Universal American Corporation v. SS Hoegh Drake

• Decision Date: 12 December 1966
• Docket Number: No. 65 AD. 1138.,65 AD. 1138.
• Citation: 264 F. Supp. 747
• Parties: UNIVERSAL AMERICAN CORPORATION and Precision Bearings India, Ltd., Libelants, v. S. S. HOEGH DRAKE, her engines, boilers, etc., Skibs A/S Arizona, Leif Hoegh & Co. and Hoegh Lines, Respondents.
• Court: U.S. District Court — Southern District of New York

264 F. Supp. 747

UNIVERSAL AMERICAN CORPORATION and Precision Bearings India, Ltd., Libelants, v. S. S. HOEGH DRAKE, her engines, boilers, etc., Skibs A/S Arizona, Leif Hoegh & Co. and Hoegh Lines, Respondents.

No. 65 AD. 1138.

United States District Court S. D. New York.

December 12, 1966.

Hill, Rivkins, Warburton, McGowan & Carey, New York City, Joseph T. McGowan, Clare E. Walker, New York City, of counsel, for libelants.

Haight, Gardner, Poor & Havens, New York City, Wharton Poor, New York City, R. Glenn Bauer, New York City, of counsel, for respondents.

MEMORANDUM

TENNEY, District Judge.

Respondents, in accordance with the provisions of Admiralty Rule No. 58 of the United States Supreme Court, move to dismiss the libel on the ground that the claims alleged therein are time-barred under the provisions of the bills of lading and by the United States Carriage of Goods by Sea Act (49 Stat. 1208 (1936), 46 U.S.C. § 1303(b) (1964)) incorporated into said bills of lading. Suit is brought to recover damage to cargo shipped from New York and delivered in Bombay, India.

There appears to be no genuine issue as to the following material facts. The 87 boxes of machinery which are the subject of the libel herein were on board S. S. "HOEGH DRAKE" at New York on October 8, 1963, and were delivered at Bombay, India, on or about November 10, 1963. Three bills of lading, two of which were dated October 3, 1963, and one of which was dated October 8, 1963, were issued to Norma-Hoffman Bearings Corporation (hereinafter referred to as "Norma-Hoffman"), the shipper of said machinery. Libelant Universal American Corporation (hereinafter referred to as "Universal") is the successor in interest to Norma-Hoffman. Libelant Precision Bearings India, Ltd. (hereinafter referred to as "Precision") is the ultimate consignee and holder in due course of said bills of lading.

Each of the bills of lading contained a paragraph 18, reading as follows:

"Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent the notice must be given within three days of the delivery. In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after the delivery of the goods or the date when the goods should have been delivered."

Said bills of lading also contained the following paragraph 19:

"All agreements or freight engagements for the shipment of the goods are superseded by this bill of lading, and all its terms, whether written, typed, stamped, or printed, are accepted and agreed by the shipper to be binding as fully as if signed by the shipper, any local customs or privileges to the contrary notwithstanding. Nothing in this bill of lading shall operate to limit or deprive the carrier of any statutory protection or exemption from, or limitation of liability. If required by the carrier, one signed bill of lading duly endorsed must be surrendered to the agent of the ship at the port of discharge in exchange for delivery order."

Each bill of lading incorporated the provisions of the Carriage of Goods by Sea Act of the United States.

Prior to the issuance of the bills of lading herein and on August 21, 1962, Norma-Hoffman entered into a Memorandum of Agreement with the members of The India, Pakiston, Ceylon and Burma Outward Freight Conference (hereinafter referred to as "Freight Conference"). The Memorandum (Contract No. 7285) is a dual-rate contract between the Freight Conference relating to the charging of lower rates to shippers who agree to confine their patronage exclusively to Conference lines.¹ Libelants urge that such Memorandum contains an arbitration clause applicable to the present dispute. Paragraph 7 of the Memorandum reads as follows:

"7. Any and every dispute arising out of, or relating to, this agreement or the breach hereof shall be settled by arbitration in New York, N. Y. One arbitrator shall be named by the Merchant or Merchants who shall be parties to the dispute, one arbitrator shall be named by the Carriers then parties to the agreement, and a third arbitrator shall be named by the two arbitrators so chosen or if they cannot agree, the third arbitrator shall be named by the American Arbitration Association. Both Parties are required to name arbitrators within thirty (30) days after one or the other has been given notice. Any award made by the majority of the arbitrators shall be final and binding. In any arbitration proceeding, including enforcement of any award, service of any and every notice and other paper may be made outside of the State of New York by registered mail, telegraph or cable with the same force as if made personally within said State. In each case of such service, reasonable time shall be allowed for response to the notice or other paper served."

It is important to note, however, that paragraph 4 of the Memorandum provides that:

"4. Shipments under this agreement are subject to all the terms and conditions contained in the respective Carrier's engagement note, permit, dock receipt and regular form of bill of lading, in use by the Carrier when shipments are tendered."

Furthermore, the freight contract entered into between Norma-Hoffman and respondents in September 1962 (Contract No. N.Y.I./116), which libelants allege in their libel and complaint was issued by respondents pursuant to the abovementioned Memorandum (¶ Twelfth) states, in paragraph 1 of its Terms and Conditions, that the booking "is subject to all terms and conditions of the vessel's usual bill of lading, whether issued or not, and of the current tariff of carrier, all of which are hereby made a part of this contract" and, in paragraph 15, it is stated that the "provisions of the Carriage of Goods Act of the United States * * * shall govern throughout the entire time the goods are in the custody of the carrier."

The libel alleges that the respondents are business entities organized and existing under and by virtue of the laws of Norway, with an office and place of business in this district, and were and are now engaged in business as common carriers of merchandise by water for hire and owned, managed, chartered and/or otherwise controlled the S. S. "HOEGH DRAKE" which was a general merchant vessel employed as a common carrier for the carriage of merchandise by water for hire.

The libel further alleges that there were delivered to the respondents as common carriers 87 boxes of machinery, material and supplies for the construction of a bearing manufacturing plant, and that the respondents accepted the shipment and agreed to transport it to Bombay, India.

In article "Sixth" the libel alleges that the respondents did not deliver the shipment in the same good order and condition as when delivered to and received by them, in violation of their contractual obligations and duties.

Under the heading of a "SECOND CAUSE OF ACTION", the libel alleges that the respondents are required to arbitrate the claims set out in the libel because of a provision in clause 7 of Freight Conference Freight Agreement No. 7285, dated August 21, 1962.

It seems clear that the First Cause of Action is barred; the libel was not filed herein until November 17, 1965, more than two years after delivery of the goods. The shipment was subject to the United States Carriage of Goods by Sea Act, which provides in Section 3 (6):

"In any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered." (Title 46 U.S.C. § 1303(6)).

This provision of the Act was incorporated in the bills of lading which repeated the statutory language.

Accordingly, as to the first claim, the libel must be dismissed. United States v. S. S. Mormacteal, 213 F.Supp. 149 (S. D.N.Y.1962); M.V.M., Inc. v. St. Paul Fire & Marine Ins. Co., 156 F.Supp. 879, 883 (S.D.N.Y.1957), rev'd on other grounds sub. nom. St. Paul Fire & Marine Ins. Co. v. United States Lines Co., 258 F.2d 374 (2d Cir.1958), cert. denied, 359 U.S. 910, 79 S.Ct. 587, 3 L.Ed.2d 574 (1959).

With respect to the Second Cause of Action, requiring respondents to arbitrate the claims set out in the libel pursuant to the provisions of clause 7 of the Memorandum, as indeed with respect to both causes of action, it is agreed that there is no genuine issue of material fact, the sole question being a question of law to be resolved by the Court—i.e., did the bills of lading constitute the entire contract between the parties? Although not clearly delineated by their pleading, libelants would appear to predicate their claim on the fact that the boxes of machinery were delivered in or about September 1962, through on or about June 17, 1963, pursuant to the Memorandum of August 21, 1962, and the freight contract of ...