Petition for Writ of Certiorari — Central Gulf Steamship Corp. v. Grace Line, Inc.

* als

¥

~OFr

APR 18 1970

Supreme Court of the United @thtvs om

OCTOBER TERM 1970

No. 1439

CENTRAL GULF STEAMSHIP CORPORATION,

Petitioner,

versus

GRACE LINE, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF AP-

PEALS FOR FIFTH CIRCUIT.

ROBERT B. ACOMB, JR.,

28th. Floor,

Louisiana and Southern Life Building,

New Orleans, La.,

Attorney for Petitioner,

Central Gulf Steamship Corporation.

INDEX.

TATIONS TO OPINIONS BELOW............

pa REE ASC de Ct ere 2

JESTIONS PRESENTED.................... 2

'ATUTES INVOLVED....................... 2

menNT OF CAMB os 550s kooks... 2

‘ASONS FOR GRANTING THE WRIT....... 5

ES are eee Pree te ee ee 7

RTIFICATE OF SERVICE.................. 8

PENDIX:

DECREE OF DISTRICT COURT........... 9

FINDINGS OF FACT AND CONCLUSIONS

SP ere oe ie Se 10

OPINION OF THE FIFTH CIRCUIT....... 16

DENIAL OF PETITION FOR REHEARING) 22

23

JUDGMENT OF THE FIFTH CIRCUIT....

ii

TABLE OF AUTHORITIES.

mes UBAOR COPY

Page

Cases:

American Tobacco Co. v. Transport Corp., 277

F. Supp. 457 (E.D. Va. 1967)............ 7

Greenwich Marine, Inc. v. S/S Alexandria, 339

F.2d 901 (2nd Cir. 1965)................ 5

States Steamship Company v. American Smelt-

ing and Refining Company, 339 F.2d 66

ER RS van ve a4 'doed Ra Rene ed 5

United Airlines v. Wiener, 355 F.2d 379 (9th Cir.

co oy cd Caen cceshweeaes weeeeess 7

United Fruit Company v. J. A. Folger & Co., 270

F.2d 666 (5th Cir. 1959)................ 5,6

United N.Y. Sandyhook Pilots Assn. v. Roderman

Industries, 394 F.2d 65 (3rd Cir. 1968).... 5

Statute Construed:

Carriage of Goods by Sea Act (COGSA) 46 USC

RRR OPP E TET Te ey 2, 4,5

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM 1970

No.

CENTRAL GULF STEAMSHIP CORPORATION,

Petitioner,

versus

GRACE LINE, INC.,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES CIRCUIT COURT OF AP-

PEALS FOR THE FIFTH CIRCUIT.

Petitioner prays that a Writ of Certiorari issue to

review the judgment of the United States Court of Ap-

peals for the Fifth Circuit entered in the above case on

September 19, 1969 and the denial by the said Court of

petition for rehearing on January 20, 1970.

CITATION TO OPINIONS BELOW.

The Findings of Fact and Conclusions of Law and

judgment of the United States District Court are repro-

duced in the Appendix. The opinions of the United States

Court of Appeals for the Fifth Circuit are reproduced jp

the Appendix and are reported in 416 F.2d 977.

JURISDICTION.

The judgment of the United States Court of Appeals

for the Fifth Circuit was entered on September 19, 1969,

Rehearing was denied on January 20, 1970. The juris.

diction of this Court is invoked under 28 U.S.C. 1254 (1).

QUESTIONS PRESENTED.

1. May a time charterer extend by written agreement

the one year limitation imposed by COGSA on the ship.

per while settlement limitations proceed?

2. Does an extension by the time charterer granted

to the shipper later preclude an action for indemnity by

the time charterer against the vessel’:

STATUTES INVOLVED.

Carriage of Goods by Sea Act (COGSA) 46 U.S.C.

1303 (6).

STATEMENT OF CASE.

This application of Central Gulf Steamship Corpora-

tion for a Writ of Certiorari is to review a judgment of

the United States Court of Appeals for the Fifth Circuit

which reversed and remanded, insofar as it applies to

Petitioner, the judgment of the United States District

o—-. ememem eet at tend DAMRD CORY

Court of the Eastern District of Louisiana which granted

etitioner, Central Gulf Steamship Corporation, Indemni-

y against respondent for damages adjudged against Peti-

joner.

