Brief of Respondent in Opposition to Petition for a Writ of Certiorari — Badhwar v. Colorado Fuel & Iron Corp. (No. 391)

5 r

| SEP 2 7 1957

Ix THE

ern des af the Hated Sates

OCTOBER TERM,’ —

en

No. 391

R. S. DASS BADHWAR. and R. B. LACHHMANDASS

MOHANL-AI. & SONS, LTD., composing the co- partnership

R A enter Ge Semi somae ent style of MULKRAJ

: ‘BROTHERS and — e

; " Plaintiffs-Petitioners,

5 “THE COLORADO FUEL AND IRON CORPORATION,

4 2 :

— * * 4 N

BRIEF OF RESPONDENT IN OPPOSITION TO THE -

PETITION FOR A WRIT OF CERTIORARI .

: 2 2 = 2 z

; *

_ Francis S. BEN SEI.

ey Counsel for Respondent, |

: ‘ Soa 70 Broadway,

es New York 4, N. Y.

te Henny E. Kxilxv,

W. Frepericx Knecurt, 3

of Counsel. g 5 5 *

INDEX

A Nature of the Action ; Sia dene

B. The Issue Involved ees se 7 ne

ARGUMENT:

Porxt I—As between plaintiffs and Colorado, the

one dispositive issue was whether, as a matter

of local New York law, Colorado had breached.

its contract. The below both-correctly |

decided, in conformity, with applicable and

well established New Ton ok that re was

vo breach e —7 ĩ272 2 qt[ᷣ—y

Poixr H colorado . been held to have per-

formed its contract and thus; ‘having had the

absolute right to receive payrfent against pres-

-- entation of the bills of lading, he question under

the Federal Bill of Lading Act was, or is,

presented „ Rvs esas ee

5 —

woe

CoNCLUSION ...... . r uranic snare |

ee |

ae Tan OF 0 — Cruso ery

A. Klipstein & Co. v. Dilsisian, 273 Fed. 473 (C. A.

224), cert. den. 257 U. S. 6 9. 11

biamend Alkali Export Corporation v. — 5

8 11921], 3 K. ee 16

Dwane v. Weil, 199 App. Div. 719, 730.1 (ist Dept.), 25

aid. 25 N. A

8 Harper v. Hochstim, 278 Fed. 102 (C. A: A0 .. . II,

; In re an Arbitration between Weis & Co., Ltd. and

Credit Colonial et Commercial bac [1916]

% aa cand . 17

Laon v. Havemeyer, 121 N. T. 179, 154 N 13

Madeirense do Brasil S/ A v. Stulman-Emrick Lam-

| ber Co., 147 F. 2d 399, 402 (C. A. 2d), cert. den. 7

% ee . 11 *

Matter of Bullard, 210 App. Div. 2 (Ist Dept.), 3

„ OM BOON. T. hence me, ings tniuss - Oe

Mee v. MeNider, 109 N. X. 300 3 .

Ocean S. S. Co. v. United States Steel Products Co.,

25 Fed. 823, 826 (C. A , K den, 308 U.'S. b

5 “— .. •⁰¹·wAm.];Ä s cae beamaese 17:

Olivier Straw Goods 8 v. Osaka Shosen

Kaisha, 27 F. 2d 129 (C. A. 2d), cert. den. 278

%% ͤ ͤ ( ˙ » . 17

Reaver ¥. Lide Light Ce. UX

‘Smith Co., Lid. v. Moscahlades, 198 App. Div. 126

Week WN ok ces ag se J an 510,17

Voietor v. National City Bank, 200 App. Dir. 557, 565

e e . f. . . 16

FaoenaL (Pomznext) Bu. ow Lapixe Act, 49 U.S. C. 8

Usrrep rares Canada or Goons sy Su Acr,

Section 303), 46 U.S. C.:

* § 1303(3)

2 6 „ „% %% %%f ;⅛F „ „„ ee „„ „„ „ „„ „„ „ „ „ „„ „„ „„ tee eeee

. . —

PAGE

In THE

Cont st tee Menne ae

- OCTOBER TERM, 1957

| No. 301

2 25 4 os

R. S. Dass Bapzwar and R. B. .

& Sons, Lrn., composing the co-partnership doing busi-

ness under the firm name and style of MuLKRis Bnorg-

ERS and —

. Pune Penuosers

— „ = 8 g parle agamst 0

Tas Col ona Fon. Ax p Inox —

3

*

*

b BRIEF OF RESPONDENT IN OPPOSITION TO THE

PETITION FOR A WRIT OF CERTIORARI :

Petitioners' statement of. the case (Petition, pp. 5-12)

is inadequate and misleading. It ignores significant facts

and explicit findings of the District. Court, which the Court

of Appeals unqualifiedly accepted (Petition, p. 25), and

does not accurately state the issue tendered and deeided

below. A brief statement of the facts involved is, there-

fore, necessary to a proper determination of the petition.

