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BUBBLE UP INTL. LTD. v. TRANSPACIFIC CARRIERS CORP

September 29, 1978

BUBBLE UP INTERNATIONAL LTD., Pakistan Beverage Company, Clinton Milling Company, Masir Abdulla Al Schagawi, Seaboard Commodities Inc., J. M. Al- Mahaidib, Fahad & Omar Alateig-Al-Ahsa, Riviana Foods Inc., Saeed Ahmed Al- Mahroos, Mohamed & Abdulla Alsulaiman Alsaadi, the Alliance Milling Co., Uncle Ben's, Inc., General Trading Company, McMaster Car Supply Gresham Linley Ltd., Tube Turns Division of Chemetron Corp., Kuwait Oil Fields Supply Co., Rockwell Manufacturing Co., S.A., Alfarsi, Kuwait Oil Co. Ltd., United Export Clothing Co. Inc., Haji Ferman, Haji Zahid, Spahi & Nazar Jan, Toor Khan, Singer Products Co. Inc., Associated Batteries Co. Ltd. and Lloyd's Underwriters and Insurance Companies, Plaintiffs,
v.
TRANSPACIFIC CARRIERS CORP. and Hellenic Lines Ltd., Defendants



The opinion of the court was delivered by: BRODERICK

I.

Plaintiffs Bubble Up International Ltd., et al., owners of cargo carried upon defendants' ship, bring this action to recover General Average deposits required by and paid to defendants as a prerequisite for the release of plaintiffs' cargo at ports of discharge.

 Admiralty and maritime jurisdiction is properly invoked pursuant to 28 U.S.C. ยง 1333 and Rule 9(h), F.R.Civ.P.

 I find, for the reasons set forth below, that plaintiffs are entitled to recover the amounts they paid as General Average.

 II.

 Plaintiffs are the owners or underwriters of certain cargoes which were loaded aboard the freighter "Hellenic Glory" in various United States ports for carriage to foreign ports of discharge. "Hellenic Glory" is owned by defendant Transpacific Carriers Corp., a subsidiary of defendant Hellenic Lines Ltd., operator of the vessel.

 During December of 1971 and January of 1972, the "Hellenic Glory" took on plaintiffs' cargoes at various U.S. east coast and gulf coast ports for transport to ports in the Persian Gulf, India and Pakistan. With respect to all such cargoes, defendants issued bills of lading, each of which set forth the terms and conditions of the contract of carriage as between the shipper and the operator of the vessel. Each bill of lading contained, either in fact or through incorporation by reference, Clause 11, commonly referred to as the "new Jason Clause" *fn1" (hereafter "the Jason Clause").

 On February 1, 1972, shortly following her departure from her last United States loading port, "Hellenic Glory" sustained an engine failure which left the vessel powerless upon the high seas. The owner caused the vessel to be towed into New York Harbor, where it was delivered on February 23, 1972. Repairs were carried out; a survey was conducted to ascertain the cause of the machinery failure; and the vessel resumed her interrupted voyage on March 20, 1972.

 As a consequence of the engine breakdown and the costs incurred in having the vessel towed and repaired, the vessel owners declared a General Average pursuant to the Jason Clause, and collected from the cargo interests, prior to or at the time of delivery of the cargo at the ports of destination, deposits covering their respective estimated shares of General Average. These deposits with respect to cargos owned or underwritten by plaintiffs totalled $ 7,128.17. *fn2" Discharge of the cargo loaded in United States ports was completed at the final discharge port on June 30, 1972.

 General Average is a principle long recognized by the general maritime law and embodies the concept that a sacrifice made for the common benefit which is incurred by one who partakes in a maritime venture should be shared proportionately by all who participate in the venture and benefit as a result of the sacrifice. See generally: Buglass, Maritime Insurance and General Average in the U.S., 12022 (1973); Gilmore and Black, The Law of Admiralty, 2d Ed., 244-71 (1975). Initially the sacrifice incurred by the common benefit of vessel and cargo is paid by the vessel owner, who must save his vessel if the cargo aboard is also to be saved. Thereafter the vessel owner arranges for a General Average Statement to be drawn up and prepared.

 Pending determination and issuance of the final General Average adjustment, the ship has "a lien upon the cargo for such contributory share as, under the facts of the case, the cargo owners might be bound to pay . . .." Agathe, 71 F. 528, 530 (S.D.Ala.1895). As a practical matter, the carrier is usually satisfied to accept upon delivery of the cargo an undertaking given by one who might be liable to pay such contribution as might be found owed by him. Alternatively, a cash deposit may be collected by the carrier's agent as a condition precedent to release of the cargo, and held in trust pending resolution of challenges to the General Average. Such deposits were collected in this case.

 The actual work in preparing the adjustment, or "Statement of General Average", is performed by the "adjustor" who is selected and hired by the vessel owner. The adjustor investigates the entire course of events on the basis of which the General Average contribution is claimed and allocates charges and expenses to cargo owners in proportion to their cargo on the ship when the damage occurred.

 However, the adjustor does not resolve any challenges to the ship owner's right to General Average contributions. That task is now before me, pursuant to the admiralty and maritime jurisdiction of the district courts.

 On January 30, 1973, a Statement of General and Particular Average *fn3" (hereinafter the "General Average Statement"), was issued at New York, New York, by the designated General Average adjustor, Fred S. James & Co. of N. Y., Inc. The adjustor fully described the circumstances and expenses constituting the General Average.

 The General Average Statement reproduced reports by the vessel owner, those involved in towing and repairs, and testing laboratories for interested underwriters. The statement also included log extracts, the Vessel Masters' Report, and a Certificate of Valuation. It attributed charges and expenses to cargo owners, plaintiffs among them, modifying and reiterating the General Average contributions required of the cargo interests.

 In the narrative at the beginning of the General Average Statement, the adjustor reported that the engine failure of the "Hellenic Glory" was caused by crew negligence on a prior journey:

 
This damage is attributed to crew negligence on August 16th, 1971 in not properly fitting the split pin in the front bolt after opening up the No. 4 bearing for examination which has been agreed to by Underwriters Surveyors.

 The General Average Statement set forth that slackness resulting from the absence of the pin had the effect of increasing the bending load and stress on the port side bolt of the No. 4 bottom end bearing which ultimately failed and which, in turn, caused the starboard side bolt to fail. The failure of the No. 4 bearing and the damage caused to the main engine as a result thereof rendered the vessel unable to move under its own power.

 III.

 In December, 1974, plaintiffs commenced this suit for recovery of the General Average deposits. *fn4" Plaintiffs argue that defendants are not entitled to General Average contributions for the losses suffered because of the engine failure. Defendants allege that ...


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