Petition for a Writ of Certiorari — Badhwar v. Colorado Fuel & Iron Corp. (No. 391)

i

— Court ot the Ginited States

"October Term, 1987..

„ 591 .

R. S. DASS BADHWAR and R. B. "PACHHMAND ASS:

MOHANLAL & SONS, Lap., composing the co-

partnership doing business ander the firm. name and

style of MuLKRas Bnornxns AND Bann, Cue

8 g 5 prs >

8 Pa against pea a

THE COLG RADO FUEL AND. RON CORPORATION, |

Defendant-Respondent.

*. | ies eo — — ——

ae Petition for a Writ of Certiorari to the United Statee

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i. hs — & — as ah

3 f Attorneys for Potitionsra, 3

— 1475 Broadway,

fic “2 New York, N. Y.

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Foe 4 | ate: | Page

Citations to Opinions Below 1 *

Questions Presented 7 sg

Statutes Involved „ 5

“A ‘Statement ’ 7

Reasons Why the Writ Should be . — 1.

A. An Important Question of Federal Law Re- a

mains. to be Settled 12

B. Conflicts Between the Second Circuit on the

‘One, Hand and the United States Supreme

Court and the New York Court. of. Appeals

on the Other : 1

* Basie Contract ‘ta 5 14

om Application to the Law of Shipment 16

3. Conflict. With the New Tork Law

Good Faith . 18

3 The Second 3 i of a

Federal Statute Should be Reviewed ..:......... 19.

D. The Statut of a Freight Forwarder and the

Nature of His Trade Practices 3 Re-

— . ͤ ůʃnʒꝛ̃ 20

E. The Issues Herein are of Prinlery Impor-

tance to Domestie Commerce and Interna-

tional Trade W 2¹

Conelusion 3 — — . 1

W 5 — &

— —VT ee 8 8

„ — 84

a

ii,

TABLE or CASES rm

| * Page

"Application of Reinhardt, Surr. Ct., Kings Co., 202

Misc. 424, 114 N. V. S. 2d 208 pide 19

Armour Grain Co. v. Compagnie G cerale Transat.

antique, S. D. N. 1. 26 F. (2a, 739, aff d 26 F. 6

2d 741 5 — WE

Canadian Industrial Aleohol Co. v. Dunbar b |

Co., 253 N. V. 194, 179 N. E. 383 . 14, 15

Carnegie Steel Co. v. U. 8. 240 U. 8. 156, 165, 365

S. Ct. 342, 60 L. Ed. 576 14

Commercial Union v. Anglo-South Amer. Bank Lia :

2nd Cir., 16 F. 2d 979 18

Companhia De Navigacao Lloyd Brasileiro v. C. G.

* Blake Co., 2nd Cir., 34 F. 2d 616 13, 17

Connell Bass. Co. v. Diederieksen & Co., 9th Cir., 213

; ö f Fed. 737 : 22 18

Day v. U. S., 245 U. 8. 159, 38 8. Ct. 57, 62 L. Ed.

219 —. 6 14, 15

Eppens v. Littlejohn, 164 N. Y. 187 i 16

„ Farlou Realty Corp. v. Woodsam Associates, Inc. “hs

< agi 49 N. T. Supp. 367, aff'd 268 \app. Div. 975, 52

2 N V. S. 2d 575, aff d 294 N. V. 846, 62. N. E. \-

$4 0

Fidelity & Deposit Co. v. Queens County Trust .

226 N. V. 225, rvrsg. 174 App. Div. 160, 159

oe A Supp. 954; rearg. den., 226 N. V. 711... 19

Kramer v. Joseph P. Day, Ine., 26 N. V. S. 2d 734. 19

Kramer v. Uchitelle, Ing., 288 N. C. 467, 472, 43 N.

E. 2d 493, 495, 14. 41.8199 2 — 15

1

a

iii” |

, ; my ie Page

5 Lamborn v. Log Cabin Products Co., p. 0. *

J 2091 Fed. 435 = 18

Ledon v. Havemeyer, 121 N. Y. 179 24 N. E. 297 — 16

L. N. Jackson & Co., Inc., v. Royal Norwegian Go V- .

ernment, 2nd Cir, 172 ee ig | ¥ A 20 —

Madereinse Do Brasil S/A v. Stulman-Emrick Lum-

I ber Co., 2nd Cir., 147 F. 2d 399, cert. den. 325

D. . 65 S. Ot. 1201, EN es 17

Miller v. Harvey, 221 N. V. ot an

Normandie Shirt Co., Inc., v. J. H. & C. K. Eagle.

238 N. V. 218, 144 N. E. 507. * 12

* Pacific Ry. Co. v. American Trading Co. *

. U. 8. 439, 25 S. Ot. 84, 49 L. Ed. 269. 14, 15

Ocean S. S. Co., Ltd., v. U. S. Steel Produets Co.,

Olivier Straw Goods Corp. v. Osaka Shosen Kaisha.

And Cir., 1928, 27 F. 2d 129 6 19

119 Sth Avenue, Inc., v. Taiyo Trading Co., Inc.,

Supreme Court, N. V. County, June 24, 1947, f

73 N. Y. Supp. 2nd 774, 776 . ‘ 4 15.

Raner v. Goldberg, 244 N. v. 438, 155 N. E. 734. 15

Reynolds v. Commerce Fire Ins. Co., 47 N. V. 597 19

. Robitzek Investing Co., Inc., v. Colonial Beacon Oil

; Co., 265 App. Div. 749, 753, 40 N. J. S. 2d

819, W Id, 291 N. T. 831, 50 N. E. 2d 555 15

Skinner v. Norman, 165 N. V. 565 a 19

State Street Trust Co. v. Ernst, 278 N. . 3 9

Sun Printing Co. v. Moore, 183 U. S. 642, 22 8. Ct. 9

240, 46 L. Ed. 366 .. — 14

° $ °

And Cir., 293 Fed. 825, cert. den. 244 U. S. 652 19

Page

Pie m 10 U. 8. sei: torte m i 14, 16

The T. J. Hooper, 2nd Cir., 60 F. 2nd 737 Ge... 21

Tobias v. Lissberger, 105 N. T. 404, 12 N. E. 13 — 16, 18

William C. Atwater & Co., Ine., v. Panama R. Co...

e K. 19

Restatement, Contracts, 9288, 458 15

Williston on Contracts, Rev. Ed. 51938, 1939, 1955. 15

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R. S. Dass Bannwan and R. B. Lacnn-

Mannass Monantat & Sons, Ltd., com-

posing the co- partnership doing busi-

ness under the firm and style of

Mulkraj Brothers and war, — —

es — oners,

Tun Coronado FUN xp Inox Corpora-

TION, ; ee ae

— Defendant-Respondent. [ .

Petition for a Writ of Certiorari to the United States

Court of Appeals for the Second Circuit.

To the Honorable: The Chief Justice and the Associate —

. ¢Sastices of the Supreme Court of the United States:

~ . Petitioners pray that a writ of certiorari. issue to re-

view that part of a judgment of the United States, Court

of Appeals for the Second Circuit, entered in t above

cause on May 29, 1957, which ‘affirmed that part of a

decision of the United States District Court for the

Southern Pistrict of New York dismissing on the merits =~

petitioners action against The Colorado Fuel and Iron

Corporation, respondent. 8 8 e

Citations’ t0 Opinions Below. |

. he opinion of the District Court (as. lia) is reported

at 138 Fed Supp. 595. In the Court of Appeals for

the Second Circuit, the opinion of the Court was. writ-

N ten by Chief Judge Charles E. Clark for himself and

Judge J. Edward Lumbard, and a dissenting opinion was

written by Judge Learned Hand, who voted to reverse

the judgment of the ‘District Court and to remand to as-

certain damages. Said opinions are printed as A

A. (Infra, b. 23.) & “

8 The jedenieat of the United States deut of .

was dated and entered on May 29, 1957, and is printed a

Appendix B. (Infra, p. 32.) The jurisdietion of 75

Court is — under 28 U. S. C., 3 *

Questions Presented

1. The majority ä of the Court of 1 *

with the following statement:

„This appeal presents interesting issues con-

N 2 the duty of an American seller under a

I. F. contract to select a suitable re to carry |

Arkane (5 buyer on the eve of an impend-

ing strike. P. 24. infra.) 1 *

: (a) What is the effect (upon such seller’ 8 duty to select

Da suitable ship) of a national emergency 80-day in juno

tion against a general maritime strike? During such in-

Junction period may such seller contract with a buyer in

India to sell and ship him goods without disclosing to him

the strike threat to performance of the contract, or re-

1 Figures in parentheses refer to pages of the printed Appendix to

W — m United States Court of Appeals. .

