Zarati SS Co. v. Park Bridge Corporation, 135

• Decision Date: 20 March 1946
• Docket Number: No. 135,184.,135
• Citation: 154 F.2d 377
• Parties: ZARATI S. S. CO. v. PARK BRIDGE CORPORATION et al.
• Court: U.S. Court of Appeals — Second Circuit

154 F.2d 377 (1946)

ZARATI S. S. CO. v. PARK BRIDGE CORPORATION et al.

Nos. 135, 184.

Circuit Court of Appeals, Second Circuit.

March 20, 1946.

Hill, Rivkins & Middleton, of New York City (George B. Warburton, of New York City, of counsel), for appellant.

Benjamin Siegel of New York City (Benjamin Siegel and Benjamin Brownstein, both of New York City, on the brief), for Howard Smith & Co., Inc., defendant-appellee.

Abraham L. Pomerantz, of New York City (William E. Haudek, of New York City, of counsel), for defendant-appellee Park Bridge Corporation.

Before SWAN, CHASE, and CLARK, Circuit Judges.

CHASE, Circuit Judge.

On the first of November 1944, the defendant Petroleum Equities Corporation, a New York corporation, chartered the S.S. Sagona from her owner the Zarati Steamship Company, a corporation of the Republic of Panama, to carry a cargo of stem bananas from Baracoa, Oriente, Cuba to Port Everglades, Florida. The charter-party provided that freight should be one cent per pound with a minimum of six thousand dollars, in addition to which the plaintiff was to receive one-half of any net profits derived from the importation and sale of the cargo of bananas. Demurrage charges of six hundred dollars per day and pro rata for any fraction of a day were provided for any delays in loading or discharge occasioned by the charterers.

Petroleum was neither experienced in the produce business nor able to finance the venture alone; so, on November 14, 1944, it entered into a contract with the defendant Howard Smith & Co., Inc., a New York corporation engaged in the business of produce merchants, by the terms of which Smith was to receive the bananas, transport them to an appropriate market, and sell them. Smith was to receive a 7% selling commission and 25% of any net profits, losses were to be shared equally by Petroleum and Smith.

Smith, however, did not furnish the funds to finance the undertaking initially. It had on November 9, 1944, entered into a loan agreement with Park Bridge Corporation, a New York finance corporation, which agreement had been incorporated by reference into the aforementioned contract of November 14. This agreement provided that Park Bridge would open a letter of credit with the Banco Agricola Industrial, Banes, Cuba, for approximately $13,500; that before it did Petroleum would execute and deliver to Park Bridge its promissory note, with endorsements, for $3,905 and in addition would assign as security a royalty interest which it held in certain properties; and Smith agreed unconditionally to pay Park Bridge $10,000, or proportionately less if the letter of credit were not used to the full, a certain number of days after arrival of the bananas. Also Park Bridge was to receive the documents of title which were then to be turned over to Smith under a trust receipt.

The Sagona was loaded and arrived at Port Everglades on November 22, 1944 with the bananas which were later delivered to Smith, the plaintiffs then being entitled to freight, both loading and discharge demurrage, and expenses totaling $7,212.43. Smith as named consignee and as trustee presented the bills of lading. These bills were drawn without reference to the charter-party and provided for delivery to Smith "or assigns he or they paying freight." The plaintiff, without being paid, but, as is shown by affidavit but not alleged in the complaint, on the express promise of Smith's president that Smith would pay the charges, delivered the bananas to Smith which shipped them to New York and there sold them. The plaintiff then secured a letter from Petroleum to Smith authorizing and consenting to payment of plaintiff's charges from the net proceeds in Smith's hands. The sale resulted in a loss and the plaintiff has not been paid.

The plaintiff, relying on diversity as the ground of federal jurisdiction, sued all three of the named defendants alleging causes of action in the alternative against each of them upon different theories. The charterer Petroleum is not a party to this appeal; and no decision has as yet been made below in the action against it. The District Court, acting through one judge, denied plaintiff's motion for summary judgment against Smith and granted Smith's cross-motion for summary judgment and dismissal of the complaint and the plaintiff appealed. Subsequently, the Court, acting through another judge, granted Park Bridge's motion for summary judgment, dismissed the complaint as to it, and denied plaintiff's cross-motion for summary judgment. The plaintiff then appealed from that order. These two appeals were heard together.

