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MAHMOOD ALJASSIM v. SS SOUTH STAR

February 18, 1971

Mahmood ALJASSIM, Mishari Aljassim and Sadoun Aljassim d/b/a Mahmood Aljassim & Brothers and Antar Industries, Inc., Plaintiffs,
v.
SS SOUTH STAR (formerly SS Dona Gisella) her engines, apparel, tackle and furniture, In rem and General Navigation Trading Co., S.A. c/o Chandris Shipping U.S.A., Inc. and American Oriental Navigation Corporation, Defendants


Cooper, District Judge.


The opinion of the court was delivered by: COOPER

COOPER, District Judge.

Default against defendant General Navigation and Trading Co., S.A. (General) was entered by Judge Wyatt on June 28, 1968 upon motion pursuant to Rule 37(d), F.R. Civ. P. brought on by plaintiffs Mahmood, Mishari and Sadoun Aljassim d/b/a Mahmood Aljassim & Brothers (Aljassim) and Antar Industries, Inc. (Antar), following General's willful failure without excuse to answer written interrogatories propounded by plaintiffs. *fn1"

 This opinion *fn2" constitutes our findings of fact and conclusions of law pursuant to Rule to an inquest held before us (following Judge Wyatt's order) throughout the entire course of which defendant actively participated through his legal representative.

 Facts

 Aljassim maintains a place of business in Kuwait as the exclusive retail sales outlet there for Antar Air Conditioners (Complaint para. 2, hereinafter "Compl., para. --"). *fn3" Plaintiff Antar is a New York corporation (Compl. para. 3) which sells its air conditioners and other appliances under its brand name in Kuwait and eight-five (85) other countries (Transcript, p. 17, hereinafter "Tr. p. ").

 With Aljassim as exclusive dealer, Antar first tendered air conditioners to the Kuwait government in 1954 and to the Kuwait public in 1960 (Tr. pp. 17-19, 64, 67). As Antar's exclusive dealer in Kuwait, Antar's sales in Kuwait were directly tied to Aljassim's sales on a 1-1 basis (Tr. pp. 66, 208-210), with Antar the leader among all brands of air conditioners sold in Kuwait from 1960-1965 (Tr. p. 234).

 Due to temperature fluctuations from an average maximum of 99 degrees F. in the shade in April to approximately 120 degrees F. in June (Exhibit 6 hereinafter "Ex. "), the Kuwait air conditioner market is seasonal. (Tr. pp. 27, 28, 73, 75-79, 85). It was therefore the practice of Aljassim to order air conditioners each year for delivery in advance of the peak season during May-June (Tr. p. 76).

 Accordingly, Aljassim ordered 2,000 air conditioners and spare parts from Antar to be delivered for sale in 1966, the order being placed in November, 1965 (Ex. 7, Tr. pp. 29, 86). Part of this order, 1874 units and 11 boxes of spare parts, was booked by Antar for shipment on the SS DONA GISELLA through Antar's booking agent, American Union Transport (Ex. 10; Tr., pp. 34-35; 53-54). The booking was effected on January 14, 1966 with defendant American (not to be confused with Antar's agent American Union Transport), the time charterer of the vessel, and constituted a contract of affreightment between Antar and American (Compl., para. 8). Under that contract American was obligated to deliver the cargo to Aljassim, the consignee, in accordance with the terms of the booking note (Ex. 10, Tr., pp. 54-55) and the bill of lading subsequently issued on February 19, 1966 by defendant General (Compl., para. 8), the owner and operator of the vessel (Compl., para. 5). *fn4" General had time-chartered the vessel to American on December 24, 1965, for a period of three to five months at charterer's option (Compl., para. 7). Under the terms of the charter, General was to furnish the captain and crew and operate the vessel; the charter was not to be construed as a demise of the vessel (Compl., para. 7). The charter also provided that the captain was to sign bills of lading for cargo carried on the vessel (Compl., para. 7).

 In accordance with the booking note which constituted the underlying contract of affreightment with American, on or about February 19, 1966 Antar delivered the cargo to the vessel in Baltimore in good order and condition. In consideration of an agreed freight duly prepaid, defendant American agreed to transport the cargo to Kuwait and deliver it in like good order and condition as when shipped to the consignee Aljassim (Compl., para. 8) in accordance with the conditions of a bill of lading duly issued and signed for the master of the vessel SS DONA GISELLA on behalf of defendant General, its owner. General's issuance of the bill of lading created a contract between it and the plaintiffs (Defendant's pre-trial brief, p. 13); the plaintiffs duly complied with all the terms of the contract of affreightment (Compl., para. 14) between Antar and American.