. 2 * 5 = N —

2 \ PX x 20 8 „

—

8 1 carrier, or bargaining for and obtaining an exculpa-

Waling the ‘tentative shipping arrangements with the

clause in the contract, and nevertheless escape li-.

‘bility for delay caused by the strike?

1

ment with a carrier during such strike injunetion period

and prior to seeking out and contracting with the foreign

buyer to sell and ship him the goods, and fails to disclose

to the buyer the terms, or infirmities of such contradł of

affreightment, can the latter contract be deemed. to have

been made on behalf of the buyer as required by the

Uniform Sales Act, so as to bind the buyer to its in-

firmities * Rey 5 . *

(e) May such seller modify such contract of affreight-

ment, without notice to the foreign buyer, so as to accept

a. ship subject to immobilization by such ‘strike, and

scheduled to sail after ‘the expiration of the strike in-

junction, and may he proceed to load the goods thereon,

despite the foreseeable risk of delay in movement thereof,

without assuming such risk?

2. (a) Whether such seller, having unilaterally elected ;

“to take a-chance that the (vessel). would not be struck

or would be struck briefly’? (majority opinion, p. 28,

infra); although the duration of the strike could not be

_ forétold by ‘anyone, is relieved of his gamble when the

5 strike continues far beyond the seller's final dates for

proper shipment under the contract.

(b) Whether such majority holding, Ger the vigorous

dissent of Judge Hand, conflicts with a basic prindple of

contract law with respect to foreseeable risks, long

settled in this Supreme Court and in the Court of Ap-

of the State of New York, and followed by the

Court of Appeals for the Second Circuit in its previous

decisions. : a a

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d) Where the seller as made a contract ot affreight- )

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4.

3. Where a contract specifies ipment of goods, part

assumption that the buyer would accept an October 11th. .

sailing if necessary (p. 28, infra), for all of the

gods 1 Does not this holding exceed the lower Court’s .

- ¢ompetency as defined by this Court and does it not

dangerously unsettle basic contract law in New York

. 2 September 22nd and part / hy October 10th, may a

Court alter such 1 — own purely speculative

af eapd elsewhere

oy (a) Has the Court ‘plow, in dealing with the ee

tion of fraudulent negotiation of bills of lading, negated .

the New York law of good faith“ in the performance

of contracts and disturbed such law in other states?

(b) Has it likewise rendered -ineffectua] 49 U. S. C.,

Section 114 (e), which states that one negotiating a bill

of lading warrants that he has knowledge of no fact

which would impair .the validity or be gud of the bill’’?

5. Whether a freight forwarder is an independent con-

tractor to whom a seller can delegate his duty of ‘ship-

ment without further responsibility to a buyer and achieve

isotation from facts known to the freight forwarder.

Whether he achieves the same. result by delegating —

the duty of obtaining a bill of lading.

6. Whether a freight forwarder deputed Sto 1 a

ship may leaye its selection all together to an interested

carrier, or whetlier that constitutes, as Judge Hand de-

clares, an irresponsible subinfeudation = oe

(P. 31, infra). me es 2

7. Whether the Court below has dignified 1 jad 0

Practices ** a dangerously binding and conclusive effect

that would /preclude Courts from inquiring as to their

adequacy, scope, necessity, freedom from Lestat and

familiarity to foreign re sf,

‘The statutes involved ae the Labor Management Re-

lations ct of 1947, §§ 209, 210, 61. Stat. 5 155, 156, 29

4

V. S. C., 179, 180; the United States Carriage of Goods

‘by Sea Act, April 16, 1936, C. 229, §4, 19 Stat. 1210,

46 U. 8. C., § 1304 (2) (i); the Act of August 29, 1916,

C. 415 (Bills of Lading): § 34, 39 Stat. 6548, 49 U. S. C.,

65 § 114, (a), (b), (e); and the New York Personal Prop-

erty aw, 5127 and 100 (5), which are ‘identical with

the Uniform Sales Act, §§ 46 and 19 (5), 1 Uniform Laws

Annotated.. These statutes are printed in Apes: 2

0. 34. iafra). ie 3 :

The action is for substantial money an sustained 7

by a buyer of caustic soda chiefly through market de-

cline, due to the failure of the seller, the defendant-

respondent, to make proper and timely shipment thereof.

The soda arrived in Bombay some six months after

its loading aboard the S. S. Hawaiian at New Orleans.

Plaintiffs-appellants dre citizens and residents of Luck-

now, India. The defendant-respondent, The Colorado Fuel

and Aron Corporation, is a corporation organized in

Colorado. In the lower courts, two other defendants

were included, ga whom no writ is sought, namely

.American-Hawaiian- ‘Steamship Company, owner of the’ |

S. S. Hawaiian, an Isbrandtsen Company, Inc.,~ char-

terer thereof. The District Court found complete di-

versity and jurisdiction under 28 U. 8. C. 1332 (a) (2).

The delay complained of, which gave rise to plain-

» tiffs’ damages, resulted from a strike of the unionized

‘erew of the-S. S. Hawaiian, which interrupted’ her load-

ing and immobilized. her for more than three months.

. was not a localized strike, a a wilden strike, nor

. 6 |

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at all sudden, but was antoupaed * before Colorado

initiated negotiations for a. sales contract with plain-

tiffs, and went into effect on schedule when the statutory.

injunction. against it expired. As \the District Court

opinion states (10a) :

“On June 14th, | 1948 * threatened maritime 3

„ strike on the East, Gulf and West coasts was

temporarily restrained, and subsequently enjoined

for a full eighty-day period expiring. September

2nd, 1948. ers were made by this Court and

_ the United States District Court ‘hr the Northern

District of California pursuant to the ‘national

emergency’ provisions of the Labor Management

Relations Act of 1947. Separate actions were filed

on behalf of the United States against various

maritime unions and ship operators, * Is- 7

brandtsen and American- Hawaiian.

a On. * 29, 1948, or 46 days after the strike injune-

tion commenced running, Colorado entered into an af-

5 freightment contract, or booking, with Isbrandtsen, A.

calling for the carriage of 1 000 tons of caustic soda from

New Orleans to Bombay on the S. S. Jane G. Swissbelm

or other A-i.vessel. Shipside delivery was to be made

between August 19 and 25, as required by Isbrandtsen’s

agents. The scheduled sailing date of the vessel was

August 28-30 (C. * p. 25, e (Col. Appx.

51a ]). .

Thereafter, er, 4 in August, 1948, Colorado ra i *

requested the National City Bank of New York to find

a buyer in India for its caustie soda (42a, 45a), atid

the bank found plaintiffs, who agreed to take 2,000 tons

at a flat price of 9 1/2 cents per pound, C. I F. Bombay,

giving no consideration . to an F. A. 8. alternative offer.

2 Most of the 3 cables and 8 are reproduced or

summarized in the District Court Opinion (Sa-9a), but a few not fully,

5 1 ate printed in the ‘Appendix to Plaintiffs-Appellants’ Brief

* ). we — .

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alanis had first 1 from the * that the ä

market trend was downward and speculative elements in

India were selling (42a, . 45a). New York law was

applied to the construction of the contract by agreement

of the parties .