Central Gulf time chartered the S/S Santa Victoria

ysing the government form approved by the New York

Produce Exchange as amended. Central Gulf then en-

ered into an agreement with a shipper to transport car-

go of yellow corn in bulk from the port of New Orleans

to the port of Kandla, India.

Upon arrival in Kandla, India and on August 9, 1959,

it was noted that a portion of the cargo had been dam-

aged by water which apparently was the result of sweat-

ing by the vessel.

It was found by the court below and not controverted

at this point that the sweat was caused by the manner

of loading, which prevented proper operation of the ship’s

ventilation system.

The shipper’s insurer, Royal Insurance Company, and

Central Gulf commenced settlement negotiations. No set-

tlement was reached upon the anniversary date and Central

Gulf granted in writing an extension of the one-year limi-

tation for bringing suit to May 9, 1961. This extension

of time was given with the written consent of Grace Line,

Inc. Subsequent to this Central Gulf gave an additional

extension of time to August 9, 1961, but no written con-

sent was obtained from Grace Line, Inc.

On August 9, 1961, suit was filed by Royal Ingur.

ance Company against Central Gulf and Grace Line, Inc.

Answers were filed by both parties and a Petition of Im.

pleader under the old Admiralty Fifty-sixth Rule was

filed by Central Gulf against Grace Line seeking indem.

nity. fe

Grace Line moved for a summary judgment against

both parties based on the one-year limitation period of

COGSA and the fact that written extensions had not

been given by Grace Line, Inc. up to the actual date of

filing. Summary judgment was granted as to Royal In-

surance Company but not as to Central Gulf.

After a trial on the merits, the District Court found

for Royal Insurance Company against Central Gulf. How-

ever, it granted indemnity to Central Gulf against Grace

Line, Inc.

The reasoning was that it found as a matter of fact

that the vessel owner, Grace Line, Inc. breached its du-

ties under the applicable time charter.

The United States Court of Appeals for the Fifth

Circuit reversed the granting of indemnity by the Dis-

trict Court on the grounds that Central Gulf’s claim for

indemnity was barred by the one-year limitation period

46 U.S.C. 1303 (6).

REASONS FOR GRANTING THE WRIT.

When the Fifth Circuit held that the indemnity cause

of action by Central Gulf against Grace Line, Inc. was

barred by the statutes of limitation of COGSA it cre-

ated a disparity between the law of that Circuit and the

law of the Ninth Circuit, the Second Circuit, and the

Third Circuit.

It is a fundamental concept of maritime law that a

cause of action for indemnity does not accrue until the

indemnitee has been cast in judgment. States Steamship

Company v. American Smelting and Refining Company,

339 F.2d 66 (9th Circuit 1964).

The Second Circuit has held that when a time char-

terer filed suit against the vessel owner prior to its be-

ing sued then its cause of action was premature. Green-

wich Marine, Inc. v. S/S Alexandria, 339 F.2d 901 (2nd

Circuit 1965).

The Third Circuit has also held that on a maritime

claim for indemnity the time does not begin to accrue

until liability is fixed by judgment or upon payment by

indemnitee. United N.Y. Sandyhook Pilots Assn. v. Roder-

man Industries, 394 F.2d 65 (3rd Circuit 1968).

The Fifth Circuit has in dicta recognized that the

one-year limitation period of 46 U.S.C. 1303 (6) can be

extended by agreement without a loss of the cause of

action. United Fruit Company v. J. A. Folger & Co., 270

F.2d 666 (5th Circuit 1959).

Central Gulf’s case against Grace Line, Inc. was based

upon the fact that Grace Line, Inc. breached the express

obligations under the charter contract.

Both the Trial Court and the Court of Appeals agree

that there was a breach of this contract.

It is an uncontroverted fact that Central Gulf was

damaged by this breach. Central Gulf issued a clean bill

of lading as the time charterer and at destination a por-

tion of the cargo was rejected because of the sweat dam.

age. In an effort to minimize litigation, settlement ne-

gotiations were conducted between Central Gulf and the

shipper.

