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INTERSTATE STEEL CORP. v. S.S. "CRYSTAL GEM"

February 25, 1970;

INTERSTATE STEEL CORPORATION, Libelant,
v.
S.S. "CRYSTAL GEM", her engines, boilers, etc., Sugar Line Ltd., Federal Commerce & Navigation Co., Ltd., Pittston Stevedoring Corporation, Respondents


Tenney, District Judge.


The opinion of the court was delivered by: TENNEY

TENNEY, District Judge.

This suit in admiralty commenced by Interstate Steel Corporation (hereinafter referred to as "Interstate") seeks to recover for damage allegedly sustained to a shipment of 581 coils of hot rolled steel while on board and during discharge from the S.S. CRYSTAL GEM, a vessel owned by defendant Sugar Line Ltd. (hereinafter referred to as the "shipowner"). Trial began on October 22, 1969 and concluded the following day. Post trial memoranda were thereafter submitted by all parties, and at the Court's request proposed findings of fact and conclusions of law were prepared by plaintiff Interstate and defendant Pittston Stevedoring Corporation (hereinafter referred to as the "stevedore"), the discharging stevedore. Having heard testimony, examined the record and exhibits and carefully considered counsels' supporting briefs and applicable authority, the Court makes the following determinations.

 Findings of Fact

 1. At all times pertinent hereto, the S.S. CRYSTAL GEM was owned by defendant shipowner.

 2. Defendant Federal Commerce & Navigation Co., Ltd. (hereinafter referred to as the "charterer") entered into a time charter of the British flag vessel S.S. CRYSTAL GEM with shipowner, dated April 11, 1963 on the standard Government form, as approved by the New York Produce Exchange.

 3. Defendants charterer and shipowner have filed a true copy of this time charter with the Court, and have stipulated that this contract was in existence and governed the relationship between these defendants on the voyage of the S.S. CRYSTAL GEM in September and October 1963. *fn1"

 4. By Clause 8 of the time charter, it was provided that: "The Captain (although appointed by the Owners), shall be under the orders and directions of the Charterers as regards employment and agency; and Charterers are to load, stow, discharge and trim the cargo at their expense under the supervision of the Captain, who is to sign Bills of Lading for cargo as presented, in conformity with Mate's or Tally Clerk's receipts."

 6. Clause 24 of the charter provided that it was subject to the "U.S.A. Clause Paramount" which was to be included in all bills of lading issued thereunder.

 7. On August 15, 1963, defendant charterer, as time chartered owner, and The Jordan International Co. (hereinafter referred to as "Jordan") as subcharterer, entered into a charter party to which the bill of lading involved herein refers. *fn2" Clause 33 of this charter party provided that the "U.S.A. Clause Paramount" was to be considered a part of this charter party as though fully incorporated therein.

 8. During the term of the charter party with shipowner, defendant charterer directed the vessel to the port of Tampico, Mexico, where it loaded 581 hot rolled steel coils which had been purchased by plaintiff Interstate from the Eastern Steel & Metal Co. of New Haven, Connecticut, *fn3" pursuant to an irrevocable letter of credit dated July 2, 1963. *fn4" The steel had been produced by Altos Hornos de Mexico, S.A., at its mills in Montclova, Mexico.

 9. On September 25, 1963, defendant charterer issued a "clean on board" negotiable bill of lading at Tampico, Mexico, indicating that the cargo of 581 hot rolled steel coils were shipped "in apparent good order and condition". The bill of lading was signed by charterer's agents, Representaciones Maritimas, S.A. but not by the Master of the vessel. *fn5"

 10. The cargo of steel coils was consigned to plaintiff Interstate for carriage to Chicago, Illinois. *fn6"

 11. In consideration of charterer omitting to clause the bill of lading as follows:

 
"All cargo loaded from open quai and all coils showing signs of rust in various stages"

 Jordan agreed to hold charterer harmless from any and all consequences that might arise from the bill of lading not having been claused as indicated. *fn7"

 12. The steel coils were stowed in the Nos. 2, 3 and 4 holds of the S.S. CRYSTAL GEM.

 13. Plaintiff did not inspect the coils prior to the arrival of the vessel at the port of Chicago on October 25, 1963.

 14. Prior to the discharge of the cargo by defendant stevedore, which had been employed by defendant charterer to unload the coils, an initial inspection of the cargo in the No. 2, 3 and 4 holds was made by William J. Coakley, a marine surveyor who represented both plaintiff and its cargo insurer, The Hartford Fire Insurance Company of New York, *fn8" and George E. Fanning, a marine surveyor representing the interests of the defendant charterer.

 15. The steel coils were bound by two 2-inch-wide bands around the circumference and four bands of about an inch and a quarter in width through the eye and around the coil at 90-degree intervals. In addition, the outer laps at the end of the coils were tack-welded to the next inside lap to protect the edges of the steel from the strapping. *fn9" These bindings provided adequate packaging for the ocean voyage involved herein. *fn10"

 16. The coils showed no evidence of shifting in stowage. *fn11" There was evidence, however, of some broken bands and small amounts of telescoping and edge crimping which apparently occurred either prior to or during loading of the cargo at Tampico, Mexico. *fn12"

 17. Additionally, rust in varying degrees was noted on the coils in the No. 2, 3 and 4 holds, *fn13" with excessive rust conditions observed on 42 coils located beneath the hatch coaming of the No. 3 hold. *fn14"

 18. Samples of steel strapping and paper wrapping material from the excessively rusted coils were submitted by Mr. Coakley to the Factory Standards Laboratory Inc. of Chicago, Illinois, for chemical analysis. *fn15" The Chloride Anion Test performed on these samples revealed a heavy concentration of ...


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