West India Industries, Inc. v. Tradex, Tradex Petroleum Services

• Decision Date: 28 December 1981
• Docket Number: No. 80-1896,80-1896
• Citation: 664 F.2d 946
• Parties: WEST INDIA INDUSTRIES, INC., Plaintiff-Appellant, v. TRADEX, TRADEX PETROLEUM SERVICES, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 946

664 F.2d 946

WEST INDIA INDUSTRIES, INC., Plaintiff-Appellant, v. TRADEX, TRADEX PETROLEUM SERVICES, et al., Defendants-Appellees.

No. 80-1896.

United States Court of Appeals Fifth Circuit.

Dec. 28, 1981.

Robert M. Julian, Houston, Tex., for plaintiff-appellant.

Perkins, Oden, Warburton, McNeill & Adami, J. G. Adami, Jr., Alice, Tex., William C. Bullard, Houston, Tex., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before GEE and RUBIN, Circuit Judges, and SPEARS ^*, District Judge.

ALVIN B. RUBIN, Circuit Judge:

West India Industries, Inc. ("West India") carried aboard its ship M/V INAGUA SURF a cargo of used oil well equipment from Maracaibo, Venezuela, to New Orleans, Louisiana, for the account of Tradex. The sole issue in this appeal is the amount of freight to be paid to West India. We conclude that the district court correctly held that the bill of lading set forth the agreement between the parties and affirm the judgment denying West India recovery for a sum greater than the amount specified in the bill of lading.

I

David Howell, who does business under various trade names including Tradex, obtained an option to buy used oil well equipment in Venezuela from Perforaciones Delta, C.A., a Venezuelan subsidiary of Delta Drilling Company. He proposed to ship the equipment to the United States for resale. After obtaining this option, he assigned a two-thirds interest in the equipment to Arnold Wiederkehr, a Texas resident who is in the oil business.

During the late summer or early fall of 1978, Tradex began negotiations with West India, a company engaged in the ocean carriage of freight, to transport the equipment from Venezuela to the United States. On October 23, 1978, Hubert Colburn, who was employed in West India's Houston office, sent Tradex a letter confirming their oral agreement whereby West India had booked a shipment by Tradex of oil well equipment from Maracaibo, stating that "(t)he rate applying is $64.00 per 2000 pounds or 40 cubic feet, whichever basis yields the greater revenue to the vessel." On October 26, Howell signed and returned to West India a copy of this letter, and thereby "agreed to and accepted" its terms.

Wiederkehr and his agent, Travis Vollmering, went to Maracaibo early in October 1978 to make final arrangements for the delivery of the equipment. They negotiated with Jose Brisino, ¹ an employee of Taurel & Co. ("Taurel"), West India's general agent in Maracaibo, for shipment of the equipment. There is no evidence that they knew of the negotiations between Howell and Colburn; and Wiederkehr and Vollmering both testified that, when they were dealing with Brisino, they knew nothing about the October agreement. Brisino proposed to transport the cargo for $64 per weight ton. Vollmering and Brisino orally agreed to this figure.

At Brisino's request, the weights and measurements of the various pieces of equipment were given to him. Taurel then communicated these weights and measurements by telex to West India's home office in West Palm Beach, Florida.

The INAGUA SURF arrived at the port of Maracaibo on October 28. After the equipment was loaded onto it, Taurel prepared three original bills of lading. These showed that the shipper was Perforaciones Delta and the consignee was Tradex-David Howell. They listed the quantity, type, and weight of the equipment and showed the total vessel freight as $44,800, calculated on the basis of $64 per ton for 700 tons of freight. Although West India says in its brief that "someone in Venezuela, without authority from West India inserted the sum of $44,800.00 as the freight amount," it cites only the trial court's findings for this. The trial court found instead, with ample record support, that the freight calculations "originated" in West India's West Palm Beach office and were sent by telex to Taurel in Venezuela.

All three original bills of lading were signed and sealed by John Hurlston, master of the INAGUA SURF. However, West India sent Taurel a telex message "directing (that) the original bill of lading not be delivered until such time as the freight had been paid in full." Accordingly, when the vessel sailed, the three original bills of lading were sent by courier to West India's West Palm Beach office.

Taurel gave a photocopy of the bill of lading to Perforaciones Delta. Its representative in turn handed the photocopy to Vollmering in Maracaibo. Vollmering and Wiederkehr then returned to the United States where, in reliance on the amount of freight due as shown on their copy, he and Vollmering began final negotiations to finance the purchase and transportation of the equipment. Title was, of course, still in Perforaciones Delta, which had not yet been paid. Vollmering testified that he and Wiederkehr also relied on the amount of freight due as shown on their copy by forgoing possible shipping arrangements with other carriers.

