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Ocean Transport Line Inc. v. American Philippine Fiber Industries Inc.

decided: August 14, 1984.

OCEAN TRANSPORT LINE, INC., PLAINTIFF-APPELLEE-CROSS-APPELLANT,
v.
AMERICAN PHILIPPINE FIBER INDUSTRIES, INC., DEFENDANT, AND CHEMTEX FIBERS, INC., DEFENDANT-APPELLANT-CROSS-APPELLEE



Appeal from a judgment of the District Court for the Southern District of New York (Charles L. Brieant, Judge) awarding damages for discharge port demurrage against a shipper and its guarantor.

Oakes and Newman, Circuit Judges, and Mishler, District Judge.*fn*

Author: Newman

JON O. NEWMAN, Circuit Judge:

This is an admiralty action by a carrier to recover discharge port demurrage from a shipper and the shipper's guarantor. Defendant-appellant Chemtex Fibers, Inc. ("Chemtex") appeals from the February 17, 1984, judgment of the District Court for the Southern District of New York (Charles L. Brieant, Jr., Judge), after a bench trial, awarding plaintiff-appellee-cross-appellant Ocean Transport Line, Inc. ("OTL") $475,224.91. On appeal Chemtex contends primarily that (1) the shipper was obliged to pay only loading port demurrage and (2) Chemtex's guaranty was limited to a specific sum, which it has already paid, and did not cover any demurrage. Chemtex also argues that the damages awarded were too high, and OTL, in its cross-appeal, claims they were too low. For reasons that follow, we affirm the judgment of the District Court in all respects.

Facts

In 1976, defendant American Philippine Fiber Industries, Inc. ("APFI"), a Philippine corporation, purchased a nylon manufacturing plant in Hopewell, Virginia, with the intent of dismantling, transporting, and reassembling the plant in the Philippines. APFI entered into an agreement with Chemtex, a New York corporation, which agreed to provide "equipment, materials, know-how and technical services in connection with" the project. As the District Court found, "Chemtex was engaging in the function of a project engineer for the entire project including shipment" of the dismantled factory to the Philippines. Chemtex also acted as the financier for the project by loaning APFI $5,100,000 in return for APFI's promissory notes, which were guaranteed by the Development Bank of the Philippines.

In order to transport the dismantled factor, APFI entered into a contract of affreightment with OTL, a Panamanian corporation, which agreed to provide APFI with empty containers and to ship the loaded containers and uncontainerized factory parts to the Philippines. An early draft of the contract of affreightment, dated October 17, 1977, included the following provisions on the subject of container demurrage:

Carrier agrees to supply up to 150-40 foot containers or any additional containers necessary for the carriage of the cargo at Hopewell, VA for discharge Manila, Philippines. Carrier allows shipper 15 days to load containers and 30 days for discharge and return to carrier's designated terminal. Any additional time shipper shall pay demurrage of $4 per day per container. Carrier will supply approximately two containers per day and shipper will load approximately 2 containers per day.

Shipper agrees to take delivery of containers at Manila at end of ships tackle and any expenses for trucking etc. to job site and return to carrier's designated terminal for shippers account.

The contract, as finally executed on October 31, 1977, treated the same subject as follows:

Carrier agrees to supply up to 150-40 foot containers or any additional containers necessary for the carriage of the cargo at Hopewell, VA for discharge Manila, Philippines. Carrier allows shipper 15 days to load containers at Hopewell, VA and 30 days for discharge at Manila and return to carrier's designated terminal at Manila. After 90 days from delivery of first container for loading at Hopewell, VA, if all cargo not delivered that was contracted for, Shipper will pay $4.00 a day demurrage per box for all boxes loaded and to be loaded after 90 days until full cargo delivered.

Shipper agrees to take delivery of containers at Manila at end of ships tackle and any expenses for trucking etc. to job site and return to carrier's designated terminal for shippers account. Containers cost during vessels transit from loading port to Manila for account of carrier.

OTL requested security for APFI's performance under the contract of affreightment. Chemtex executed the following guaranty:

We unconditionally agree to pay ocean freight as per contract dated October 31, 1977 between American Philippine Fiber Industries, Inc. Herman Zucker Textile Corp., Agent and Ocean Transport Line, Inc. Oceanic Operations Corp., Agent.

Payment shall be as follows:

1. Downpayment of $87,750 payable immediately with ...


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