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August 1, 1962

The MARINE MIDLAND TRUST COMPANY OF NEW YORK and Ocean Trading Corporation, Respondents

The opinion of the court was delivered by: WEINFELD

The libelant seeks to recover $ 84,247.56 which it paid to the respondent The Marine Midland Trust Company as assignee of respondent Ocean Trading Corporation.

The payment represented prepaid freight charges for transportation of a cargo of sugar from Cuba to Japan under a voyage charter party between libelant and Ocean Trading Corporation as time chartered owner of the s/s Aspromonte. Marine Midland concedes that the freight money was not due to Ocean Trading since Ocean failed to perform its obligations under the time charter; nonetheless it resists repayment to the libelant upon the ground that the money was paid voluntarily with knowledge that it was not due. I am satisfied that the libelant is entitled to the return of the payment, first upon the ground that it was made under a mistake of fact, and second because it was subject to a condition which was never satisfied.

The facts are these: On January 11, 1958 Ocean Trading Corporation time chartered the s/s Aspromonte for a period of twelve to fourteen months from the vessel's owners, hereinafter called 'Garibaldi.' Thereafter on January 22, 1958 Ocean Trading and libelant entered into a voyage charter party under which Ocean Trading was to transport from Cuba to Japan a cargo of sugar which libelant had purchased in Cuba and resold to a Japanese consignee. This charter party specified a rate per ton for the carriage of the sugar and further provided:

 'All freight to be prepaid in New York in U.S. Currency on telegraphic advice of signing bills of lading on net bill of lading weight, * * *.

 'Mate's receipts to be signed for each parcel of Sugar when on board, and Captain to sign Bills of Lading in accordance therewith, as requested by Shippers.'

 On January 29, 1958 Ocean Trading assigned to Marine Midland all freight moneys due or to become due under the voyage charter of the s/s Aspromonte as collateral for loans to finance Ocean's charter operations.

 The cargo of sugar destined for delivery to libelant's purchaser at a port in Japan was to be loaded at Jucaro, Cuba. Libelant sold the goods by documents and was to receive payment from its Japanese customer upon presentation of the bills of lading to bankers in England. *fn1" Loading of the sugar aboard the s/s Aspromonte at Jucaro, Cuba commenced on March 7, 1958 and was completed at two o'clock on March 24th. Some time after the completion of the loading, a representative of Atlantica del Golfo (from whom libelant had purchased the sugar) telephoned from Cuba to Roger A. Coe, libelant's representative here in New York City, advising him to that effect and giving him data upon which to compute the freight charges payable under the charter. Libelant's practice was to check the freight charges upon receipt of such informal advice and on the basis thereof to make payment to the shipper's representative; it did not await formal telegraphic advice that the bills of lading had been signed by the ship's master as specified in the charter.

 Under common practice and usage of the trade, the mate's receipts are tallied against cargo as it is delivered to the vessel and, as soon as the last of the cargo is received aboard, the bills of lading as prepared by the shipper are checked against the mate's receipts, following which the master signs the bills of lading as a matter of routine. This procedure usually took from two to three hours. Coe testified that in all his experience he knew of no instance where a master had refused to sign the bills of lading in accordance with mate's receipts showing delivery of cargo to a vessel by the shipper.

 It was against this background that the payment here in question was made by libelant on the morning after it had been advised that the last of the cargo had been loaded. Libelant delivered to the respondent Marine Midland its check payable to 'S/S Aspromonte and/or Owners and/or Agents and/or Operators,' together with a letter as follows:

 'We are enclosing our check in the amount of $ 84,247.56 covering ocean freight on shipment of raw sugar on S/S Aspromonte in accordance with the above Charter Party. Please instruct your Havana Agents to release the bills of lading to our affiliated company, Compania Azucarera Atlantica del Golfo, Havana, Cuba.'

 The check and letter were delivered at 12:40 P.M. on March 25th to William Gebhardt, then Marine Midland's Assistant Treasurer, who was in charge of the Ocean Trading account. Early that afternoon Coe, who had telephoned Atlantica del Golfo in Havana to inquire as to the departure time of the s/s Aspromonte from Jucaro, Cuba to Japan, learned for the first time that the ship's master, upon presentation of the bills of lading, had refused to signed them. The evidence establishes that when delivery of the cargo to the vessel was finally completed on March 24th, the bills of lading were presented to the master for his signature and, although he found them correct, he did not sign them under direct instructions of the shipowner, Garibaldi. The assigned reason for this was that Ocean Trading had been in default in the payment of charter hire.

 When Coe learned of the master's refusal to sign the bills of lading, he promptly called Gebhardt. This was shortly after the latter had received libelant's check. Gebhardt then advised Coe that he was in touch with Ocean Trading and that matters would be worked out.

 Gebhardt, who also testified upon the trial, was a less than frank witness. Many of his answers were either evasive or he failed of recollection on the material matters as to which Coe had testified specifically. His actions in connection with the transaction show a deliberate purpose to hold on to the freight payment. When Gebhardt received the check from libelant, he had already been put on notice on two separate occasions, March 20th and 21st, that the ship's owner had threatened to refuse to permit the master to sign the bills of lading unless Ocean's default in the payment of charter hire and port charges was cured. *fn2" In any event the evidence is convincing that in the early afternoon of March 25th he was advised by Coe of the master's refusal to sign the bills of lading. Thereupon Gebhardt, then aware that the freight money was not due, caused libelant's check to be certified, notwithstanding that there was no question of libelant's financial responsibility. The certification was admittedly obtained after discussions among Marine Midland's officers regarding the possibility of libelant stopping payment on the check. And when Coe made a further effort to reach Gebhardt that afternoon, the latter made himself unavailable. Coe, obviously concerned about the payment, continued thereafter his attempts to reach Gebhardt, but without success.

 On March 28th additional charter hire was due from Ocean to Garibaldi which was not paid. This default was suffered when Marine Midland refused to advance additional funds to Ocean. Thereupon Garibaldi, because of this default, withdrew the Aspromonte from the service of Ocean and demanded that libelant immediately discharge the sugar cargo from the vessel or make new arrangements directly with Garibaldi for its carriage to Japan. Since ...

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