*2 Before VAN GRAAFEILAND WYATT,* PIERCE, Judges, and Circuit Judge. District PIERCE, Judge: Circuit Corporation (Exxon) appeals Exxon in the Haight S. by Judge an order Charles District Court for the South- United States April York entered on ern District of New compelled order Exxon 1982.1 The involving a contract arbitrate $2,177,751 damages in alleged pursuant Act, Arbitration 9 U.S.C. the United States Lines, (the Act), with (1976) Prudential § States-flag (Prudential), a United Inc. be- steamship line. For the reasons stated low, order. we the district court’s affirm I corporation a Delaware of business in principal place with its York; is a of New District Southern offices Jersey corporation having New York. The District New the Southern n jurisdiction of upon the this Court is based States Arbitration of the United provisions Act, (1976), and the maritime 9 U.S.C. 4§ matter, (1976). On 28 U.S.C. subject § Prudential “bareboat” November com- year for a 15 term its vessel chartered to Exx- delivery date of mencing with the Exxon in was delivered to The vessel on.2 be made May, 1964 and Wyatt charterer The names of the owner the United *The Honorable Inzer B. litigants’ party are those of District the charter States District Southern Court predecessors. purposes York, designation. of this sitting by corporate For New appeal, the own- be considered Prudential shall charterer. er and Exxon the (S.D.N.Y. Reported F.Supp. at 535 below 1982). May, 1979. Under Clause 7 of agree- rule judgment of court and a or decree ment, Exxon was full to have control over entered thereon. during term the charter. when the term of the charter term, At the end of the Exxon was to end, was about the owner Prudential pursuant redeliver appointed Morrell, independent Carter *3 to the instructions set forth in Clause 16 of surveyor, marine to conduct the survey on the charter party. 16(a) Clause required its in compliance behalf with the require- Exxon to redeliver the vessel as good in ments 16(b). of Clause Morrell awas naval it order as was at the time of to delivery engineer architect and marine who had su- Exxon, except for damage resulting from vessel, pervised the construction of the had ordinary 16(b) wear and tear. Clause called Prudential, as worked a consultant to and joint for a survey of the vessel at the time assisted in a survey of redelivery drydock “on and by afloat” vessel in 1975. Morrell attended the vessel representatives of parties the two and re- redelivery port, at the and participated in quired that representatives an by “[s]uch joint survey May, 1979. writing instrument jointly shall agree Numerous factual by claims are made upon designate and repairs or work parties both as to events surrounding the necessary to place the vessel on the date redelivery of the vessel. Since the district redelivery in the required by condition this deciding court was whether to compel arbi- 16.” 16(c) Clause required Clause the char- tration and parties’ merits perform terer to necessary all repairs prior claims, it no findings made fact in this or, to redelivery at the owner’s option and regard 1, April in its decision entered with the consent Mortgagee note, however, The court did that vessel, to such discharge responsibility by redelivery port, representative, Prudential’s payment for the repairs and lost time to the Morrell, a executed written “Certificate of 16(d) provided owner. Clause “[ajccep- Acceptance Redelivery.” During and tance by of the vessel Owner shall be con- 25, period May August, 1979 and clusive evidence of Charterer’s compliance 1979, alleges Exxon the vessel was in any all and of the obliga- Charterer’s Prudential’s sole control. tions under this charter with respect to the vessel’s class and condition at the time of argues that execution of this cer- redelivery.” light tificate 16(d), Morrell of Clause above,
Also relevant to litigation this were described acceptance constituted charter, Thus, arbitration provisions any damage Claus- vessel. claim for 13(d) 13(d) es and 25. Clause provided might that Prudential as owner have had part: against allegedly extinguished Exxon was “acceptance” of the vessel under any
Should dispute arise between the 16(d). Clause Owner and the respect Charterer the responsibility repairs, renewals 25,1979, May Prudential states that after replacements, or as to the condition of anticipated learned that would the vessel at the redelivery, time of $1,000,000 18, cost more than and March be matter shall decided by arbitration as 1980, submitted claim to Exxon for provided in Clause 25. $2,177,751. pay. Exxon refused On Jan- provided: Clause 25 23,1981, uary Prudential demanded arbitra- any
Should dispute arise under this dispute subsequently desig- tion agreement, the arbitrator, matter in shall be nated an as referred to three one persons, ap- to be charter party. reciprocate, Exxon failed pointed Owner, Charterer, 18, one required by May Clause On chosen; the third two so their petition filed its in the district decision or that of two of compel them shall court for an arbitration of order final, and their may award be made claim. Rules of Southern and order dat- Rule Civil opinion aIn memorandum York, de- initially when Prudential Judge Haight of New ed June District petition arbi- with arbitra- proceed denied Prudential’s that Exxon manded had ac- By that Prudential pending appeal. tration. He found despite tion vessel, accept- held cepted the district order entered “[t]hat of re- ‘conclusive evidence’ appeal ance constitutes the motion. On denied court very with those obli- spondent’s compliance motion, stay granted denial of petitioner breach gations alleged whose on condition on June this court But the to arbitration. now seeks submit security in or other Exxon file a bond foreclosed, nothing remains issue is proper the district court deemed an amount rejected also arbitrated.’’ The court on remand. was not argument that Morrell Prudential’s accept the vessel and held authorized *4 ap- him with
that Prudential “clothed” whether the herein is presented The issue authority. parent Prudential’s granting erred district court reconsidera Prudential filed motion for In particu- arbitration. petition granted by was the district tion which court’s deci- lar, review the district we must 9, September 1981 to further con judge on responsibility dispute over the sion that the authority whether the question sider the of encompassed repairs, and sub-issues non, petitioner’s vel actual or of apparent, dispute, were arbitrable.3 main within the of rede surveyor to execute the certificate opinion dissenting the light persuasive of In Upon re livery dispute. arbitrable address the we shall also Judge Wyatt, consideration, a deci Judge Haight entered presented considerations equitable serious 1, 1982, the April on and noted sion herein. arguments and oral focused briefs authority whether the issue of Morrell’s Ill agreement to the was collateral “ up brought pursuant parties ‘inextricably tied with This action was the Act, 4 9 U.S.C. underlying dispute,’ § Arbitration the merits United States part that: ‘wholly (1976), of issues that fall provides thus derivative ” clause.’ scope within the of the arbitration failure, alleged aggrieved by party A 293, McAllister Bros. F.Supp. quoting 585 to arbitrate refusal of another neglect, or 519, (2d Co., 621 523 Transp. F.2d v. A & S for arbitra- agreement written under a decision, reversing In his earlier Cir.1980). States dis- any United may petition tion of Morrell’s the issue he concluded directing that for an order trict court ... He noted that authority was not collateral. the manner proceed in arbitration such decision, erroneously he had in his earlier .... agreement in such provided analysis that issue of “assumed without upon parties, shall hear The court authority could be decided surveyor’s making being satisfied need papers, Court on the motion or the failure for arbitration agreement 535 not be submitted to arbitrators.” issue, the comply therewith F.Supp. at 293. directing the order make an court shall in ac- proceed to arbitration parties appeal April notice of Exxon filed a agree- the terms of the with cordance stay 27, pending and moved for a 1982 62(d) ment.4 Fed.R.Civ.P. appeal pursuant Supreme (1967), elabo- Court 1270 main- L.Ed.2d note that the district court focused 3. We authority provided ly Section 4. the issue of the limitations on whether Morrell’s rated on 4, respect are Several other sub-issues § was arbitrable. “Under The Court stated: infra, appeal. jurisdiction text Exxon on this See raised of the federal matter within at 64. an arbitration the existence courts save for clause, to order court is instructed the federal Mfg. Corp. & v. Flood Conklin Prima Paint 1801, 1806, Co., 18 87 S.Ct. 388 U.S.
