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YANGMING MARINE TRANSP. CORP. v. EAST COAST CHEMS.

September 14, 1986

YANGMING MARINE TRANSPORT CORP., Plaintiff,
v.
EAST COAST CHEMICALS AND PAPER CORP., Defendant



The opinion of the court was delivered by: SPRIZZO

OPINION AND ORDER

SPRIZZO, D.J.

Plaintiff, Yangming Marine Transport Corporation ("Yangming"), brought this action for breach of contract. Yangming seeks to recover outstanding freight charges for five containers of wastepaper shipped aboard plaintiff's vessel from Baltimore to Taiwan for the defendant in January of 1982. *fn1" See Complaint at [P][P] 4-7. The defendant, East Coast Chemicals and Paper Corporation ("East Coast") counterclaims for damages it allegedly suffered as a result of Yangming's refusal to ship thirty additional containers of wastepaper from New York and Baltimore to Taiwan during the same time period. See Counterclaim at [P] 7.

 A bench trial was held and both parties have filed post-trial briefs. Upon considering all of the evidence presented at trial, as well as all of the arguments made by the parties' counsel at trial and in their papers filed with the Court, the Court concludes that plaintiff is entitled to judgment on its claim set forth in the Complaint and defendant is entitled to judgment on its counterclaim. The following constitutes the Court's findings of fact and conclusions of law pursuant to Fed. R. Civ. P. 52.

 BACKGROUND

 The defendant, East Coast, is a New York corporation, see Pre-Trial Order ("PTO") at [P] 5(i), which exports wastepaper. See Tr. at 40. According to the testimony of Mr. Sharwell, the president of East Coast, wastepaper is used in the recycling business to make finished paper. See id. East Coast purchases the wastepaper in the United States and then sells the commodity to purchasers in countries, such as Taiwan and Korea, where there is no virgin pulp. See id. at 41. The testimony at trial establishes that the export market for wastepaper is highly competitive. See id. at 41-42. According to Mr. Sharwell, the freight rate is "the most integral" factor in determining which exporter will succeed in the competition for supply contracts. See id. at 42. This is because the freight rate costs more than the wastepaper itself. See id.

 The plaintiff, Yangming, is a foreign corporation engaged in the international carriage of goods by sea. See PTO at [P] 5(a). Solar International Shipping Agency Inc. ("Solar"), not a party to the action, is plaintiff's Atlantic and Gulf Coast agent. See PTO at [P] 5(b). It is authorized to make bookings, to issue bills of lading and to collect ocean freight. See id. Glory International Forwarders Inc. ("Glory"), not a party to the action, is a freight forwarder. See Tr. at 44. Acting as defendant's agent, it is authorized to make bookings that reserve cargo space for the shipment of defendant's wastepaper.

 On October 1, 1981, Yangming published a special freight rate for wastepaper at $1,300.00 per container. This rate applied only to wastepaper delivered to the pier prior to December 31, 1981. See Tr. 13-15. In late November, based on this freight rate, Mr. Sharwell was able to secure contracts for the sale of wastepaper to purchasers in Taiwan. See Tr. at 50-51; 83-85. After Mr. Sharwell guaranteed delivery of the wastepaper, the foreign purchasers issued irrevocable letters of credit to East Coast. See Tr. at 43, 51. East Coast then booked space on Yangming's vessels to ship the wastepaper.

 Specifically, on November 30, 1981, Glory, acting on behalf of East Coast, telephoned Mr. Wang, the supervisor of traffic at Solar, and booked space for fifteen containers of wastepaper aboard plaintiff's vessel, the Ming Moon, traveling from Baltimore to Taiwan ("the Baltimore booking"). See Pl. Ex. 12. On December 17, 1981, Glory, again acting as East Coast's agent, contacted Solar and booked space for twenty containers of wastepaper aboard plaintiff's vessel, the Ming Star, traveling from New York to Taiwan ("the New York booking"). See Pl. Ex. 19. *fn2"

 Once a booking was made, the normal shipping procedure between the parties was that plaintiff would release containers, which are used to carry the cargo aboard plaintiff's vessels, to East Coast's supplier of wastepaper. See Tr. at 33, 52, 56. The supplier then would load the wastepaper into the containers and return them to the pier. In December of 1981, however, Mr. Sharwell discovered that Yangming had only released five of the fifteen containers booked pursuant to the Baltimore booking. Moreover, Yangming had not released any of the containers booked pursuant to the New York booking. See id. at 51-52. Upon telephoning Yangming, Mr. Sharwell was informed that Yangming was cancelling both bookings because there was no space available for the wastepaper aboard plaintiff's vessels. See id. at 53.

 Following this telephone call, Mr. Sharwell went to Solar and met with Solar's vice president of sales and traffic, Mr. Edward Yu. See id. at 53, 117. At that meeting, Mr. Yu again told Mr. Sharwell that there was no space available for the wastepaper on the vessels booked. See id. at 54, 118. Moreover, Mr. Sharwell's testimony, which the Court finds credible, establishes that Mr. Yu refused Sharwell's request that Yangming roll the bookings over and carry the wastepaper on ships with space available sailing later in January. Mr. Yu told Mr. Sharwell that he could not roll the bookings over because there was no space available for wastepaper on Yangming's vessels travelling later in January. See id. at 54-55. In addition, Mr. Yu told Mr. Sharwell that, in any event, Yangming did not want wastepaper cargo anymore and that therefore Yangming was raising the rate for wastepaper to $1,900.00 a container. See id. at 55. *fn3"

 In accordance with what Mr. Yu told Mr. Sharwell, after Yangming's special freight rate for wastepaper of $1,300.00 per container expired on December 31, 1986, Yangming raised its rates for wastepaper to $1,900.00 per container. See Tr. at 23-24. On January 6, 1982, however, shortly after Yangming cancelled East Coast's bookings due to lack of available space, Yangming lowered its rate to $1,400.00 per container. See id. Yangming applied this lowered rate to cargo delivered to the pier after December 31, 1981 which was transported on ships sailing on or after January 6, 1982. See id. at 24-25.

 Mr. Wang, the supervisor of traffic at Solar, testified that the rate was initially raised to $1,900.00 because, in December of 1981, it appeared that Yangming had too much cargo and not enough space. See id. at 23. According to Mr. Wang, however, in early January it became apparent that Yangming did not have enough cargo on ships sailing in January, and the rate was lowered in an effort to attract more cargo. See id. at 24.

 On January 6, 1982, plaintiff's vessel, the Ming Star, left New York without any of East Coast's cargo, booked pursuant to the New York booking, aboard. See id. On or about January 15, 1982, however, Solar did issue two bills of lading for the shipment of the five containers which were previously released to East Coast pursuant to the Baltimore booking. See Pl. Ex. 1, 2. Plaintiff shipped those five containers aboard the Ming Moon, which left Baltimore for Taiwan on January 15, 1982. See Tr. at 24. Plaintiff's charge for this shipment, at the agreed upon rate of $1,300.00 per container was $6,500.00. ...


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