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L. N. JACKSON & CO. v. LORENTZEN

February 9, 1949

L. N. JACKSON & CO., Inc.
v.
LORENTZEN et al.



The opinion of the court was delivered by: GODDARD

This suit for damages for breach of contract for the carriage of goods was tried to the court without a jury.

The defendant, The Royal Norwegian Government, owned, operated, controlled and managed through its agency, the Norwegian Shipping and Trade Mission, of which Oivind Lorentzen was director, the steamship Tropic Star of Norwegian registry. It in turn engaged the Seas Shipping Company, Inc., as berth agent to book cargo for the Tropic Star for carriage from Beira, East Africa to the United States.

 On October 4, 1941 the defendant voluntarily filed an undertaking under the Ship Warrants Act, 50 U.S.C.A.Appendix, ยง 1281 et seq., for all its ships which would or might come to United States ports. The shipowner under the Act obligates itself or himself to comply with rules and regulations of the United States Maritime Commission including the trades in which such vessel shall be employed, the voyages it shall undertake, the class of cargo to be carried, and such incidental and supplementary matters as appear to the Commission to be necessary or expedient for the purposes of the warrant. In return the shipowner obtains certain priorities and facilities for loading and discharging cargo, fuel, repairs, etc.

 On November 7, 1941 the plaintiff and the defendant, through its agent, Seas Shipping Company, Inc., entered into an agreement in letter form, *fn1" for the carriage from Beira to New York of 1,000 tons of copra on board the Tropic Star. At the time this letter was written, the Tropic Star was undergoing repairs at Durban and due to war time conditions the repairs took longer than anticipated and upon being notified of the delays, the plaintiff continued to extend the time for loading at Beira. However, on receipt by the defendant of a telegram *fn2" of December 22, 1941, and confirmed on January 2, 1942, *fn3" the defendant notified plaintiff that pursuant to the orders of the United States Maritime Commission, plaintiff's shipment of copra is cancelled. *fn4"

 The defendant urges two principal defenses:

 1. Estoppel by res adjudicata.

 2. Frustration by a sovereign power.

 The plaintiff originally sued the Seas Shipping Company, Inc. as principal in the New York State Supreme Court, and after trial a judgment was rendered in favor of the Seas Shipping Company, Inc. with an opinion by Mr. Justice Levey, Jackson & Co. v. Seas Shipping Co., 185 Misc. 94, 56 N.Y.S.2d 501. The judgment was affirmed by the Appellate Division, 270 App.Div. 830, 61 N.Y.S.2d 371, and by the Court of Appeals, 296 N.Y. 529, 68 N.E.2d 605, without written opinion in either court.

 The opinion in the State Supreme Court indicates that four points were considered by the trial court, namely --

 1. That the Seas Shipping Company, Inc., was not in default prior to cancellation.

 2. That the Seas Shipping Company, Inc. was justified in complying with the order of the United States Maritime Commission.

 3. That 'This direct intervention by a Government mandate * * * embodied every element significant and essential for a complete frustration so as to excuse * * * performance on the part of the defendant'. (Seas Shipping Company, Inc.)

 4. That the defendant Seas Shipping Company, Inc., acted as agent for a disclosed principal and hence was not liable for breach of contract.

 Subsequent to this litigation in the State Court the Circuit Court of Appeals for this Circuit in Baker Castor Oil Co. v. Insurance Company of North America, 2 Cir., 157 F.2d 3, affirmed a decision of the District Court holding in substance that the control exercised under the Ship Warrants Act by the War Shipping Administration over vessels of foreign owners was not the exercise of the sovereign power of the United States but was the exercise of rights voluntarily conferred upon the War Shipping Administration by the owners in return for certain privileges. Upon the basis of this decision, plaintiff moved for a re-argument in the New York Court of Appeals and in its brief in opposition the Seas Shipping Company, Inc. took the position that the Baker Oil Company case was factually different, but primarily relied upon the contention that the Baker case did not affect the decision in the State Court since the trial court found that the defendant in that court was an agent of a disclosed principal. The motion for re-argument was denied. The present defendant, who was not a party to the suit in the State Court, now asserts the defense of estoppel by res adjudicata, asserting that all the issues now raised were tried out in the State court in the suit against the agent of the present defendant, Seas Shipping Company, Inc., and since that court found for the Seas Shipping ...


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