63 Thus, 4, under it must adoption Section be estab- Since the United States Arbi (1) agreement Act, lished that: an arbitration tration American jurisprudence fa has exists; (2) the dispute falls within the scope vored the arbitrability disputes whenever (i.e., arbitration “under a parties contractually provide for arbitra arbitration”); written agreement Co., tion. Scherk v. See Alberto-Culver 417 506, (3) dispute 510-11, not involve making 2449, does 94 2452-53, U.S. S.Ct. 41 the failure to comply (1974). legislative L.Ed.2d 270 history therewith. of the United States Arbitration Act indi cates that the Act designed to avoid Here, there dispute concerning is no “the costliness and delays litigation,” and requirement first Section As noted to place agreements “upon above, two clauses of the provided charter ” same footing other contracts . ... for arbitration. any disagree Nor there 96, H.R.Rep. Sess., 1, Cong., No. 68th 1st regarding requirement ment the third since (1924); see S.Rep. Cong., also No. 68th Exxon contests neither the Moreover, 1st (1924). Sess. arbitrators agreement nor has refused to arbi appointed parties presumably are trate the with Prudential over a specialists, only familiar not with the rele matter covered by the arbitration clauses of statutory vant and common law but also party. charter See Mercury Constr. usage with custom and of the trade. Fed Corp. v. Moses H. Hosp., Cone Memorial Navigation eral & v. Commerce Co. Kane (4th Cir.1981) (en banc), F.2d cert. matsu-Gosho, Ltd., (2d 457 F.2d 389-90 granted, 102 S.Ct. U.S. *5 Cir.1972). procedures Use arbitration is, however, (1982). L.Ed.2d 647 There disa also eases the workload the courts. Con greement parties between the as to whether Lion, ticommodity Inc. v. Philipp Serv. & dispute purview the falls within the of the 1222, 1224 (2d Cir.1980). F.2d For these agreement in light sequence the reasons, courts have held consistently events which occurred herein. Before dis doubts about arbitrability should be re cussing issue, it is helpful to state the Galt, in E.g., solved favor of arbitration. applicable law regarding scope of cover 714; 376 F.2d at v. Corp. World Brilliance age of an agreement. arbitration Co., 362, (2d Bethlehem 342 F.2d Steel McAllister, As we noted 621 F.2d Cir.1965). “ at ‘arbitration is a matter of contract mind, presumption With this a court and a be party required cannot to submit to must requirement examine second any dispute arbitration which he has not 4, namely, Section scope agree- agreed so to submit.’” (quoting United ment inquiries to arbitrate. Two be must Steelworkers of Am. v. Warrior and Gulf (1) made at district court the outset: Co., Navigation 574, 582, 363 U.S. 80 S.Ct. is the agreement arbitration or broad nar- 1347, 1353, 4 (I960)). L.Ed.2d 1409 row?; (2) narrow, if dispute does the in- question of a dispute whether between the agreement? volve a “collateral” parties is agree covered the arbitration respect With ment is broad narrow courts to decide. Galt v. query, we Co., stated McAllister: Libbey-Owens-Ford Glass 376 F.2d (7th Cir.1967); see Atkinson v. Sinclair If the arbitration clause is broad and Co., Refining 370 U.S. 82 S.Ct. arguably disputes concerning covers con- 1318, 1320, 8 (1962) (under termination, L.Ed.2d 1581 tract be arbitration should Management Section 301 of the Labor Rela compelled and the arbitrator should de- Act, tions the courts must decide whether a cide claim that the arbitration agree- party ment, has his promise breached to arbi because of substantive temporal trate). limitations, not cover the underlying does ” proceed agreement] (footnote arbitration to it is once satisfied that is not in issue.’ omit- agreement ted). ‘the for arbitration or comply
the failure to
the arbitration
[with
a collateral
However,
dispute
If a
arises under
... when “deal-
dispute ....
clause,
dispute can-
arbitration
arbitration of that
ing
agreement,
with a narrower
upon the
merely
whether
based
proper
compelled
consider
not be
...
it will
its
within
clause in the
is on
face
an arbitration
the conduct
issue
existence of
Hence,
Village,
if the
Inc. v.
agreement.
of the clause.”
Rochdale
purview
main
reasonably
Union,
cannot
Employees
Local No.
Public Serv.
over
disputes
(2d Cir.1979).
cover
be construed to
1296-97
605 F.2d
during
was in
Rochdale,
the contract
force
whether
we noted that if
example,
For
not
period,
arbitration need
relevant
contract
termination
dispute
a
over
be compelled.
theory
the contract had
on the
based
terms,
dispute
own
then
expired
(citations omitted). Simply
65 McAllister, scope clause,” of the arbitration permitted go forward where relevant 523, is 621 F.2d at and therefore within the petitioner’s evidence has been lost due to a scope of the arbitration clauses of the char- delay in bringing suit. LaGares v. Good party. ter The district court was Co., correct Shipping F.Supp. Commander 1243 holding. so (S.D.N.Y.1980). A court of equity confront with a laches issue must consider ed wheth
IV plaintiff slept er the has his inexcusably on dissenting opinion expresses rights against concern so as make decree conduct, delay Todd, over Prudential’s and conse- defendant unfair. Russell v. 309 U.S. quent prejudice 280, 287, to Exxon bringing this S.Ct. 84 L.Ed. action, appears significantly (1940). traditionally to have factor One considered benefitted Prudential while at equity determining same courts of whether placing time Exxon in a position plaintiff’s of serious claim is barred laches is the disadvantage. Judge Wyatt asserts that prejudice resulting defendant alia, charter, inter either delay. Public Adm’r of New York v. parties, Naviera, S.A., their through surveyors, agree Angela Compania 592 F.2d all repairs (2d Cir.1979), dismissed, for which the charterer was 63-64 cert. responsible 928, 100 or demand re- (1979). arbitration as to S.Ct. L.Ed.2d 897 U.S. sponsibility repairs redelivery. Judge understandably before Wyatt concerned Judge Wyatt asserts that a require- likely prejudice such with the issue of to Exxon ment: resulting delay from Prudential’s extended seeking before known claim and
recognizes the importance
establishing
Therefore,
arbitration.
we believe it
at the
time of
the then condi-
fruitful
to consider how courts have dealt
tion of the vessel rather
delay
than to
conjunction
with laches in
with motions
this
determination
some later date
compel árbitration.
when the condition of the vessel will have
changed
owner,
been
operations of the
case
is Trafalgar
The seminal
area
charterers,
of new
the mere
Co.,
v.