Statement of the Case’

A. Nature of the Action

a EF 3 3

_ This action was brought by plaintiff-petitioners (herein-

after called ‘‘plaintiffs’’) for the recovery of damages for

breach of a c.i.f. contract of sale by reason of the alleged

a

'

— — —

*

improper pe 1 delayed 8 to 4 at Bombay, India, 2

of some 1, 490 tons of caustic soda (Isb. “Appx. 3a-13a). .

Joined as defendants were the respondent, The Colorado

Fuel and Iron Corporation (hereinafter called ‘‘Colo-

rado’’),:the seller of the caustic soda; Isbrandtsen Com-

pany, Inc. (hereinafter called ““Tsbrandtsen’”’), the ocean

carrier engaged by Colorado to transport the cargo from

New. Orleans, Louisiana, to Bombay; and American-

Hawaiian Steamship Company (hereinafter called ‘+ Ameri-

-. can‘Hawaiian’’), the owner of the vessel, to wit, the S. S.

Hawaiian, which Isbrandtsen chartered for the voyage and

upon which the caustic soda. was loaded and shipped.

The gravamen of. plaintiffs’ claim against Colorado was

that Colorado breached its contract with them by wrong

; fully and improperly causing or permitting the eaustie

_. soda to be loaded aboard the S. S. Hawaiian at the Port

of New ‘Orleans ‘at a time when it knew, or should have

known, that said vessel was about to beeomè immobilized

by a strike of its unionized crew, as it thereafter did, and

could not reasonably be expected to depart in the ordinary

and usual time and manner ¢ Isb. Appx. *

B. The 1 — i

“i the trial, it was stipulated that the contract of tbe

sued upon by plaintiffs was made in the State of New York

and should be construed in accordance with the law of

Ne Vork (Isb. Appx. 47a-48a). |

Accordingly, as between plaintiffs and ‘Colorado, the sole

issue was whether, on the facts and as a matter of local

New York law, Colorado had — or breached its

contract w rith plaintiffs.

Figures in parentheses, unless as i in this instance otherwise in-

“dicated, refer to-pages of the appendix to respondent’ s brief in the

United States Court of Appeals.

4

2

3 ö ;

*

C. Facts

Early i in 1 1948, Colorado agreed 4 bell plaintiffs

2,000 tons of caustie soda at a price of 914 cents per pound,

e. if. Bombay, India, payable by irrevocable letter of credit

in favor of Colorado, with shipment to be made from a

Gulf port in one or more lots on or before Septemder 1

1948 (3la-32a, 37a; Pls.’ Appx: Sa-8a).

, ‘Thereafter, on August 19, 1948, plaintiffs caused: an

“irrevocable letter of credit to be opened by The. National-

City Bank of New York for $239,000 and, on August 26,

1948, plaintiff, Badhwar, caused a further irrevocable

Jetter of credit to be opened by said bank for $186,000 (32a-

Ba, 39a-42a). Under the first of these credits (which was

. subsequently amended on August 25, 1948, so as correctly

_ to designate Colorado as the beneficiary thereof [a; Pls.’

Appx: 43a, 46a]) payment waz to be made against on board

bills of lading, dated at the latest October 10, 1948, evi-

deneing the shipment of 1,000 tons of caustic soda °(39a-

40a), and by the second of the credits payment was to be

made against like bills of lading, dated at the latest Sep-

tember 22, 1948, evideneing the shipment of the balance of

the caustic soda (4la-42a). The District Court found

(Pls. Appx 9a), as.did the Court of Appeals by its ac-

. eeptance of such finding (Petition, p. 25), that the first of

the two eredits effected a modification of the contract to

the extent of permitting shipment of part of the caustic

soda, i i. e., 1,000 tons, to be made as late as October 10, 19488

rather than on or before e 23° 1948, as initially

specified. 5 i ; . 1 4

When the 8 was made. ‘ii had a contract

of affreightment with Isbrandtsen‘ dated July 29, 1948, for

the transportation of 1,000 tons of caustic soda from New.