When a settlement agreement could not be reached

prior to the one-year period, Central Gulf extended the

time in order to avail both parties additional time in

which to effect a settlement. Had not Central Gulf ex-

tended this time, suit would have been immediately filed.

The effect of the Fifth Circuit’s holding in this matter

is twofold. First, it holds that any extension by party

possibly liable under COGSA actually extinguishes the

cause of action. Second, it implies that suit for cargo

damage indemnity on the time charter must be brought

against shipowner within one year.

There is no jurisprudence to support the proposition

that an extension of time agreed upon by the parties abso-

lutely extinguishes the cause of action under COGSA.

The Fifth Circuit’s own Folger case, supra, actually sup-

ports the propriety of extensions by the parties.

The maritime jurisprudence of the other circuits is

actually contrary to the holding that a cause of action

on indemnity begins to accrue prior to payment by in-

demnitee or judgment against indemnitee.

To substantiate its holding the Fifth Circuit relies

on two cases: United Airlines v. Wiener, 355 F.2d 379

(9th Cir. 1964) and American Tobacco Co. v. Transport

Corp., 277 F. Supp. 457 (E.D. Va. 1967). These two cases

arise out of claims for indemnity based upon tort. In-

demnity was denied on the basis that the indemnitee

was not liable in the first place. Clearly they are not

proper support for the far reaching decision of the Fifth

Circuit on relations between maritime carriers, charter-

ers, and shippers.

CONCLUSION.

Petitioner urges this Court to issue a Writ of Certi-

orari to the Fifth Circuit in order to clear up the dis-

parity between Circuits and to clearly define the law of

limitations under COGSA and standard form time char-

terers. ,

Respectfully submitted,

ROBERT B. ACOMB, JR.,

28th Floor,

Louisiana and Southern Life Building,

New Orleans, Louisiana,

Attorney for Petitioner,

Central Gulf Steamship Corporation.

CERTIFICATE.

I certify that a copy of the foregoing petition

certiorari and accompanying brief has been served on ;

posing counsel by depositing same in the U.S. Mail Post e i

age prepaid. .... day of April, 1970. i

ROBERT B. ACOMB, JR.

DECREE.

(Number and Title Omitted.)

(Filed June 21, 1966.)

This cause came on for trial at a former day upon

the pleadings and proofs adduced on behalf of the re-

spective parties and, after hearing argument of proctors

for the parties at interest, the Court having found that

judgment herein should be entered in favor of libellant

and against Central Gulf Steamship Corporation for the

damages sustained by libellant, together with interest from

November 8, 1965, and costs; and the Court having fur-

ther found that judgment should be entered herein favor

of Central Gulf Steamship Corporation and against Grace

Lines, Inc., respondent-impleaded, for the damages sus-

tained by Central Gulf Steamship Corporation, together

with interest from November 8, 1965, and costs; accord-

ingly.

IT IS ORDERED, ADJUDGED AND DECREED

that judgment be, and is hereby, entered in favor of li-

bellant, Royal Insurance Company, Ltd., and against Cen-

tral Gulf Steamship Corporation for damages sustained

by libellant, together with interest from November 8, 1965,

and costs.

IT IS FURTHER ORDERED, ADJUDGED AND

DECREED that judgment be, and is hereby, entered in

favor of Central Gulf Steamship Corporation and against

Grace Lines, Inc., respondent-impleaded, for damages sus-

10

tained by Central Gulf Steamship Corporation together

with interest from November 8, 1965, and costs.

IT IS FURTHER ORDERED BY THE COuRT

that if damages cannot be stipulated within thirty days,

the Court will refer the question to a commissioner.

Dated at New Orleans, Louisiana on this 20th day

of June 1966.

s/ HERBERT W. CHRISTENBERRY,

United States District Judge.

FINDINGS OF FACT AND

CONCLUSIONS OF LAW.

(Number and Title Omitted.)

(Filed March 7, 1967.)

CHRISTENBERRY, J.

