Tarstar Shipping Co. v. Century Shipline, Ltd., 545

• Citation: 597 F.2d 837
• Decision Date: 27 April 1979
• Docket Number: D,No. 545,545
• Parties: TARSTAR SHIPPING CO., Plaintiff-Appellee, v. CENTURY SHIPLINE, LTD., Century Shipline & Agencies, Inc., Defendants, and Koctug Line, Defendant-Appellant. ocket 78-7453.
• Court: U.S. Court of Appeals — Second Circuit

Page 837

597 F.2d 837

TARSTAR SHIPPING CO., Plaintiff-Appellee, v. CENTURY SHIPLINE, LTD., Century Shipline & Agencies, Inc., Defendants, and Koctug Line, Defendant-Appellant.

No. 545, Docket 78-7453.

United States Court of Appeals, Second Circuit.

Argued Jan. 18, 1979.

Decided April 27, 1979.

Daniel K. Read, New York City (Hill, Betts & Nash, New York City, of counsel), for defendant-appellant.

Philip V. Moyles, New York City (Robert J. Babiak, Freehill, Hogan & Mahar, New York City, of counsel), for plaintiff-appellee.

Before OAKES, GURFEIN and Van GRAAFEILAND, Circuit Judges.

PER CURIAM:

Tarstar Shipping Co. ("Tarstar"), owner of the vessel M/V ALIKI I.P., sued Koctug Line ("Koctug"), a Turkish shipping company, for unjustified refusal to honor Tarstar's notice of lien on freights or subfreights owing from Koctug to the vessel's charterer, Century Shipline, Ltd. ("Century"). ¹ After a non-jury trial, the United States District Court for the Southern District of New York (Hon. Robert J. Ward, J.) held in favor of Tarstar and awarded it damages in the amount of $85,071.55 plus interest from March 8, 1976, the date on which notice was served.

The District Court described the factual background of the case substantially as follows. Tarstar is a Liberian shipping company. On February 6, 1976, Tarstar entered into a time charter party with Century under which Century chartered the vessel M/V ALIKI I.P. for carrier service. Payment of charter hire was to be made semi-monthly in advance, and the charter party provided "(t)hat the Owners shall have a lien upon all cargoes, and all subfreights for any amounts due under this Charter . . . ." Century defaulted on the second hire payment of $65,812.50, due on February 26, 1976, as well as on a payment for bunkers. This event triggered Tarstar's attempt to enforce its contractual lien on the freights, which led to its encounter with Koctug, whose further action and inaction is described below.

Koctug is itself a maritime carrier, with a fleet of vessels both owned and chartered which operate between the Mediterranean and the United States. On January 9, 1976, Koctug entered into a Liner Booking Note contract with Prodex International ("Prodex"), a grain merchant, to carry a shipment of lentil beans from Baton Rouge, Louisiana, to Algiers, Algeria sometime between February 20-28, 1976. Koctug intended to carry this cargo on one of its own vessels but had the right to substitute another's vessel if one of its own was not available. Finding that it had no vessel available to meet the loading date, Koctug attempted to find a substitute. To this end, Koctug requested Charles Ries, a broker employed by International Chartering Services, Inc. ("International"), to locate a suitable vessel. Ries discovered that the ALIKI was available, and a Freight Engagement was negotiated between Koctug and Century Shipline & Agency, Inc. ("Century Shipline"), agent for Century.

The Freight Engagement, dated February 10, 1976, is unsigned. It is, however, printed on a Century Shipline & Agency form, with "I.S.O.S." (International) listed "as Agents to Charterers." The document confirms "reservation of space for Your account" (emphasis added) on the ALIKI, and it specifies a cargo of 3,500 long tons, more or less, of lentil beans. Freight is to be "fully prepaid in New York 6 days after release of Bills of Lading less commission," with the bills of lading to read "Freight Payable as per Engagement Note." ² The terms of the Freight Engagement were confirmed by a telex recap dated February 11, 1976.

The ALIKI was loaded with the cargo of lentil beans on February 25, 1976, and bills of lading were issued to the shippers. Accordingly, under the terms of the Freight Engagement, freight was to be paid to Century by March 2, 1976. ³ On March 1, ICD Export Corp. (on behalf of the shippers) delivered to Koctug's New York office a check to the order of Koctug for $147,326.57. The same day, Koctug endorsed the check over to International, and delivered it to International so that the latter could pay Century for the freight due on March 2. As is apparently customary in such transactions, International deposited the check in its own account at Marine Midland Bank on March 3. A week later, on March 10, International had a new check in the amount of $127,519.38 issued to Century Shipline, as agent for Century, for the freight less International's commission. On March 11, 1976, Century Shipline returned the check to International with the request that it be certified. The check was certified and returned to Century Shipline that same day. The check was paid by Marine Midland on March 12.

Tarstar served Koctug with notice of its contractual lien on the freights on March 8. This was a full week after Koctug had delivered the endorsed check for freight to International. It was, however, before the date when International's first check to Century was issued, as well as before the date on which the check was finally paid.

Okyay Ustun, Koctug's New York representative, received a telephone call on March 8 from Tarstar's New York counsel, who informed him that Century had defaulted on the charter hire, and that Tarstar was asserting its lien on all unpaid freights. This was...