Orleans to Bombay on the S. Sy Jane G. Swisshelm, or

‘other A-1 vessel, the schedtled ‘sajling date of which was

; — — . with — os require between

*

* 19.25 1948 (Pls.“ Appx. . * This contract

had been procured by Colorado through its local New

Orleans freight forwarder, Farrell Shipping Company

(hereinafter called ‘‘Farrell’’), and admittedly had to be

J obtained well in advance of shipment both because of the

\ large size and bulk of the cargo (12a-14a) \and because

olf the difficulty in booking space for caustic due to

ae the reluctance of shipping companies to handlè a material

V its undesirable 8 characteristics. (Pls. 5

pe. a

Under the right reserved to it by its contract,. ‘because

the S. 8. Jane G. Swisshelm would not be available for the

voyage, Isbrandtsen, lon August 17, 1948, substituted in

lieu ereof the 8. S. Hatoadiian, concededly an A-1 vessel,

with latest shipside delivery at New Orleans by September

2, 1948 (19a; Pls.’ Appx. 12a). When advised of this sub-

stitution and the added time for shipside delivery, Colorado

arranged to have the tonnage increased from 1 000 to 1,500

tons (Pls.’ Appx.. 12a-13a).

~ ‘Thereafter, between August 20 and 27, 1948, Colorado

shipped some 1,490 tons of caustic soda from its plant at

Ladora, Colorado, to New Orleans (28a, 47a; Pls.’ App.

13a), where it was delivered into Isbrandtsen’ s custody

. (Isb. Appx: IITa-127a; Pls.’ Appx. 13a). Meanwhile, the-

Hawaiian arrived at New. Orleans, where it docked: on

August: 31st (Pls.“ Appx. 13a). Loading of the caustic

Soda aboard the vessel was thereafter begun, continued on

. September Ist and completed by 6 P. M. on . 2nd

= © ( Pls.’ Appx. 13a-15a). N

At 3 15 A. M. on September 3rd the Hawaiian’s R a

ards left the ship and went on strike (Pls,’ Appx. 15a).

However, loading of other cargo continued throughout

the remainder of the night and until 100 0 Wer! in the morn-

a &

It is to be noted that no credit een were — by

plaintiffs prior to August Igth and that they were not completed

until August 25, one day after the ** date fixed: for —

ä : as - pa

—

898

ing, at. which time the engine room crew struck the vessel,

with the result that it was thereafter impossible either to

load any further cargo or to remove the cargo of caustic

dboda that already had been loaded and place it aboard

another vessel (Pls.“ Appx. 16a, 19a-20a). 1 1

At 9:30 A. M. on September 3rd, Farrell, then having

no notiee or knowledge of the work stoppage of the Hawai-

5 ian ' stewards, delivered Colorado's cheek for $32,848.72

to Isbrandtsen’s shipping agent in payment of the ocean

freight charges and at the same time received two on

board bills of lading which were on the same day, a Fri--

day, mailed by it to Colorado (26a, 48a-49a; Pls.’ Appx: -

Ia). On Tuesday, September 7th (the intervening Mon-

day being Labor Day (2va]), Colorado presented sicht

drafts, together with the bills of lading and other docu-

ments required by the letters of credit, to The }dtional

City Bank of New-York which were thereafter paid paid by.

said bank (33a-36a, 39a-42a). 3

— The strike which immobilized the Hawaiian vas an us.

usually prolonged one lasting until D. der

(Isb. Appx. 87a-88a)—and was unexpected insofar as Far-

rell and Colorado were concerned.

maritime strike on the t, ult West Coasts had

been enjoined in June, by two 80-day Taft-Hartley.

Act (29 U.S.C. §§1/1, et seg.) injunctions expiring at

midnight September 2, (Pls.’-Appx. 10a), the news-

papers thereafter reported that collective bargaining ne-

gotiations were in progress between the affected unions _

and ship operators (Pls.“ Appx. 10a). As a: result, those-

connected with the maritime industry were. optimistic that

the disputes would be settled before the expiration of -

the 80-day ‘period (Pls.’ Appx. 10a-lla). The same op-

timism was shared by New York and New Orleans freight

forwarders who, as the courts below béth found (Pis.’