Libelant, Royal Insurance Company, Ltd. brought

this action against respondent, Central Gulf Steamship

Corporation as charterer and Grace Lines, Inc. as owner

of the S/S Sooner State (ex Santa Victoria) for sweat

damage to a cargo of corn in bulk which was shipped

from New Orleans, Louisiana to Kandla, India. Grace

Lines, Inc. was dismissed by the Court as a respondent

prior to trial but remained in the litigation as respondent-

impleaded by virtue of 56th Rule Petition filed against

it by respondent, Central Gulf Steamship Corporation.

RI CED THROUGH POOR COPY

11

FINDINGS OF FACT.

Libelant was, at all material times, the insurer of 7,424

long tons of yellow corn in bulk and by virtue of its pay-

ment under its policy of insurance to the consignee for the

damage to the corn, became subrogated to the rights of

the consignee to proceed against the parties responsible

for the damage.

Respondent, Central Gulf Steamship Corporation, was

at all material times herein, the time charterer of the

S/S SANTA VICTORIA.

Respondent-impleader, Grace Lines, Inc., was at all

material times herein, the owner of the S/S Santa Vic-

toria.

On April 14, 1959, respondent, Central Gulf Steam-

ship Corporation entered into a berth grain charter par-

ty with Mitchell Cotts & Co., Ltd., pursuant to which

respondent was to provide a vessel for the transporta-

tion of a bulk cargo of corn from a safe U. S. port to

Bombay or Kandla, India and, to issue bills of lading

therefor containing U. S. A. Clauses Paramount.

12

5.

On May 26, 1959, Central Gulf Steamship Corpora.

tion entered into a time charter party with Grace Lines,

Inc. for the charter of the S/S Santa Victoria. Pursuant

to the terms of this charter party, charterers were obli-

gated to load, stow, trim and discharge the cargo at char.

terer’s expense under the supervision of the Captain.

6.

On or about June 21, 1959, the S/S Santa Victoria

was loaded by Central Gulf at New Orleans with the

cargo of bulk corn. Three clean bills of lading were is-

sued showing that a total of 7,424 long tons of corn was

received aboard the vessel in apparent good order and

condition and were signed by the Master of the S/S Santa

Victoria.

7.

Thereafter, the vessel departed New Orleans and ar-

rived at Kandla, India on August 9, 1959. When the No.

4 hatch was opened the corn therein was found dam-

aged by the chief officer of the vessel.

8.

The No. 4 upper ’tween deck of the vessel had been

stowed completely full with corn even up into the hatch

trunk. This restricted ventilation of this stowage space

BLEED THROUGH POOR COPY

13

and allowed sweating of the undersides of the deck plates

which caused the damage.!

CONCLUSIONS OF LAW.

This matter is governed by the United States Car-

riage of Goods by Sea Act of 1936. 46 U.S. C. A. §1300-

1315.

By proving that the cargo was shipped in good order

and condition as evidenced by the clean bills of lading

and outturned at a destination in a damaged condition,

libelant has established a prima facie case of lading.”

The facts show that the cargo was improperly stowed

and that this improper stowage caused the sweat dam-

'The chief officer noted in the vessel’s log for August 9, 1959, the follow-

ing:

“Upon opening +4 hatch found that complete top layer of corn

in hatch trunk to a depth of 2 ft. was wet and fermented due to

lack of ventilation. Further sweat damage was found from

sweating of under-deck plating. No ventilation had circulated

in +4 UTD due to being loaded completely full.”

*The Vallescura, 298 US 296, 1934 AMC 1573; Ionian Pioneer, 236 F2d

78, 1956 AMC 1750 (CA 5); Shickskinny, 227 F2d 348, 1955 AMC

2171 (CA 2); The Saturnia 226 F2d 147, 1955 AMC 1935 (CA 2);

Orient Ins. Co. vs. Flotta Mercante del Estado, 102 FS 729 (ED La.-

1951) aff'd 198 F2d 740 (CA 5-1952); The Great Atlantic & Pacific

Tea Company vs. Lloyd Brasileiro, 159 F2d 661, 1947 AMC 306 (CA

2); The Monte Iciar 167 F2d 334, 1948 AMC 615 (CA 3); Edmond

Weil, Inc. vs. American West African Line, 147 F2d 363, 1945 AMC

Red Mississippi Shipping Co., Inc., 1953 AMC 148, 108 FS 918

( -).