Shipping
Milling
Co.
International
passage
time.
(2d Cir.1968). Trafalgar,
We note the of the similarity con expressed by Judge cerns Wyatt policy to in the often esoteric field of commercial considerations of underlying dealings, admiralty, the doctrines and in it would seem laches and waiver. For example, severity prejudice the doc that suffered delay, trine laches instructs that an inequity through and reasonableness might dilatory party, result in a case a is where claim excuses offered 66 arose, laches, Philipp arbi- might disagreement be resolved bet- demanded
elements of
Conticommodity argued
and
had to
tration
expertise
ter where
is
resort
untimely. The district
the demand was
the arbitrators.
held that the issue
timeliness
court
to
parties
noted that
Id. at
The court
court,
that the de-
before the
and
properly
could
this result
agreement
a charter
avoid
untimely.
arbitration was
mand for
in their
by expressly providing
agreement
Judge Feinberg, writing
court reversed.
be
to the
all issues
laches
submitted
court,
to a
temptation
noted
for the
also noted one instance
Trafalgar
court.
of a lach-
court to decide
merits
district
delay
questions
properly
could be
when
es defense:
court, which
such
decided
a
is when
the merits of such defenses
Determining
questions:
simple
to be
task
may
appear
often
relate to
affect
issues which
[the
deferred, and
delayed
or
should
to
upon
is
decide in connec-
called
court]
are,
training
temperament,
judges
tion with
motion under 9
U.S.C. §
come
to
the issues that
prepared
decide
Furthermore,
inev-
them.
there is
before
only
which the court is autho-
issues
itably
judicial hostility
some
toward
compel
to
rized
consider on motion to
deprived
jurisdic-
view that
court is
arbitration
which
to “the
pertain
are ones
procedural questions simply be-
tion over
making of the arbitration
or
parties
agreed
have
to arbitrate
cause
failure, neglect,
perform
refusal
disputes.
the same.”
...
If one of
is
these issues
at 1224.
court concluded
Id.
court,
disputed
par-
if one
before
limits the
carefully
Federal Arbitration Act
ty
ability
proof
claims that its
to present
considering
motions
role
courts
prejudiced
in relation thereto has been
compel arbitration.
Id.
other,
through
delay of the
the court
may
permit
consider whether
fair
in con
This view on the laches issue
even
dilatory party
to invoke
Act
Federal Arbitration
junction
the Act.
processes under
adopted
courts
widely
has also been
Int'l,
E.g,
this and other circuits.
Halcon
(citations omitted) (emphasis
Id. at 571.
Ltd.,
F.2d
v. Monsanto Australia
446
Inc.
added). Thus,
Trafalgar,
under
if the
only
denied,
949, 92
(7th Cir.), cert.
404 U.S.
156
alleged laches
pertains
(1971) (arbitration
266
L.Ed.2d
S.Ct.
failure, ne-
or the
contract
compelled pursuant
to construction
glect,
comply
refusal
therewith —the
injury
years
elapsed
five
had
between
two issues
the court
Act— n
arbitration);
compel
Singer
and motion to
decide under
Federal
Arbitration
Co.,
(D.N.J.
Tappan
F.Supp.
Co. v.
dispose
is the court
laches
free to
aff’d,
(3rd Cir.1976) (ar
1975),
544 F.2d
In all
issue.
other
laches must
cases,
pursuant
goods con
compelled
bitration
decided
the arbitrator.
years
elapsed
tract after three
Trafalgar has
consistently
been
followed
of motion
arbi
injury
filing
questions
in this circuit when
arise as
Mari
tration);
Arbitration Between
Re
af-
compelled
whether arbitration should be
“Spetsai,”
Co.
S.A.
International
time
long
court
delay.
recently,
ter
Most
Corp.,
F.Supp. 258
Export
Commodities
Trafalgar
Conticommodity
followed
(arbitration
pur
(S.D.N.Y.1972)
compelled
Serv.,
Lion,
v. Phillipp
Inc.
&
A similar
is ef-
analysis
apply
would also
to a
is
instance,
fected.
reason
to achieve
basic
waiver defense here.
For
in
objective
that,
of the redelivery provisions
Corp.
World Brilliance
v. Bethlehem Steel
before
Co.,
redelivery,
repairs
all
for which the
(2d Cir.1965),
Despite its acceptance of the vessel in rede- of that claim based on the condition any not survive to Prudential at important livery, redelivery it arbitrated before is vessel be prompt to secure a retransfer that time dispute had raised no at made. Prudential Exxon, control, from because and the vessel as accepted time but negotiating to turn Prudential was then is, acceptance according redelivered. Such charterer. Con- the vessel another over charter, “conclusive evidence” wish Prudential did not to raise sequently, the con- obligation respecting Exxon has no The redelivery. at the time of any dispute the vessel when redelivered. dition of dispute to a final of such arbitration requires decision nevertheless majority have necessarily would meant decision the issue Exxon submit to arbitration obtaining possession delay in Prudential This obligation. such an whether it has Therefore, Pru- of the vessel. and control terms the charter and contrary to the deliberately, knowledge with full dential compels dispute to arbitrate a Exxon for its own advan- consequences, and must it to arbitrate. I there- agreed never from Exxon in tage, accepted the vessel fore dissent. respectfully raising any redelivery question without It ship’s condition. was thus about able, day on which it took very on the same is not on differences dissent based Exxon, vessel from to execute the back the majority policies as to the with the Apex Towing Company. new charter law, out ably arbitration set principles of and additions to the Various alterations Nor is opinion Judge Pierce. the new required by vessel were charter equitable on considerations dissent based delivery Apex. of the vessel before Prudential, al- arising from the conduct of separate apart any were These from majority though result reached that, “repairs” redelivery, before necessary unjust The reasons and unfair Exxon. responsi- have been to be a might claimed majority my are: disagreement with bility of Exxon. (a) agreed to arbitrate a Exxon never (clause 13(d)) By the terms the charter over the ves- dispute condition any repairs had “the to make right” Exxon redelivery initiated own- sel at responsible it had been found for which complet- redelivery had been er after unless redelivery, before certain ed; were the owner to permit conditions met (b) on has no claim based repairs the owner to make such the ex- of the vessel at condition pense Having already of the charterer. acceptance its the vessel at because possession and control of the vessel secured is, charter, according time to the Exxon, disregarded the Exxon “conclusive evidence” that has any Without terms of the charter. arbitra- obliga- with all relevant complied its tion, any with compliance without the con- tions; and permitting ditions for the owner make any communication repairs, (c) without the vessel re- By acceptance Exxon, Prudential, decision, its own purposes delivery, to further its own alterations, additions, arranged to have interests, Prudential waived Thereafter, made to the vessel. have right may had to arbi- August or about Prudential deliv- tration as vessel’s condition to Apex. ered the vessel Later —on March when redelivered. against 1980—Prudential made a claim the issues embodied determination Much Exxon for some two million dollars. Court, is for in these reasons January later —on 1981—Prudential arbitrators. made a demand for arbitration of this claim correctly (a), majority opinion As majority and the must decides recognizes that “whether a now arbitrate.