Appx. lla; Petition, p. 25), continued to do business as

usual and to book, freight for July, August and Septem-

ae

ie sailings. Later, on a Angst 18, 1940, this optimism was

3 the announcement in the press, including the

Ne Orleans newspapers, that the threatened strike on

te East end Gulf Connte had — settled (64a; Pls.’ Appx.

830).

Despite the ‘sctQiment the East and Gül Const la labor

dauisputes, the Hawaiian was struck some two weeks later

at the Port of New Orleans. This happened as the result

ae of tne· eireumstance that the Hawaiian had been time char-

„ _ | tered by, Isbrandtsen from “American-Hawaiian, a West

Coast line, and was accordingly. manned by a West Coast

crew, the members of Which belonged to various West

Coast maritime unions which theretofore had ‘failed to

settle their differences with ship operators (Am. Haw.

Appx. 35a-38a; Isb. Appx. 86a-87a, 91a; Pls.’ Appx. 90a-

ae Na). Only ons other vessel in the Port. of f New Orleans

was similarly affected (Pis.’ Appx.ol9a). . RS a

prior to the strike, Farrell s officer, Recker, who handled 8

8 the booking arrangement for Colorado (20a-20b), did not

Du. know tliat the S., S. Hawaiian was owned by American-

2 5 =z Hawaiian (25a; Pls.’ Appx. 13a, 17a). He testified that

| this was a matter which was of no concern to him since his

business dedlings-were with Isbrandtsen who he considered

to be a reliable company ( 25a-26a ; Pis.’ Appx. 13a). He

further testified that while he had been told at the time of

the making of the affreightment contract that the. Swiss-

- helm was under bareboat charter to Isbrandtsen, he was

not informed*of the type of charter covering the Hawatian.

and that he made no inquiry with respect thereto as it was

. neither the custom nor the practice in the Port of New -

Orleans to do 80 (22a; Pis:* Appx. 13a, Gta). Conlon, a

New York freight forwarder called as a witness by plain-

. corroborated Becker's testimony that it was not cus-

tomary to inquire as to the type of charte> made between

<p: operators and testified that. he never made any duch

Pa inquiry (Ibn. 3 . Sgt c=

——

7

time charter te Isbrandtsen or that ‘American-Hawaiian

_was the owner thereof, he did not know, prior to the strike,

that the vessel was manned by a West Coast etew or to

hat unions the officers And crew belonged (22a, 23a; Pls.’

Appx. 13a, 17a). Prior to September 7th, ‘Colorado also

knew nothing about the crew or charter of the .

N (28a, 29a, 55a-55b; Pls.” Appx. 13a, 18a).

Becker first learned of the strike in the early aftemncen

of September 8rd (22a, 26a; Isb. Appx. 56a; Pls.’ Appx. -

Ia). However, he did not inform Colorado of it until

September 7th for the reason that on September 3rd the

situation was unclear and, with the long Labor Day week-

end intervening, it was not until the 7th that he was able

to ascertain. that the rike was definitely on (26a, Gla).

Colorado was first apprised of the strike when its Denver

Traffic Manager received Becker’s telegram of Septem-

ber 7th (Pls.’ Appx. 18a). Colorado wrote Farrell for an

explanation and,.upon being advised as to the cause of the

strike, notified its New York expart office accordingly (56a-

Sa) which, on September 20th, informed plaintiffs of the

. facts (Pls.“ Appx. 18a). In reply, plaintiffs wrote Colo: -

rado on September 27th asking to be informed chen the

strike is called off and the steamer sets sail’’ Pl.“ Appx.

Ba, 47a). ae ee 8

On October 9, 1948, for reasons b unrelated to the strike,

plaintiffs cancelled the balance cf the contract covering the

unshipped tonnage (Pls.“ Appx. ga, 43a, 48a). Three

months later, they for the first time complained of the

delay ( Pls.’ Apes. * Ha, 8

. The Decisions Below

The Distriet Cunt, applying local New York law, held

| that due und proper shipment was made by Colorado when

7 the” caustic soda. was * aboard the Hawaii * and that.

