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Nievelt v. Cargo & Tankship Management Corp.

decided: February 16, 1970.


Waterman, Hays and Feinberg, Circuit Judges. Waterman, Circuit Judge (dissenting).

Author: Hays

HAYS, Circuit Judge.

This appeal challenges so much of a judgment entered in the United States District Court for the Southern District of New York as failed to allow pre-judgment interest on the amount of appellant's recovery.


Plaintiff-appellant chartered three motor vessels to defendant-appellee in 1960 and 1961 at an agreed price per deadweight ton per month, payable semi-monthly. The charters were extended beyond the original periods through the summer of 1963. However, the charterer stopped regular payments in the fall of 1962 and the vessels were withdrawn in the late spring and early summer of 1963.

On April 9, 1964, the shipowner commenced suit against the charterer for the earned but unpaid charter hire and for certain cash expenditures. The total amount claimed was $663,789.71, and a demand was made for pre-judgment interest on that figure. The shipowner did not claim damages based upon the unexpired terms of the charters.

Although the charterers' answer was a general denial, in a pre-trial order dated June 1966, it admitted liability, disputing only the amount.*fn1 In that same pre-trial order, the shipowner renewed its demand for interest.

On April 16, 1969, at a pre-trial conference before Judge Edelstein, the charterer's counsel stated that he had authority to consent to a judgment. However, the shipowner had submitted amended figures for the unpaid hire*fn2 which reflected certain clerical adjustments in the initial computations and charterer's counsel requested a short adjournment so that his client, who was in Europe, could verify these amended figures. This request was granted.

On June 3, 1969,*fn3 the charterer's counsel informed the court that he was authorized to consent to judgment in the amount of $627,576.11.*fn4 Shipowner's counsel again raised the question of interest on the amount awarded. The court requested memoranda and held a further conference before reserving decision on this point. When the final judgment was rendered on July 2, 1969, interest was not awarded and no reasons were given for its denial.*fn5 We agree with the shipowner that interest should have been awarded and therefore reverse and remand to the court below for the computation of interest.


The charterer argues that the figure consented to was the product of a negotiated settlement which included the question of interest. The record belies this contention. The liability was liquidated and the minor adjustments were merely clerical corrections. At no time did the shipowner's counsel agree to relinquish the demand for interest.*fn6 In fact, he vigorously renewed the demand even after the charterer's counsel indicated that he had authority to consent to the judgment.

The charterer also suggests that since the question of awarding interest was within the discretion of the trial judge, it should not be disturbed on appeal. The general rule is that an admiralty court has discretion to award or deny pre-judgment interest. E.g., Lekas & Drivas Inc. v. Goulandris, 306 F.2d 426, 429 (2d Cir.1962); O'Donnell Transportation Co. v. City of New York, 215 F.2d 92, 95 (2d Cir.1954). However, this discretion is not unlimited:

"* * * allowance of interest is the general rule and * * * disallowance is supportable only in the face of 'exceptional circumstances.' See The Wright, 2 Cir., 1940, 109 F.2d 699, 702. But it is equally clear that the rationale underlying the award of interest is the desire to make whole the injured party, see The President Madison, 9 Cir., 1937, 91 F.2d 835, 846, and the presence or absence of 'exceptional circumstances' must always be determined in the light of that purpose." Id.

This general rule in favor of allowing interest is much stronger where, as in the instant case, the damages are liquidated and are based upon a breach of contract. Cf. Gardner v. The Calvert, 253 F.2d 395, 402 (3d Cir.), cert. denied sub nom. Sound Steamship Lines Inc. v. Gardner, 356 U.S. 960, 78 S. Ct. 997, 2 L. Ed. 2d 1067 (1958);*fn7 5 Corbin, Contracts § 1046 (1964); 3 Benedict, Admiralty § 419 p. 191 (Knauth ed. 1940). And interest ...

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