Inasmuch as the charterer's liability remains unresolved, the first question is whether the orders here appealed from are final orders so that there is appellate jurisdiction. If the parties-defendant below had been in the position of indemnitor and indemnitee, Oneida Nav. Corp. v. W. & S. Job & Co., 252 U.S. 521, 40 S.Ct. 357, 64 L.Ed. 697, or of principal and agent, Hohorst v. Hamburg-American Packet Co., 148 U.S. 262, 13 S.Ct. 590, 37 L.Ed. 443, or if the alleged liability of the defendants had arisen from the same set of facts constituting a single tortious act, Kuhn v. Canteen Food Service, Inc., 7 Cir., 150 F.2d 55; Hunteman v. New Orleans Public Service, Inc., 5 Cir., 119 F.2d 465, certiorari denied 314 U.S. 647, 62 S.Ct. 89, 86 L.Ed. 519, in all of which the liability in the first place of each defendant would have been dependent upon or interrelated with the liability of each other defendant, then the order entered as to one defendant before disposition of the cause of action as to all defendants would not have been an order disposing of the entire cause and thus would not have been final and appealable. But, as will be seen from the discussion below, the causes of action against each defendant herein are predicated upon separate facts and separate theories, even though they all grow out of a single business venture. The liability of the charterer depends upon whether it has breached the provisions of the charter-party, whereas the liability of the present appellees, if there is any, depends upon the legal effect of their own later acts and undertakings. The plaintiff could have sued each of the defendants in a separate action, and if it proved its cause, would have been entitled to a judgment for the full amount against each. The fact that the plaintiff would be entitled to satisfaction of only one judgment or to only the amount for which it sues each does not make the causes "joint" or "derivative." The bases of each action are different, and the liabilities several and primary. The orders here do not affect determination of the charterer's liability. An appeal will lie from each of these orders. See Curtis v. Connly, 1 Cir., 264 F. 650, affirmed 257 U.S. 260, 42 S.Ct. 100, 66 L.Ed. 222; Reeves v. Beardall, Ex'r, 316 U.S. 283, 285, 286, 62 S.Ct. 1085, 86 L.Ed. 1478; Williams v. Morgan, 111 U.S. 684, 699, 4 S.Ct. 638, 28 L.Ed. 559.

As against defendant Smith, the plaintiff now relies on three theories. The first is really a mixture of three other theories: (a) that the contracts among the three defendants are so closely interrelated as to make it proper for the plaintiff who has expressly contracted with only one of the three to sue any one of them as principal; (b) that the contracts between Petroleum and Smith concerning allocation and payment of expenses, and the contracts between Smith and Park Bridge under the trust receipt, established a third-party beneficiary contractual obligation from Smith to plaintiff; and (c) that by the trust receipts agreement, Smith constituted itself an express trustee of the proceeds of the sale in favor, among others, of the plaintiff.

The first of these is a novel theory the bases of which are not quite made clear; and we are cited to no authority advancing or explaining it. In any event, there has been no sufficient showing of the interrelation of all the contracts to enable the plaintiff to recover from Smith as a party to the charter on that ground even if it were otherwise tenable. Nor can Smith be held as an undisclosed principal, because, at the time of making the charter-party, Petroleum and Smith had not entered into their contract of co-adventure, see 1 Restatement, Agency (1933) § 186, and comment b; nor can that later agreement be considered as a ratification or affirmance inasmuch as there is no allegation or showing that Petroleum purported to act as an agent or as one party in a joint adventure in making the charter-party. See Id. at §§ 82, comment b, 93(1); 2 Ibid. § 319. Nor can the latter two parts of the plaintiff's first ground for reversal be supported by the phrases abstracted from the various agreements among the defendants. All of these statements referred either to the allocation of the initial burden of the expenses between Petroleum and Smith or to the protection of Park Bridge's security interest in the documents of title and the bananas represented thereby. The contracts do not in terms, and were not intended, to make plaintiff a contractual or trust beneficiary.

The second theory is one not expressly pleaded, but some of the facts relied on appear in the complaint, and some were presented by affidavit. It is that the plaintiff was induced to part with possession of the bananas without payment of the freight by an express promise of Mr. Solomon, Smith's president, that, if the plaintiff would do so, Smith would pay the freight and demurrage charges. If this contention is proved, it is plaintiff's strongest case for recovery from Smith, either on the resulting unilateral contract, 1 Restatement, Contracts (1932) § 12, or on the theory of promissory estoppel, 1 Williston, Contracts (Rev.Ed.1936) § 139; 1 Restatement, Contracts (1932) § 90, or on a comparable tort doctrine of reliance, cf. 4 Restatement, Torts (1939) §§ 872, 894. The trial judge concluded that there was no occasion for the application of...