Sinoe i did not * that the Hawaiian was under 8

—— ey

——

8 ee

a

since the contract between the parties was one for the sale

of goods c.i.f. Bombay, all risk of delay was thereafter upon

plaintiffs ( Pls.’ Appx. 20a-22a). The District Court further -

held that, even apart from the e. i. f. feature of the contract,

~ loss occasioned by the delay should be borne by plain-

since Colorado and Farrell both had acted in good

per Bass exercised reasonable business prudence and since

Colorado, at the time the caustic soda was loaded, had no

reason to believe that the vessel would not sail before the

stipulated shipping dates (Pls.“ Appx. 24a-25a). Judg- ©

ment was accordingly entered dismissing the complaint on

the merits as to Colorado (Pls.“ Appx. 3a).

On appeal, the Court of Appeals, Judge Learned Hand

dissenting, affirmed. The majority, in an opinion written

by Chief Judge Clark, stated the issue before the court

and the decision reached as follows (Petition, p. 25) : 1

10 © 1 chief question on appeal is whether Colo-

rado breached its contract. The distriet eourt found

no breach: We agree with its conclusion and aceept

its findings of fact.” 5

Having made this pronouncement, which was dispositive

of the appeal, and having also thereby accepted the finding, |

implicit in the Distriet Court's deeision, that prior to Sep-

tember 3, 1948 neither Farrell nor Colorado knew, or could

reasonably be expected to have known, that the Hawaiian

“would become strikebound, the majority went on to note

that, even if it were assumed that Colorado was chargeable —

with sueh knowledge, it could not be charged with knowl.

edge that the vessel would not sail by at least the latter of

the two, dates specitied for shipment and that it could

reasonably and in good faith have anticipated the contrary

(Petition. pp. N. 2). The majority further noted that

plaintiffs were entitled to no redress under the Federal

(Pomerene) Bill of Lading Act (49 U.S.C. 5114 (e) [Peti-

tion, pp. 35-36]) by reason of the presentation hy Colorado

+

*

. 3 ye

on September 7th of the two bills of lading, first, because

_ there was no proof that the worth of the biils of lading had

deen impaired by the strike, and, secondly, because Colo-

rado at the time had no actual knowledge of the, strike and

could not be-imputed with Becker’s prior knowledge thereof

as the evidence showed that his duty as Colorado’s freight

forwarder ended with the delivery of the bills of lading to

Colorado on September 3rd- (Petition, pp. 26, 29-30).

Judge Hand based his dissent on the proposition, con-

tradieted -by the evidence, that Colorado was ‘‘fully’’

charged with notice that the Hawatian was from the West

Coast and that the “strike on that coast had not been

settled and, from this premise, concluded that Colorado

assumed the risk that the vessel might not sail before the

date fixed for shipment (Petition, pp, 30-31): AS already

noted, both the District Court and the majority. of the

Court of Appeals found the fact to be otherwise and agreed

that Colorado neither knew nor was charged with notice

that the Hawaiian was owned by a West Coast line or

manned by a West Coast crew.

Plaintiffs deal with this action as though it were immate-

wa! that their contract with Colorado was for the sale of

the caustic soda, ¢.i:f. Bombay. However. the fact is that

the v.i.f. feature of the contract is of the utmost importance“

ö and required that the rights and obligations: of the parties a

che determined hy the well established rules of New York. -

law applic able to e. i. f. contracts.

10 an oak

In Seaver v. Laden Light Co. 288 N. V. 273, the New

Tork Court o of Appeals stated (p. 276):

„The meaning of the letters e. i. f. in an executory

contract is, and at the time the contract in question

was made were, well understood in the commereial

world. They mean the cost of the merchandise, insur-

ance thereon, and freight charges to point of destina-

tion. (Thames & Mersey Ins. Co., Lid., v. U. S., 237

U. S. 19.) Unless there is something in a c.i.f. contract

to indicate to the contrary, the seller completes his

contract. when he delivers the merchandise called for

to the shipper, pays the freight thereon to point of

destination, and forwards to the buyer bill of lading, _

invoice, insurance policy and receipt showing payment

of freight.“

Similarly, in Smith Co., Lid. v. Moscahlade-, 193 App.

