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ALICIA OCEAN TRANSP., S.A. v. ROLLINS BURDICK HUNT

November 5, 1985

ALICIA OCEAN TRANSPORT, S.A., BMF OCEAN TRANSPORT, S.A., EMILY OCEAN TRANSPORT, S.A., BARBARA OCEAN TRANSPORT, S.A., SONIA OCEAN TRANSPORT, LTD., MENYA OCEAN TRANSPORT, LTD., RMF OCEAN TRANSPORT, S.A. and BENYOMIN OCEAN TRANSPORT, LTD., Plaintiffs, against ROLLINS BURDICK HUNTER OF NEW YORK, INC., Defendant and Third-Party Plaintiff, - against - EQUITY STEAMSHIP AGENCIES, LTD., Third-Party Defendant


The opinion of the court was delivered by: MACMAHON

MacMAHON, District Judge.

This is an action by eight former owners of eight seagoing vessels against a marine insurance broker, Rollins Burdick Hunter of New York, Inc. ("RBH"), to recover $242,822.57 in insurance proceeds. Plaintiffs allege that RBH received the proceeds and either wrongfully paid them to Equity Steamship Agencies, Ltd. ("Equity"), the former general managing agent of plaintiffs' vessels, or wrongfully withholds them. RBH denies liability but seeks indemnification from Equity if plaintiffs recover. The action was tried before us, without a jury, on September 19 and 20, 1985.

 JURISDICTION

 The court has subject matter jurisdiction of this action pursuant to 28 U.S.C. §§ 1332 and 1333.

 FACTS

 After carefully considering the exhibits, hearing and observing the witnesses, and weighing all the evidence and arguments of counsel, we find the following facts:

 Each of the eight plaintiff corporations purchased a seagoing vessel between September 1979 and February 1981 and, pursuant to eight essentially identical agreements ("Management Agreement"), retained Equity as managing agent. The Management Agreement gave Equity virtually complete authority to maintain, repair, operate and charter each vessel.

 In accordance with its obligation to obtain "all necessary insurances," Equity obtained hull insurance policies for all eight vessels through defendant RBH. Although both plaintiffs and Equity are named assureds, the loss payable clauses provide for payment either directly to the repairer or to the shipowner as reimbursement for its payment for repairs. *fn1"

 During the two years that Equity was managing agent for plaintiffs, several insurable losses were suffered by the vessels, including the constructive total loss of one vessel, OCEAN ENDEAVOR. Most of the proceeds from these claims were paid by RBH.

 On December 10, 1981, however, all of plaintiffs, except Benyomin Ocean Transport, Ltd., whose vessel, OCEAN ENDEAVOR, suffered a constructive total loss a year earlier, sold their vessels to corporations controlled by Captain John Emmans, the president of Equity. After the sale, there still remained unpaid insurance claims for casualty losses suffered before the sale. RBH ultimately paid the proceeds on these remaining claims to Equity, but Equity refused to remit to plaintiffs, offsetting them as credits against unpaid trade debts owed to Equity by plaintiffs. *fn2"

 Plaintiffs now seek to recover $242,822.57 in insurance proceeds from RBH, contending that plaintiffs were the sole loss payees under the applicable marine insurance policies and that Equity was not authorized to receive the payments on plaintiffs' behalf.

 DISCUSSION

 The central issue here is one of agency. Did RBH's payments to Equity constitute ...


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