Appeal from a final judgment of the United States District Court for the Southern District of New York, Mary Johnson Lowe, Judge, holding employee of ship's operations manager jointly and severally liable for the tort of conversion. Held: Employee not liable for conversion where plaintiffs fail to establish possessory interest in property alleged to have been converted and where all claims for damages stem from an alleged breach of contract to which employee not a party. Judgment reversed.
Before: OAKES, MESKILL and PIERCE, Circuit Judges.
This strange admiralty case, on submission to use, involves as real party plaintiff a proprietorship in Rajkat, India, conducting a ship's agency and stevedoring business in certain Indian ports, including the port of Vadinar. A vessel for which the plaintiff was acting as agent arrived at that port short of diesel bunker oil and hence unable to discharge its petroleum cargo; after four days of mooring with tug assistance, the vessel was towed out to an anchorage at sea by the port operator, and Indian governmental authority, which proceeded to assess the vessel, and when the vessel did not pay, to assess plaintiff $142,000 in "pull-back charges." When plaintiff refused to pay the charges, the port authority suspended plaintiff's stevedoring license. Thereafter plaintiff and its principal brought suit for damages in the United States District Court for the Southern District of New York, naming as defendants two corporations -- the Liberian owner of the vessel and its New York-based operations manager -- and one individual, the operation manager's port captain, who had been ordered to India by the operations manager to try to straighten matters out. The corporate defendants defaulted, and judgment was entered against them in the district court, after a court trial before Mary Johnson Lowe, Judge, for damages, punitive damages, attorneys' fees, and expenses, in an amount totaling $1,009,619.65. The district court then entered judgment in the same amount against the port captain on the theory that he is jointly and severally liable for the tort of conversion of the ship. Only he appeals. since we are unable to fathom how there can be liability for conversion -- a claim not pleaded in the amended complaint -- where plaintiffs' possession or right to possession of the vessel is neither alleged nor proven, we reverse the judgment.
The M/T IRINIO, a Panamanian flag vessel, was owned by codefendant Dutchess Shipping Co., Ltd. ("Dutchess"), a Liberian corporation. codefendant International Ship Management, Inc. ("ISM"), a New York corporation, acted as operations manager of the IRINIO. Appellant and codefendant Stavros K. Sorros was employed by ISM as a port captain; his job was to troubleshoot around the world for ISM, routinely meeting and inspecting vessels upon their arrival at foreign ports.
In December 1981, ISM entered on behalf of Dutchess into a charter party for the IRINIO with the Indian Oil Company ("IOC"), an Indian governmental agency exercising exclusive control over the importation and distribution of all oil products in India. The charter party called for the IRINIO to carry a cargo of crude oil from Venezuela to one or two discharge ports on the west coast of India, one of which was the port of Vadinar. Vadinar has no berthing facilities but does have an offshore single-buoy mooring facility, or SBM, which is operated by IOC and at which vessels anchor to discharge their oil cargo through a submerged pipeline. The port nearest to Vadinar is some sixty kilometers away.
On February 5, 1982, while the IRINIO was en route, ISM entered into a general agency agreement with Cruickshank & Company, Limited ("Cruickshank"), a ship's agent operating in India. Because Cruickshank itself does not maintain an office near Vadinar, it appointed as subagent Pestonjee Bhicajee [Kutch] ("Kutch"), a sole proprietorship doing business as steamship agent, stevedore, clearing and forwarding agent, ship chandler, and container terminal operator. Although Kutch has an office at Jamnagar, the port sixty kilometers from Vadinar, communications with ISM were maintained through Cruickshank's office in Bombay.
On February 6, the Master of the IRINIO transmitted a radiogram to Cruickshank requesting that Cruickshank makes arrangements for the vessel to bunker, i.e., to fill up with diesel fuel oil for her engines, upon her arrival. Thereafter, the IRINIO apparently encountered engine trouble and remained idle for some three days while repairs were being performed, during which she consumed most of her little remaining fuel oil. On February 10, the Master again transmitted a request to Cruickshank for delivery of seventy long tons of diesel oil upon the vessel's anticipated arrival the following day, similar requests for fuel having been sent by telex from ISM to Cruickshank that same day and on the two previous days. Kutch however, directed Cruickshank to inform ISM that IOC would not release any fuel unless payment was received in advance, despite the fact that IOC owed Dutchess a considerable amount of money in charter hire earned on the voyage.