Div. 126, the New York Appellate Division, F inst 3

ment, said (p. 12997

Under such contracts [e.i.f.] the vidio fulfills all. of

his obligations by -putting the cargo on board and

forwarding to the purchaser a bill of-lading and a

policy of insurance of the kind then current and eus-

tomarily issued in the trade, and if the goods had not

heen: paid for in rdvance it was customary to present

a draft for the purchase price aceompenied by the bill

of lading and policy of insurance and a credit slip for

the insurance’ and freight if not actually paid-for by

the shipper, which. documents were to be delivered to

the purchaser on his paying the draft, and the insur-

ance is for the protection.of the purchaser, who as

sumes all risks after the goods have: been placed ‘on

board; and this constitutes a delivery by the scller-

under such a contract and title thereupon passes to .

the huver even though it be stated in the contract that

delivery was to be made at the’ poiyt of destination.

tItalies ours.) 2 3

11 re „ *

Likewise, in Wen Bro}. 20 Co. v. Isvael, 101 F. 2d 59,

the United States Court: of Appeals, Second Circuit, in

stating the law of New York on this subject, said (p. 60):

Under a cif. contract the seller receives a pur-

chase price payable as the parties agree and for that

consideration is bound to arrange for the carriage of

the. goods to their agreed destination, for insurance -

upon them for the benefit of the buyer, and either

to pay the cost of the carriage and insurance or al-

low it on the purchase price. When this has been

done the seller has fully performed and is entitled to

be paid upon delivery of the documents to the seller

regardless of whether ! oods themselves have ar-

rived at their destination 0 ever will. (Italics ours.)

25 See also to the same effett:

Mee v. Me} ider, 109 N. V. 500; 8 N

Dane v. Weil, 199 App. Div. 719, 730-1 (ast

Dept. ), affd. 235 N. X. 327

Matter of Bullard, 210 App. Div: 476 (1st Dept.),

affd. 240 N. I. 388: N

A. Klipstein & Co. v. Dilsizian, 273 Fed. 473 a

24), cert. den. 257 U. S. 639;

- Harper v. Hochstim, 278 Fed. 102 (C. A. 20);

Madeirense do- Brasil S/A v. Stulman-l “*mrick

Lumber Cöõ., 147 F. 2d 399, 402 (C. A. 2d), cert.

den. 325 U. S. 861.

—— —

The uncontroverted evidence here is that Colorado

- caused 1,490 tons of the caustic soda to be loaded aboard

the Hawatian priorto 6 P. M. on September 2. 1948, that

on September 3rd, after payment of the ocean freight and

_prior to tie strike of the engine. room crew ot the Hawai-

Vun, it procured Isbrandtsen's two on board bills. of lad-

ine covering the shipment, and that on September 7th ‘it

presented the bills of lading, together‘ with ‘ts invoices

—

12

“a appropriate cértificates of marine insurance, to the

bank designated by intiffs for that purpose. Accord- -

ingly, under the enunciated in the foregoing

authorities Colorado di all it was required to do to per-

_ form its contract with plaintiffs, timely shipment was made

on September 2nd, and any subsequent gaia transit :

** was, as a matter of law, at plaintiffs’ risk.

Notwithstanding ‘the foregoing, plaintiffs contend that

Colorado. did not perform its contract and assumed the

risk of delay because the strike of the Hawaiian s crew

allegedly was foreseeable by it at or before the time of

_ shipment. Plaintiffs do not state upon what facts they

base this claim of foreseeability. However, as the proof

is that neither Becker nor Colorado knew that the strike

would occur, plaintiffs’ contention. must be that Becker,

acting on behalf of Colorado, was ‘under the duty to know

that the Hawaiian was owned by a West Coast line and

was under time charter to Isbrandtsen and hence manned

by a West Coast crew belonging to West Coast unions and

that, with this presumed knowledge and supposedly know-

ing that the threatened West Coast strike would not be

settled; he should have known that the Hawatian’s crew

would strike the vessel in New Orleans before it could sail

from. that port. Manifestly, any such proposition is un-

tenable and was properly rejected by the courts below.