With respect to shipment, Ooléredo- . by

cable of August 6, 1948, that it had shipping space for

a minimum of 500 tons-of caustic soda from New Or-

_ledns’* on or about August 22, 1948, and undertook to ar-

range shipment of the balance from a Gulf Port“ by

September 20, 1948 (6a, 7a). It further represented, by

cable of August 10, 1948, that it had an option on.

boat space expiring Friday“ August 13, 1948—a non-

existent option, unexplained at the trial (Pl. Exh. 1, Sched.

P., 46a). It further stated, by cable of August 12, 1948,

a mat it hoped to load 1, 000 tons on. the steamer Jane G. \.

Swisshelm leaving New Orleans about August 23“ (8a,

ga). Plaintiffs first letter of credit. was issued to Colo-

rado August 19, 1948, and was in a sufficient amount to

pay for the 1,000 tons. On . 26, 1948, Colorado

eabled:

If shipment on ‘ icant. $186,600 is to

go out on present steamer must have * 1 er. |

credit arrangements immediately. EI Exh. 1,

Sched. AD, 46a, italics supplied.

The credit arrangements were completed. on the same

day. However, the credits established by the plaintiffs

(Appx. to Colorado Br. in C. A., pp. 39a, 41a), merely.

called for on board ocean bills of lading which might

be of later date, « evidencing shipment of caustic soda

from any U. S. ports to Bombay in one or more ship-

ments, and the District Court coneluded that they ex-

tended the permissible shipping dates accordingly. Thus

Colorado had the option of loading part of the soda on

one or more ‘Properly selected Wessels at any U. 8. 8 Ss

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as late as September 22 1948, anil the remainder as

; late as Octobsr 10, 1948 (D. C. . C. A. * PP:

24, 27; infra).

The booking with: Isbrandtien for 1 000 tons on the

S. S. Jane G. Swisshelm or other A vessel had been

o obtained for Colorado by Farrell Shipping Co., its

permanent sole freight forwarders at New Orleans, and

depeeifeally by the witness Becker, an offver thereof.

Becker, on direct examination by Colorado’ s counsel, tes-

titzed that he knew there would be a substitutiqn. for

the. Swisshelm ‘‘either at the time of the first booking. or.

shortly thereafter” (61a). The exact vessel was not then

“known, but on August 17th, Isbrandtsen chartered the

S. S. Hawaiian and the substitution thereof was on that

day confirmed by Becker g the Colorado traffic depart-

ment. In 80 doing, Col o accepted a sailing date

subsequent to the impending termination of the strike

> injunction, a critical factor not present in its previous

arrangements regarding the Swisshelm. The scheduled

ailing date of the Swisshelm had been August 28th-30th

Ila). On August 19th, at Colorado's request, the caus-

tic soda booking tor the S. S. Hawaiian was verbally

inereased to 1,500 tons, with latest shipside delivery at

New Orleans by September 2nd, 1 (12a, 134), the very

da; the maritime strike was to be ‘Tesumed, sheent an

ee intervening settlement.

Plaintiffs-petitioners had no el of the enjoined

VU. S. maritime strike (649, 55a), and were given none

by Cdlorade during the many exchanges. Moreover, they

were nevercpotified of the true terms made by Colorado

for the Sivisshelm, nor of the substittuion of the Hawaiian

for the Swisshelm; nor of the deferred sailing date, so

that under no circumstances could they be charged with

notice ‘of the shipping — sede —

by Colorado. ‘|

i

nde

uh, Isbrandtsen 5

tor the Swisshelm, he Rad ascertained that she was under-

bareboat charter to Isbrandtsen (Gla). But when he con- ae

firmed he substi- -tien of the Hawaiian, he did not inquire 8

as to her charter status, nor did Colorado’s traffic de-

partment. He never admitted knowing who owned the

Hawaiian or what type of charter existed. He maintained

it was of ne concern to him as he was. dealing with ‘ship- .

ping people in whom he had confidence (68a) He knew

the difference between a bareboat charter and a time

and he admitted that the-fact that he was déal-

ing with Isbrandtsen did not necessarily mean ‘to him that

Isbrandtsen was going to operate the vessel — The i

question was then put by plaintiff’s counsel ( — |

10 So when you say yen had no reason to 5

wonder whether this strike vou read about was

gar. affect this vessel, are you basing that

on the fact that you did not know that American- .

Hawaiian was the*owner of this vessel? A. I could

base it on that fact, plus the fact that I did not

know what type of, charter was involved.

Incidentally, a later witiless, Vice-President Crinkley

of Isbrandtsen, testified that of some 60-80 vessels util-

ized by Isbrandtsen, at that time, only about ten were

owned by: it and dest chartered ( 11a). It had no

regular service from New Orleans or any Gulf ports to E

Indian or adjacent. ports (118, 120). Isbrandtsen had 8

booked this caustic soda as the nucleus of à cargo to be

assembled (74a). There were regular lines which had

no freight room at the time. (73a, 74a). 5 Pie

Significant also is Becker's admission that bia A

“ception of his duty was to obtain an ocean bill of ladz.

ing and he would not de concerned with when & how

the vessel would leave port unless his shipper instracted «

‘him, which Colorado did not do in this case (69a). He

also testified that r 8 traffic department usually

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told him what ship to use on its steel shipments out of ; j

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New Orleans (73a). ite

Becker also testified that from reading the New Orleans

press reports, which are in evidence (Pl. Exh. 4, in part,

76a-9 2a), he formed the opinion about August 18, 1948,

that there would be no strike at New Orleans (65a).

These press reports. ‘show that, while the east and Gulf

coast disputes w ettled August 18, the west coast

situation was : ‘Associated Press dispatch carried

on August before Ioading of the caustic seda be-

. gan, reported an atmosphere of more than usual antag-

onism, in which a spokesman for the West Coast unions re-

‘ affirmed that their strike called for September 2nd, when

the 80-day injunction would expire, would come off on

schedule (85a). This announcement was reiterated in the

press of Keqwst 31st (87a). The press of September Ist

reported a planned railroad embargo of Wet Coast ports

to prevent tie-up of freight cars, and that prospects of set-

tlement between the operators und the five unions appeared

slim (88a, 89a). At best, Becker had erroneously concluded

that the East Coast settlements. applied to a ship which he

had neglected to in was owned by a West Coast

operator and crewed by a different set of. unions having

their strike negotiations on the West Coast.

The Hawaiian docked 2 New Orleans on August 31st,.

shortly after noon. At one P. M., on the same day, load-

ing of the caustic soda commenced and was continued on

September Ist, including overtime from 5 P. M. to 6

P. M. and on tember 2nd, when it commenced an hour

early, at 7.A. M. On September 2nd, the expired strike

injunction was lifted at 10 A. M. by order. of the Dis-

. trict Court at San Francisco and the walkouts, which had

‘commenced at midnight, September Ist, spread to all

’ Pacific Coast ports (90a, 91a). At New Orleans only

the Hawaiian and one other vessel. were affected and

rendered strikebound (D. C. Op., 19a).

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The District Court found that all of the 1 400 tons of

caustic soda witk which the Haivaiian ‘eventually sailed

was loaded by 6 P. M., on September 2nd (15a), It. fur-

ther found (15a, 16a):

The smooth deck log r

that at three P. M. on September 2nd, the stewards’

department left the ship to attend a union meet-

ing and did not return to the ship until three A. M.

on September 3rd; when they returned to remove

their personal effects. At 3: 71

r 3rd, 1948, the stewards of the ship went ashore and

§ were ‘definitely on strike.’ * loading of the

8 continued throughout’ 1 of that

t and until 10 X M. in morning. The

. at that time,

struck the vessel and refused to supply the steam

Se ee

should be loaded. 3

Lsbrandtsen thereupon declared the chip off bie and

American-Hawaiian had her towed to anchorage. where she

remained strikebound and unable to be loaded or un-

loaded until December 9th, when the strike was settled.

She remanned, refueled, went back on hire, resumed

loading operations December 13th, and sailed from New

Orleans December 19th, ‘ultimately eine) at N

February 28, 1949 (27a, Ftnte., 92).