69 the parties Pictures, is covered by 381, arbitration 529 F.Supp. (S.D.N.Y. 383 (P. is for the 1982); courts decide” Leasing, Janmort Inc. v. Econo Car 63). Int’l, Inc., 1282, (E.D.N.Y. 475 F.Supp. 1288 1979). circuits, In other it has been ex (b), principle As to the same would apply pressly stated that waiver is an issue to be since the in the char- by determined Mercury Court. Constr. ter conclusively would not cover a claim Corp. v. Moses H. Hosp., Cone Mem. 656 by provision barred a of that charter. 933, (4th Cir.1981) (en banc); F.2d 939-40 to (c), As a distinction must be drawn Corp. Timothy Burton-Dixie v. McCarthy between the doctrines of laches and of Co., 405, (5th Constr. 436 F.2d Cir.1971); 408 waiver. are The words as frequently used Fashions, Indus., Inc., N & D v. Inc. DHJ though but, doctrines are the in same 722, (8th Cir.1976); 548 F.2d 728-29 Martin my understanding, they very are different. Alum., Co., Inc. v. Marietta General Elec. Laches occurs a party when delays ask- 143, (9th Cir.1978). 586 F.2d 146 ing for arbitration an to such extent relevant evidence has been lost and is there arbitrators,
prejudice to the
party.
according
majori-
other
Reconstruc-
Crosfield,
ty,
tion Fin.
v.
should decide
Corp. Harrisons &
204
“several sub-issues” which
366,
(2d Cir.1953).
F.2d
370
come down to whether there was
Waiver occurs
an “ac-
ceptance”
when
party
a
takes some affirmative
the vessel
Prudential.
action
right
inconsistent with the assertion of
There can
no
issue nor sub-issue of
prejudice
arbitrate and there is
to the other
however,
acceptance,
because the present
party,
Ali,
Broadcasting
American
Co. v.
fully
record
establishes
there was an
1108,
434 F.Supp.
(S.D.N.Y.),
1112
aff’d
acceptance. This is true whether or not the
mem., 573
(1977),
F.2d 1287
as for example
surveyor
selected
Prudential had author-
by participating
or,
here,
a lawsuit
ity
sign certificate.
If
(contrary my
an owner accepting redelivery of a vessel belief)
authority,
he had no such
this would
asking
without
beforehand for arbitration
not alter the fact that
con-
as to its then condition.
trol of
the vessel were received
Pruden-
25,
majority
1979,
refers to
tial from Exxon on May
“laches or
and have
waiver”
(correctly my
kept
concludes
been
ever
opinion)
since. Prudential made a
(mere
whether
new
delay)
May
laches
charter of the vessel on
bars arbitra-
ownership
not,
tion is for
decision
exercise
which would
arbitrators.
not,
unless,
and could
have been carried out
My disagreement
point
on this
is because
by acceptance,
pos-
Prudential had secured
the conduct of Prudential raises the issue session and control.
Insurance in
favor
waiver,
laches,
that of
and whether
25,
made effective on
there has been waiver is for
decision
1979,
head office official of Pruden-
Court, not by the arbitrators. While this
(not
surveyor)
tial
taking
authorized the
Court does not
seem have
declared
so
“physical
custody”
ship
on the
many words that waiver in arbitration cases
(248a;
same date
“a” references are to
Court,
is to be
determined
waiver
pages of the Joint Appendix). The affida-
has in fact been so determined in the cases
supporting
vit
petition
arbi-
Pierce,
here
Lynch,
decided. Merrill
Fen
tration
itself refers to
“return of the
ner
Lecopulos,
842,
& Smith v.
553 F.2d
845
(7a).
vessel in 1979”
(1977); Demsey
Star,
& Assocs. v. S.S. Sea
461 F.2d
There
no
(1972);
special, peculiar,
1018
v.
or esoteric
Carcich Re
Nordic,
meaning
sought
deri
“accept-
A/B
389 F.2d
for the word
(1968);
696
Chatham
v.
ance”.
It is not
but
Shipping Co. Fertex
defined
the charter
Steamship
Corp.,
(1965);
ordinary
352 F.2d
293
has its
meaning.
American
normal
“Ac-
Ali,
Broadcasting Co. v.
act
F.Supp.
ceptance”
accepting”
“the
and “ac-
(S.D.N.Y.),
mem.,
aff’d
573 F.2d
cept”
(something
is “to receive with consent
Prod.,
(1977); see
Ltd.
given
offered)”.
Clar
v. Isram Motion
Webster Third New
in the record shows that after
(1961).
Everything
Dictionary,
International
*11
25,1979,
possession
and
May
Prudential
context,
“acceptance” simply
this
the word
the
was able to
ship.
control of
receives with consent
means that the owner
alterations, additions,
re-
and
dictate what
the
control of
vessel
possession
and
it
be made because
had such
pairs should
redelivery.
its return is offered
when
very
and
claim now
possession
control. The
majority,
underlying premise
The
of
by
in arbi-
sought
be asserted
to
opinion,
I
is that
there
as
understand the
arisen
only
tration could
have
transferring possession
redelivery,
be a
can
by
and
secured
Pruden-
possession
control
owner, without
there
and control to the
tial from Exxon.
by
owner. This is
being any acceptance
circumstances,
Under all
it seems
contractually impossible, my
logically and
redelivery
completed
if
plain that
of
vessel
If
and control
a
possession
view.
(as
was)
it
if
and control
and
offered,
or
accept
the owner can either
are
were),
(as
were
it follows
they
turned back
acceptance by
reject. Had there been no
acceptance
of the
inevitably
there was
Prudential, Exxon would now have the ves-
Prudential.
by
sel, and
it does not and since
admittedly
majority opinion
The
notes that
Dis-
25, 1979, has not.
findings
no
of fact.
If
trict Court made
Apex
a new
The execution of
charter to
such omission means that this Court cannot
ship
delivery
Apex
and the actual
of the
to
acceptance
find
of the vessel from the
totally
are
inconsistent with the contention
record, would
far
to
present
seem
better
acceptance
Prudential that there was no
by
for
determi-
remand to the District Court
a
it.
