Western Bulk Carriers (Australia) v. PS INTERN., No. C-2-91-262.

• Decision Date: 22 April 1991
• Docket Number: No. C-2-91-262.
• Citation: 1991 AMC 2828,762 F. Supp. 1302
• Parties: WESTERN BULK CARRIERS (AUSTRALIA), PTY. LTD., Plaintiff, v. P.S. INTERNATIONAL, LTD., Defendant.
• Court: U.S. District Court — Southern District of Ohio

762 F. Supp. 1302

1991 AMC 2828

WESTERN BULK CARRIERS (AUSTRALIA), PTY. LTD., Plaintiff, v. P.S. INTERNATIONAL, LTD., Defendant.

No. C-2-91-262.

United States District Court, S.D. Ohio, E.D.

April 22, 1991.

Timothy Alan Riedel, Arter & Hadden, Columbus, Ohio, Henry Billingsley, Arter & Hadden, Cleveland, Ohio, for plaintiff.

Kenneth Michael Richards, Luper, Wolinetz, Sheriff & Neidenthal, Columbus, Ohio, for defendant.

MEMORANDUM AND ORDER

HOLSCHUH, Chief Judge.

This matter is presently before the Court on defendant's motion to vacate a maritime attachment.

STATEMENT OF FACTS

According to its verified complaint, plaintiff Western Bulk Carriers (Australia) Pty. Ltd. (hereinafter "Western Bulk") is an Australian corporation engaged in the business of operating, chartering and subchartering and trading with ocean going vessels in international commerce. Defendant P.S. International Inc. (hereinafter "P.S. Int'l") is an Indiana corporation dealing in agricultural products and in contracting for maritime transportation of such commodities. In May 1990 Western Bulk as owner and operator of the Motor Vessel MORLAND entered into an agreement of time charter with Meridian Ship Agency, Inc. (hereinafter "Meridian") under which Western Bulk chartered to Meridian the vessel for a time chartered trip with cargo of steel and meals. The vessel was to be placed at Meridian's disposal at New Orleans, Louisiana and redelivered to Western Bulk at Indonesia, with a time charter hire to be paid by Meridian at a rate of $10,650.00 per day. The charter agreement also provided that Western Bulk would "have a lien upon all cargoes, and all sub-freights for any amounts due under this Charter."

Meridian entered into a subcharter agreement with defendant P.S. Int'l under which they agreed that P.S. Int'l "would voyage charter the M/V MORLAND for a part cargo of 15,000 metric tons ten percent more or less at Meridian's option of soya bean meal in bulk, with the M/V MORLAND to transport same from one safe berth, one safe port Mississippi River, Louisiana, to one safe berth, one safe port Manila, Philippines." P.S. Int'l agreed to pay to Meridian the cost of loading, spout trimming and discharging the vessel, including demurrage, if incurred, at the rate of $10,650 per day for each day, or pro rata for part of a day, for all time used in loading or discharging in excess of the allowed time.

The M/V MORLAND entered into the service of Meridian at 0001 hours on May 11, 1990, and 16,499.873 metric tons of bulk soybean meal were laden on board for shipment by defendant to the Philippines. Meridian prepaid the time charter through June 25, 1990, paying $449,296.86, but failed to make any further payments. In August 1990 Meridian filed a petition in bankruptcy, and plaintiff claims that $1,304,029.21 is due and owing from Meridian to plaintiff under the time charter. Meanwhile, the M/V MORLAND reached the Philippines, and on or about July 20, 1990, while the soybean meal was being discharged at Manila by defendant, plaintiff sent by telex a formal notice of the exercise of its maritime lien on the sub-freights, including demurrage earned or to be earned. Pursuant to the notice, defendant became obligated to withhold from Meridian and pay only to plaintiff any demurrage which might become due. The total part cargo was discharged from the M/V MORLAND on 1530 hours on September 27, 1990. The demurrage earned amounted to 58 days 1 hour 35 minutes, at $10,650.00 per day or $618,402.60, less 1.25% commissions of $7,730.03, producing a total demurrage allegedly due from defendant to plaintiff of $610,672.57. Defendant has failed to pay this amount to plaintiff.

Plaintiff commenced this action on April 2, 1991. Plaintiff initiated this action by way of maritime attachment pursuant to Rule B of the Supplemental Rules for Certain Admiralty and Maritime Claims of the Federal Rules of Civil Procedure, which provides in pertinent part:

With respect to any admiralty or maritime claim in personam a verified complaint may contain a prayer for process to attach the defendant's goods and chattels, or credits and effects in the hands of garnishees to be named in the process to the amount sued for, if the defendant shall not be found within the district. Such a complaint shall be accompanied by an affidavit signed by the plaintiff or the plaintiff's attorney that, to the affiant's knowledge, or to the best of the affiant's information and belief, the defendant cannot be found within the district. The verified complaint and affidavit shall be reviewed by the court and, if the conditions set forth in this rule appear to exist, an order so stating and authorizing process of attachment and garnishment shall issue.