The District Court found that the bills of lading. were

issued by Isbrandtsen’ s agents to Colorado’s agents at

the latters’ request on September 3rd at 9:30 A. M. (17a),

und that they were -mailed to Colorado. at Denver on

Friday, September 3rd. Monday, September 6th, was

Labor Day (66a). On-Septéuber 7th, Becker wired Colo- .

-rado’s traffic department bout the strike delaying the

Hawaiian (Col. Appx., 61a). Colorado wrote Becker Sep-

tember 10th for further details and Becker’s answering

letter was dated September 13th (Col. Appx., 60a-62a).

In the meantime Colorado proceeded with the business

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of n the bills of lading. Sight drafts, accbm-

panied by the bills of lading were presented to the bank

at New York on or about September 7, 19487 and each

was thereafter honored by said bank by the payment

to The Colorado Fuel and Iron Corporation on or about

September 13, 1948 of the sums called for (Stip., Col.

Appx., 33a-35a). On Septembef 20th, Colorado’s New -

York office wrote plaintiffs-petitioners of the strike de-

lay to the Hawaiian. The balance of the order was can- ö

celled by an guchange of cables (48a).

Reasons Why the Writ: Should be Gramed.

* 5 a

\ A. An Important Question . Law Remains'to

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2

The opinions of the 1 below only compound the

3 in which the commercial world must operate

during the 80. day injunctive. period afforded to the presi-

dent and the Federal Courts to restrain a maritime strike

of national emergency proportions. Prior to the passage

of the injunctive legislation, Congress had expressly

exempted ocean carriers from loss or damage resulting

from strikes or lockouts (46 U. S. C. A., § 1304 (2) (5);

p.. 35, fra; ef. D. C. Op. 26a) Thus a slipper

deals with a carrier in awareness of such éxemption. No

legislation protects the shipper. A manufacturer or seller

of merchandise protects himself against strike interfer-

ence with performance of his contract by bargaining for

and obtaining an exculpatory strike clause and, in the

absence thereof, non-performance or delay is not excused.

Normandie Shirt Co., Inc., v. C. K. Eagle, 238 N. V. 218,

144 N. E. 507, and authorities cited therein.

exculpatory strike, clause is’ strietly n by |

the New Yo? Court of Appeals. William C. Atwater 4

bom 9 0

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Co., Inc., v. Panama R. Co., 255 N. V. 496, 175 N. E. 189.

In the absence of agreement a marine strike does not ex-

euse non- delivery of goods. Id., Companhia M Navigacao

Lloyd Brasileiro v. C. G. Blake Co., 2nd Cir., 34 F. 2d

616. : ores Se 5

Herein the District Court, while femarking that con-

tractual strike clauses are to be encouraged (24a), not

only refuses to make the rule absolute but evicts it en-

tirely. from the area of maritime strikes, The ultimate

rationale of the District Cgurt's decision is that al mari-

time strikes are unpredictable, especially in duration

(23a), and the loss should remain where it happens to

fall (25a). It lumps. all strikes together, national emer-

gency strikes with local waterfront disturbances (23a),

despite the fact that Congress -has charged the President

and the federal Courts with the predictability of a na-

“tional .emergency. strike and they have exercised their

function so that all prospective shippers may know when

such strike impends.

This refusal to apply to the situation the normal prin-

|

:

|

on this subject, a hands-off policy on the part of the

‘courts which ill befits the realities of our highly unionized *

— om

° Judge Hand, in Me’ dissenting opinion in the Court

of Appeals, suggests a workable distinction between

strikes arising unexpectedly after the eontraet of sale

was made and a situation such as ours (p. 30, infra).

The majority opin ion, however, makes confusion thrice

compounded by ‘misapplying contract law and rejeeting

its. own prior oe, as we shall see.

*

*

—

ciples of contract law would create a vacuum in the lau-

ee —ä

7

*

“Realising that the strike which immiobilized the S. 8.

Hawaiian was fully foreseeable and predictable but its

duration was not, the Court below would allow the shipper

to put the goods aboard and take. a chance that it would

be @ brief strike“ (p. 28; infra). Thus, he may take

the chance but not assume the risk — it would bee

; beg strike. i:

This Court has wre since dealt with the subject of

foreseeable risks overhanging the -sperformance of a

contract. If such a risk was within the contemplation .

of the promisor, it does ‘not mattér that it eventually

caused damage in an unusual way, unpredictable in de-

tail. Northern Pacific Ry. Co. v. Americus Trading Co.,

195 U. S. 429, 25 S. Ct. 84, 49 L. Ed. 269. Nor does ijt

matter that the nature and extent of the damage be far

beyond the promisor’s expectation. Day v. U. S., 245 U.

S. 159; 38 S. Ct. 57, 62 L. Ed. 219. The answer to the

objection of hardship in all such cases is that it might

have been ‘guarded against by proper stipulation.“ The

Harriman, 76 U. S. 161, 173; 19 L. Ed. 629 Carnegie

Steel Co- b. U. S., 240 U. S. 156, 165, 36 S. Ct. 342, 60 I.

Ed. 576; Sus Printing Co. v. Moore, 183 U. 8. 642, 22 8.

Ct. 240, 46 L. Ed. 366.

8 In Canadian Industrial Alcohol Co. v. beser M b

. . 194, 179 N. E. 383, it was held that a ;

middleman must have’ disclosed to his customer the in-

firmities of his arrangements with his supplier, and have

obtained an exculpatory clause to escape liability. “The

New York Court of Appeals stated (Cardozo, C. J.):

* —

8 \ - ‘ ‘ 3 |

8 . a

- N * be > 13

“So far as the sii . it (defendant)

puts its faith in the mere chance that the output

of the refinery would be the same from year to

year, and finding its faith vain, it tells us that its „

customer must have expected to take. a chance as

great. We see no reason for importing into the

bargain this aleatory eleme t’’ (at p. 199, citing

Day v. U. S. and Northern P Ry. Vo. v.

American Trading Co., supra). Boe

It is settled in New Fork that, where > the risk is for-

8e. able, and not guarded against in the contract, the

promisor takes responsibility fon a dad outeome, however

optomistie his expedtations. Rauer v. Goldberg, 244 N. v.

438, 155 N. E. 734; Farlow Realty Corp. v. Woddsam As-

sociates, Inc., 49 N. V. Supp. 367, aff d 268-App. Div. 975,

aff'd 294 N. T. 846, 64 N. E. 2d 396; 119 5th Avenue, Inc.,

v. Taiyo Trading Co., Inc., 73 N. Y. Supp: 2d 774, 776;

Kramer v. Uckitelle, ie, 288 N. C. 467, 472, 43 N. E. 2d

493, 495, 141 A. L. R. 1497; Robitzek Investing Co., Inc.,

v. Colonial Beacon Oil Co., 265 App. Div. 749, 753, 40 N.

V. S. 2d 819, 822; Id., 291 N. V. 881, 50 N. E. 2d 555:

Williston on Contracts, Rev. Ed., §§1938, 1939, 1955; Re-

statement, Contracts, §§288, 458.

The majority opinion of the Court of “Appeals, in al-

lowing the seller to gamble on a short strike, has also ex-

tended thé final shipping date under the contract. In so

doing, it violates an elementary principle of contract law

in such manner as to make the decision a potential source

. of great mischief. The two letters of credit (Col. Appx. -

_ 39a-42a) were in the respective ‘sums of $239,000 and

186,600. Colorado drew 6212, 743.67 on thie one and

$104,631.86 on the other ( Col. Appx. pp. 33a. 35). By

making one shipment only and drawing on both letters

of credit; Colorado obviously accepted the earlier of the

two shipping dates in the letters of credit, September 22nd,

rather than the later date, October 10th (Cf. D. C. Op. 9a).

— U

16 * 5

°

.

Colorado could not unilaterally extend a letter of credit

nor can the Court of Appeals vary the terms of a contract.

