Badhwar v. Colorado Fuel & Iron Corp.

245 F.2d 903
CourtCourt of Appeals for the Second Circuit
DecidedMay 29, 1957
DocketNo. 328, Docket 24016
StatusPublished
Cited by6 cases

This text of 245 F.2d 903 (Badhwar v. Colorado Fuel & Iron Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Badhwar v. Colorado Fuel & Iron Corp., 245 F.2d 903 (2d Cir. 1957).

Opinions

CLARK, Chief Judge.

This appeal presents Interesting issues concerning the duty of an American seller under a C.I.F. contract to select a suitable ship to carry goods to a foreign buyer on the eve of an impending strike. The facts are fully stated in the reasoned opinion of the district court, D.C.S.D.N.Y., 138 F.Supp. 595; and so we shall limit ourselves to a summary statement. In early August 1948 The Colorado Fuel and Iron Corporation agreed to sell the plaintiffs 2,000 tons of caustic soda C.I.F. Bombay. Part of this merchandise was to be shipped from a Gulf port by September 22, 1948, the last day on which one of the buyer’s import licenses was valid. The 1,490 tons in controversy were loaded aboard the S.S. Hawaiian in New Orleans by September 2, and the documents of title were delivered to the buyer’s New York bank on September 7. But on September 3 the ship’s crew went on strike, and the vessel did not leave New Orleans until some three months later. The Indian buyers brought this action, based on the diverse citizenship of the parties, against the shipper, the carrier, and the vessel owner to recover damages for loss of market caused by the late delivery; and the chief question on appeal is whether Colorado breached its contract. The district court found no breach. We agree with its conclusion and accept its findings of fact.

The United States District Court for the Northern District of California on June 14, 1948, temporarily restrained, and later enjoined, a threatened maritime strike of the East, Gulf, and West Coasts, under the national emergency provisions of the Labor Management Relations Act of 1947, 29 U.S.C. § 141 et seq. The injunction was to expire at midnight September 2 at the end of an 80-day cooling-off period. During the summer, settlement negotiations were conducted; and the maritime industry was sufficiently optimistic as to the prospects of settlement that New York and New Orleans freight forwarders contin[905]*905ned to book freight for September sailings. Colorado’s New Orleans freight forwarder entered into an affreightment contract with Isbrandtsen Company, Inc., July 29, 1948, whereby Isbrandtsen was to transport 1,000 tons of caustic soda from New Orleans to Bombay on the 5.5. Jane G. Swisshelm or other A-l vessel, the scheduled sailing date being August 28-30, 1948. Shipping companies were reluctant to handle caustic soda, and Isbrandtsen was the only carrier found by the freight forwarder willing or able to undertake shipment.

Under the contract of affreightment shipside delivery was required between August 19 and 25. On August 17, Isbrandtsen exercised its right to substitute the S.S. Hawaiian, an A-l vessel, for the S.S. Jane G. Swisshelm, with latest shipside delivery September 2, 1948. Upon receipt of this advice Colorado had the tonnage covered by the contract increased from 1,000 to 1,500 tons. Becker, secretary-treasurer of the New Orleans freight forwarder, testified that on or about August 18 he learned that the Gulf and East Coast disputes had been settled; and he had formed the opinion that there would be no strike at New Orleans. He did not know that the substituted vessel had a West Coast crew, since he was not advised by the carrier’s agent and made no inquiry of his own; it was not the custom or practice of the port to do so. Becker testified further that he dealt with Isbrandtsen, which he considered reliable, and not with the persons from whom Isbrandtsen chartered ships. Consequently he did not know whether the 5.5. Hawaiian was under time or bare-boat charter or the identity of its owner.

Loading began at 1:00 p. m., August 31, within an hour after the ship docked at Westwego Wharf, and continued overtime. On September 2, at 3:00 p. m., while the injunction was still in effect, the stewards left the ship to attend a union meeting, but did not strike. Three hours later the last of the caustic soda was on board and the ship was loading other cargo. At midnight the injunction expired. At 8:15 a. m. the stewards-went on strike, the first the ship’s master knew that any of his crew would walk off. At 10:00 that morning the engine-room crew joined the strike, cutting off the steam to the winches and ending further loading operations. While the strike continued it was impossible to do anything with respect to loading or unloading the cargo or sailing from port.

The seller’s freight forwarders, not knowing of the work stoppage, paid the freight at 9:30 a. m., September 3, receiving two bills of lading which they mailed to Colorado that day, a Friday. On the Tuesday after Labor Day, September 7, the bills were presented to the bank in New York for payment. Becker learned of the strike in the early afternoon of September 3, but did not inform Colorado of it until September 7 because “the situation was very unclear on September 3rd * * *. It was a temporary situation and we were trying to see how it would progress, and then * * * there was a long weekend occasioned by the Labor Day holiday.” 138 F.Supp. 595, 604. Colorado’s general traffic manager was surprised by Becker’s wire late September 7 or September 8, and his assistant wrote for an explanation. Colorado learned the full story on September 13 and informed the buyer of the facts one week later.

There is no dispute that delivery of the bills of lading on September 7 was timely. But the seller in such circumstances is also obligated to the buyer to put the goods aboard a vessel “in good faith * * * having reason to suppose she would sail within a reasonable time after shipment.” Ledon v. Havemeyer, 121 N.Y. 179, 186, 24 N.E. 297, 299, 8 L.R.A. 245. “Shipment” occurred on September 2 when the caustic soda was loaded on board; what constitutes a reasonable delay before sailing depends on the particular contract of sale. Tobias v. Lissberger, 105 N.Y. 404, 12 N.E. 13. Since documents of title could be presented as late as September 22, shipment on September 22 would not be [906]*906improper; and it is to be expected that a vessel will take additional time to load other cargo if the shipper is not supplying a whole cargo. Ledon v. Havemeyer, supra, 121 N.Y. 179, 24 N.E. 297. Thus the buyer would certainly have had no complaint had the S.S. Hawaiian sailed September 23. From the exchange of cables and letters which constituted the contract of sale it appeared that part of the goods could be put on board as late as October 9, suggesting that the buyer fixed the September 22 dead line because that was the expiration date of its import license, and not because it feared an immediate market drop. From all this Colorado could properly assume that the buyer would be satisfied with a September 23 sailing', and would accept an October 11 sailing if necessary.

Even if we ascribe to the seller knowledge that the ship had a West Coast crew, the seller could nevertheless reasonably entertain the belief in good faith at the time of loading that the vessel would depart by the second week in October. The duty defined in Ledon v. Havemeyer, supra, 121 N.Y. 179, 24 N.E. 297, was accordingly satisfied. Moreover, Colorado, as we see it, did everything to speed the goods on their way that the buyer could have done had the latter been on the spot and representing its own interests.

The contract with Isbrandtsen made on July 29 was as good a contract as could be had at the time. There was no reason then to be suspicious of a possible substitution of another A-l vessel. When on August 17 Colorado confirmed the substitution of the S.S.

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Badhwar v. Colorado Fuel and Iron Corporation
245 F.2d 903 (Second Circuit, 1957)

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