14

age to the corn. Central Gulf attempted to show that

inherent vice of the corn caused the sweat damage but

the fact that only the corn in the No. 4 upper ’tween

deck was damaged while corn in other stowage spaces

outturned undamaged, makes this contention untenable,

No effort was made by Central Gulf or Grace to show

that other stowage with sufficient ventilation could not

have been provided which would have prevented such

damage.*®

4.

Central Gulf cannot escape liability to libelant for

this damage merely because the corn may have such char.

acteristics that it could become damaged under certain

stowage conditions. The fact that stowage was provided,

which because of the character or nature of corn, was

likely to produce sweat during the voyage, amounts to

negligent stowage, especially so, when there is no show-

ing that better stowage space was not available.‘

5.

Central Gulf is therefore liable to pay all damages

sustained by libelant herein, plus interest and costs.

6.

Between Central Gulf and Respondent, Grace Line,

although Central Gulf was responsible for the actual load-

SWessels vs. Asturias, 126 F2d 999, 1942 AMC 360 (CA 2).

‘Ensley City, 71 FS 444, 1947 AMC 568 (DC Mad.) aff’d 170 F2d 25 (CA

4-1948); Rita Sister, 1946 AMC 910 (ED Penn.).

BLEED THROUGH POOR COPY

15

ing and stowage of the corn, the Charter Party provided

that this was to be accomplished under the supervision

of the Captain. Accordingly, if this stowage prevented

proper ventilation, as pointed out in the vessel’s log after

arrival at the discharge port, then the supervising Mas-

ter, by failure to object to the unseaworthy loading, as-

sumes the responsibility for the damage caused by the

ship’s inability to ventilate. Even though the Time Char-

ter provides that the actual loading is to be done by

the charterer, the Master, as the vessel owner’s repre-

sentative, must object if the stowage is such as to ren-

der the ship unseaworthy or prevent the ship from properly

caring for the cargo. By his failure to so act, he has

breached the provisions of the Time Charter. This breach

of contract renders Grace Line responsible by way of in-

demnity and, thus, Grace Line must reimburse Central

Gulf for its damages, including attorney's fees, together

with interest and costs. Cia de Navegacion Fruco, S. A.

vs. M/S HEINZ HORN, 233 F.S. 637 (SD Ala. 1964)

and authorities cited therein.

A decree has been entered accordingly.

New Orleans, Louisiana, March 7, 1967.

s/ HERBERT W. CHRISTENBERRY,

United States District Judge

16

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 23938

GRACE LINES, INC.,

Appellant,

versus

CENTRAL GULF STEAMSHIP CORPORATION,

Appellee.

Appeal from the United States District Court for the

Eastern District of Louisiana.

(September 19, 1969.)

Before THORNBERRY and DYER, Circuit Judges, and

FISHER, District Judge.

FISHER, District Judge: Appellant Grace Lines, Inc.

appeals from a judgment granting appellee Central Gulf

Steamship Corporation indemnity for the breach of a

time charter contract.

17

Grace Lines, Inc. was the owner of the vessel, SS

Santa Victoria, which appellee time chartered, using the

government form approved by the New York Produce

Exchange, as amended. The Time Charterer entered in-

to an agreement with Mitchell Cotts & Company, Ltd.

to transport a cargo of yellow corn in bulk from the Port of

New Orleans to the Port of Kandla, India. When the

SS Santa Victoria docked in Kandla, India on August

9, 1959, it was discovered that “sweat’’ damages had been

sustained by the cargo because the manner of loading

prevented proper operation of the ship’s ventilation system.

A complaint was filed by Royal Insurance Company,

insurer of the cargo claimant, against Central Gulf Steam-

ship Corporation, Grace Lines, Inc. and the vessel.

The trial judge correctly granted Grace Line’s mo-

tion for Summary Judgment as to Royal, but commit-

ted reversible error in failing to dismiss the third party

petition filed by the Time Charterer, Central Gulf, against

the vessel owner, Grace.

