Strachan Shipping Co. v. Dresser Industries, Inc., Civ. A. No. 79-3779.
| Decision Date | 21 January 1982 |
| Docket Number | Civ. A. No. 79-3779. |
| Citation | 534 F. Supp. 205 |
| Court | U.S. District Court — Eastern District of Louisiana |
| Parties | STRACHAN SHIPPING COMPANY, the Bank and Savill Line, Ltd., Empresa Lineas Maritimas Argentinas, S.A., Costa Armatori, S.p.A. Atlantic Cargo Service AB, Plaintiffs, v. DRESSER INDUSTRIES, INC., Oilfield Products Corporation (Oilfield Products Group), James Sierra & Company, Inc., Defendants. |
James O. M. Womack, New Orleans, La., for plaintiffs.
Charles Kohlmeyer, Jr., New Orleans, La., for defendants.
This case was submitted to the court on stipulated facts, depositions, exhibits, and briefs. After careful consideration of those materials and the applicable rules of law, I have decided in favor of the defendants. My findings and conclusions are set forth below.
Familiarity with the facts which have been stipulated to in the Joint Stipulation of Facts, filed on February 3, 1981, is assumed. The plaintiffs1 in this case, four shipping lines and their steamship agent (the agent is "Strachan"), have sued for unpaid freight and stevedoring costs. These charges were paid by the defendant, Dresser, Industries, Inc. ("Dresser"), to the freight forwarder, James Sierra & Company ("Sierra"), but Sierra failed to remit the payments to the plaintiffs. On November 28, 1979, Sierra filed for a Chapter XI Corporate Reorganization, and thus any recovery from Sierra is unlikely.
On October 24 and October 30, 1978, as well as on January 13, 16, and 19, 1979, Dresser shipped cargo on vessels operated by the four plaintiff steamship lines. Freight for these shipments became due in the amount of $115,998.01. Between the months of December 1978 through February 1979, Strachan provided stevedoring and car unloading services for Dresser, for which the sum of $9,553.43 became due.
For each of the above-mentioned shipments, Dresser contacted Sierra, and Sierra then booked space on one of the shipping lines' vessels. The shipping lines paid Sierra a brokerage commission for each booking. When the vessel had departed the Port of New Orleans, the bills of lading signed by Strachan as agent for the plaintiff shipping lines were given to Sierra for forwarding to Dresser. The negotiable original of each bill of lading, marked "Freight Prepaid", was delivered to Dresser through Sierra. On a non-negotiable copy of the bill of lading, Strachan stamped a clause entitled "Freight Due Bill" which provided that freights were past due 15 days after the sailing of the vessel. This copy of the bill of lading was given to Sierra as an invoice, and the amount of freight due was computed in the appropriate box on the "Due Bill." Sierra then prepared its own invoice to Dresser, including the amount due for freight as well as the amount due for Sierra's services. When Dresser received the invoice from Sierra, it sent its check to Sierra for the amount invoiced.
The normal procedure was for Sierra to then remit the amount due for freight to Strachan. However, for the five shipments and stevedoring charges upon which this suit is based, Sierra did not remit the payments to Strachan, but instead presumably diverted the monies to other uses.
Although all shipments occurred from October 1978 through January 1979, and the stevedoring services were performed from December 1978 through February 1979, Dresser's first notice that Strachan had not received its payment was on April 17, 1979, when a representative of Strachan contacted Dresser. As previously mentioned, by the terms of the Freight Due Bills, freights were past due 15 days after the sailing of the vessel.
Plaintiffs argue that regardless of Dresser's payments to Sierra, Dresser must still pay plaintiffs for the freight and stevedoring charges which Sierra failed to remit to plaintiffs. In support of their claim, plaintiffs first contend that Dresser is absolutely liable for payment under all circumstances based on the language of a Conference Credit Agreement that Dresser signed. Dresser, on the other hand, argues that under such a credit agreement the parties were bargaining for credit privileges and not over who would ultimately be responsible for payment.
Secondly, plaintiffs contend that Sierra was Dresser's agent, and that Dresser is, therefore, responsible for the failure of its agent (Sierra) to remit the funds owing to plaintiffs. Dresser admits that Sierra was its agent for certain purposes such as the preparation of export documents, but claims that Sierra was plaintiffs' agent for purposes of collection. Thus, under Dresser's theory, payment to Sierra would satisfy Dresser's obligation to pay plaintiffs. In addition, Dresser claims that in any event plaintiffs should be equitably estopped from making Dresser pay twice because plaintiffs delayed far beyond the 15 day period specified in the Freight Due Bills before informing Dresser that Sierra had not properly remitted payment to plaintiffs.
There are two separate and independent grounds upon which plaintiff asserts that Dresser could be found liable: (1) the Conference Credit Agreement, and (2) principles of agency.
(1) The Conference Credit Agreement
One of the plaintiff shipping lines2 was a member of the U.S. Atlantic And Gulf/Australia-New Zealand Conference (the "Atlantic and Gulf Conference"). Dresser, as a shipper, had signed the Conference Agreement. By this agreement, Dresser agreed to confine its shipments within this geographic area to vessels of the carriers that were party to the Atlantic and Gulf Conference, and the carriers agreed to provide contract rates only to those merchants bound by the Atlantic and Gulf Conference rate agreement. In order for the bills of lading marked "prepaid" to be released before the freight had been received by the carrier, members of the Atlantic and Gulf Conference entered into a Shippers' Credit Agreement. This credit agreement reads in relevant part:
Plaintiffs contend that this language makes Dresser absolutely liable for the payments that Sierra failed to remit to the plaintiffs. A similar argument was presented to the court in Koninklijke Nedlloyd BV v. Uniroyal, Inc., 433 F.Supp. 121 (S.D.N.Y.1977) ("Uniroyal"). In that case, the court held that under such a credit agreement the parties were bargaining for credit privileges and not over who would ultimately be responsible for payment. The credit agreement in Uniroyal, quoted below, contains language almost identical to that of the Atlantic and Gulf Conference credit agreement at issue in this case. The Uniroyal agreement states, in relevant part:
The Uniroyal court determined that the most reasonable interpretation of this agreement was that the parties were bargaining for credit privileges and not over who would ultimately be responsible for payment.
The introductory clause uses the language `in consideration of granting credit to us directly or to our duly authorized forwarder;' and ¶ 2 states that Uniroyal...
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