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GLIDDEN CO. v. HELLENIC LINES

June 19, 1959

GLIDDEN COMPANY, Libelant,
v.
HELLENIC LINES, LIMITED, Respondent



The opinion of the court was delivered by: KNOX

The Glidden Company, libelant herein, is a large industrial enterprise, incorporated under the laws of Ohio. Hellenic Lines, Limited, respondent, is a Greek maritime corporation, with headquarters in Piraeus. It has offices in New York City, and various other ports; and is the owner and operator of 22 merchant ships.

Libelant sets forth three alleged causes of action, arising out of two contracts.

On September 7, 1956, libelant and respondent entered into a charter party, whereby respondent, as vessel owner, agreed to tender a vessel to libelant, at Koilthottam, on the west coast of India, for the purpose of loading and carrying 9,000 to 10,000 tons of ilmenite ore, from that port 'via Suez Canal, or Cape of Good Hope, or Panama Canal, at Owner's option, declarable not later than on signing of Bills of Lading to one safe U.S. Atlantic Port, North of Cape Hatteras, Port at Charterer's option, to be declared not later than on vessel's passing Gibraltar * * *.' Glidden agreed to pay freight at the rate of $ 16 per long ton.

 On November 1, 1956, an addendum was added to the charter party. It provided that the ship, Hellenic Sailor, instead of the Grigorios C. III, previously named, was to perform the voyage.

 Libelant charges that, on November 20, 1956, the Hellenic Sailor arrived at Koilthottam, but respondent refused to lift and carry the cargo tendered by libelant, and failed to tender the vessel to the Glidden Company, thereby repudiating and refusing to perform its obligations under the charter.

 Libelant further avers that it was ready, able and willing, and duly offered, to perform its agreement with respondent. By reason of respondent's default, libelant was required to seek a substitute vessel to carry its cargo. Such substitute vessel was ultimately found, and chartered, but at a much higher freight rate. The substitute ship, being unable to reach Koilthottam until early December, it became necessary for libelant to obtain an extension of time within which to lift its cargo. Upon the foregoing premises, libelant claims damages in the sum of $ 120,000, and, also, a further sum of $ 20,000, to cover additional costs, and increased handling charges.

 Libelant's second cause of action is to this effect: On November 1, 1956, libelant and respondent entered into three additional charter parties, whereby Hellenic Lines agreed to carry, in three monthly shipments -- December, 1956, January and February, 1957 -- about 25,000 tons of ilmenite ore from Koilthottam, to one safe United States Atlantic port, north of Hatteras, at the rate of $ 18.50 per long ton.

 Respondent, it is said, failed to observe its obligations under such charter parties. As a result, libelant was compelled to engage two substitute vessels, at a much higher freight rate, to carry 20,000 tons of ore, and incurred additional expenses, amounting, in the aggregate, to $ 300,000.

 Libelant's alleged third cause of action asserts that, due to respondent's repudiation of its agreements, libelant was unable, within a required space of time, to engage a substitute vessel, to carry some 5,000 tons of ilmenite ore from Koilthottam to the United States, thereby reducing libelant's local supply of high grade ore, and necessitating a curtailment of its operations. Damages claimed in this cause of action amount to $ 100,000.

 Respondent denies that it repudiated its obligations under the contract of September 7, 1956. It also denies the allegations in libelant's second cause of action. As respects the third cause of action, respondent denies that it has knowledge or information sufficient to form a belief as to the allegation contained therein. Respondent admits demand and nonpayment of the damages claimed.

 As a separate and complete defense to libelant's first cause of action, respondent asserts that Koilthottam, being on the west coast of India, the ordinary, usual, and shortest route from that location, to a United States port, north of Hatteras, was through the Suez Canal, the Mediterranean, and Straits of Gibraltar.

 Respondent further alleges that, it was understood between the parties, that such route should be pursued, and the charter party provided that nomination of the discharging port was 'to be declared not later than on vessel's passing Gibraltar.'

 Respondent also declares that, on November 5, 1956, British and French armed forces landed at Port Said, in an attempt to seize the Suez Canal. This invasion was resisted by the Egyptian Government which, in order to prevent use of the Canal, sank vessels therein, thus blocking the waterway, and rendering it unnavigable until April 10, 1957. A further allegation is that the unusability of the Canal, for a prolonged and uncertain duration, made performance of the contract between the parties impossible, and frustrated the adventure.

 In addition, respondent interposes a defense based on Section 9 of the charter party, and alleges that closure of the Canal was either a restraint of princes and rulers, a danger and accident of the seas and rivers, or an unusual occurrence beyond control of either party, and terminated and frustrated the charter party, releasing both libelant and respondent from obligations thereunder.

