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BADHWAR v. COLORADO FUEL & IRON CORP.

September 12, 1955

R. S. Dass BADHWAR and R. B. Lachmandass Mohanlal & Sons, Ltd., composing the co-partnership doing business under the firm name and style of Mulkraj Brothers and Badhwar, Plaintiffs,
v.
The COLORADO FUEL AND IRON CORPORATION, Isbrandtsen Company, Inc., and American-Hawaiian Steamship Company, Defendants



The opinion of the court was delivered by: RYAN

Plaintiffs seek in this action money damages in the amount of $ 203,639.09 which they claim because of defendants' improper shipment and transportation of a purchase of caustic soda and the improper issuance and negotiation of two bills of lading relating thereto.

Plaintiffs are citizens and residents of Lucknow, India; defendant Colorado Fuel and Iron Corporation is a corporation organized under the laws of the State of Colorado; defendant Isbrandtsen Company, Inc. is a corporation organized under the laws of the State of New York; and defendant American-Hawaiian Steamship Company is a corporation organized under the laws of the State of New Jersey. There is complete diversity of citizenship between all plaintiffs and all defendants and the amount in controversy exceeds the sum of $ 3,000, exclusive of interest and costs. *fn1" None of the parties questions the jurisdiction of this Court. *fn2"

Plaintiffs alleged in their complaint five causes of action: the first against Colorado for breach of contract; the second against all defendants for negligence in the performance of their various contractual obligations; the third against all defendants for fraud; the fourth against Isbrandtsen and American-Hawaiian for conversion; and the fifth against all defendants for the loss of 60,203.3 pounds of caustic soda which arrived in Bombay in 526 allegedly damaged drums. The first four alleged causes of action all arose out of the same transaction or occurrence and can conveniently be considered together. We will treat these allegations and the evidence submitted in support of them as one claim determining whether plaintiffs can recover under any theory. *fn3" Plaintiffs' counsel has in addition presented his case in this manner. *fn4"

 The contract *fn5" between the plaintiffs and Colorado came about in the following manner: At the request of Colorado the New York Branch of the National City Bank of New York cabled its Bombay Branch on August 2, 1948 that Colorado had an export license for 4,300 tons of caustic soda solid, 76% alkalinity, N.Y. & L. test, for immediate delivery at 9 cents per pound FAS Gulf Ports or 10.102 cents per pound CIF Bombay. The New York Branch asked the Bombay Branch to cable if it knew of a buyer who had an import license and who would be able to open a credit at once. *fn6" On the day following the Bombay Branch advised the New York Branch of the National City Bank that their contacts showed no interest in the Colorado offer, and Colorado was informed of this reply. *fn7" At the request of Colorado, on August 4, 1948, the New York Branch cabled the Bombay Branch to continue their endeavors to arouse interest for all or part of the 4,300 tons, *fn8" and on August 5, 1948 the Bombay Branch cabled the New York Branch as follows:

 'Your Six Our Eight Mulkraj Interested Buy Up To Two Thousand Long Tons Caustic From Colorado Provided Price Cent 9.50 Per Pound CIF Bombay And Quality Equal To Ninetyeight Percent Noah Stop Working.' *fn9"

 The plaintiffs admit the facts stated in this cablegram to be true; Colorado admits that the contents of the cablegram were communicated to it. On that same day (August 5th) the New York Branch cabled the Bombay Branch that Colorado's best price was 10 cents per pound CIF Bombay. *fn10" Plaintiffs admit that the contents of this cable were communicated to them. On August 6th the Bombay Branch cabled the New York Branch that plaintiffs insisted upon the 9 1/2 cent price, CIF Bombay, and Colorado admits that it was informed of the contents of this cable. *fn11" On August 6th, a Friday, at the request of Colorado the New York Branch cabled the Bombay Branch the following:

 'Urgent Your Eleven At Request Colorado Fuel & Iron Corporation And Without Responsibility To Bank Advise Mulkraj Quote Colorado Fuel & Iron Agree Sale Two Thousand Long Tons Caustic Soda Solid 76% Alkalinity NY&L Test Packed Steel Drums Price Nine And One Half Cents Per Pound CIF Bombay Payable U.S. Dollar Irrevocable Letter Of Credit Stop In Order To Expedite Validation Of Export License Number Please Have Buyer Cable Confirmation Stating Their Import License Number And Full Name Address Direct To W.A. Bartle Care Of Colorado Fuel & Iron Corporation 1616 Eye Street Washington DC Stop Have Shipping Space Minimum Five Hundred Tons From New Orleans On Or About August 22 And Balance Will Be Shipped From A Gulf Port Between September 15 and 20 Stop For Your Information It Is Impossible For Anyone Other Than Colorado Fuel & Iron Corporation To Offer Caustic Soda Of U.S. Origin To India At Nine And One Half Cents CIF Bombay As Colorado At Present Have Exclusive Authorized Export License Please Reply Earliest Unquote.' *fn12"

 This cablegram was received at the Bombay Branch on August 9th, a Monday, and its contents were communicated to the plaintiffs. On the same day R. S. Dass Badhwar (care Laxmansons) cabled directly to Colorado the following:

 'Reference Our Negotiations 2000 Tons Caustic Soda Solid Through National City Bank New York Bombay And Your Acceptance Our Offer At 9.5 Cents Per Lb CIF Indian Port Our Import License Number 000417/48 Valid Up To September 22 Stop Establishing Letter Credit Your Favor Through National City Bank On New York Stop Arrange Shipment Entire Quantity In One Or More Lots To Calcutta Before Above Noted Date Stop Cable Export License Number.' *fn13"

 This cablegram was confirmed by R. S. Dass Badhwar by letter dated August 9th. This letter contains the following language:

 '* * * *

 'We also understand from our mutual intermediary that you will ship 500 tons by August 22, 1948 from New Orleans-La and the balance from some port in one or more lots as is convenient to you, but you should complete the entire quantity before September 22, 1948 in any case.

 'We have had a very sad experience of dealing with another U.S. firm of New York, who offered us June shipment of 800 tons Caustic Soda and believing on their cable we immediately established a letter of credit in their favor but till now, we have no news of the shipment of the goods. We are therefore rather cautious and if it had not been through the National City Bank of New York, Bombay we would have hesitated to deal with a firm whom we do not know. We trust you won't misunderstand our position. We have therefore to request you to fulfill the contract within the stipulated time and in case you fail in your part, you shall be liable to compensate us for the loss of commission and interest.

 * * * *' *fn14"

 A subsequent passage of cables fixed Bombay and not Calcutta as the port of discharge.

 On August 12, 1948 Colorado cabled the plaintiffs:

 'Hope To Load About 1000 Tons Steamer Jane G. Swisshelm Leaving New Orleans About August 23 Stop Will Cable Exact Amount When Letter Of Credit Definitely Confirmed With Proper Shipping Instructions Cannot Proceed With Shipment Until Documents Properly Prepared In Accordance Stop Now Have Validated Export License For 2000 Tons For Mulkraj Number 1385760.' *fn15"

 I find that the agreement between the plaintiffs and Colorado although initially requiring shipment of all of the caustic soda on or before September 22, 1948 *fn16" was subsequently changed by the parties when the plaintiffs caused two letters of credit to be opened in favor of Colorado and when Colorado accepted payment under the letters of credit. The first letter of credit, which called for payment on one part of this shipment of caustic soda, provided that the bills of lading be dated not later than October 10, 1948; *fn17" the second letter of credit, calling for payment of the remainder of this shipment of caustic soda, provided that the bills of lading be dated not later than September 22, 1948. *fn18" Thus, plaintiffs by causing one letter of credit to be valid if bills of lading thereunder were dated before October 10, 1948 and Colorado by accepting payment under that letter of credit agreed that shipment of one part of the caustic soda could be made as late as October 10, 1948 (shipment of the other part to be before September 22, 1948).

 In sum then, the contract between the plaintiffs and Colorado was for the sale of 2,000 long tons of caustic soda of a specified type, CIF Bombay, India, at a price of 9 1/2 cents per pound, one part to be shipped not later than September 22, 1948, the other part not later than October 10, 1948.

 The claim in this suit is only as to some 1,490 tons, the remainder or balance of the contract having been cancelled by the mutual consent of the plaintiffs and defendant Colorado. *fn19"

 The vessel on which the caustic soda was loaded (the S.S. Hawaiian) arrived at Bombay on February 28, 1949, some six months after it had been loaded. To understand plaintiffs' contentions with respect to this delay, it is necessary that we examine somewhat the conditions affecting the maritime industry in 1948, a year of considerable and widespread labor unrest in that industry.

 On June 14, 1948 a threatened maritime strike on the East, Gulf and West Coasts was temporarily restrained, and subsequently enjoined for a full eighty-day period expiring September 2, 1948. Orders were made by this Court and the United States District Court for the Northern District of California pursuant to the 'national emergency' provisions of the Labor Management Relations Act of 1947. *fn20" Separate actions were filed on behalf of the United States against various maritime unions and ship operators, including Isbrandtsen and American-Hawaiian. *fn21" During this period collective bargaining negotiations looking to a settlement of the dispute were in progress. As a result of these negotiations those connected with the maritime industry *fn22" were optimistic that the disputes would be satisfactorily settled before the expiration of the eighty-day injunction period. *fn23" This same optimism was shared by New York and New Orleans freight forwarders who continued to do business as usual and to book freight for July, August and September sailings. *fn24" It was in such a setting that Colorado, acting through its New Orleans freight forwarder, Farrell Shipping Co., entered into the affreightment contract of July 29, 1948, *fn25" with the defendant Isbrandtsen for the transportation of 1,000 tons of caustic soda from New Orleans to Bombay, India, on the S. S. Jane G. Swisshelm or other A-1 vessel, the scheduled sailing date of which was August 28-30, 1948, with shipside delivery required between August 19-25, 1948. *fn26" Conlon, a New York freight forwarder, testified that to arrange for a shipment of cargo of this size required a considerable period of intervening time. *fn27" Both he and Becker testified that it was very ...


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