc. 1455 No. Northlake Place, Seattle, Washington 98103". The second shipment for delivery at Bellingham was accepted on July 28, 1970. The consignee was designated as "Seattle First National Bank account of Royal Red Seafoods, Inc.", followed by the same address in Seattle. Both shipments were to be delivered to warehouses at the respective ports. Each bill had a space after the heading "Address Arrival Notice to" filled in as follows: "Royal Red Seafoods, Inc.," followed by Royal's Seattle address.

The canned salmon was delivered by States Marine to the destinations in Bellingham and Seattle. As provided in the bills of lading, arrival notices were sent to Royal notifying it that its goods had been delivered and were being held in the warehouses. Pursuant to the lending agreement between the Bank and Royal, negotiable warehouse receipts were issued by the warehouses to the Bank for the loan account of Royal. The salmon remained in the warehouses until Royal was able to conclude sales agreements with its customers, at which time Royal notified the Bank of the sales, and the Bank then instructed the warehouses to release the goods for sale through documents known as Banker's Orders. The proceeds from the sales of the salmon were forwarded to the Bank under a trust receipt arrangement.

The bills for the shipping charges were sent by States Marine to Royal and not to the Bank. ² When Royal failed to make payment, this action was filed under 28 U.S.C. § 1333. Most of the facts were stipulated in a pretrial order. Following the submission of the evidence, exhibits, and oral argument, the district judge stated that he was not satisfied that "the bank incurred any liability" for freight charges, that he did not believe that "there was a delivery within the meaning of the rule" (which holds certain consignees responsible for freight charges); and "while shipper named the bank as consignee, the bank had no knowledge it had been so named".

At the court's request findings of fact and conclusions of law were prepared by counsel and signed by the judge. The findings of fact included:

"IX.

Negotiable warehouse receipts were issued by warehouses in Seattle and Bellingham to Bank indicating receipt of the cargo shipped on the Vessels CONSTITUTION STATE and STEEL EXECUTIVE for the account of 'Seattle-First National Bank Acct. Royal Red Seafoods, Inc.' Said Documents do not contain any obligation of Bank to pay any freight charges and Bank did not author, direct or prepare the phraseology, verbage or content thereof."

"XII.

Bank did not at any time material exercise any control over the movement of the goods from Alaska to Washington, nor did Bank authorize Royal or any other person to designate Bank as consignee; nor did Bank authorize Royal to obligate Bank to pay any indebtedness of Royal. The inclusion of Bank as a named party to the bills of lading was a voluntary act of Royal and was inserted without the permission of Bank. Bank did not receive copies of the bills of lading and had no knowledge of the fact that Royal had inserted Bank as a named party on the bills of lading."

"XIII.

Bank did not accept shipment of the goods."

The conclusions of law stated, inter alia:

"II.

Bank did not contract with States for the shipment of the goods in question or appoint Royal as Bank's agent.

"III.

There was not delivery of the goods to Bank and it did not accept shipment of the goods."

Appellant contends that as the consignee named in the bill of lading, the Bank is liable for the freight charges since it (1) accepted delivery of the goods through the warehouses and (2) "exercised such exclusive dominion and control from the moment of delivery that it constituted itself the 'presumptive owner' of the goods."

It is well settled that the shipper rather than the consignee is primarily liable to the carrier for freight charges Louisville & N. R. Co. v. Central Iron & Coal Co., 265 U.S. 59, 67, 44 S.Ct. 441, 68 L.Ed. 900 (1924). It is only when there is some binding obligation on the part of the consignee to pay freight charges that the courts will look beyond the shipper's primary responsibility.

Most commonly the consignee's obligation to pay freight charges arises under the Interstate Commerce Act, 49 U.S.C. § 3. The Shipping Act, 46 U.S.C. § 817, under which an ocean shipper's tariffs are filed, does not contain similar provisions with respect to a consignee's liability. The consignee's responsibility for shipping charges, however, may be based on a contractual obligation as well as upon a statutory requirement. In the absence of express statutory provisions regarding a consignee's liability for ocean shipments, it is necessary to determine whether, under the applicable law, there may be an enforceable contractual obligation. ³

To determine the existence of a consignee's contractual liability, the courts examine first the bill of lading which "serves both as a receipt and as a contract." Louisville & N. R. Co., 265 U.S. at 67, 44 S.Ct. at 443. Where, as here, the bills of lading impose no liability the courts must look...