Illustrative
this con-
ship
shown,
fact,
than
easily
nation of this
to
where
nection are landlord and tenant cases
expensive
long
a
arbitration.
question
infrequently
not
arises wheth-
3.
acceptance
er there has been
the land-
of
A
over the condition
the vessel
of a
lord
surrender of
lease
tenant.
redelivery,
the time
which is not
at
Where the landlord makes a new lease of
redelivery, is
covered
raised until after
not
uniformly
premises,
this is
held
arbitrate;
ap-
so it
acceptance
amount to the
of a surrender
question
me.
is not a
pears to
example Gray
the old
An
v. Kauf-
lease.
time)
(delay, lapse
laches
but of
388,
Co.,
Ice
Dairy
man
&
Cream
N.Y.
against the terms
sequence of events tested
(1900)
terer for a
of
period
time”. Reed
The
v.
in 1979.
the contrary,
Saroula
On
he
Yaka,
410, 412,
1349, 1351,
373 U.S.
83 S.Ct.
knowledge
had
intimate
of the Saroula
(1963).
The of ownership changed the Saroula 6. from time to time as between the three 1979, April In Exxon notified Prudential companies in the group compa- “Skouras of Saroula would arrive for redelivery (a nies” term used counsel for group, at Shipbuilding Dry Norfolk & Dock Com- 108a). The companies three were Skouras (Norfolk pany Company) a little later than Lines, (“Skouras Lines”), Inc. World Wide 13. May Tankers, (“World Wide”), Inc. and Pruden- Worrel, Exxon then selected one its Lines, (“Prudential”) tial Inc. (105a-108a). Repair Supervisors, its representative to be 1975, In ownership of the vessel was redelivery. addition, at the de- Exxon transferred from Skouras Lines to World Fife, Alyn consultant, cided that an outside (dat- Wide and an addendum to the charter would also employed to attend the rede- August 1975) ed as of substituted World livery in the event that there was dis- for Wide Skouras Lines in the charter pute concerning the vessel’s at condition (252a-253a). At some time between March rédelivery. May 25, 15 and title the Saroula Coast Guard certificates to the vessel’s passed seems have from World Wide to sent condition were to Prudential early Prudential. learned a pleading from May (64a). On 18May Captain John filed Prudential in a civil action in the telephoned Haw Prudential to say Civil City Court of New York de- responsible that Haw for Prudential scribed an affidavit for Prudential sub- the redelivery, for and that Carter Morrell mitted to the (95a-96a). district court represent and Sheridan Lee would the own- pleading stated that the “pur- Saroula was redelivery. er at the a Haw asked for sea chased” Prudential from World Wide “prior trial to the redelivery Saroula 1979; subsequent March the date of survey” agreed although and Exxon this purchase is given but it must have been it was not precondition redelivery un- May before pleading because the (60a). der the charter May 25, that on Prudential States Morrell understood from Prudential executed new charter of the vessel to he was to deal with Haw for Prudential Apex Towing Company. (156a-159a, 162a). negotiating Prudential had been the new 7. to Apex charter since 1979. early The new addition, required charter other among In advance the arrival of the Saroula things, ship. heater coils to the In March redelivery, Norfolk for it been deter- that, and Lee and returned delivery before matters Morrell mined Prudential evening May (247a, under new to York the New survey by the the annual Apex, 248a). charter to be ad- Guard would
ABS and the Coast survey annual vanced in time. This separate treat- provided charter October, but, by advanc- not due until “inventory”. Mor- ment on redelivery by ing just it to period storekeepers agreed rell Worrel Exxon, work could be done necessary Company would take the in- from Norfolk the heater coil installa- concurrently with period of during May ventory tion, changes ballasting, clean other completion, 25. At through the charter storekeeper reported “substan- leading Apex. taking This would avoid Saroula were gear and stores tially equipment, more under the charter to off-hire while was at the time of the vessel than board be great advan- Apex and was believed (67a). delivery” Morrell recommended tage to Prudential. com- plan, agreed Ytuarte Skouras needed panies, by May specifications noted, the vessel was already put As *13 survey developed the had been for annual day the dry May 24. On that and dock 194a, 132a, 195a). (131a, by Morrell inspectors and Coast Guard following, ABS examined not as of annu- ship, part the 8. verify with survey compliance al but morning May Morrell On the with maintenance of ABS class and Coast Lee) representa- (assisted by as the owner’s (Clause 13(a), 67a). requirements No Guard met in Norfolk with tive for prior were found and ABS defi- deficiencies Fife) as the (assisted by Worrel charterer’s up (67a). were The Coast ciencies cleared representative and boarded the Saroula against ship” (147a) “nothing had Guard (138a). minor) (apparently one deficien- except for There then of the ship. was a sea trial section of cy which involved defective operation Morrell of all machin- checked cargo (148a). piping boilers, ery including engine, main and — duplicate auxiliaries. there was Where 12. over equipment, engineers changed so were surveys owner and charterer The everything “could witness in Morrell May May 24 and 25. made on On operation” (138a). Morrell talked to the completed were and Morrell and they and, at engineer master the chief his owner, Lee and Worrel Fife request, they machinery. demonstrated all charterer, lounge. in vessel’s met general problems Morrell asked about handwritten, fifteen gave page, Morrell his specific problems. about The result (72a-86a) A to Worrel. survey” “condition “nothing sea trial was that untoward devel- study survey of this shows that close oped” (139a). ship The docked at Norfolk minor ship, relatively with condition May in the afternoon good. was found be Morrell’s exceptions, May in Continuing the afternoon of reports throughout period of May and until the afternoon May are consistent with through surveyed vessel was accordance with that, according to given to Exxon in survey 16(b) of Thursday, Clause the charter. On its state court admissions in Prudential’s May 24, put dry was dock. reported “that the vessel pleading, Morrell was “on dock survey dry thus operating good repair in a state afloat”, provided (20a). as in the charter condition”. a result of the discussion As parties, it was believed surveyors of the Captain Haw came to Norfolk on repairs for which Exxon that the cost of the ship acquaint and was on himself (estimated responsible (222a). might arguably its condition He discussed $150,000 (179a)) Morrell at about angle meeting the Apex date of roughly the same as the value of inventory things charter” other among because he ship then on the put excess that when “would have been unable to the heater- delivery (the took place to Exxon in 1964 coil work in hand until [Prudential] excess inventory (170a). was understood Morrell ship” This was $150,000” (153a)). to have “a value about because he “didn’t think Exxon would per- pointed work, Worrel had also work, out the discus- mit to do our [Prudential] sion that Exxon had made a number of ship. their It ship” would still their improvements (171a). to the vessel which enhanced efficiency bow, and value —a “bulbous response proposal, Mor- oil lubricated bearing, stern and auto- [an] rell said that the proposal was worth look- mation of the fireroom” were mentioned into, ing and that he have to “would take (154a-155a). up (156a). meeting with Prudential”
aAs result of their beliefs and the adjourned discus- was then about hour. sion, it was proposed that Exxon turn over Morrell went to a telephone the officers’ to Prudential charge without all inventory ship lounge Captain and called Haw fuel) (except vessel, then on the including (156a, 222a). in New York equipment, replacement parts, spares, un- Morrell and Haw differ to what was said stores, etc., broaehed consumable and leave in this conversation. charge without the improvements made When meeting resumed Morrell stat- during charter, term the and in re- ed agreed that he on behalf of Skouras turn that Prudential should redeliv- accept accept redelivery Lines to of the vessel ery (69a), of the vessel “as is” thus assum- Morrell, from Exxon (according to Haw had
