Zim Israel Navigation Co. v. T. Chatani & Co.

• Decision Date: 17 January 1966
• Parties: ZIM ISRAEL NAVIGATION CO., Ltd., Cross-Libellant, v. T. CHATANI & CO., Ltd., Reliance Merchandise Co., Inc., and Metropolitan Industries, Inc., Cross-Respondents.
• Court: U.S. District Court — Southern District of New York

249 F. Supp. 535

ZIM ISRAEL NAVIGATION CO., Ltd., Cross-Libellant, v. T. CHATANI & CO., Ltd., Reliance Merchandise Co., Inc., and Metropolitan Industries, Inc., Cross-Respondents.

United States District Court S. D. New York.

January 17, 1966.

Hill, Rivkins, Louis & Warburton, New York City, for cross-respondents; Thomas P. Pender and Thomas D. Toy, New York City, of counsel.

Hill, Betts, Yamaoka, Freehill & Longcope, New York City, for cross-libellant; Donald B. Allen, New York City, of counsel.

HERLANDS, District Judge:

The cross-respondents have moved for a summary judgment dismissing the cross-libel, pursuant to Supreme Court Admiralty Rule 58, the counterpart of Fed.R.Civ.P. 56. Reliance Merchandise Co., Inc. (hereinafter "Reliance") and Metropolitan Industries, Inc. (hereinafter "Metropolitan") seek a complete dismissal of the cross-libel as to them. T. Chatani & Co., Ltd. (hereinafter "Chatani") seeks to dismiss the cross-libel "in part" as to it, so as to reduce the damages claimed against it in the cross-libel to $75.

The motion is supported by the affidavit (and the exhibits annexed thereto) of Thomas P. Pender, Esq., one of the cross-respondents' proctors. Since the motion is grounded upon the Pender affidavit and its exhibits, an analysis of its asseverations is necessary. That affidavit asserts:

(1) the original libel (64 Adm. 195) was filed on February 28, 1964 by Chatani, Reliance and Metropolitan against Zim Israel Navigation Co., Ltd. (hereinafter "Zim") and its vessel, S.S. TEVERYA, "for non-delivery and damage to a shipment of general merchandise" carried by Zim's vessel from Kobe, Japan, to New York under a bill of lading (No. K-NY-63) dated November 24, 1961;

(2) Zim's cross-libel was filed on July 8, 1964 (Exh. "A" annexed to the Pender affidavit);

(3) the cross-libel alleges that Zim is an Israel corporation; that Chatani, a foreign corporation, has a place of business in Japan; that Reliance, a corporation of an unspecified state of this country, has a place of business in Chicago; that Metropolitan, a corporation of an unspecified state of this county, has a place of business in Chicago; that, since January, 1961, Zim has operated a liner service between Japan and the United States under the name of Pacific Star Line, under a published system of freight charges, depending upon the nature of the goods; that "From time to time during the operation of this service, and specifically on the voyage referred to in the companion libel to this pleading, cross-respondents knowingly and fraudulently misrepresented the contents of packages and containers shipped on said Line in order to obtain lower freight charges" (paragraph "Sixth"); and that "As a result of the aforementioned misrepresentation" Zim was deprived of properly earned revenue in the approximate amount of $10,000 (paragraph "Seventh");

(4) "the cross-libel alleged matters and causes of action which did not arise out of the subject-matter of the original libel";

(5) the verified answer of the cross-respondents, "upon information and belief," denies each and every allegation contained in paragraphs "Sixth" and "Seventh" of the cross-libel; pleads (in behalf of the three cross-respondents) as a "separate and partial defense" that the cross-libel sets forth "a cause or causes of action dependent upon transactions not included in the original libel filed herein, which are not proper subjects of a cross-libel" (paragraph "Tenth"); and pleads (in behalf of the two cross-respondents, Reliance and Metropolitan) as a "separate and complete defense" that Reliance and Metropolitan "are not proper parties to the Cross-Libel" (paragraph "Twelfth");

(6) the verification of the cross-respondents' answer to the cross-libel is by Mr. Pender, who alleges that the sources of his information and the grounds for his belief are "documents and records in his files";

(7) Zim's proctors, under date of June 17, 1964, sent a letter (Exh. "C") to the proctors of the cross-respondents stating, in part, that they intended to "counterclaim for extensive damages due to deliberate misrepresentation of shipments"; that "the bill of lading describes the cargo as `baskets' and `toys', whereas it actually consisted of batteries and shaving mirrors. The loss of revenue to the carrier from this deliberate misdescription alone is $75, and we suspect that an investigation of similar shipments involving the same parties would uncover a great deal more of the same";

(8) the cause of action set forth in the cross-libel is "for additional freight due and owing by reason of the alleged fraudulent misrepresentation to it by the shipper of the character and content of many differed and undefined shipments, including the one which is the subject of the libel herein";

(9) Reliance and Metropolitan "were merely the notify parties" and Reliance was "the ultimate receiver" with respect to "the subject shipment";

(10) Reliance and Metropolitan "were in no position to make fraudulent misrepresentation to Zim, and were not parties to the transactions between Zim and Chatani";

(11) Zim's cross-libel against Chatani is limited, by operation of law, "to freight allegedly due and owing on the shipment of November 24, 1961, only" the maximum of which, according to Zim, is $75.

The motion is opposed by the affidavit of Donald B. Allen, Esq., one of Zim's proctors, which asserts:

(1) the original libel is on behalf of "the shipper, consignee, and owner of the cargo, which was allegedly damaged in 1961";

(2) "When claim was presented, it was found that the goods which consisted of batteries and shaving mirrors had been deliberately misdescribed as `baskets and toys' to obtain a lower freight rate; * * * and the claim was declined";

(3) "* * * a cross-libel was filed to recover for additional unpaid freight on the basis of the carrier's Zim's experience and belief that this was not an isolated instance but a continuing practice. Specific details of underpayment have been promised as soon as libellants identify their shipments and produce the covering invoices * * *";

(4) concerning the statement in the Pender affidavit that Reliance and Metropolitan "were in no position to make fraudulent misrepresentation to Zim, and were not parties to the transactions between Zim and Chatani": — "This is a very strange statement regarding two parties originally named and still maintained as libellants. Furthermore, there is not one single bit of evidence, not even an affidavit, from the parties themselves to support this conclusion";

(5) concerning the impermissibility in admiralty of pleading a cross-libel filed upon a counterclaim not arising out of the same transaction, occurrence, contract or cause of action that is the subject matter of the original libel: — the cross-libel and the libel "both deal with ocean shipments concerning the same parties" (p. 3).

Neither the Pender moving affidavit nor the Allen opposing affidavit meets the prerequisites of Supreme Court Admiralty Rule 58(e). Neither affidavit is made "on personal knowledge" nor sets forth "such facts as would be admissible in evidence" nor shows "affirmatively that the affiant is competent to testify to the matters stated therein."¹

This insufficiency is compounded by the fact that no one having personal knowledge has clearly stated the facts defining the exact relationship between the libellants (cross-respondents) inter se or between each of them and Zim.

Furthermore, the cross-libel (paragraph "Sixth") speaks of Zim's "service" between Japan and the United States under the name of Pacific Star Line and then alleges that "From time to time during the operation of this service" the "cross-respondents knowingly and fraudulently misrepresented the contents of packages and containers shipped on said Line in order to obtain lower freight charges." This charge is levelled against all three cross-respondents (libellants) and...