(The Harriman, supra.) Having done so, however, the

Court goes on to measure the seller's performance against

these varied terms, holding (5. 28, in fra):

3 the ‘seller could nevertheless reasonably

entertain the belief in good faith at the time of

loading that the veseel would depart by the second

week in October. The duty defined in Ledon v:

Havemeyer, supra, 121 . F. 178. 24 N. E. 297, was

accordingly satisfied.””

This error affects the application of tke Cort s on

theory of permissible chanee-taking 80 materially as to

call for a reversal on that ground alone. 3 :

2. Application to the Law of Shipment

The. Court tied a that the buyer could have

done no more to speed the goods on their way had it been

present and representing its own interests. Could it not

have sought a ship at another port at greater expense to

‘Colorado? Could not the contract have simply been can-

celled with respect to these 1490 tons as was done with

the remaining 510 tons? There was no categorial neces-

sity for Colorado to make its profit by shipment, espe-

cially i in a market it knew to be declining. :

: The Court continues. in the same vein of error, always

on the assumption that the seller must ship and if he

cannot make normal and proper arrangements he may

make do with whatever is available. This is not the-New

York law. Cf. Dissenting Op. p. 30, infea; Miller v

Harvey, 221 N. T. 54; Eppens v. Littlejohn, 164_N. T.

187, 58 N. E. 19; Tobias v. Lissberger, 105 N. T. 404,

12 N. E. 13. The Second Cireuit has previously agreed

with Eppens v. ä 80 that it N to be *

on

Say

that inability to find a 8 suitable to the cargo, difficult

through it be, with room to stow it properly and not sub-

ject. to abnormal delays, did nch excuse the seller from 7

either non- Performance or delayed ‘performance. Com-

panhia De Navigacao Lloyd Brasileiro d. C/G. Blake Co.,

Qnd Cir., 34 F. 2d 616; Madereinse Do Brasil S/A v. Stul-

‘nan-Emerick Lumber Co; 2 Cir., 147 F. 2d 399, Cert. De.

325 U. S. 861, 65 S. Ct. 1201, 89 L. Ed. 1982. The recog-

nized exception is a supervening cause of an unexpected

or eatastrophie nature, such as the attack on Pearl Harbor

and our consequent entrance into 4 war previously con-

“fined to the European nations. L. N. Jackson & Co., Inc.,

v. Royal 9 e 2nd be 172 F. -

694. ‘

: Admitting that Colorado could escape liability for non- - -

delivery only if the catastrophe which prevented perform-

‘ance was not foreseeable, the Court in its last paragraph

- holds that it was never necessary for the seller to es-

tablish the impossibility of its performance becausé the

plaintiffs failed to satisfy the Trial Court that the seller

breached its contract. As Judge Hand points out, with

many citations, this was merely a conclusion of law and

not a finding of fact of the Trial- Judge. This deprives.

the point of virtue even as a technicality. The issue of

foreseeability ‘of the strike was a central one at the trial

and all that Colorado could prove it did prove thereon,

as is evident from both the lower court opinions. The

reasoning is circuitous. Whether the Court intends to

make a new and unwarranted distinction between non-

delivery and delay cases is not clear. The cases cited

in this section of this petition show no distinction of that

— nature and no difference in the duty of sel-ction of a

vessel. for shipment whether the Sales contract 1 a

C. I. F. term or not.

18

The cases we have cited grant no legal concessions *

. seller who undertakes to sell and ship-a difficult cargo

for a price against foreseeable’ obstacles. The nature of

the cargo points up the shipping problems he has as-

sumed. Here Colorado had made no arrangements what-

— ever to ship the balance of the 2000 tons it agreed to sell

plaintiffs and obviously took the risk of not oe: able to

perform its contract at all. 5 :

For commercial purposes, ‘tee aes may 4 a ar-

rival of the goods in the length of time after loading

thereof that an ordinary departure and an ordinary voyage

would take, accident and perils of the sea excepted. Lam:

born v. Log Cabin Products. Co. D. C. Minn., 1923, 291

Fed. 435; ; Armour Grain Co. v. Compagnie Generale Trans-

Atlantique, 26 F. 2d 739, affd. 26 F. 2d 741; Tobias v.

Lissberger, 105 N. V. 404; Connell Bass Co: v. Diederick- -

sen & Co., 9h Cir., 213 Fed. 737; Commercial Union v.

Anglo-South Amer. Bank Ltd., 2nd Cir., 16 F. 2d 979.

3. Conflict With the New York Law of Good Faith.

The finding is that Colorado’s agent Becker, had: actual :

knowledge on September 3rd that the S. S. Hawaiian was

strikebound and communicated such knowledge to Colorado

September 7th, not necessarily prior to its presentation

of the bills of lading and supporting documents to the

bank on September 7th for negotiation against the letters

of credit. Ignoring the fact that the formalities took un-

til September 13th, when checks were issued to Colorado,

the Court holds that Colorado did not have actual, knowl-

edge at the time of. negotiations and that actual rather

than constructive knowledge is required (p. 29, infra).

This conflicts with the New York law. Whatever is

notice enough to exeite attention, and put a party upon

his guard and call for inquiry, is notice of everything to

, 19

“whieh 9 inquiry might have led. Failure to investi-

gate will not absolve one from i puted knowledge of all

the investigation might have osed. my a v. Com-

merce Fire Ins. Co., 47 N. V. 597; Fidelity & sit Co.

i Queens County Trust Co., 226 N. V. 225, rvrsg. 174 App.

‘Div. 160, 159 N. Y. Supp. 954; rearg. den., 226 N. V. 711;

First National Bank of Paterson v. National Broadway

Bank, 156 N. V. 459; Application of Reinhardt, Surr. Ct.,

Kings Co., 202 Mise. 424, 114 N. V. S. 2d 208; Skinner o. ey

Norman, 165 N. V. 565. a

In fact, one who: fails. to see the obvious. or to investi-

gate the doubtful may be held liable for fraud and deceit,

even where there is lacking deliberate or “active fraud.

Kramer v. Joseph P. Day, Inc,, 26 N. V. S. 2d 734; State

Street Trust Co. v. Ernst, * N. 1 2 8 112. 7

S37

—

0. The Second Oireuit's Interpretation “of a Federal

Statute Should be n 8 |

In the same . the Court below extends. its re-

- quirement: of actual:knowledge to the statute, 49 U. 8. C.

—1¹4 te), which states that one negotiating a bill of lad-

ing warrants That he has knowledge of no fact which

would impair the * worth of thé bill.“ Obviously

the worth of the bills was impaired when the vessel ‘was

strikebound and the market declining and the bills could

be further negotiated, at their value absenfithe strike, only

by perpetrating a similar fraudulent coneealmefit on an

innocent third party. They were negotiated at New York,

where the law of good faith“ makes constfuetive knowl-

edgo applicable, in accord with the jaw elsewhere. More-

over, the Court has seen fit to repudiate its salutary die-

tum in Ocean 8. 8. Co. v. U. S. Steel Products, Co., 2 Cir.,

239 F. 823, 826; cert. den. 244 U. S. 652! and constrict

the healthy principles of Olivier Straw Goods Corp. v.

: Osake Shosen Kaisha, ud Cir., 27 F. 2d 129.

a

ay

ite

—

* i o “ee

3 a 20

D. The Status of Freight Forwarder and the Mature

of His Trade Practices Require Review. .

he Court below held in L. V. Jason E Co. v. het

Norwegian Government, 21d Cir., 177 F. 2d 694, that a-

shipping agent was charged with inquiring and knowing

whether a foreign vessel had registered under the U. 8.

- Ship. Warrants System in effect during World War II

and impüted the knowledge not only to the agent 1 to

his principal. Heré it declines to impute even the agent's

actual knowledge to the principal (P. 29, fra), 2 a. oer

reversal. |

It allows the seller’s: wee 10 the buyer to be delegated

to an agent even against a showing that the agent was

not informed of the sales contract or the duty thereunder.

It accepts the agent uncertain concept of his duty to

shippers as ending when he del, red bills of lading, with-

out requiring the shipper to take over from there.