In the verified complaint plaintiff alleged that defendant cannot be found within this district but that defendant has goods and chattels, or credits and effects within this district, specifically an account at BancOhio National Bank, against which plaintiff is entitled to a writ of maritime attachment and garnishment. In support plaintiff presented the affidavit of attorney Henry E. Billingsley, II, in which Mr. Billingsley details his efforts to find defendant within this district and states his belief, based on such efforts, that defendant cannot be found within this district. On April 3, 1991 the Court ordered the issuance of process of maritime attachment and garnishment, and such process was immediately served upon an agent of BancOhio. According to the present state of the record, BancOhio was served with process of maritime garnishment and attachment at 9:14 a.m. and 10:00 a.m. on April 3, 1991, at 1:20 p.m. and 1:51 p.m. on April 4, 1991, and at 1:05 p.m. and 1:25 p.m. on April 5, 1991.¹

On April 5, 1991, defendant filed a motion to vacate attachment order and consent to jurisdiction. Defendant contends that the attachment of its funds at BancOhio has caused extreme hardship threatening its continued viability as a business. Defendant argues that there exists no basis for the attachment order because defendant can be found within this district, consents to this Court's jurisdiction, and has an authorized agent within this district for acceptance of service of process. Accordingly, defendant requests that the attachment order be vacated, or alternatively, that no further attachments be forthcoming under the terms of the order. Counsel for the parties appeared for a conference before Magistrate Judge Terence P. Kemp on April 5, 1991, at which plaintiff was directed to file a memorandum contra defendant's motion by the close of business on Monday, April 8, 1991. Plaintiff filed its memorandum contra on April 8, 1991 and an amended memorandum contra on April 9, 1991, and defendant filed a reply memorandum on April 15, 1991. On April 17, 1991 the Court granted plaintiff's request for leave to file a response to defendant's reply memorandum, and plaintiff was given until April 19, 1991 to file a response. Plaintiff did file a responsive memorandum on April 19, 1991. On the same date, April 19, 1991, defendant filed a supplemental memorandum in which defendant brings to the Court's attention the fact that it has now made application to register as a foreign corporation doing business in the State of Ohio. Accordingly, defendant's motion to vacate is now before the Court for decision.

DISCUSSION

"Quasi in rem proceedings are begun by attachment or other seizure of the property when the court has no jurisdiction over the person of the defendant, but has jurisdiction over a thing belonging to him or over a person who is indebted to, or owes a duty to the defendant." Stevedoring Serv. of America v. Ancora Transp., N.V., 884 F.2d 1250, 1252 (9th Cir.1989). See also Belcher Company of Alabama, Inc. v. M/V Maratha Mariner, 724 F.2d 1161, 1163-64 (5th Cir.1984).

The process of foreign attachment is known of old in admiralty. It has two purposes: to secure a respondent's appearance and to assure satisfaction in case the suit is successful.... While the process may be utilized only when a respondent is not found within the jurisdiction, an attachment is not dissolved by the subsequent appearance of respondent.

Swift & Co. Packers v. Compania Columbiana Del Caribe, 339 U.S. 684, 693, 70 S.Ct. 861, 867, 94 L.Ed. 1206 (1950) (citations omitted). See also Pride Shipping Corp. v. Tafu Lumber Co., 898 F.2d 1404, 1407 (9th Cir.1990); 7A Moore's Federal Practice ¶ B.08 (2d ed.1988). "Processes in rem and of maritime attachment represent an exception to the general rule that in the absence of statutory authorization a plaintiff may not have security for his claim until it is established and reduced to judgment." Thyssen Steel Corp. v. Federal Commerce & Navigation Co., 274 F.Supp. 18, 21 (S.D.N.Y.1967). Consistent with Swift & Co. Packers, courts have repeatedly recognized that maritime attachment serves both to obtain jurisdiction over the defendant in personam through his property and to assure satisfaction of any judgment in favor of the party bringing the action. See Stevedoring Serv. of America, 884 F.2d at 1252; Trans-Asiatic Oil Ltd. v. Apex Oil Co., 743 F.2d 956, 960 (1st Cir.1984); Seawind Compania, S.A. v. Crescent Line, Inc., 320 F.2d 580, 581-82 (2d Cir.1963); Jackson v. Inland Oil & Transp. Co., 318 F.2d 802, 806 (5th Cir. 1963).² These two purposes are necessarily interrelated, "for security cannot be obtained except as an adjunct to obtaining jurisdiction." Seawind Compania, S.A., 320 F.2d at 582. See also Cordoba Shipping Co., Ltd. v. Maro Shipping Ltd., 494 F.Supp. 183, 185 (D.Conn.1980); East Asiatic Co., Ltd. v. Indomar, Ltd., 422 F.Supp. 1335, 1338 (S.D.N.Y.1976). However, courts have also held that the spirit of Rule B "is not violated when a party's primary interest in seeking the attachment is obtaining security to satisfy a judgment, rather than simply obtaining in personam jurisdiction." Staronset Shipping Ltd. v. North Star...