ing responsibility for the for which told him “to delivery take on behalf of *14 in their discussion Exxon arguably might be (169a)). Skouras Lines” A Certificate of responsible (149a). Acceptance and Redelivery signed was then respect With acceptance (69a, 87a, to an the ship 168a). This certificate recites is”, “as there was a significant May factor which that at 1700 on 25 Exxon “redelivered” influencing had been for the vessel to Prudential some World Wide Tankers and that advantage time. This was the World Wide “accepted” to Pruden- Tankers the vessel. tial of In securing possession and accordance with what he testified were control of Haw, the vessel as directions of out possible, soon as without wait- Morrell struck ing signature for World Wide Tankers and arbitration as to re- Lines, pairs substituted the name to be “Skouras Inc.” by made Exxon without and (169a). signed Morrell for waiting for Skouras Lines Exxon to make the it repairs, as signed Worrel for Exxon. Morrell then right had to do under the charter. Pru- Redelivery Accept- mailed a of the copy dential was anxious to make a new charter Haw, May ance Certificate to on “probably” Apex, Saroula to and the earlier the (170a). Exxon, redelivery by the earlier the new executed, charter could be the additions and 13. necessary modifications Apex for could be reliance on the made in made, effected, to delivery Apex and re- good Prudential, faith with possession and ceipt the new charter-hire commenced. control of the by Saroula were turned over Additionally, a advantage second to Pru- Exxon to Prudential on May 1979. In- dential from an early redelivery by Exxon surance on the vessel for Prudential had was the opportunity periodic, to conduct the arranged been through by the Haw New survey by annual and the ABS Coast advance, York office of Prudential Guard due in October an earlier date. come into force when Prudential received The advantages May Prudential from Exx- on vessel 1979. Since on’s proposal date, were apparent therefore control of the vessel has been exer- Morrell. Prudential, He was “concerned on the time cised Exxon. 17.
14. ten of March 1980—some Under date was redeliv- day On the when Saroula pos- over months turned May 1979—Prudential ered Exxon — of the Saroula one and control session Apex of the vessel to executed a charter companies other the Skouras not appear This does Towing Company. —Skour- Exxon, on be- making a claim as wrote to in a below but is found the record made against Exxon half of World Wide Tankers state filed pleading dollars. Part of for some two million al- reference has litigation court to which yard at the “repair was for costs Norfolk ready Apex prom- charter been made. Exx- for “items which were and elsewhere” delivery by ised char- under the Exxon responsibility on's 31, 1979. July 1 and Apex July for “loss of Part of this was (53a). ter” (para. According pleading to the Prudential interruption of vessel’s new “the hire” 12), in fact delivered Saroula to make in order employment” charter August 1979”. Apex “on or about (53a). repairs 18, 1980, is letter of March Skouras Having secured and control that rede- acknowledgment in substance 25, Prudential May gave the vessel on place vessel had taken livery of the (a) Company: of orders to Norfolk number 25, 1979, to me seems sets forth what but equip- to add heater coils and clean ballast aof charter totally erroneous statement other items complete ment and to (54a): provision charter; (b) to advance and Apex 13(d) charter World Under clause survey the annual the ABS commence accept rede- entitled to clearly Wide was Guard, otherwise due in Octo- the Coast husbanding pur- livery for ber; (c) repairs Pru- make such arrange repairs, renewals poses, (132a, dential had itself determined make upon pay call Exxon to replacements, and 188a, 199a, 206a-209a). as appears far So such work. performing costs of all record, nothing, told Exxon was justify 13(d) by any does not stretch Clause being nothing, and knew what was about statement; contrary, pro- such a done to the vessel. must be responsibility vides that made, they are determined before to make the right charterer then has a itself spoke On June 12 and Skouras *15 such that the owner can avoid repairs, and by telephone to Exxon. Robinson of W.F. conditions, nei- memoranda, right only by satisfying two Skouras, to according his file or even ther of which Prudential satisfied “repairs” ship told on Robinson that the attempted satisfy. to $1,100,000, anticipated were to run about not repair that he did know “whether the 25, 1980, Exxon re- April Under date would be the or letter, costs for account Exxon rejecting any to plied the Skouras Wide”, redelivery the account of World and that after out that pointing claim and reviewing the from Norfolk quotations obligations had been satisfied. he to Company, position would “in a ... 18. fur-
know whether we believe we have January 23, 1981—some- Under date of against (238a, 245a). ther claims Exxon” as- ten months after the claim thing over Skouras raised no with Exxon demand serted World Wide Tankers —a shortly these conversations held after the was addressed to Exxon for arbitration he no redelivery; suggestion made that How Pru- (28a). for Prudential attorney an that re- redelivery be rescinded and Exxon matter was shown dential into the came sume and the statement except control the Sar- in the demand in interest contrary, oula. Skouras retained that is “successor On Prudential Tankers, Inc., in in- successor redelivery, pri- the benefits of World Wide Lines, (28a). Inc.” marily, vessel. The Skouras possession and control terest 19, 1981, 1, 1982, Under the date of February April opinion On an and order appointed an by Judge Haight arbitrator. were filed (279a-291a). order, Contrary to his first Judge Haight 19. now, order, by a second vacated the earlier 18, 1981, On petition compel petition denial of arbitration arbitration was filed the district court. that granted petition. opinion The ex- support The affidavit petition plained the controlling that issue was recites that there was a “return of the whether authority accept Morrell had vessel in 1979” was Prudential vessel such issue was required to who performed repairs vessel be (280a). submitted (7a). been returned There no ex- appeal the order planation as to why World Wide Tankers then followed. had asserted a repairs claim for the on March 1980.
Opposing affidavits were objective submitted The the redelivery pro- basic Exxon. that, visions of the charter is before the redelivery, repairs all the charter- 22, 1981, On June Judge filed Haight an er is responsible, any, if determined order with opinion memorandum denying agreement of surveyors from both parties the petition (90a-91a); judgment on this any dispute. arbitration of rea- The order was June entered on 1981. Pru- son for doubtless frequency “[t]he dential’s claim was described as alleging disputes with which occur between the own- that Exxon “redelivered the chartered ves- er regarding and charterer the condition of sel damaged condition” and liable “for ” Gebb, a demised vessel .... The Demise the cost of post-redelivery repairs to such Conceptual Charter: A and Practical Anal- damages”. It (correctly was noted in my ysis, (1975). Tul.L.Rev. 778-79 view) that responsibility Exxon’s for re- pairs, by “explicit and unambiguous” provi- Clause 16 the charter deals with rede- sions of the charter was to be livery. “both meas- ured and satisfied redelivery before required vessel is to be redelivered in vessel; and acceptance good order as when delivered unless the [by the time redelivery put owner] “lack of order good solely ... is due end to issue”. As to authority (19a, ordinary 20a). wear and tear” vessel, Morrell to accept Judge Haight surveyed vessel “shall be dock dry nothing found record negate “to representatives afloat of the Char- apparent authority with which [Prudential] terer and the Owner” who in “shall writing (91a).
