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KERR-MCGEE REF. CORP. v. M/V LA LIBERTAD

September 14, 1981

KERR-McGEE REFINING CORPORATION, Kerr-McGee Corporation, Plaintiffs,
v.
M/V LA LIBERTAD, her Engines, Tackle, etc. and Consorcio Naviera Peruano, S.A., Defendants



The opinion of the court was delivered by: SAND

Kerr-McGee Refining Corporation and Kerr-McGee Corporation (hereinafter collectively "Kerr-McGee") have brought this action to recover for an alleged short delivery of cargo of Ninian crude oil transported aboard the M/V La Libertad, a vessel owned by defendant Consorcio Naviera Peruano, S.A., together with money expended for additional barge hire, dock time and inspection costs. The case has been tried to the Court and our findings of fact and conclusions of law follow.

FACTS

 On or about January 30, 1980, a shipment of 436,685 gross barrels of Ninian crude oil, or 436,099 net barrels of Ninian crude oil were loaded into defendant's vessel at Sullom Voe, Scotland, for delivery to the Texoma Pipeline at the Sunoco Terminal in Beaumont, Texas. Plaintiffs had chartered the vessel pursuant to a charter party, the relevant provisions of which are:

 
"PART II, Paragraph 9.
 
SAFE BERTHING-SHIFTING. The vessel shall load and discharge at any safe place or wharf, or alongside vessels or lighters reachable on her arrival, which shall be designated and procured by the Charterer, provided the Vessel can proceed thereto, lie at, and depart therefrom always safely afloat, any lighterage being at the expense, risk and peril of the Charterer. The Charterer shall have the right of shifting the Vessel at ports of loading and/or discharge from one safe berth to another on payment of all towage and pilotage shifting to next berth, charges for running lines on arrival at and leaving that berth, additional agency charges and expense, customs, overtime and fees, and at any other extra port charges or port expenses incurred by reason of using more than one berth. Time consumed on account of shifting shall count as used lay time except as otherwise provided in Clause 15."

 A rider to the charter party contains the following provisions:

 
"10. Owner Warrants that the vessel will discharge the entire cargo within twenty-four (24) hours or maintain 100 PSI at ship's rail, provided shore facilities permit....
 
13. Owners agree to use Charterer's agent at discharge port."

 Although the M/V Libertad had a maximum cargo limit of 69,000 tons and, under the terms of the charter, plaintiffs could have transported that quantity of cargo without incurring additional freight charges, the plaintiffs instructed the vessel to load only 58,000 tons to maintain a maximum draft of 40 feet, fresh water. Michael Arnold, plaintiffs' manager for foreign oil operations, testified that this was done in order to permit the vessel to dock alongside in Beaumont, Texas, thus avoiding the risks and costs of lightering.

 The voyage from Sullom Voe to Texas ran into bad weather, and telexes sent by the vessel to Texas informed that damage had occurred, that cargo had shifted and that a break had occurred in a pipeline which served as part of the hydraulic system of the vessel. This necessitated ballasting as a consequence of which the vessel's fresh water draft increased to 45 feet.

 Arnold testified that he went to Beaumont, Texas, arriving while the vessel was en route. In Texas, Arnold was told by Gulf Coast Marine, an agency servicing vessels at the Sunoco Terminal at Beaumont, Texas, that the vessel had been in an accident and would have to be lightered to get into port. Arnold went out to the ship and inspected the cargo. Before any discharge of cargo took place, ullage and BS&W (basic sediment and water) readings were taken aboard the Libertad. *fn1" The results of these readings are contained in a report prepared by a surveyor and indicate 438,754.60 net barrels aboard the Libertad. Plaintiffs exhibit 11 at 5.

 Arrangements were then made for the engagement of barges to lighter the crude oil from the vessel, moored offshore, to the Texoma Pipeline Terminal. One of the key disputed issues in the case is which party is ultimately liable for the cost of this barging.

 Arnold testified that the Libertad, which was new to this trade, was experiencing difficulty in establishing credit and Arnold agreed, on behalf of the plaintiffs, to pay the barge fees to assure the discharge of the cargo by the barge operators (who might otherwise have held up delivery pending payment). This oral agreement was entered into between Arnold and Cecil Hightower, the manager of Gulf Coast Marine, prior to the arrival of the barges. Plaintiffs contend that the barge cost, which it agreed to pay, was for the account of the defendant and that the agreement to advance the funds was simply to facilitate prompt delivery of the cargo without any assumption of ultimate liability for these costs. Defendant contends that the costs of lightering are, under the charter party, the owner's responsibility; that Gulf Coast Marine was in this regard plaintiffs' agent; and that the advancing of funds for the barging by plaintiffs confirmed these understandings and agreements.

 The M/V La Libertad discharged approximately one-quarter of its cargo into three barges and discharged the remaining three-quarters of its cargo at the Sunoco Terminal, coming alongside after the barges had been loaded. The barges, in turn, discharged their cargo at the Sunoco Terminal. At dockside, dripline samples were taken for the purpose of measuring BS&W which is a measure of the quantity of unusable and unmarketable impurities which have been mingled with the cargo. From the dockside, some or all of the crude oil discharged from the M/V Libertad and from the barges which discharged cargo at another point at ...


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