The Contract between Central and Mitchell to trans-

port the cargo was made subject to the Carriage of Goods

by Sea Act of 1936, 46 U.S.C.A. §1300 et. seq. The “USA

Clause Paramount” of the time charter party between

Grace and Central likewise made that agreement subject

to the Carriage of Goods by Sea Act, and the one-year

18

statute of limitations of Carriage of Goods by Sea Aci

was applicable.

Grace granted Central written authority to extend

the one-year limitation for bringing suit for damages to

the cargo through May 9, 1961, but on May 2, 1961 re.

fused to allow a further extension of time. Therefore,

Royal’s suit filed on August 9, 1961 against Grace was

barred by the statute of limitation, being filed too late.

United Fruit Company v. J. A. Folger & Company, 270

F.2d 666 (5th Cir 1959). Thus, the question is presented

of what effect would the statute of limitation provision

of the time charter agreement have relative to the in.

demnity suit? We hold that the indemnity cause of ac.

tion by Central against Grace was barred by the statute

of limitation under the Carriage of Goods by Sea Act.?

The trial court held that the cause of action for in-

demnity was not barred because it had not accrued. States

Steamship Company v. American Smelting and Refining

Company, 339 F.2d 66 (9th Cir. 1964); Lyons Magnus

Incorporated v. American Hawaiian SS Co., 41 F.Supp.

575 (S.D. N.Y. 1941); St. Paul Fire and Marine Insur-

ance Co. v. United States Lines Company, 258 F.2d 374

(2nd Cir. 1958).

146 U.S.C.A. $1303 (6)

“... Im any event the carrier and the ship shall be discharged

from all liability in respect of loss or damage unless suit i

brought within one year after deiivery of the goods or

date when the goods should have been delivered: Provided,

that if a notice of loss or damage, either apparent or con-

cealed, is not given as provided for in this section, that fact

shall not affect or prejudice the right of the shipper to bring

suit within one year after the delivery of the goods or the date

when the goods should have been delivered . . .”

*See footnote 1.

Fs

— = —_—— - - Tr ”* | aa ~~ oe ol oth A

The cases cited support the rule that the ordinary

cause of action for indemnity would be separate from

the suit for initial liability insofar as time bar periods

are concerned. The right of indemnity would accrue once

payment was made, and the statute of limitation on an

action to enforce that right would not begin to run un-

til payment was made. cf. State Steamship Co. v. Ameri-

can Smelting and Refining Company, supra.

The question arises under the applicable provisions

of the time charter agreement* whether Grace or Cen-

tral had the final responsibility to see that the vessel was

properly loaded. Grace asserts that under the time charter

agreement the Master, while carrying out any supervi-

sion of stevedoring, is the servant of the charterer and not

the servant of the vessel owner; however, the trial court

correctly determined that since the capacity of the ship

to transport the cargo in the manner specified in the char-

ter party is an aspect of seaworthiness, the captain’s failure

to object to stowage interfering with ventilation was an

omission as agent for the ship owner. Horn v. Cia de

Navegacion Fruco, S.A., 404 F.2d 422 (5th Cir. 1968).

Thus the mistake of reasoning made by the able trial

court was in assuming at the time suit was filed by Royal

‘Time Charter Agreement-Appendix p. 90, Lines 76-79:

“That the Captain shall prosecute his voyage with the utmost

dispatch, and shall render all customary assistance with ship’s

crew and boats. The Captain (although appointed by the own-

ers) shall be under the orders and directions of the charters

as regards employment and agency, and Charterers are to load,

stow, trim and discharge the cargo at their expense under the

supervision of the Captain, who is to assign Bills of Lading for

cargo as presented in conformity with Mates or Tally Clerks’ re-

ceipts without prejudice to this Charter party.”

that Central would have a cause of action for indemnity

against Grace based on breach of the time charter agree.

ment resulting from an unseaworthy condition being cre.

ated in loading the corn in such a manner as to prevent

proper operation of the ship’s ventilation system, to which

conduct the master of the vessel, as agent for Grace, failed

to object.