clothed” Morrell upon jointly agree designate necessary work place
On June Prudential filed a mo- date of in the condition tion district court *16 (20a). “reconsider” its ...” denying order petition the “order representatives Where the do agree upon trial to resolve disputed issues of fact” and designate necessary the repairs for (93a-94a). which responsible, the charterer is char- the 9,1981, On September Judge Haight filed ter is explicit that the charterer make must an with order memorandum opinion grant- such repairs (Clause “before redelivery” ing reargument to the 16(c), 20a, extent of the issue emphasis the supplied). While the authority whether Morrell accept charterer makes the the con- repairs, the vessel was be arbitrated by possession tinues in the the control of who, the terms the argument course, charter. Oral charterer liable continues heard this issue and further memo- for hire charter until there is randa were (20a). received. two are possession Assuming wishes to obtain these conditions
If the owner shall, waiting met, the vessel without and control of “the at the Owner’s Charterer agreed to make the for the charterer to the the cost of option, pay ... Owner may, the owner with the designated repairs, (18a). such work” performing (20a, em- mortgagee consent of the vessel for the for Having paid repairs made or upon the charterer to phasis supplied) call the arbitrators decided that the char- which discharge obligation repairs “by pay- for liable, may charterer then terer was the an sufficient ment to the Owner of amount vessel, charter hire stopping redeliver the (20a). the ... provide repairs” ... for terminating the charter. paid repairs made or for the des- Having Thus, there is a survey, after the when the ignated by representatives, charter- charterer with dispute between owner and vessel, may stopping er then redeliver the must be respect repairs, terminating charter hire and the charter. If the decided at that time arbitration. Thus, survey, when there is is re- decide that the charterer arbitrators the representatives has any repairs, for the charterer sponsible repairs owner and charterer on for or, repairs, make the if right itself to responsible, which the charterer is such re- (described above) are met two conditions pairs by, paid by, must be made for owner, “pay the charterer must redelivery. charterer before there is repairs. the cost” of owner charter, event, either as I read the Where, survey, representa- after a repairs by, paid by, must be made tives of the owner and charterer are not redelivery. charterer before there is Clause agree able to as to the responsibility for 13(d) clearly means to me that while repairs, and a dispute arises about this be- repairs ordered ar- charterer makes the charterer, tween owner and then under bitrators and which the charterer has 13(d) charter, Clause of the arbitration is make, the vessel continues explicit right to (18a). then and there required the charter- possession in the and control of If the result of the arbitration ais deci- matter, practical repairs er. As a could sion that the charterer responsible charterer to a vessel which be made any repairs dispute, then “the of anoth- possession was in the and control Charterer shall have the right at its ex- that -the er. It will also have been noted pense (18a, to do the emphasis work ...” charterer must charter hire to the own- pay supplied), the vessel continuing meanwhile the charterer to required by er for the time possession in the and control of the charter- complete repairs. er. paid Charter hire must be char- any period terer for until redelivery during as fol- 16(d) Clause of the charter reads which the vessel remains in its lows: permit and control to the completion of the Owner shall necessary repairs (18a). Acceptance of the conclusive evidence of Charterer’s If the owner wishes to obtain possession all of the Char- compliance any and and control of the vessel without waiting under this charter with obligations terer’s for the charterer to make class and condition respect to vessel’s decision arbitrators redelivery. the time of liable, charterer may he do so if two are conditions met: owner, in the warning Here is a (a) that “the if it has performance redelivery, of such work charter clause on by the Charterer unreasonably shall in- to the condi- survey claim after the *17 terfere with the Owner’s or any redelivery Charter- tion of the vessel at the time of operation (18a); er’s of the vessel” the charterer to obligation and as to the (b) must be made repairs, that the vessel make such claims mortgagee consents (18a). redelivery determined is effect- before Acceptance ed. by the owner redelivery will conclusively establish Despite the denials and disavowals of the obligations of the charterer have been Prudential, there was authority in Morrell Judge satisfied. As Haight put so well it in accept the return of the vessel and to
his first (91a): decision in this case execute the certificate. interrupted Morrell parties, by explicit and unambiguous his dealings with Exxon to pro- submit the contractual language, provided posal to the head office of Prudential New York and to responsibility person (Captain Haw) [charterer’s] would be to whom he had both measured been instructed by and satisfied Pruden- tial vessel; report before and who had redelivery of the himself been on and that ship in Norfolk day before. If Haw acceptance of the [the owner] needed authority from some one higher up, the time of redelivery put an end to the duty, Exxon, it was his not that of to obtain issue. such authority. Skouras and the other knew higher-ups that the ship was at Nor- folk for redelivery and that Morrell was There was “acceptance of the vessel” representing Prudential at that transaction. its owner Prudential aas at the redelivery It duty was the of the officers of Prudential period This, end of the of the charter. keep informed of the redelivery events. provision 16(d) in Clause is “conclusive That these officers day on the of redelivery evidence” that Exxon has complied with all executed for Prudential a new charter of obligations “with respect to the vessel’s Apex vessel to strongly would evidence class and condition at the time of redeliv- they had done so. authority If actual ery”. No issue as to the in Morrell vessel’s condition was lacking, nevertheless there survives for arbitration was an appearance abundant acceptance of of authority. the vessel When on its Morrell told Exxon redelivery. put that he would Judge Haight’s proposal up Prudential, was, first decision and when fact view, correct; telephone he did my entirely head office of Pru- it was error to dential, change and when he that decision. told Exxon that he was authorized to accept proposal The district court was led into error ship, amply accepting as the decisive issue “whether the justified relying apparent authori- non, authority vel or apparent, actual ty which Prudential had itself created. surveyor to execute the cer- [Prudential’s] If Morrell did not have authority sign tificate of redelivery was an arbitrable dis- the certificate or accept redelivery of the pute” (279a-280a). This is not the decisive vessel, it is clear from what undisputed issue; indeed, it is not even important and all Skouras the officers of Pruden- issue. The charter does not mention a “cer- tial, with full knowledge, themselves ac- tificate of redelivery” or a “certificate of vessel; cepted the they moreover ratified acceptance”. There is no magic in such a all that Morrell had done they accepted document. The issue is simply whether for Prudential the benefits from the Exxon was, there language charter, proposal. an “acceptance of the vessel by Owner.” There can be such a certificate but I would There has never been any effort or move suppose that acceptance of a vessel on rede- kind to rescind the livery is usually without any certificate of transaction reacquired the ves- any kind. The question is simply whether sel from Exxon. There has been no offer to the owner has received possession back the restore the vessel to the and con- and control of the so, vessel. If he has Exxon, done trol of from which it was transfer- did, as Prudential indisputably then there red in reliance on the made by has been an “acceptance of the vessel” Morrell. The benefits from that within the meaning of the charter here. have been secured and retained Pruden- *18 affirm, the the ves- he disclaims an intent to ratification principally