Since, as the uncontroverted proof established, Becker

did not Won and, by custom and practice, was under

no duty to ascertain either the ownership of or type of

charter covering the Hawaix or the constituency of ‘the -

_ Vessel’s crew, it follows that the courts bele-y. correctly

refused to charge Becker and. Colorado with, or to impute: .

to them, knowledge that the Hewgtian was manned by a

West Coast erew and with knowledge that such crew mem-

bers belonged to West Coast unions. By the sare token, it

also follows that Becker, and through him Colorado, like-

wise could not be charged with knowledge, or with having

—

— ee

7

reasonable cause to alee that the Sean would oe

affected by the threatened West Coast maritime strike. d

‘Plaintiffs’ contention that the strike was a foreseeable

risk is sheer ‘sophistry. As is apparent, any such conten-

tion must rest on the premise that, because Colorado

-. allegedly had notice that the 80-day injunction against the

West Coast unions was due to expire on September 2nd,

it was not only bound to conclude that a 4 would o , r

immediately thereafter but was also bound to know that

such strike would continue hot only beyond September

22nd, the date fixed for shipment of part of the caustic:

soda, but also beyond October 10th, the date fized for ship-

ment of the remainder. Patently, any such proposition, aS

the courts below both held, is unsustainable. -

First, no one could know whether the labor dispute would

end in a strike. ‘Secondly, it was, as it still is, a matter of

common knowledge that most threatened strikes either do

not materialize at all or are deferred pending further

negotiations between the parties to the dispute. Thirdly,

no seller could conceivably foretell, before a strike ma-

terialized, when it. would occur, where it would occur and

the duration thereof.

‘ Upon all the facts, it is accordingly clear that when

Colorado caused the caustic soda to be put aboard the

Hawaten it did so, to use the language of the New York

Court of Appeals in Ledon-v. Havemeyer, 121 N. v. 179,

184, “with the. intent, in good faith, to have [it] eleared

for the port of destination, or in a reasonable time after

the — ‘and that doe and ~~ shipment was

- then made.

Reclizing. that the issue involved was correctly decided

by the courts. below in accordance with applicable New ©

York law, plaintiffs attempt to s le-step this obstacle and

to create the illusion of a reviewable conflict under Rule .

/ 19, subdivision 1(b), of the Rules of this Court, first, by |

’ assuming that Colorado failed to perform its contract and,

then, by arguing that under the doctrine o“ frustration,

4 : 8

\ : /

14

3 n by this Court and the New York Court of

d Appeals, the strike may not be proffered by Colorado

( zich it has not done) as an excuse for its assumed non-

4 performance (Petition, pp. 12-17). Of course, no such

| * feigned and fictitious issue can, or does, present any ques-

tion for review by this Court. The issue below was

whether Coldrado had breached its contract. The courts

below both held it had not.

Plaintiffs advert to J udge Hand’ 8 3 on Becker 8, .

purported action, in permitting Isbrandtsen to substitute

. the Hawaiian for the Swisshelm, as amounting to an irre-

sponsible subinfeudation of authority.“ However, Judge

cer Hand apparently overlooked, the fact, as do_ plaintiffs,

* that this was a matter over which Becker had no choice or

control, first, because the Swiss helm had become unavail-

able and did not call at the Port of New Orleans (19a)

and, secondly, because Isbrandtsen, under its affreight-

ment contract with Colorado, had the unqualified right to

substitute, any other A-1 vessel, and the Hawaiian conced-

edly was such a vessel (51a; Isb. Appx. 58a). Accord-

ingly, if Becker had rejected the Hawatan, as Judge Hand

implies he should, he not-only would have effected a breach

of contract but would have exposed his a to li-

- bility for damages to Isbrandtsen.

In the circumstances of this case any loss 3 by

N the strike logically and rightfully should. be borne by

plaintiffs. They intentionally made the purchase under a

e. i. f, contract, declining a prior F. A. S. offer (Pls.“ Appx. —

Sa, Ba), and hne that one the caustic soda was placed

aboard a vessel at or before the time specified by them

they thereupon would become the owners thereof and that

all risk of delay thereafter would be theirs. Since, as the

courts below both found, Colorado acted in good faith, this

risk could not properly be shifted to it and was justly left

. the contract and the New York law placed it. 3

- POINT II -

sz 7 8

N Ontrect and thus having had the absolute right to re-

ceive payment against Presentation of thé bills of

5 N under the Federal Bill = Lading

a was, or is, presented. 7

In the Court of Appeals, plaintiffs 3 again on

the unfounded assumption that Colorado had not made

shipment or performed its contract, that Colorado had

no legal right to “‘negotiate”’ the bills of lading’ after the

strike and that it committed a fraud in doing so. This

argument, as: the majority opinion of the Court of Ap-

peals indicates, led to the cansideration there given to

tlie Federal Bill of Lading Act (49. U. S. C. § nice.