There was testimony that the only distinction between original bills of lading and copies is that the copies are nonnegotiable. Copies of the bill of lading are customarily delivered to the shipper of the cargo; they are used and relied upon for securing export licenses, for banking arrangements, and for other business transactions. There was further testimony that the primary difference between an original bill of lading and a copy is that the original allows a person to transfer title to the freight.

After the original bills of lading reached West India's Florida office, employees there noticed that the freight had been calculated on a "weight" basis instead of on a "volume" basis. The "volume" basis would have yielded greater revenue to the vessel. Recalculation of the freight on a "volume" basis resulted in an upward revision of the charge to $122,854.40. Accordingly, West India's employees altered the original bills of lading by blacking out the $44,800 freight amount. After the equipment was unloaded in New Orleans, it was remeasured and reweighed, and the $122,854.40 figure was reduced to $108,000. West India claims that it is due $108,000 plus an insurance premium, less $45,000 already paid to it.

The preamble to the bill of lading states: "It is agreed that the custody and carriage of the goods are subject to the following terms on the face or back (of the bill of lading) which shall govern the relations, whatsoever they may be, between the shipper consignee, and the Carrier, Master and ship in every contingency, wheresoever and whensoever occurring ...." ² One of these "following terms," P 27, provides: "All agreements or freight engagements for the shipment of the goods are superseded by this bill of lading ...." The district court concluded that the bills of lading, "as they were signed and sealed and before they were altered, represent(ed) the controlling agreement between the parties" and that the bills of lading "superseded any prior agreement between the parties." West India takes exception to this conclusion.

II

A bill of lading is an acknowledgment by a carrier that it has received goods for shipment. G. Gilmore & C. Black, The Law of Admiralty § 3-1, at 93 (2d ed. 1975); 1 T. Parsons, A Treatise on the Law of Shipping and the Law and Practice of Admiralty 190 (Boston 1869). The bill of lading is also a contract of carriage. G. Gilmore & C. Black, supra, § 3-1, at 93; 1 T. Parsons, supra, at 190; see Baker Oil Tools, Inc. v. Delta S. S. Lines, Inc., 562 F.2d 938, 940 (5th Cir. 1977), modified per curiam on other grounds, 571 F.2d 978 (5th Cir. 1978); Cabot Corp. v. S. S. Mormascan, 441 F.2d 476, 478 (2d Cir.), cert. denied, 404 U.S. 855, 92 S.Ct. 104, 30 L.Ed.2d 96 (1971). It serves this function whether negotiable or not. See G. Gilmore & C. Black, supra, § 3-1, at 93. In addition, "if the bill is negotiable (as, for all practical purposes, all ocean bills are) it controls possession of the goods and is one of the indispensable documents in financing the movement of commodities and merchandise throughout the world." Id. (footnote omitted).

We need not expatiate on the effect of the October letter between Colburn and Howell. Even if, as West India argues, it was a contract, ³ it was nevertheless superseded by the bill of lading. Universal Am. Corp. v. S.S. Hoegh Drake, 264 F.Supp. 747, 751-52 (S.D.N.Y.1966); Armour & Co. v. Leopold Walford (London), Ltd., (1921) 3 K.B. 473, 474, 475-76; H. Longley, Common Carriage of Cargo § 3.04(3), at 23 (1967).

West India seems to argue that, if the October 26 letter was a contract, it was thereafter immutable. To state this proposition baldly is to expose its error. Be a contract ever so binding, it is but a meeting of the minds, and those who enter into a contract may by mutual agreement rescind or alter it. ⁴ Parties may, therefore, after they have formed a contract for carriage, assent to different terms contained in a bill of lading, and "thereby ma(k)e a new and different contract." Northern Pac. Ry. v. American Trading Co., 195 U.S. 439, 463, 25 S.Ct. 84, 92, 49 L.Ed. 269, 279 (1904). ⁵

In its brief, West India asserts that the bill of lading cannot thus replace the contract contained in the October letter between Colburn and Howell because the bill of lading is "not supported by any consideration or mutuality." See 3 A. Corbin, supra, § 574, at 371 n.12 ("antecedent agreements are not discharged by a later agreement that is void for lack of consideration"); L. Simpson, Handbook of the Law of Contracts § 58, at 101 (2d ed. 1965). This assertion, however, is groundless. The bill of lading does not merely grant Tradex a lower shipping rate, and otherwise duplicate the terms of the October letter. Rather, the bill of lading contains numerous additional terms, conditions, and requirements applicable to both West India and Tradex. Thus we find that, by entering into the contract embodied in the bill of lading, Tradex at least "assumed even a slight additional duty" in...