Apparently Cruickshank used the wrong telex number in attempting to communicate this demand to ISM, which remained unaware that IOC would not bunker the vessel until funds were remitted in advance. The following day, February 11, the Master requested "urgent urgent" that Cruickshank obtain the seventy long tons of diesel oil, and ISM continued to instruct Cruickshank by telex to provide the vessel with the required fuel. On arriving at the SBM off Vadinar on February 12, the IRINIO apparently had only 1.2 tons of diesel oil left on board, an amount insufficient to enable her to discharge. She therefore remained at the SBM awaiting a fuel delivery, meanwhile needing tug assistance from the port authority to remain at the mooring. By Friday, February 12, Cruickshank and ISM were finally in mutual contact, but funds were not remitted to IOC until the following Monday, when $37,500 was sent to Cruickshank.*fn1
Meanwhile, the Kandla Port Trust ("KPT"), the Indian governmental port authority that was supplying tug boats to keep the IRINIO properly moored at the SBM, levied a fee known as "pull-back charges" against the vessel for the services provided by its tug boats. Although the original terms of the charter party obligated IOC to pay the pull-back charges assessed by KTP, IOC apparently refused to allow the vessel to discharge, even after the IRINIO had received three tons of fuel obtained by Kutch through local sources, until the Master signed a letter purporting to shift the obligation to pay the pull-back charges from IOC to Dutchess. On February 16, 1982, after finally discharging her oil cargo, the IRINIO went to an outer anchorage some five to seven miles at sea to await delivery of additional bunker fuel; at this point, the Master also sent Kutch a letter of protest citing Kutch's failure to provide the diesel oil when requested. On the same day, KPT advised Kutch that Kutch was being held responsible for seeing to it that the pull-back charges were paid and that Kutch should therefore take steps to ensure that the IRINIO did not depart until the charges were satisfied.
While the parties remained at odds over who was responsible for paying the pull-back charges, ISM sent Sorros from New York to India to discuss the situation with Cruickshank, Kutch, and a Bombay attorney who represented the vessel's protection and indemnity underwriters ("P&I Club"). On March 12, Sorros met in Bombay with the attorney, who agreed to seek a bond from the P&I Club in London that would secure the pull-back charges claim. On March 15, Sorros proceeded to Vadinar to inquire about the situation and to obtain Kutch's assistance in boarding the vessel. The next day, when Sorros boarded the IRINIO in the company of a Kutch employee, the ship's Master evidently expressed anger at Kutch for its failure to respond promptly to his repeated requests for diesel oil; the Kutch representative, however, attributed the delay to Cruickshank's failure to issue the necessary instructions. Sorros spoke with the Master, discussing the condition of the vessel and its fitness to sail, and upon leaving observed a barge delivering fuel that had been procured for the vessel by Kutch.
Sorros then returned to Bombay, where he met with a Cruickshank representative and the P&I Club attorney. The Cruickshank representative blamed Kutch for the problems at Vadinar, but warned Sorros that the IRINIO would not be permitted to leave port unless the pull-back charges were paid and that Cruickshank and Kutch were preparing to seek a judicial order of arrest for the vessel. The attorney told Sorros that he had been unable to obtain a bond from the P&I Club because liability for pull-back charges was not within the P&I insurance coverage. Sorros testified that he then reported the status of the situation to ISM, which indicated that it would itself arrange for a bond. Sorros then left India to visit Greece.
Meanwhile, the IRINIO had departed from Vadinar before any order for its arrest had issued, proceeding to Singapore and then to Taiwan, where it was scrapped, the victim of a declining oil market. In June 1982, after a meeting in New York between ISM and Cruickshank at which ISM declined to pay Cruickshank and Kutch for the pull-back charges, ...