s In view of the Court of kee affirmance of the Dis-

triet Court’s determination that Colorado had performed,

its contract with plaintiffs, which necessarily constituted

approval of the District Cegrt’s holding that proper ship-

ment of the caustic soda gyas made prior to the strike,’

it is clear that no question under the Federal Bill of

Lading Act was, or could be, presented. Stated other-

wise if, as both courts held, Colorado performed its con-

tract by making proper shipment, payment of the stipu-

lated purchase price to Colorado was obligatory and no

right of action under the Bill of 2 Act could pos-

sibly arise or exist. isc | ’R

: It is elementary ‘that. when N made shipment

and paid the freight charges, it immediately became en- A .

titled to receive Isbrandtsen’s two on board bills 0: lading. |

In / fact, following Colorado’s request, through Farrell,

for. delivery of the bills of lading (Pls.“ Appx. 17a), their

issuance and receipt was a matter of statutory mandate

— ——— —EAÄA————————— — — — ety aoe —

: „„ eae

and right under Section 3(3) of the United State Car:

of Goods by Ben N (46 U. § 1303 5

bills of lading received by Colorado evidenced, as

ee that shipment had been made, i. e., they

. ‘were ts which, as was stated in Vietor v. National

City 200 App. Div. 557, 565 (1st Dept.), in quoting

with approval from Diamond Alkali Export Corporation

v. Fl. Bourgeois, [1921] 3 K. B. 443, 449, acknowledged

actual shipment on board a particular ship... 5

This attribute of the bills of lading was not impaired

by the subsequent strike. It did not alter the fact that

shipment had been made and that the bills of lading cor

reetly evidenced that fact: Accordingly, the majority of

the Court of Appeals correctly held that it had not been

established ‘‘that the worth of the bills of lading: Was

impaired by the strike“ (Petition, p. 29).

‘Under 4

— — to the order of The National City Bank or

‘assigns * b. Appx. 117a-118a, 1253.) Accordingly, they

were both order bills of lading (49 U.S. C. 483) and, as

such, were negotiable or transferable, in the. first instance,

only by indorsement or 22 by The Natio ity Bank -

(49 U.S. C. §§ 108, 110). It therefore follows that Colorado,

in presenting the bills of lading to The National ‘City Bank,

neither could nor did negotiate or transfer the mee

within the meaning or purview of 49 U.S. C. § 114(c).

In the circumstances presented, it is apparent that the

provisions of 49 U.S.C. § 114(c) never came into play, that

no question was presented thereunder. and that Colorado,

as a matter of law, had the absolute right to present the

3 * Section, 3(3) of the U * States Carriage of Goods Act (46 -

U.S.C. wh provides: a

Atter recei vit the goods into his-tharge the carrier, or the

master or agent of the carrier, shall. W demand of the shipper,

Soe the Sipe sof dg» - |

A een

Cre —

a We

*

dills of lading. 10 The National, C city which Was bound to

7 4

ace the same and honor the mpanying sight ‘drafts. -

Mee v. McNider, ‘supra, 109 N. v. 500

Duane v. Weil, supra, 199 App. Div. 719, 730-1

(Ist Dept.), affd. 235 N. Y. 527;

5 ‘Smith Co. Lid. v. Moscahiqdes, supra, 193 pom :

Div. 126 (ist Dept.) ;

Warner Bros. ck Co. v. Israel, supra, 101 F. 2d 59

(C. A. 2d);

In re an Arbitration béiwees Weis 4 Ca; Lid.

5 4 and Credit Colonial et Commercial (Antwerp), |

19167 1 K. B. 346.

* .

For the above stated reasons, it also follows that Colo. ;

- rado committed no fraud in presenting the bills of lading ©

and that the Court of Appeals accordingly did not, as

plaintiffs assert (Petition, p. 19), either repudiate its dic-

tum in Ocean S. S. Co. v. United States Steel Products Co.,

239 Fed. 823, 826 (C. A. 2d), cert. den. 244. U. S: 652, or

constrict the principles of Olivier Straw Goods Corporation.

v. Osaka e Kaisha, 27 =: A 1. A. — cert. den.

278 U. S. 6

i, a

~ CONCLUSION

3 b tented metaind

FFP

| Respectfully submitted, : 1

ie s en cai ee Ee st . BxxskEI.

5 | — : BP Be pod re

Hewry E. Kriiey. | es: |

W. Frepertck Kxecut, _ 88 5

of Counsel. Bore VVV