_ Assuming the agent was adequately. deputed to aw

a ship during the strike injunctive period, the Court al-

lows him to leave the selection altogether to an interested

carrier free of strike responsibility, which Judge Hand

denounces as an „irresponsible subinfeudation of author-

ity.” , AN \

Both Courts below *. given undue weight to a heen

so-called trade practice of non- inquiry, indulged by a

freight forwarder. and his friends, the agents of a car-

rier from whomshe also receives commission. It likewise

honors’ his condept of his duty as limited to obtaining

a bill of lading as being an apparent personal’ trade prac-

tice. It also honors the trade practice of the carriers to

‘continue booking cargo in the face of an impending strike.

That may well be the practice that best befits their busi-

ness, free as it is ‘from. * responsibility. Their stock

*

, .

‘optimism’? is a necessary public attitude: to miles bnsi- 2

ness ‘at such times and is part of the ‘‘trade practice.’’

None of this can determine the rights of a buyer and seller.

Actually, no trade practice is applicable to this case

because it was the first time a Taft-Hartley enjoined strike

Situation arose. New legislation invalidates old trade

practices in any industry. A new situation requires rea-

sonable new measures. The T. J. Hooper, 2nd Cir., 60 F.

2d 737. A trade practice whereby a shipper relies on a

carrier who. does not accept the responsibility and con-

‘siders_ it the shipper's own: problem, is a worthless prac-

tice leaving a vacuum of responsibility to the innocent con-

‘signee. This is not a matter which should be left obscure

and only the highest court can effectively deal with it.

k The Issues Herein are of Primary Importance to

Domestic Commerce and International: Trade. se

Such importance is self-evident. Moreover, the deci-

sion of the Court below unsettles various sound legal

0

concepts, creating new —," sources of doubt . .

minen

CONCLU SION.

Warkronx, petitioner: respectfully Swe this Court

to issue its writ of certiorari to the United States Car ae |

of 3 for the Second Cireuit.

DUNN & ZU CKERMAN,

5 Attorneys for Petitioner. - :

Jamis F. Durr, |

Morton ZUCKERMAN, , .

Of Counsel.

3

0

— — 1

A a f es ; 23

AEN A.

. UNITED. STATES COURT OF arth

| Fox ran Stoo Onur. | "y rea os

ae — l 8 .

as a 328—October ‘Tom, A 3

sa (Argued April me Decided “May 29, 1957. 3

Docket No. 24016. oasis a

a J

8 1 8. ‘tune 2 and R. B. 3 Mo.

HANLAL & Sons, Ltd., a copartnership d. b. a. Mulk-

raj Brothers and Badhwar,

Ig

v. 2

Prange

Tus 8 axp Inon Corporation, Isnhanpr- ;

sex Company, Inc., and Aacenrcan-Hawatian Sream-

SHIP. Company, 3 f

\

8

8 . Defendants. 3

%%%

G Chief Jadge, wid 1

Haxp and a Loachass, Cirenit Judges, / .

—

1

—

Ry °

er,

Appeal from the United States District court * the *

. Distriet of N ew — 9 J. N Judge.

* —

a

— a 8 : 0 i fy : oh *

4 “a . 5 8 ; 74 2 8 Te . 8 2

=

~ defendant The Colorado Fuel and Iron Corporation.

24

Plaintiffs, a partnership of Lucknow, India, appeal from

a decision, D. C. S. D. N. V., 138 F. Supp. 595\dismissing’_

n the merits their action for damages for the delayed

% delivery, because of a strike, of a shipment of caustic soda

from New Orleans to Bombay, brought against the seller,

the carrier, and the owner of the vessel upon which ship.

—

ment was made. Affirmedd.

James F. Dunn, of Duan & Zuckerman, New York City,

for plaintiffs. 88 aig ä

Francis S. Bensel, of Kelley, Drye, Newhall & Maginnes,

New Vork City (W. Frederick Knecht, of Kelley, Drye,

Newhall & Maginnes, New York City, oa the brief), for

S

n.,

for defendant Isbrandtsen Company, Inc.

‘Woodson D. Scott, of Lord, Day & Lord, New York City,

Edward J. Heine, Jr, (L. DeGrove Potter, of Kirlin,

Campbell & Keating, New“ York City, on the brief), for

defendant American-Hawaiian Steamship Company.

Chief Judge:

This appeal presents interesting issues concerning the

duty of an American, seller under a C. I. F. contract to

select a suitable ship-to carry goods to a foreign buyer on

the eve of an impending strike. The facts are fully stated

in the reasoned opinion of the district court, D. C. S. D.

N. V., 138 F. Supp. 595; and so we shall limit ourselves

to.a summary statement. In early August, 1948, The Colo-

rado Fuel and Iron Corporation agreed to sell the plain-

tiffs 2,000 tons of caustic soda C. I. F. Bombay. Part of.

this merchandise was to bé shipped from a Gulf port by 7

September 22, 1948, the last day on which one of the |

Be ih 8

| bayer’ s import licenses was valid. The 1,490 tons in con-

troversy were loaded abroad the S. S. Hawaiian in New

Orleans by September 2, and the documents of title were

delivered to the buyer’s New York bank on September we.

‘But on September 3 the ship’s crew went on strike, and

the vessel did not leave New Orleans until some three

months. later. The Indian buyers brought this action,

based on the diverse citizenship of the parties, against the

shipper, the carrier, and the vessel owner to recover dam-

‘ages for loss of market caused by the late delivery; and

the chief question on appeal i is whether Colorado breached .

its contract. The district court found no breach. We

agree with its conclusion and accept its findings of fact.

The United States District Court for the Northern Dis-

trict of California on June 14, 1948, temporarily restrained, |

and later enjoined, a threatened maritime strike of the

Fast, Gulf, and West Coasts, under the national emergeney

provisions of the Labor Management Relations Act of

1947, 29 U. S. C. §141, et seg. The injunction was to expire

at midnight September 2 at the end of an 80-day cooling-

off period. During the summer, settlement negotiations

were conducted ; and the maritime industry was sufficiently

optimistic as to the prospects of settlement that New York ©

and New Orleans freight forwarders continued to book

freight for September sailings. Colerado’s New Orleans

freight forwarder entered into an affreightment contract

with Isbrandtsen Company, Inc., July 29, 1948, whereby

Isbrandtsen was to transport 1,000 tons of canstic soda

from New Orleans to Bombay on the S.S. Jane G. Swiss-

helm or other .A-1 vessel, the scheduled sailing date being

August 28-30, 1948. Shipping companies were reluctant

to handle caustic soda, and Isbrandtsen was the only

carrier found by the freight forwarder willing or able to

undertake shipment.

Under the contract of affreightment shipside delivery

was required between August 19 and 25. On: August 17,

Isbrandtsen exercised its right to substitute the S.S. Ha-

2 " J.

* —

waiian, on A-1 oer 4 for the 8.S. Jane G. Swisshelm, with

latest shipside delivery September 2, 1948. Upon receipt

of this advice Colorado had the tonnage covered by the

contract increased from 1,000 to 1,500 tons. Becker, secre-

tary- treasurer of the New Orleans freight forwarder, tes-

tified that on or about August 18 he learned that the Gulf

and East Coast disputes had been settled; and he had

formed the opinion that there would be no. strike at New

Orleans. He did not know that the substituted vessel had

a West Coast crew, since he was not advised by the cat-

rier’s agent and made no inquiry of his own; it was not

the custom or practice of the port to do so. Becker testi-

fied further that he dealt with Isbrandtsen, which he con-

sidered reliable, and not with the persons from whom

Isbrandtsen chartered ships. Consequently he did not

17

know whether the S. S. Hawaiian was under time or bare-

boat charter or the identity of its owner. f

Loading began at 1:00 P. M., August 31, within an hour

after the ship docked at Westwego Wharf, and. continued

overtime. On September 2, at 3:00 P. M., while the injunc- |

tion was still in effect, the stewards left the ship to attend

a union nieeting, but did not strike. Three hours later the

last of the. caustic soda was on board and the ship was

loading other cargo. At midnight the injunction expired. -

At 3:15 A. M. the stewards went on strike, the first the

ship’s master knew that. any of his crew would walk off.

