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Fairmont Shipping Corp. v. Chevron International Oil Co.

decided: February 4, 1975.

FAIRMONT SHIPPING CORP. AND FAIRWINDS OCEAN CARRIERS CORP., OWNERS OF THE STEAMSHIP WESTERN EAGLE, PLAINTIFFS-APPELLEES,
v.
CHEVRON INTERNATIONAL OIL COMPANY, INC., DEFENDANT-APPELLANT



Appeal from an interlocutory order of the United States District Court for the Southern District of New York, Lloyd F. MacMahon, Judge, sitting in the admiralty, holding that warranty of workmanlike performance was implied in contract to provide tug assistance, finding appellant in breach thereof, and appointing special master to determine damages. 371 F. Supp. 1191 (S.D.N.Y. 1974). Affirmed.

Smith, Hays and Mansfield, Circuit Judges. Mansfield, Circuit Judge (Dissenting).

Author: Smith

SMITH, Circuit Judge:

Fairmont Shipping Corp. and Fairwinds Ocean Carrier Corp. (collectively referred to as Fairmont) brought this action against Chevron International Oil Company, Inc. seeking to recover for damage suffered by their vessel, the steamship Western Eagle, when she fetched up against a dike in Flushing Roads at the port of Flushing, The Netherlands. Chevron contracted with Norland Shipping & Trading Co., Fairmont's agent, to supply bunkers (fuel oil) to the Western Eagle at Flushing. The contract stipulated that Chevron would also provide tug assistance; it did so through its sub-contractor or agent, Steenkolen Handelsvereeniging (SHV). The tugs, however, did not make fast to the Western Eagle when directed to do so by the pilot, and the vessel, unable to make headway on her own against the prevailing wind and current, drifted into the dike as a result. The United States District Court for the Southern District of New York, Lloyd F. MacMahon, Judge, sitting without a jury, found that a warranty of workmanlike service was implied in the contract to provide tug assistance and that the tugs' failure to make fast constituted a breach of that warranty, and directed that a special master be appointed to ascertain damages. 371 F. Supp. 1191 (S.D.N.Y. 1974). We affirm.

I. THE FACTS

Since Chevron does not challenge on appeal the district court's finding that under the bunker supply contract Chevron was obligated to provide tug assistance,*fn1 we may proceed directly to the facts as they unfolded at Flushing in the early morning hours of December 14, 1969. At 3:00 a.m. the Western Eagle entered the Scheldt River, eastbound for Buitenhaven, the harbor of Flushing, located on the river's north bank. She took on a local pilot, L. J. Pennarts, at 3:45. Pennarts met the Western Eagle approximately a mile upriver from the pilot station, the normal boarding area, because the pilot boat was late in leaving the harbor. Thus, when Pennarts came on board, the Western Eagle was almost abeam of Buitenhaven. The visibility at that time was poor, but not bad enough to prevent Pennarts from seeing the lights of the pilot station, the lights of the British Statesman (a tanker anchored nearby), and the fog lights on shore, half a mile away. A stiff wind (19-31 m.p.h.) was blowing out of the south, and a flood tide was moving upriver at 2 to 2 1/4 m.p.h.

As soon as Pennarts got on board, he radioed for the tugs. In the meantime, since the Western Eagle had gone past Buitenhaven, and since the normal practice was for tugs to meet ships over a mile to the west of Buitenhaven, Pennarts decided to turn the Western Eagle back downriver by swinging her to starboard, around the British Statesman, and to wait for the tugs at the normal meeting place in Flushing Roads. But the wind pushed the ship to port, and Pennarts' corrective steps brought him close to a buoy marking the south side of the channel. Rather than risk leaving the channel, Pennarts decided to abandon the attempt to turn the ship by itself; he stopped the engines, and then put them full speed astern, waiting for the tugs.

When the tugs -- the Sophia and the Frederik Hendrik -- arrived, the Western Eagle was thus considerably upriver from the normal meeting place. Pennarts ordered the tugs to make fast as soon as possible, the Frederik Hendrik to the port bow and the Sophia to the stern. The Frederik Hendrik took a heaving line, but before it could make fast both it and the Sophia suddenly moved out of position at the approach of a downriver coasting vessel. A few minutes later, a second downriver coaster approached, and again the tugs left the ship; this time, the Frederik Hendrik unfastened the heaving line. The Western Eagle was approximately 1800 feet from the northern shore when the coasters passed, port to port, between her and that shore.

Without the tugs, the Western Eagle was helpless against the wind and the tide. As she drifted toward the northern bank of the Scheldt, the tugs returned to her, but they were not in position to make fast. Despite Pennarts' efforts to keep her from stranding, the Western Eagle ran aground on the dike at 4:15. Later in the day, at high tide, she was refloated and towed to drydock where extensive damage was discovered.

