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CHARLES J. KING, INC. v. BARGE "LM-10"

July 22, 1981

CHARLES J. KING, INC., Plaintiff,
v.
BARGE "LM-10", its appurtenances, etc., Luria Brothers Co., Inc., and Lipsett Steel Products, Inc., Defendants



The opinion of the court was delivered by: LASKER

This suit arises out of the capsize of the barge LM-10 on August 4, 1978. Charles J. King, Inc. ("King") and Luria Brothers Co., Inc. ("Luria") are in the business of buying and selling scrap steel. Luria owns a fleet of barges used in transporting scrap steel products from outlying suppliers, such as King, to Luria's yard at Port Newark. Lipsett Steel Products, Inc. ("Lipsett") was affiliated with Luria and responsible for the maintenance and dispatch of Luria's barges at the time of the occurrences at issue.

On July 31, 1978, King and Luria entered into a contract whereby King agreed to sell Luria 4,000 tons of # 1 heavy melting steel scrap which Luria was to send its barges to pick up in installments. On August 2, 1978, Captain Harry Newak dispatched a Luria barge, the LM-10, to King's yard on Newtown Creek in Brooklyn to receive the first load of steel scrap. On Thursday and Friday, August 2nd and 3rd, King's personnel loaded the barge. Upon completion on Friday afternoon James Moss, King's weighmaster, called Newak's office and left word that the barge was loaded and ready to be picked up. Except for a watchman employed for security, King's personnel did not work at the yard over the weekend.

On Sunday morning a passing tug captain, Myron Crowl, noticed that the LM-10 was listing toward the pier. Crowl was unable to contact Lipsett directly so he contacted the tug dispatcher for the New York Trap Rock Company who relayed the message to Lipsett. Lipsett sent a maintenance crew which had trouble getting to the barge because of traffic and stormy weather. When they finally reached the barge, they were too late to prevent the capsize, which they witnessed. The capsize resulted in damage to the LM-10 and to King's bulkhead and necessitated a salvage operation to recover the steel scrap.

 King sues to recover for damages suffered by its bulkhead of $ 24,948. on the grounds that the LM-10 was unseaworthy and that Luria negligently failed to pick up the LM-10 before Sunday. Luria and Lipsett counterclaim for damages sustained in the amount of $ 24,124.06 on the grounds that King negligently loaded the barge and negligently failed to watch and sound the barge over the weekend. In addition, the defendants contend that King is liable for the damage caused by the capsize by virtue of the indemnity provision of Luria's confirmation of the purchase agreement. Luria also counterclaims for expenses incurred in salvaging the steel scrap the LM-10 had been carrying when it capsized.

 I.

 We first consider defendants' claim that King was contractually bound to indemnify Luria for damages incurred in transporting the steel scrap.

 The contract for the sale of the steel scrap was initiated by Jack King's telephone offer on behalf of King to Luria's trader, Sidney Schwartz, on July 31, 1978. Schwartz called King back later in the day and accepted King's offer, agreeing that Luria would buy 4,000 tons of # 1 steel scrap for $ 80. a ton, f.o.b. Kings' dock. (Tr. at 4). Luria sent a written confirmation form to King the next day. The confirmation consisted of a printed form which had a description of the steel, the quantity, the price, and the f.o.b. point typed on the front of the form. The back side of the printed form provided in part that

 
"1. Contract (a) This order constitutes the entire contract between the parties. Shipment of materials pursuant to this order shall be deemed to be an acceptance by the Seller of the terms and conditions of this order regardless of whether or not Seller has acknowledged this order.
 
2. WARRANTY and INSURANCE : All materials sold hereunder shall conform with the description set forth herein and shall be fit for the particular purpose or use for which the materials are required by the buyer or its customers. Seller shall procure and maintain product liability insurance. Seller shall indemnify Buyer against any and all actions, claims, damages, liabilities and expenses, including attorneys' fees, for any personal injury or property damage arising out of the transportation of such materials or the use thereof by buyer or its customers." (Pl.Ex. 1).

 King did not sign the confirmation, nor did it voice any objection to its terms. According to Jack King, none of the quoted provisions were mentioned in his conversation with Schwartz. (Tr. at 7-8). Jack King also testified that the King company had been doing business with Luria for approximately seven years and regularly received identical confirmation forms. (Tr. at 9-11). Charles King, the President of King, testified that he may have signed the confirmation form on occasion. (Tr. at 48-49).

 Defendants argue that Luria's written confirmation became the operative contract under N.Y.U.C.C. § 2-201(1) and (2) despite the fact that King had not signed it because King had reason to know its contents due to their prior course of dealing and did not object to the terms. Defendants contend that King was therefore bound under the warranty and insurance provision quoted above to indemnify Luria against any loss incurred in transporting the steel scrap.

 Defendants' contention is unpersuasive for several reasons. First, defendants' interpretation of the warranty and insurance paragraph to encompass damage incurred by virtue of the capsize of its barge is unduly broad. While the indemnity provision is somewhat ambiguous, the context of the entire paragraph suggests that it was concerned with the warranty of the goods themselves rather than with loss incurred in the transportation of the goods not due to defects of the goods. Thus, assuming arguendo that Luria's confirmation constituted the operative contract, the provision cannot be reasonably construed on its face to provide for King to indemnify Luria for the type of loss at issue.

 Second, defendants' reliance on N.Y.U.C.C. § 2-201(1) and (2) (the U.C.C. Statute of Fraud) is misplaced. *fn1" King's uncontradicted testimony and the typed provisions on the face of the confirmation demonstrate that the parties agreed that Luria would take the goods f.o.b. at King's dock. If, as Luria contends, its confirmation provided that King would indemnify Luria for any damage incurred after the goods were loaded at King's dock, its confirmation materially altered the terms of the oral agreement. This new term is governed by N.Y.U.C.C. § 2-207(2)(b) which provides that additional terms contained in a confirmation do not become part of the contract if they materially alter the contract. *fn2" See N.Y.U.C.C. § 2-207, Official Comment, n. 5. Section 2-201, upon which defendants rely, does not apply to the facts of this case. While that section does relate to a written confirmation of an oral contract, it provides only that a merchant receiving a written confirmation with knowledge of its contents who fails to object may not interpose a statute of limitations defense in an action to enforce the contract. The case at bar does not involve a statute of limitations defense and, in any event, § 2-201 does not purport to govern where the written confirmation materially differs from the oral agreement. See N.Y.U.C.C. § 2-201, Official Comment, 3.

 Third, while a prior course of dealing between parties under identical terms can establish assent to contractual terms despite one party's failure to sign the written contract, see Ernest J. Michel & Co. v. Anabasis Trade, Inc., 72 A.D.2d 715, 422 N.Y.S.2d 79 (1st Dept. 1979), defendants here presented no evidence that the prior transactions between Luria and King were identical. Specifically, it is clear that in this transaction the parties agreed that the f.o.b. point was to be at King's dock. Thus, regardless of what King may have agreed to in the past, the express terms of this ...


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