At 10:00-that morning the engine-room crew joined the

strike, cutting off the steam to the winches and ending

further loading operations. While the strike continued it .

was impossible to do anything with respect to looding or

unloading the cargo or sailing from port.

The seller’s freight forwarders, not knowing of ‘the work

stoppage, paid the freight at 9:30 A. M., September 3,

receiving two bills of lading which they mailed to Colorado

that day, a Friday. On the Tuesday after Labor Day,

September 7, the bills were presented to the bank in New

* . . n @ .x N

Vork for payment. Becker learned of the strike in the

. early afternoon of September 3, but did not inform Colo-

rado of: it until September 7 because the situation was

fry unclear on September 3rd * . It was a tempo- .

rary situation and we were trying to see how it would

progress, and then there was a long week end

occasioned by the Labor Day holiday. ” 138 F. Supp. 595,

604. Colorado’s general traffic manager was surprised by

- Becker’s wire late September 7 or September 8, and his

assistant wrote for an explanation: Colorado learned the

full story on September 13 and informed the buyer of the

facts one week later.

There is no dispute that delivery of the bills of lading

on September: 7 was ay But the seller in such circum-

5 *

— a — ‘in — faith ec a ee having reason to

suppose she would sail within a reasonable time after

shipment.“ Leden v. Havemeyer, 121 N. V. 179, 186, 24

N. E. 297. Shipment“ occurred on September 2 when

the caustic soda was loaded on board; what constitutes a

. reasonable delay before sailing depends on the particular

contract of sale. Tobias v. Lissberger, 105 N. V. 404, 12

N. E. 13. Since documents of title could be presented as

late as September 22, shipment on September 22 would

not be improper; and it is to be expected that’a vessel will

take additional time to load other cargo if the shipper is

not supplying a whole cargo. Ledon v. Havemeyer, supre,

121 N. V. 179, 24 N. E. 297. Thus the buyer would cer-

tainly have had no complaint had the S. S. Hawaiian sailed

September 23. From the exchange of cables and letters

TFhich constituted the contract of sale it appeared that

part of the goods could be put on board as late as October

9, suggesting that the buyer fixed the September 22 dead-

line because that was the expiration date of its import

license, and not bevause it feared an immediate market

drop. From all this Colorado could: property assume that

my Ds 55

*

*

the buyer would be satisfied with a September 23 sailing,

and would accept an October 11 sailing if necessary.

Even if we ascribe to the seller knowledge that the ship

*

had a West Coast crew, the seller could nevertheless rea-

- gonably entertain the belief in good faith at the time of

loading tliat the vessel would depart by the second week in

October. The duty defined in Ledon v. Havemeyer, supra,

121 N. V. 179, 24 N. E. 297, was accordingly satisfied.

Moreover, Colorado, as we see it, did everything to speed

the goods on their way that the buyer could have done

had the latter been on the spot and representing its own

interests. g

The contract with Isbrandtsen made on July 29 was as

no reason then to be suspicious’ of a possible substitution

of another A-1 vessel. When on August 17 Colorado con-

füirmed the substitution of the S.S. Hawaiian there was

still no reason to reject a ship because it had a West Coast

erew; the East Coast and Gulf settlements were still in the

future, and one crew seemed no more likely to strike than

another. Later when it appeared that West Coast crews ~

were less desirable than others, there was no alternative

course open whith promised mere likelihood of prompt

sailing. If Colorado broke its contract to use the S.S.

. Hawaiian and sought another ship with a Gulf or East

Cast crew, there was virtually no chance of obtaining

space promptly. There was evidence that it takes consid-

erable time to book space for 4 cargo of that size and that

other lines were unwilling to handle caustic soda. Refusing —

to load until the strike situatica was clear involved the

same disadvantages. It made far better sense to take a

chance that the S.S: Hawaiian would not ‘be struck or

_. would be struck briefly. While it was foreseeable that

there would be a strike, it was far less foreseeable that a

maritime strike crippling the entire West Coast would last

from September-2 past the first ‘week in October; and.in

29 :

the ‘circumstances it was an intelligent n decision

to load aboard the S. S. Hawaiian.

The plaintiffs’ other major argument concerns Colo-

rado’s presentation of the bills af lading to the buyer’ s

bank after the strike occurred. mtiffs cite a dictum in

Ocean S. S. Co. v. U. S. Steel Pr ucts Co., 2 Cir., 239 F.

823, 826, certiorari denied 244 U. 8. 653 for the propos

tion that this constituted fraud. See also 49 U. S. C.

§114(c), which states that one negotiating a bill of lading

- warrants ‘‘That he has knowledge of ae fact which would

impair the * worth of the bi - Assuming that

the worth of the bills of lading was — by the strike,

a fact which was not established below, it was still neces-

the time it negotiated the bills. Plaintiffs would have :

us impute the knowledge of Becker, secretary-treasurer of

the freight-forwarding corporation, to Colorado, for it

that Becker learned of the strike late on Sep-

four days before Colorado presented the docu-

ments off title. But Becker was under no duty to keep

Colorado informed of strike developments, and corfse-

quently His knowledge cannot be imputed to Colorado.

1 Restatement, Agency §275 (1933). Becker's original

deposition indicated that he kept abreast of strike devel-

opments and notified shippers if they materialized, but at

trial he ‘insisted that his duty to shippers ended when he

delivered bills of lading. The trial court accepted - -his

later version, and we cannot say that this * was

clearly erroneous.

Inasmuch-as Colorado conducted its freight forwarding She

ne through an independent contractor whose reliability is not

questioned, and only two vessels in the whole port of New

Orleans were affected by the West Coast strike, it cannot

properly be charged with constractive notice of the strike

before the time Becker cabled the news on September 7.

-Moreever, we think actual, ratier than constructive, knowl-

edge is required in such circumstances. Fenold v. Green,

2 Cir. 175 F. 2d 247; Bank of Otterville v. Bank of Boon “3

ville, 223 Mo. App. 572, 16 S W. 2d 70 |

_ . Plaintiffs also named as defendants Isbrandtsen and the

owner of the S.S. Hawaiian; but the claims against them,

‘if any, are barred by the one-year statute of limitations in

. the Carriage of Goods by Sea Act, 46 U. 8. C. 51303 (6).

Commercio Transito Internazionale, Lid., v. Tykes Bros.

8. S. Co., 2 Cir., April 29, 1957. N

In their briefs the plaintiffs treat the present case as

one in which a seller fails to perform and then attempts to

establish the defense of ‘impossibility. In such cases the

seller has the burden of proving the defense, which. often

amounts to establishing that the catastrophe which pre-

vented performance ‘was not foreseeable, e. g., L. N. Jack-

son & Co. v. Royal 8 Government, 2 Cir., 177 F.

2d 694, certiorari denied 339 U. S. 914. Here, however,

the plaintiffs failed to satisfy the trial eourt that the

. seller breached its contract; consequently it was never

necessary for the seller to establish the impossibility of

its performing.

Affirmed.

=

Hann, Circuit Judge (dissenting):

We should distinguish between a failure to deliver the

cargo at: all, and a failure to make timely delivery (in this

case on board a ship, September 22). The seller did in-

deed make delivery under 5127 (1) of the New York Per-

sonal Property Law and at common law, by laying the

cargo alongside the ship, and it is also true that this

delivery was in season to conform to the date fixed in, the

contract which was September 22. Nevertheless, it “was

not such a delivery as the parties contemplated because

the ship did not break ground on or about September 22;

8 hence. it wag not the stipulated performance. If the strike .

had arisen "unexpectedly after the contract of. sale was

Sl a

„

‘ 5 — ; ~

‘made, ‘perhaps it pers thave excused the defendazi’s

failure to perform; but, at the time, the situation was such

that a West Coast strike might well be resumed after

September 1 when the injunetion expired; and, that being

true, the defendant took the risk that it would be unable

to perform. Madeirense do Brasil 8/ A v. Stulman-Emrick

Lumber Co., 147 F. 2d 399 (C. A. 2). Compare L. V.