tial — sel, (among others) these bene- from which results.” ability to new char- (a) fits flowed: make a Court, Supreme A case in the with some vessel ter to to deliver the to Apex and bar, good to that at is a illus- resemblances Apex; (b) the and modi- to make additions of the in ratifica- equitable tration elements at an required by Apex fications charter Chicago, Ry. M. & P. Co. v. United tion. St. the deliv- earlier date and thus to advance States, 61 L.Ed. U.S. S.Ct. (c) ery date to to advance the Apex; (1917). The sued to en- government periodic survey and Coast Guard ABS join operation of a railroad in a national October to or June and thus avoid An of the agent forest Idaho. railroad taking the off-hire when would be ship it Peck, company, permission had secured Moreover, Apex. under to the ex- charter government company from the to cess on the inventory been re- has operate construct a railroad the for- Prudential, and, course, tained est. was done Peck a mem- This improvements made by Exxon have been the company orandum that retained. by stipulations execute and to would abide It principle is a basic law that agency prescribed by government. This an agent subject unauthorized act of an if ratified memorandum was made to ratifica- “given is principal affirmed and ef- described company. tion As 354-55, fect as if originally (244 authorized him”. Court at Supreme U.S. S.Ct. (Second) Agency 626-27): Restatement 82 at § (1957). An act ratified if to such consent There was no ratification of express act is manifested. Id. comment § memorandum, the Peck but shortly after (b). This explained is further in the Re- it company upon was made the entered statement: proceeded the reserve and with actively
Thus, road, there is purport- ratification if the the construction of its which it ed with principal knowledge permitted facts would not have been to do receives or property retains to which he is without memorandum. entitled if the only earlier transaction is company ratify The then declined to validated .... Such conduct is evidence prom- Peck memorandum or to execute the of his consent but even if he disclaims an stipulations. Supreme ised Court de- affirm, intent ratification results. clared, however, company that was upon rule is based that one belief by the Peck bound memorandum and must permitted should not be or re- obtain operations with it or its comply discontinue tain the of an purported benefits act in the forest. The Court ex- Supreme be done on his account unless he made (244 plained reasoning as follows at U.S. responsible for the means by they 628): 37 S.Ct. have been Id. obtained. comment § manifest, Here the it Secretary made (c). through the regulations before noticed otherwise, law here is based on the ancient judgment that in his due maxim speak that actions louder than for the regard public interests words. No matter how much transac- a stipulation, as was such described tion and agent memorandum, or disa- disaffirmed in the Peck be exacted of vowed, if retains principal company approv- the benefits as a condition transaction, is, this is map, ratification al survey agent’s authority. transaction and of the securing way. the right Rightly so, Peck, Prudential has never understanding offered to restore the Mr. Exxon; another, chartering company’s promised representative, put it its power out of As comply do so. said on its behalf that it would in the just quoted: Restatement con- given “Such condition. The promise consent, duct is securing permission evidence his even if purpose but for the *19 proceed at the construction of Hauser authority once with of as bank’s road, faith of the promise and on the agent disputed. is He was an assistant permission given. While this complete vice had of president charge and subject company’s was said to be to the releasing goods pledge. held It is ratification, upon it must held this however, necessary, determine an implied record that there was ratifica- making of the whether contract promptly tion. The availed it- company question the scope was within of Hauser’s permission proceeded self of the with authority, subsequent since conduct the work of construction. The circum- of the bank of constituted ratification stances were such it must have his the principal acts. Where known permission how the was obtained. knowledge of the facts retains the benefit It largely thereby benefited and to contract, of an he unauthorized must these benefits it since has ever held fast. deemed also to have assumed its burdens. True, after elapsed, some months had it purpose manifested a disaffirm Mr. promise, Peck’s but was after the But in it was any event notified of the
implied ratification and after the con- bill by particulars contract proceeded struction had so far that resto- moneys thereafter to return the failed ration of the situation original was not paid it by plaintiff by reason of the possible. contract. It therefore must be deemed retaining The effect of benefits from a have ratified it. act agent
claimed
of an
unauthorized
The principle of this decision means to me
expressed by
(1
thus
treatise
standard
F.
that,
if Morrell
no authority,
had
retention
Mechem, A
the Law Agency
Treatise on
possession
Prudential
of the Sar-
(2d
1914)):
ed.
§
oula
and of the other benefits received
is, further,
There
ordinarily no more
redelivery of the vessel was a ratification
satisfactory
certain and
a method of man-
by Prudential
the execution by
Morrell
act
ifesting approval of an
than voluntar-
Acceptance
of the Certificate of
and Rede-
ily
knowingly taking
the benefits
livery
“acceptance
and was an
of the ves-
which flow from performance;
and it
sel” by Prudential.
rule,
is a general
constant application
who,
the law
agency,
he
volun-
tarily
knowledge
facts,
and with
made
being
only
decision
here is not
accepts the
an act purporting
benefit of
in disregard of the terms of the contract of
account,
have been
his
done on
his
charter.
It
me that at the
seems to
same
agent,
thereby ratifies
and makes it his
unjust
time it
unfair
to Exxon.
own
though
he had authorized it in the
beginning.
The agreement
was made
representative
Prudential
selected
A decision
years ago by
some
a distin-
and sent
dispute
any
to Norfolk. No
guished panel
(L. Hand, Swan,
of this Court
kind
any
was raised
one from Prudential
Hand)
applicable
and A.N.
seems also
at that
time.
on this
reliance
state
case at bar. Gotham National Bank v. Sha-
affairs, Exxon, May 25,1979,
returned to
Co.,
(1928).
rood
Now, contrary to the redelivery objective
of the charter provisions, ap- this Court is
proving an order require, which will may
require, an attempt by arbitrators, long af- date,
ter the to determine the condition of Saroula on May 1979. The owner has used the then, vessel since Norfolk AETNA CASUALTY & SURETY COMPANY, Plaintiff-Appellant, Shipyard has made additions and modifica- then, Cross-Appellee, tions since repairs have been made at the sole decision then, of Prudential since v. Apex and undoubtedly other new char- GENERAL TIME CORPORATION and terers have used the vessel since then. The Talley Industries, Inc., Defendants- prejudice clear; to Exxon is even assuming Appellees, Cross-Appellants. those part who took in the events of 1979 Cal. Nos. Dockets available, are their fading; memories are 82-7172, 82-7194. the only written survey made at the time of the redelivery, (which that Morrell is in Appeals, United Court of States 72a-86a, the record at the “condition sur- Second Circuit. vey”), is presumably disavowed Pruden- Argued Oct. tial and not available as an admission of the March Decided condition; vessel’s then new, and no neutral persons including arbitrators —can recon- — struct the condition of Saroula in
1979'from her appearance now. Exxon has