Goodpasture, Inc. v. M/V Pollux

602 F.2d 84, 1979 A.M.C. 2515
CourtCourt of Appeals for the Fifth Circuit
DecidedSeptember 10, 1979
DocketNo. 79-2507
StatusPublished
Cited by15 cases

This text of 602 F.2d 84 (Goodpasture, Inc. v. M/V Pollux) is published on Counsel Stack Legal Research, covering Court of Appeals for the Fifth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Goodpasture, Inc. v. M/V Pollux, 602 F.2d 84, 1979 A.M.C. 2515 (5th Cir. 1979).

Opinion

GEE, Circuit Judge:

The facts of this unfortunate case present a maritime version of the eternal triangle, one in which the difficulties arising between each of the three (or perhaps four or five) actors transcend their relationship to bedevil the others.

Plaintiff Goodpasture, Inc. is a Texas corporation that deals in wheat. Defendant M/V POLLUX, an oceangoing vessel engaged in commerce upon navigable waters of the United States, is owned by defendant Negocios del Mar, a foreign corporation. Negocios del Mar has no offices or permanent officials in the United States, no property there except the M/V POLLUX, and no employees in this jurisdiction other than the complement of the POLLUX.

Early this year Goodpasture contracted to sell a large quantity of wheat to Empac Grain Corporation, Inc. Under the terms of that sale, Empac was to set up in a major stateside bank an irrevocable letter of credit payable to Goodpasture for an amount sufficient to cover this wheat. The bank was to be instructed to pay Goodpasture upon presentation of various documents, one a bill of lading. After this original contract had been reached but before any [85]*85performance by either side, Empac requested that the contract be renegotiated to permit, rather than a letter of credit in favor of Goodpasture, an assignment by Empac to Goodpasture of a portion of the letter of credit set up for Empac by its customer Idema, a Colombian entity. Payment under the Idema-Empac letter of credit was to be made against documents, including a freight prepaid bill of lading.

Shortly thereafter, such a new contract was agreed on between Empac and Good-pasture. The quantity and price terms remained the same, but the payment terms of the new contract provided for an irrevocable assignment to Goodpasture of so much of the Idema-Empac letter of credit as would be necessary to pay for the grain. For its part, Empac agreed to issue Good-pasture freight prepaid bills of lading upon the completion of loading. These bills would show Empac as the shipper, but Goodpasture would be entitled to possession of them until Goodpasture was paid under the Idema-Empac letter of credit. Under the terms of the sale, the grain was to be stowed and trimmed by Empac, a type of contract known in trade usage as an “ex spout” sale.

Under a further trade custom and usage, title to such grain does not pass until payment is made. Both Goodpasture and Empac were aware of this custom and usage in the grain trade, and each negotiated this contract pursuant to that custom and usage, which forms a part of and is a term of the contract between the parties. Both parties, therefore, understood that title to the grain was not to pass from Goodpasture to Empac until payment was made under the Idema-Empac letter of credit.

After the original sales contract but before its renegotiation, Empac entered a time charter party with Negocios del Mar for M/V POLLUX to carry this grain from Houston to Colombia. Clause 35 of the Empac-Negocios charter party reads, “master will authorize charterers or their agents to sign bills of lading in his behalf, but bills of lading to be in accordance with mates and tally clerks receipts.” The charter party further provided that the vessel was to be delivered on or before March 30, 1979. Charter hire was payable at a daily rate beginning on the date the vessel was delivered at Houston, the first 24 days hire to be paid in advance by Empac. Empac assured Goodpasture that Empac was authorized by Negocios to sign freight prepaid bills of lading on behalf of the master. Receipt of this authority from Negocios was confirmed by Empac’s Houston agent.

The vessel arrived at Houston about a week late, when Negocios tendered the vessel to Empac and demanded prepayment of the first 40 days charter hire. Between April 6 and April 11, 1979, Negocios repeatedly demanded payment of the charter hire. On April 11, 1979, Empac assured Negocios that the money had been transferred. On the basis of this assurance, Negocios did not withdraw the ship from the charter and permitted it to be loaded. When loading was completed, Goodpasture, in accordance with Empac’s instructions, prepared a freight prepaid bill of lading showing the quantity of grain loaded and its condition in accordance with the mate’s and tally clerk’s receipts.