II. THE EXISTENCE OF A WARRANTY OF WORKMANLIKE SERVICE

The district court held that, because the tugs were in the best position to adopt measures to prevent the accident, but failed to do so and thereby caused the accident, there was a breach of Chevron's implied warranty of workmanlike service. Chevron argues that there was no such warranty in this case because a contract for tug assistance does not entail the relinquishing of control over the vessel's navigation to the tugs. It claims that control is a sine qua non to a warranty of workmanlike service.

The landmark case involving warranties of workmanlike service in maritime contracts is Ryan Stevedoring Co. v. Pan-Atlantic S.S. Corp., 350 U.S. 124, 100 L. Ed. 133, 76 S. Ct. 232 (1956). Ryan was the culmination of a series of cases involving the interlocking relationship among shipowners, stevedoring companies and longshoremen, and must be read with that backdrop in mind.*fn2 In Seas Shipping Co. v. Sieracki, 328 U.S. 85, 90 L. Ed. 1099, 66 S. Ct. 872 (1946), longshoremen were held to be seamen insofar as that status made them persons to whom shipowners owe the duty -- an absolute duty, not turning on fault -- to provide a seaworthy ship.*fn3 And in Halcyon Lines v. Haenn Ship Ceiling & Refitting Corp., 342 U.S. 282, 96 L. Ed. 318, 72 S. Ct. 277 (1952), it was held that, where the unseaworthy condition was the result of the combined fault of the shipowner and the stevedoring company (the longshoreman's employer), the shipowner was not entitled to contribution from the stevedore as a joint tortfeasor.*fn4 The rationale for the holding was that the creation of a rule for contribution among joint tortfeasors was a matter for legislative, not judicial action.

After Sieracki and Halcyon, shipowners were in an unenviable position: A longshoreman might be injured as a result of an unseaworthy condition caused wholly by the stevedore's negligence, and yet the shipowner, wholly without fault, could be held liable for the entire amount of compensatory damages. And this potential liability was made even more painful by the fact that the longshoreman would, in every case, sue the shipowner for unseaworthiness rather than the stevedore for negligence because the latter cause of action had been abolished by the Longshoremen's and Harbor Workers' Compensation Act of 1927, 33 U.S.C. § 901 et seq. (LHWCA).*fn5 The shipowner's plight was "a situation which cried out for relief," H. Baer, Admiralty Law of the Supreme Court § 2-8, at 183 (1963), and that relief was granted in Ryan.*fn6 A longshoreman named Palazzolo was injured by a roll of pulpboard which had been improperly stowed by his employer, Ryan Stevedoring Company. He recovered damages from Pan-Atlantic Steamship Corporation, the shipowner, on an unseaworthiness claim under Sieracki and Pan-Atlantic, barred from seeking contribution by Halcyon, sought indemnity from Ryan on the contractual theory that Ryan had implicitly agreed to perform its stevedoring services in a workmanlike manner, and that this warranty entailed an agreement to indemnify Pan-Atlantic for any liability which it might incur by reason of an unseaworthy condition created by Ryan's unworkmanlike performance. The Supreme Court, after holding that Pan-Atlantic's action was not barred by the exclusivity provision of the LHWCA, agreed that there was indeed such a warranty, and that Pan-Atlantic was entitled to indemnification from Ryan on account of Ryan's breach thereof:

The shipowner here holds petitioner's uncontroverted agreement to perform all of the shipowner's stevedoring operations at the time and place where the cargo in question was loaded. That agreement necessarily includes petitioner's obligation not only to stow the pulp rolls, but to stow them properly and safely. Competency and safety of stowage are inescapable elements of the service undertaken. This obligation is not a quasi-contractual obligation implied in law or arising out of a noncontractual relationship. It is of the essence of petitioner's stevedoring contract. It is petitioner's warranty of workmanlike service that is comparable to a manufacturer's warranty of the soundness of its manufactured product.

350 U.S. at 133-34.

Subsequent decisions filled in the details of the nature and scope of the Ryan warranty. It was established that a stevedore's warranty to indemnify extends not only to its handling of cargo, as in Ryan, "but also to the use of equipment incidental thereto," Weyerhaeuser S.S. Co. v. Nacirema Operating Co., 355 U.S. 563, 567, 2 L. Ed. 2d 491, 78 S. Ct. 438 (1958); that it runs not only to the shipowner, but to the ship as well, Crumady v. The J. H. Fisser, 358 U.S. 423, 3 L. Ed. 2d 413, 79 S. Ct. 445 (1959), regardless of whether the stevedore was engaged directly by the shipowner, by a time charterer, Crumady, or by the consignee of the ship's cargo, Waterman S.S. Corp. v. Dugan & McNamara, Inc., 364 U.S. 421, 5 L. Ed. 2d 169, 81 S. Ct. 200 (1960); and that it can be breached not only by negligently creating an unseaworthy condition, but by negligently bringing into play a pre-existing unseaworthy condition, Crumady, as well as by the non-negligent supplying of defective equipment. Italia ...


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