Jackson d Co. v. Royal Norwegian Government, 177 F.

2d 694 (C. A. 2). If a seller makes a reasonable“ con-

tract with the carrier ‘‘on behalf of the buyer,“ that the

> ow will break ground on the stipulated day I will assume

‘that ander §127(2) this would be performance; though she *

does not do so. However, in the case at bar it was not

‘‘reasénable’ to assume that the ship selected would be

free to break ground on. September 22; she might or she

might not; no one could tell. That was not enough to

~ absolve the defendant from the implied agreement that

it would select a ship, free on September 22. It was fully

charged with notice that the ship was from the West Coast

and that the strike on that coast had not been settled. 5

It had deputed Becker to select the ship, and Becker had

left its selection altogether to Isbrandtsen, an irrespon-

. sible subinfeudation of authority. Even a casual inquiry

as to whether the ship selected was within the still strike- _

bound: zone, would have —-? the risk imposed on -_ *

— plaintiff. 5

Ineidentally J udge Ryan 8 conclusion that the ane

was reasonable“ is not a „finding of: fact,’’ reversible

only if it is “clearly ‘erroneous’’; in a case tried to a

judge it is a ‘‘conclusion of law.“

I would reverse the judgment and remand to ascertain

the damages arising —_ the delay. 5

— —— 8S. Co., 151 F. 24 558 b 0 A. 2); Great

Atlantie & Pacific Tea Co. v. Brasileiro, 159 F. 2d 661; Kreste v. United

gr ae gS 2d 575, 577; Guerrini v. United States, 167 F. 2d 352,

A eludes Johnson v. United States, 168 F. 2d 886 (C. A. 2);

255 „ Inc., 184 F. 2d 826, 828 (C. A. 2); Bonnewell v.

xd ‘State 110". 2d 411, 1 A. 4); Dale v. Rosenfeld, 229

„2d 855, 858 (C. A. 2 :

ys ®

in: : APPENDIX: BL ;

UNITED STATES COURT OF APPEALS, -

| Fea rus Sscop CmOurr. |

At a Stated Term of the United States Court of

Appeals, in and for the Second Circuit, held

at the United States Courthoase in the City

of New York, on the 29th day of May one

- *°. thousand nine hundred and fifty-seven.

— el

e 8

Present :

— Hon: CNS E. Clank, . . 2

„ 1 3 Chief Judge, : A

How. Learxen HAN oe. ate

Hon. J. Epwarp Ltmsar, . 5

Cirenit Judges.

R. S. Dass Bapuwane, et al., -

Plaintiffs-Appellants,

v. 8

Ann.-Hawanax S. S. Cosronariox, . Civ. 62-10

a 2 Defendant-Appellant, : . 5

- Covorapo Fue. 4 Inox ‘CORPORATION, -

| T

Defendants-Appellees.

Appeal fram the United States Distriet Court for. the

Southern Distriet of New Vork. . ao. ä

This cause came on to be heard on the transcript of

record from the United States District Court for the.

. Southern Distriet of New York, and was argued by counsel.

—_,

* : |

*

On 8 88 it is now vein ordered,

adjudged, and decreed that the judgment of said District. —

5 c with costs to the

* 1

A. DANIEL FUSARO

A true copy. | | |

A. Daum. Fvsano —

Clerk.

(Seal) 4

* 2

*

„

i atl

Sections 209 and 210 of tthe

tions Act of 1947, 61 Stat. §§155, 156, 20 Ul. S. C. 65179,

190, read ab fellows:

179. (a) Whenever A district court has 1

an order under section 178 of this title enjoining

acts or practices which imperil or threaten to im-

’ peril the national health or safety, it shall be the

duty of the parties to the labor dispute giving rise

tozeuch order to make every effort to adjust and

settle their differences, with the assistance of the

Service created by this chapter. Neither party shall

be under any duty to accept, in whole or in part,

any proposal of settlement made by the Service.

fig Upon the issnance of such order, the Presi-

dent ‘shall reconvene the board of inquiry which

has previously reported with respect to the dispute.

At the end of a-sixty-day period (unless the dis-

1 pute has deen settled by that time), the board of

inquiry shall report to the President the current

_ position of the parties and the efforts which have

deen made for settlement, and shall include a¥

statement by each party of its position and a state-

ment of the employer's last offer of settlement.

The President shall make such report available to

the public. The National Labor Relations Board,

within the succeeding fifteen days, shall take a

_ secret ballot of the employees of each employer

involved in the dispute on the question of whether

they wish to accept the final offer of settlement

made by their employer as stated by him and shall

certify the results thereof to the Attorney General

within five days thereafter.

1 @

4

. 180. Upon the certification of the — of such

ballot or upon a settlement being reached, which-

ever happens sooner, the Attorney General shall — |

move the court to discharge the injanction, which

motion Shall then be granted and the — |

discharged. When such motion

President shall submit to the Con

comprehensive report of the p i

——

‘the findings of the board of inquiry and ‘ins ballot

taken by the National Labor Relations Board, to-

__ gether with such recommendations as he may see

fit to make for — one appropriate

aetion.’’ 8

Section 4 of the United States eta’ of Goods * ,

| ‘Sea Act, 49 Stat. 1210, 46 U. S. C. 1304, reads in part as

follows:

my. 2) Neither the carrier nor the ship shall be

responsible for * or damage, es or resulting

from— - ve

e ° „ 8 2 7

(5) Strikes or lockoute ¢ or stoppage or restraint ;

- of labor from whatever cause, whether partial or

general: Provided, That ‘nothing herein contained

. shall be construed to relieve a carrier from. 1—

sponsibility for the carrier’s own acts;

Section 114 of 49 U. S. Code, part of a chapter headed ay

Bills of Lading, ’: v9 reads a8 follows, in part:

* j

a,

A person who negotiates or transfers for voles |

a bill by indorsement or delivery, unless a con-

; trery intention appears, warrants— 8 5

(a) That the bill is genuine; b : \

(b) That he has a legal right to transfer 15

@

2

Ses ¥ :

: : a

; Se

(e) That 1 bias n no fact which

would n the wae: r worth of the

Bs. 3. : it

| (d) * — 3

Section 127 of the New York Personal Property Law

reads as. follows:

* — — to voli or

a sale, the seller is authorized or required to -send

the goods to the buyer, delivery of the goods to

a carrier, whether named by the buyer or not, for

the purpose of transmission to the buyer is deemed __.

to be a delivery of the goods to the buyer, except

in the cases provided for in section one hundred,

rule five, or unless a contrary intent appears.

2. Unless otherwise authorised by the buyer, the

seller must make such contract with the carrier on

behalf of the buyer as may be reasonable, having

regard to the nature of the goods and the other

circumstances of the case. If the seller omit so- —

to do, and the goods are lost or damaged in course

of transit, the buyer may decline to treat: the de-

livery to the carrier as a delivery to himself, or

may hold the seller responsible in damages. 8

3. Unless otherwise agreed, where goods are sent

dy the seller to the buyer under circumstances in

which the seller knows or ought to know that it

is usual to insure, the seller must give such notice

to the buyer as may enable him to ingure them dur- 4

ing their transit, and, if the seller fails to do so,

W

such transit.“ aie et

— * 3 — . —

3 pabicalar place, or to pay the freight or cost of

*

ae place, the property does not pass until goods '

2 N 4

; J ** . * 4 ,

3 oe = rea ge on

1 9 Bay, fa

* Section . one “panied: Rule 5, feferred to in ‘Section —

8 127 (91. reads as follow: |

ee. 0 Thule 8 the amen to i aah requires the

r to deliver the goods: to the buyer, or at a

transportation to che buyer, or to a particular

have been delivered to the ‘buyer, or reached the

place. — upon.“ : ie .

*

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