About 45 minutes after loading of M/V POLLUX was completed, Negocios notified Empac that Empac’s authority to issue bills of lading was revoked and that only Negocios’ agent or the master of the POLLUX could issue them. This was done in pursuance of the shipowner’s plan to withhold issuance of such bills of lading until charter hire for the proposed voyage, plus the costs of bunkers, was paid in advance. The next day, Negocios informed Goodpasture that it would not issue freight prepaid bills of lading until it received payment in full for the proposed voyage, plus bunkers, port charges, and costs for passing the Panama Canal, suggesting that Goodpasture advance these funds. Goodpasture declined on the ground that it was not obliged to finance Negocios or Empac under either law or charter party. Goodpasture then filed this suit for conversion against M/V POLLUX, Negocios and Empac to prevent the POLLUX from sailing from Houston [86]*86with Goodpasture’s grain, causing the United States Marshal to seize the POLLUX on the same day. The vessel still remains under seizure. Goodpasture claimed that it was entitled either to the execution of “freight prepaid” bills of lading, the return of its cargo, or a security bond in the amount of $3,500,000. The vessel owner refused to execute such “freight prepaid” bills of lading and contended that Goodpasture was not the proper party to receive the bills of lading. The bills of lading show that the shipper of the cargo was Empac, and the vessel owner at all times stood willing to provide the executed “freight prepaid” bills of lading to Empac if Empac would pay freight and bunkers in accordance with its charter party. Empac, Negocios and Goodpasture explored various possibilities for resolving the dispute in such a way as to effect the grain sale and avoid the expense associated with unloading the POLLUX.

On April 25, Goodpasture made the first written demand upon Negocios to return the grain to Goodpasture. After considerable delay and after extensive negotiations with the bank issuing the Idema-Empac letter of credit and with Idema, it became apparent that no payment would be made either to Goodpasture or to Negocios under that letter. Negocios then withdrew from the charter party. Thereafter, Negocios filed a claim of owner to the POLLUX, asserted certain counterclaims against Goodpasture, and filed a third-party complaint against the grain on board the POLLUX. At the same time, Negocios requested that the court order the grain sold. Goodpasture filed a claim of owner to the grain and an answer to the third-party complaint and counterclaim. Goodpasture then posted security in the amount and form required by Negocios. Goodpasture reserved its right to have the court determine necessity for and amount of security to be required for Negocios’ claims, and Negocios agreed that the court should make those determinations. On June 5,1979, the court ordered that the grain be discharged into the custody of Goodpasture.

Having found the above facts,1 the district court concluded that Negocios’ refusal to sign freight prepaid bills of lading did not constitute conversion of Goodpasture’s wheat, that Negocios was under no statutory or contractual obligation to issue bills of lading in any form to Goodpasture, and that Goodpasture had no in rem

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Kenai Ironclad v. CP Marine Services
84 F.4th 600 (Fifth Circuit, 2023)
Fluxo-Cane Overseas Ltd. v. E.D. & F. Man Sugar Inc.
599 F. Supp. 2d 639 (D. Maryland, 2009)
Prozina Shipping Co. v. Thirty-four Automobiles
179 F.R.D. 41 (D. Massachusetts, 1998)
Finora Co., Inc. v. Amitie Shipping, Ltd.
852 F. Supp. 1298 (D. South Carolina, 1994)
Goodpasture, Inc. v. M/V Pollux
688 F.2d 1003 (Fifth Circuit, 1982)
Koch Fuels, Inc. v. CARGO OF 13,000 BARRELS, ETC.
530 F. Supp. 1074 (E.D. Missouri, 1981)
T. J. Stevenson & Co. v. 81,193 Bags of Flour
629 F.2d 338 (Fifth Circuit, 1980)

Cite This Page — Counsel Stack

Bluebook (online)
602 F.2d 84, 1979 A.M.C. 2515, Counsel Stack Legal Research, https://law.counselstack.com/opinion/goodpasture-inc-v-mv-pollux-ca5-1979.