Central’s cause of action is based on the rights of

the cargo claimant, and the fact that Central bases its

cause of indemnity on a breach of the time charter agree.

ment could not under any theory give Central a greater

right than that which the cargo claimant and its insurer,

Royal, had against Grace. At the time suit was filed,

Royal’s cause of action was barred by the limitation pe-

riod of the Carriage of Goods by Sea Act‘ from proceed-

ing against the vessel owner, Grace, and the trial court

correctly so held. Central’s indemnity right being pred-

icated on the claim of the cargo owner, and the cargo

claimant and its insurer, Royal’s cause of action against

Grace being barred, clearly Central’s cause of action for |

indemnity against Grace would also be barred. To hold |

otherwise would be to deny Grace its legal defense of _

limitation; therefore, the motion of Grace to dismiss the

impleading petition should have been granted, for once

the period of limitation ran on Royal’s suit against Grace,

no indemnification theory could establish Central’s right

to receive indemnification from Grace. Indemnity may

not be awarded without the support of liability on the

part of the indemnitor to the person injured and since

Grace was no longer obligated to Royal, Grace could

4See footnote 1.

21

not be liable in a cause of action for indemnity by Cen-

tral. United Air Lines v. Wiener, 355 F.2d 379, 403 (9th

Cir. 1964); American Tobacco Co. v. Transport Corp., 277

FSupp. 457 (E.D. Va. 1967).

Even if Grace could be held liable for the damaged

cargo as the result of an unauthorized extension of the

period of limitation by Central, no right of indemnity

would exist. By extending the period of Grace’s liability

to Royal, Central interfered with Grace’s defense of limi-

tation and thus would operate to discharge the indemni-

tor. 42 C.J.S. Indemnity #40 (1944).°

The judgment granting Central indemnity against

Grace for breach of the time charter contract is reversed

and judgment to be entered for Grace.

REVERSED AND REMANDED.

542 C.J.S. Indemnity +40 (1944).

“An indemnitor may be released from liability by a subsequent

agreement to that effect with the indemnitee,'? or by the occur-

rence of an event which, by the terms of the indemnity agree-

ment, is to result in his release,'* or by circumstances releasing

the indemnitee from liability.’ So also, any act or omission on

the part of the indemnitee in breach of his duty under the con-

tract of indemnity that increases the indemnitor’s risk or liabili-

ty or otherwise injures his rights and remedies discharges the in-

demnitor from his liability under the indemnity contract,’* at

least to the extent of the injury so occasioned.'*”

22

IN THE UNITED STATES COURT OF APPEALs

FOR THE FIFTH CIRCUIT

No. 23938

GRACE LINE, INC.,

Appellant,

versus

CENTRAL GULF STEAMSHIP CORPORATION,

Appellee,

Appeal from the United States District Court for the

Eastern District of Louisiana.

ON PETITION FOR REHEARING AND PETITION

FOR REHEARING EN BANC.

(January 20, 1970.)

Before THORNBERRRY and DYER, Circuit Judges, and

FISHER, District Judge.

PER CURIAM: The Petition for Rehearing is DE-

NIED and no member of this panel nor Judge in regular

active service on the Court having requested that the

Court be polled on rehearing en banc, (Rule 35 Federal

Rules of Appellate Procedure; Local Fifth Circuit Rule

12) the Petition for Rehearing En Banc is DENIED.

a al —_—_—_ Ta a

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

October Term, 1968

No. 23938

D. C. Docket No. 4884 “A” Adm.

GRACE LINE, INC.,

Appellant,

versus

CENTRAL GULF STEAMSHIP CORPORATIION,

Appellee.

Appeal from the United States District Court for

the Eastern District of Louisiana.

Before THORNBERRY and DYER, Circuit Judges, and

FISHER, District Judge.

JUDGMENT.

This cause came on to be heard on the transcript of

the record from the United States District Court for the

Eastern District of Louisiana, and was argued by counsel;

ON CONSIDERATION WHEREOF, It is now here

ordered and adjudged by this Court that the judgment

of the said District Court in this cause be, and the same

24

is hereby, reversed; and that this cause be, anil

is hereby remanded to the said District Court in

ance with the opinion of this Court.

It is further ordered that appellee pay to opel

the costs of this appeal to be taxed by the Clerk of

Court. f

“Per Fisher, D. J.”

9/19/69.