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HELLENIC LINES, LTD. v. LOUIS DREYFUS CORP.

January 21, 1966

In the Matter of a Motion to Compel Arbitration Between HELLENIC LINES, LTD., Petitioner, and LOUIS DREYFUS CORPORATION, Respondent


The opinion of the court was delivered by: TYLER

TYLER, District Judge.

 Petitioner Hellenic Lines, Ltd. ("Hellenic") has moved to compel arbitration of a commercial dispute with the respondent, Louis Dreyfus Corporation ("Dreyfus"). 9 U.S.C. 4.

 The basis of petitioner's motion is a letter agreement signed by Dreyfus on December 24, 1964. Dreyfus concedes execution of this agreement to arbitrate, but sets up the defense of duress or coercion in its answer to the petition. Since this court could not be certain that the issues, especially the defense of duress, were sufficiently developed in the moving papers, this matter was set down for an evidentiary hearing. On the basis of the affidavits and the testimony and exhibits offered at the hearing, the petition to arbitrate must be granted.

 On November 9, 1964, Dreyfus in its capacity as an exporter of grain contracted with the Iranian Economic Mission for the sale of approximately 5,000 metric tons of bagged No. 2 hard winter wheat "delivered free alongside buyer's tonnage at Port Covington Grain Elevator, Baltimore ". It is said that this sale was made pursuant to the United States Department of Agriculture administered Public Law 480 (7 U.S.C. 1701 et seq.) Foreign Aid Program. Concededly, petitioner was not a party to this agreement.

 On or about the same day, however, petitioner as owner of the S. S. Hellenic Star entered into a freight engagement with the Iranian Economic Mission. Under this freight engagement, Hellenic was obliged to load the aforesaid 5,000 tons of wheat from the Port Covington Grain Elevator at its expense and to transport the wheat to Bandar Abbas, Iran. Dreyfus, of course, was not a party to this freight agreement.

 Later in the month of November 1964, the New York agent of the Iranian Economic Mission notified Dreyfus that the buyer's tonnage which would call at the Port Covington Grain Elevator to load the wheat would be the vessel S. S. Hellenic Star. Apparently upon the belief that in its previous course of dealing in other transactions Hellenic had been slow in honoring drafts and invoices, Dreyfus wrote Hellenic on December 2 that prepayment of the necessary stevedoring and other elevator charges for the loading of the S. S. Hellenic Star would be required. Such a request for prepayment was, it is true, permitted but not required by the terms of Dreyfus' filed tariff for the grain elevator. Not surprisingly, this request triggered a series of irascible telephone conversations and correspondence between petitioner and Dreyfus concerning the propriety of this request. Nevertheless, several days later Hellenic sent its check of $24,096 in partial compliance with Dreyfus' demand.

 The S. S. Hellenic Star arrived at the Port Covington elevator in Baltimore City on December 2 but it was not until December 6 that it obtained a berth to load. Almost immediately after December 6 there ensued another self-righteous spate of telephone calls and correspondence in which petitioner and respondent exchanged complaints about loading conditions and the like. By way of illustration, it was Dreyfus' claim that the steam winches aboard the vessel were incapable of keeping up with the normal loading process at the elevator, while on the other hand Hellenic charged unwarranted delays in berthing the vessel and the loading once the S. S. Hellenic Star was berthed. Relations deteriorated to the point that on December 15, with approximately 150 tons of wheat still remaining to be loaded, the S. S. Hellenic Star left the Port Covington elevator without tendering to Dreyfus either a mate's receipt or a bill of lading for the cargo.

 This development put Dreyfus in a rather precarious position because in order to obtain payment for the grain from the Iranian Mission it was obliged to furnish a clean bill of lading against the letter of credit opened in its favor by the Mission. Accordingly, on December 18, 1964, Dreyfus, having despaired of receiving a bill of lading from petitioner, presented to the latter a clean bill of lading on the bill of lading form usually used by Hellenic with a request that it be immediately executed and delivered.

 Several days later, on December 21, instead of presenting a clean bill of lading, petitioner tendered to respondent its form of bill of lading which was duly executed with the usual terms but which also bore on its face the following notation:

 
"503 (FIVE HUNDRED AND THREE) BAGS SHORTSHIPPED. BAGS FRAIL CONTENTS OF SEVERAL BAGS SPILLING WHILE LOADED. NOT RESPONSIBLE FOR SPILLAGE OF CONTENTS. DETENTION IN LOADING DUE IN THE AMOUNT OF $10,659.12 AS PER ATTACHED STATEMENT. AMOUNT REFUNDABLE TO HELLENIC LINES LIMITED FOR OVERTIME AS DEMANDED AND PAID $10,000.00 ALSO
 
OVERPAYMENT OF STEVEDORING $515.05 ALL OTHER TERMS AND CONDITIONS OF FREIGHT ENGAGEMENT NO. 4575 OF NOV. 9, 1964 TO APPLY."

 It scarcely need be said that this limiting language rendered the bill of lading "unclean" and as a result caused Dreyfus considerable unhappiness in view of its aforementioned contractual arrangements with the Iranian Mission.

 There followed a series of correspondence and telephone conferences between representatives of the parties in which Dreyfus made various suggestions designed to save petitioner harmless from any responsibility for the short-count or condition of the bags of wheat but at the same time to induce petitioner to sign and deliver a clean bill of lading. Petitioner's representatives, however, rather consistently took the position that Hellenic would issue a clean bill of lading to Dreyfus only upon the condition that Dreyfus agree to arbitrate the various matters which were the subject of its notations on the previously tendered bill of lading described hereinabove.

 At the argument and during the course of the evidentiary hearing, counsel for Dreyfus urged that Dreyfus finally executed on December 24 precisely the form of letter insisted upon by petitioner, except for the name of Dreyfus' arbitrator. The testimony of Mr. Van Vort of Dreyfus and several of the exhibits in evidence suggest that the matter was not quite as simple and one-sided as counsel would suggest. Indeed, I am satisfied from the evidence that the parties consumed several days negotiating and drafting the arbitration letter agreement to which they ultimately resorted as a method of resolving their differences. Moreover, not only did Dreyfus execute the letter of December 24 agreeing to arbitrate ...


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