 Respondent further pleads the United States Carriage of Goods by Sea Act (Title 46 U.S.C.A. § 1304), and says that closure of the Canal, which prevented the voyage of the Hellenic Sailor, was a peril, danger and accident of the seas, or other navigable waters, or an act of war, or an arrest of, or restraint of princes, etc., or a cause arising without actual fault and privity of the carrier. Similar defenses are interposed to libelant's second and third causes of action. In addition, it is claimed that, 'If respondent entered into three additional charter parties with respondent, the same were reduced to writing, but never signed by either party.'

 As a partial defense to all causes of action, respondent asserts that, on or about November 13 to 16, it offered, without prejudice to either party, to perform the charter party of September 7, 1956, and the unsigned charter parties, by proceeding via the Cape of Good Hope, if paid $ 20.50 per ton with respect to all shipments; respondent agreeing that libelant might pay the additional freight under protest, the without prejudice to its right of recovery, if it were ultimately decided that a right of recovery existed. Respondent offered to secure such repayments as to which libelant might be entitled.

 Between November 21 and 29, 1956, respondent made a similar offer, except that freight should be calculated at $ 24 per ton.

 Neither offer was accepted by libelant.

 Before proceeding further, it seems desirable to identify the persons who played prominent parts in the factual situation here presented.

 George M. Halsey is a vice president of the Glidden Company, and acted upon its behalf, with respect to transportation of libelant's ilmenite.

 Pericles Callimanopulos if General Manager of respondent's New York office. Orestes Pendias was his assistant, and acted as such from 1948, until 1958, when he voluntarily resigned his position with respondent, and was employed by one of its competitors.

 James R. McGrath, a vice-president of Meridian Marine Corporation, represented the Glidden Company in its transactions with respondent. McGrath and Pendias, some ten, or more, years ago, were business partners. Their friendship, through the years, has continued; and once, or more, a week, prior to this suit, they lunched together, and played a game, or two, of pool. On these occasions, they talked freely about 'everything'.

 Callimanopulos and Pendias, also, were warm friends, and the former described Pendias as a competent, and loyal, employee. Callimanopulos and McGrath have long been acquainted, and McGrath has 'consummated a number of charters for respondent's ships.'

 Pendias 'stood up' at the baptism of one of McGrath's children, and Callimanopulos is the godfather of a child of Mr. and Mrs. Pendias.

 The contract of September 7, 1956, reduced to writing by McGrath, and executed by both parties, is an admitted agreement of respondent.

 The charter parties of November 1, 1956, were also prepared by McGrath, and sent to Hellenic Lines for signature. These documents, as heretofore stated, were never signed by either party.

 In passing, it may be noted that, on some previous occasion, the phraseology of the charters was specified by libelant, and sent to McGrath. He had them printed, and these forms, with interlineations, made by McGrath, became the charter parties in suit.

 The second, unnumbered, paragraph of the charters in controversy provides for a voyage by a vessel of respondent, from Koilthottam via Suez Canal or Cape of Good Hope, or Panama Canal, at Owner's option declarable not later than on signing of Bills of Lading, to one safe United States Atlantic Port, North of Cape Hatteras, at Charterer's option (to be declared not later than on vessel's passing Gibraltar), or so near thereto as she can proceed with safety, and there to deliver her cargo. The words in parenthesis were typewritten, and inserted by McGrath. The insertion came about as a result of a mishap, having to do with a port of discharge, of a former shipment of ore, in which libelant was involved. In other words, libelant did not wish to select a port of discharge until its cargo reached Gibraltar.

 The background of this litigation, as indicated, is the closure of the Suez Canal, in 1956.

 In a foreword to a voluminous publication, issued by the State Department, at Washington, in October, 1956, entitled, 'The Suez Canal Problem -- July 26 -- September 22, 1956', it is said:

 'The purported nationalization of the Universal Suez Canal Company by the Egyptian Government on July 26, 1956, produced an international problem, carrying dangerous potentialities for the world. In Foreign Ministers talks from July 29 to August 2, the United States, the United Kingdom, and France, agreed that the Egyptian action threatened the freedom and security of the Canal, as guaranteed by the Convention of 1888.

 'They agreed, further, that steps must be taken to assure the benefits of the Canal to all nations consistently with legitimate Egyptian interests. The three Governments, accordingly, proposed a conference of parties to the 1888 Convention, and of other nations which, by reason of ownership of tonnage or ...


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