 Aljassim grew concerned when the departed vessel had not arrived in Kuwait by April 15, 1966 (Tr. pp. 41ff., 89). Following their request (Tr. pp. 47, 88), Antar advised Aljassim that American (through its agent) revealed that the vessel was leaving (or had left) Jeddah, Saudi Arabia on or about April 15, 1966 and the estimated time of arrival in Kuwait was April 22, 1966 (Ex. 11, 12; Tr., pp. 38-40, 88).

 The cargo did not arrive on April 22, 1966; in fact, the vessel never arrived in Kuwait (Tr., pp. 42, 89). In the course of the voyage from Baltimore to Kuwait defendant General repossessed the vessel in Aden from American. Without notice to plaintiffs General ordered the vessel to deviate from the voyage to Kuwait. The cargo was damaged after discharge in Aden (Compl., para. 9), with notice of discharge being given on May 9, 1966 and only after inquiry from Antar as to the disposition of the goods. General's agent Chandris England, Ltd. notified Antar by cable that the discharged goods could be obtained only upon payment by the consignee of all charges for discharging, storage, delivery to an oncarrying ship, and production of the original bill of lading (Ex. 15; Tr., pp. 48-50).

 Antar immediately advised Aljassim of the abandonment of the goods (Tr., p. 51); Aljassim promptly sought to obtain transshipment to Kuwait on the first available steamer (Ex. 22, Tr., p. 101), and at their own expense arranged for the transportation from Aden *fn5" of the cargo (Compl., para. 11). It arrived in Kuwait on June 18, 1966 (Ex. 25, Tr. p. 105), approximately two months after the estimated time of arrival.

 Effect of General's default

 By reason of its willful failure to answer interrogatories *fn6" and by the default entered against it pursuant to Rule 37(d), F.R. Civ. P., *fn7" General has admitted the well-pleaded *fn8" allegations of the complaint. Such well-pleaded allegations may not now be contested. Trans World Airlines, Inc. v. Hughes, 308 F. Supp. 679, 682-683 (S.D.N.Y. 1969); Trans World Airlines v. Hughes, 38 F.R.D. 499 (S.D.N.Y. 1965); Thomson v. Wooster, 114 U.S. 104, 5 S. Ct. 788, 29 L. Ed. 105 (1885).

 I. The contract claim

 By defendant General's default, it is taken as true that the cargo was loaded in Baltimore "pursuant to a contract of affreightment" whereby American agreed to carry the cargo to the consignee Aljassim in Kuwait in accordance with a pre-paid bill of lading issued to Antar by General (Compl., paras. 2, 8). These allegations and their reasonable inferences, Hughes (1965), supra, showed contracts with American (the booking note supplemented by the bill of lading) and General (the bill of lading).

 The contract evidenced by the bill of lading issued by the master of the ship chartered but not demised is the contract of the ship, the charterer who caused their issue, and that of the owner whose master as authorized agent issued them. Gans S.S. Line v. Wilhelmsen, 275 F. 254, 262-263 (2d Cir. 1921), cert. denied sub nom. Barber & Co. v. Wilhelmsen, 257 U.S. 655, 42 S. Ct. 97, 66 L. Ed. 419 (1921). No delivery of the cargo was a breach of the contracts as to both American and General and plaintiffs may proceed against both American and General in contract. Compl., para. 9; Gans, supra; The Capitaine Faure, 10 F.2d 950 (2d Cir. 1926); Carver, Carriage of Goods by Sea, (11th Ed. 1963), para. 57; defendant's post-trial brief, pp. 7-8.

 Damages resulting from broken contract

 The foreseeable damages flowing from the breaches include:

 1. transportation expenses $21,260.99

 General's Pre-Trial Brief, p. 14, concedes liability for freight charges incurred by Aljassim in carrying the cargo from Aden to Kuwait. The Hellenic Lines bill of lading (Ex. 31) paid by Aljassim (Tr., p. 117) shows the cost of such transshipment was $21,260.99.

 2. additional insurance costs $4,424.00

 Aljassim was obliged to pay additional insurance premiums covering the second voyage (Tr., p. 119) and the age of the vessel (Ex. 32, Tr., p. 120) which at the stipulated exchange rate (Ex. 33 -- $2.80 per KD) total $4,424.00. This item is recoverable as "necessary expenses incurred ...


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