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EPSTEIN v. CORPORACION PERUANA

April 14, 1971

Louis L. EPSTEIN and Julius Epstein, doing business under the style and trade name of Stratford International Tobacco Company, Plaintiff,
v.
CORPORACION PERUANA de VAPORES, Defendant


Croake, District Judge.


The opinion of the court was delivered by: CROAKE

MEMORANDUM

CROAKE, District Judge.

 This is a suit in admiralty brought by the plaintiff, Stratford International Tobacco Company, against the Corporacion Peruana de Vapores to recover a balance of $7,206.50 due on a $13,436.50 purchase of cigarettes and liquor made on May 6, 1965. The facts of the case are as follows.

 I

 Plaintiff is a corporation engaged in the sale of tax-free cigarettes and liquor to vessels in the Port of New York (Transcript page 11, line 15). Alfred Parodi is a salesman in plaintiff's employ (11-3). On May 4, 1965 and May 5, 1965, Parodi had conversations with Luis E. Saavedra, the Captain of the S.S. NAPO (one of defendant's ships) (11-17). On May 6, 1965, pursuant to these conversations, Saavedra agreed to purchase 2,270,000 cigarettes totalling $12,251.50 and 40 cases of liquor totalling $1,185.00 from plaintiff. Broken down, the cigarette sales consisted of 1,000,000 Salem cigarettes, 500,000 Kents, 300,000 Lucky Strikes, 200,000 Chesterfield Regulars, 100,000 Camels, 100,00 Half 'n Halfs and 70,000 Montclairs (plaintiff's exhibit #1). The liquor consisted of ten cases of Chivas Regal, ten cases of Old Parr, ten cases of Ye Monks Flagons, five cases of White Horse, two cases of Black & White, two cases of Drambuie and one case of B & B (plaintiff's exhibits #2 and #3).

 These goods were delivered to the S.S. NAPO on May 6, 1965, and copies of the invoices for them given to the captain (36-6). However, contrary to its usual practice of cash payment at the time of delivery, plaintiff reluctantly consented to a sale on partial credit as the result of Saavedra's simply not having enough cash to pay for the cigarettes and liquor he had ordered. As Parodi himself later testified, "We were more or less forced into granting credit. * * * I was not aware that credit would occur until the last moment when the captain did not receive the money that he was supposed to have received." (21-8.)

 Following delivery of the goods, plaintiff made repeated demands of Saavedra for the $7,206.50 still due on the sale. However, these demands were met only by promises that the money would be forthcoming. When these promises were not met, copies of the original invoices were forwarded to defendant's home office in Peru with a demand for payment. Defendant received these invoices on November 2, 1965 (142-25). Disclaiming all knowledge of the transaction, it refused to pay (143-24), and began an investigation into the conduct of Saavedra (143-21). On December 1, 1965, the captain was discharged by the company (155-17). He died shortly thereafter.

 It is not disputed by either party that the master of a vessel possesses full authority to make purchases binding upon the vessel's owner for "necessaries" to be used on board his own ship unless the contrary is clearly stated to all concerned. In describing the origins of this authority, Benedict's The Law of American Admiralty states --

 
"A ship is, of necessity, a wanderer. She visits shores where her owners are not known or are inaccessible. The master is the fully authorized agent of the distant owners, but is not usually of sufficient pecuniary ability to respond to unforeseen demands of the voyage. These and other kindred characteristics of maritime commerce underlie the practice * * *." Benedict, The Law of American Admiralty, 6th Edition (1940), volume 1, pp. 19-20.

 Also, it should be noted that cigarettes have been held to be "necessaries" within the meaning of maritime law. Allen v. The M/V Contessa, 196 F. Supp. 649 (S.D. Texas 1961).

 However, the amount of cigarettes and liquor purchased by Captain Saavedra makes it clear that these supplies were not purchased for consumption by the S.S. NAPO alone (64-7). Indeed, plaintiff itself concedes that, in March of 1965 (some six weeks before the transaction in question), the same captain of the same vessel purchased 1,500,000 cigarettes, admittedly "more than what was necessary for the use of the ship." (3-10.)

 However, while admitting that the sale in question did not constitute "necessaries" for the S.S. NAPO itself, plaintiff contends that the supplies were purchased by the captain as "necessaries" for other ships owned by the defendant corporation. These cigarettes and liquor, it is claimed, were to be carried by the S.S. NAPO to a home port in Peru where they were to be redistributed to other vessels which had no access to United States ports. Accordingly, it is argued, the captain had authority to make the purchase and defendant should be bound thereby.

 Defendant, in turn, denies any knowledge of or authorization for the captain's conduct. It maintains that the captain was never authorized to purchase the supplies in question for his own or any other ship in defendant's fleet, and speculates that the real motive behind the purchase was the captain's participation in a scheme to smuggle tax-free, contraband cigarettes and liquor totally outside the scope of his duties as ship's captain. Accordingly, defendant refuses to be bound by the obligation owing ...


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