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Cti-Container Leasing Corp. v. Oceanic Operations Corp.

decided: June 28, 1982.

CTI-CONTAINER LEASING CORPORATION, PLAINTIFF-APPELLEE,
v.
OCEANIC OPERATIONS CORPORATION, DEFENDANT-APPELLANT



Appeal from so much of an order of the United States District Court for the Southern District of New York, Leonard B. Sand, Judge, as granted plaintiff's motion for summary judgment on the issue of liability and denied defendant's cross-motion for summary judgment dismissing the complaint for lack of subject matter jurisdiction.

Timbers, Meskill and Kearse, Circuit Judges.

Author: Kearse

KEARSE, Circuit Judge:

Defendant-appellant Oceanic Operations Corporation ("Oceanic") appeals from so much of an order of the United States District Court for the Southern District of New York, Leonard B. Sand, Judge, as denied Oceanic's motion to dismiss the present action for want of admiralty jurisdiction and granted summary judgment against Oceanic on the issue of its liability to plaintiff-appellee CTI-Container Leasing Corporation ("CTI"). The principal issue on appeal concerns the scope of the federal courts' admiralty jurisdiction. Specifically, we must decide whether a contract for the lease of cargo shipping containers is sufficiently "maritime" that a suit for its breach is properly within our admiralty jurisdiction. In the circumstances of this case we agree with the district court that the lease agreement was a maritime contract and that partial summary judgment was appropriate.

FACTS

The pertinent facts are not in dispute. CTI is in the business of leasing cargo shipping containers. Oceanic is an agent for several steamship lines. Neither party owns or operates ships. In November 1977, CTI and Oceanic entered into a written lease agreement pursuant to which CTI agreed to rent to Oceanic up to 170 forty-foot standard steel and aluminum containers. The containers were to be delivered by CTI in Norfolk, Virginia, and were to be returned to CTI by Oceanic in Manila, Philippines. Oceanic agreed to pay a per-container rental of $438 for the first 90 days plus $4.20 per day thereafter. Oceanic also agreed to pay $4,400 for any container lost or destroyed, and agreed to maintain the leased containers in good repair.

In accordance with the lease, CTI delivered 169 containers in Norfolk, Virginia in late 1977. In July 1978 the containers, loaded with cargo, arrived in Manila aboard the KARATACHI MARU, a ship owned by Ocean Transport Line Inc. ("Ocean Transport"). In Manila, however, the Philippine consignee failed to pay customs duties, and the cargo-laden containers were seized by the Philippine government. Nearly three years passed before the duty was paid and the shipment released, and the containers were eventually redelivered to CTI in Manila in April 1981. During the Philippine government's retention of the containers, Oceanic paid the agreed rental only until May 1980.

CTI commenced the present suit against Oceanic to recover unpaid rental for 1980 and 1981, plus repair charges resulting from Oceanic's alleged failure to return the containers in undamaged condition. CTI premised jurisdiction on 28 U.S.C. § 1333 (1976), which grants the district courts jurisdiction over suits in admiralty.*fn1 Oceanic opposed the action principally on the grounds that the lease was not a maritime contract and the court therefore had no admiralty jurisdiction, and that in any event Oceanic had been acting solely as an agent for Ocean Transport and thus had no liability under the lease. CTI moved for summary judgment on its contract claim, contending that no material facts were genuinely in dispute, and Oceanic cross-moved for summary judgment dismissing the complaint for lack of subject matter jurisdiction. In an opinion dated October 30, 1981, reported unofficially at 1981 A.M.C. 2964, the district court denied Oceanic's motion to dismiss,*fn2 granted partial summary judgment to CTI on the issue of liability, and referred the question of damages to a magistrate. This appeal followed.*fn3

Discussion

On appeal, Oceanic renews its contention that the agreement sued upon is not a "maritime contract," and argues that there are disputed questions of material fact as to its liability. We find no merit in either contention.

A. Admiralty Jurisdiction

The precise categorization of the contracts that warrant invocation of the federal courts' admiralty jurisdiction has proven particularly elusive. "The boundaries of admiralty jurisdiction over contracts -- as opposed to torts or crimes -- being conceptual rather than spatial, have always been difficult to draw." Kossick v. United Fruit Co., 365 U.S. 731, 735, 6 L. Ed. 2d 56, 81 S. Ct. 886 (1961). If the contract is a "maritime contract," it is within the federal court's admiralty jurisdiction. See id. Traditional texts have defined a "maritime" contract as one that, for example, "relat[es] to a ship in its use as such, or to commerce or to navigation on navigable waters, or to transportation by sea or to maritime employment," 1 E. Benedict, Benedict on Admiralty § 183, 11-6 (7th ed. 1981), or as one "for the furnishing of services, supplies or facilities to vessels . . . in maritime commerce or navigation." 7A J. Moore Federal Practice para. 230[3], at 2773 (2d ed. 1948) (emphasis omitted). See also Kossick v. United Fruit Co., supra, 365 U.S. at 736 ("'The only question is whether the transaction relates to ships and vessels, masters and mariners, as the agents of commerce. . . .'") (quoting 1 E. Benedict, The Law of American Admiralty 131 (6th ed. 1940)).

The definitions have proved easier to state than to apply, as seemingly incompatible results abound.*fn4 In general we seek guidance from rulings in like or analogous situations in order to arrive at a reasoned decision in the circumstances at hand. See Kossick v. United Fruit Co., supra, 365 U.S. at 735 ("Precedent and usage are helpful insofar as they exclude or include certain common types of contract . . .").

The question whether a contract for the acquisition of cargo shipping containers is a maritime contract has apparently provoked little comment. The use of such containers, which are portable receptacles in which large numbers of smaller packages may be transported, is a relatively recent development that "enables the use of two or more modes of transportation, marine, motor, rail, or air, to transport goods on a door-to-door basis." Tombari, Trends in Oceanborne Containerization and Its Implications for the U.S. Liner Industry, 10 J. Mar. L. & Com. 311, 311 (1979). Characterized by one commentator as "one of the most important technological developments in the transportation of goods by sea since steam replaced sail," ...


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