Opinion ID: 77171
Heading Depth: 2
Heading Rank: 2

Heading: Contractual Scope of Coverage

Text: 13 GAIC's first argument, that it did not contemplate the risks associated with guaranteeing the payment of penalties that might be assessed against anyone other than Rigel, lacks merit. In the case of the SIGRID, Rigel completed Form 3171 on behalf of the ship's owner, Lektor. In the case of the SHERIDA EXPRESS, Rigel completed Form 3171 on behalf of the ship's owner, Golden Shipping. Neither ship would have been allowed entry to any United States port without Form 3171, and neither could have successfully completed that form without securing the required bond. In each case, the Form 3171 refers to a continuous bond in the amount of $100,000 held by Rigel Ships-Agencies, Inc. with Surety Company Code 097. R1(Sigrid)-1, Exh. A; R1(SHERIDA EXPRESS)-1 Exh. A. The corresponding Form 301 has an X marked in the box indicating that the bond in question is an international carrier bond pursuant to § 113.64. R1(SIGRID)-1, Exh. B; R1(SHERIDA EXPRESS)-1 Exh. B. This Form 301 also lists Rigel as the principal and GAIC (identified also as Surety No. 097) as the surety. R1(SIGRID)-1, Exh. B; R1(SHERIDA EXPRESS)-1 Exh. B. Representatives of both Rigel and GAIC signed the Form 301 creating the underlying bond. By filing Customs Form 3171 on behalf of the SIGRID and the SHERIDA EXPRESS, Rigel voluntarily obligated this bond on behalf of these vessels' owners. 4 14 The language on the face of the bond (Form 301), which GAIC signed, also clearly contemplates that the bond will be obligated in favor of third parties where it gives space for the principal to list entities permitted so to obligate the bond in its name. See R1(SIGRID)-1, Exh. B at Section III; R1(SHERIDA EXPRESS)-1 Exh. B at Section III. Further, because Rigel owns no vessels of its own, it should have been clear to GAIC, that GAIC was assuming risk regarding the actions of third parties. 15 In sum, the regulatory scheme defines the risk assumed by the surety. The box checked on Form 301 in this case specifically indicates that Rigel and GAIC were posting an international carrier bond pursuant to 19 C.F.R. § 113.64. See R1(SIGRID)-1, Exh. B at Section II, box 3; R1(SHERIDA EXPRESS)-1 Exh. B at Section II, box 3. The referenced regulation specifies that the bond covers penalties or other charges assessed against the vessel, master, owner or person in charge of the vessel. 19 C.F.R. § 113.64(a). In signing Form 301, GAIC voluntarily agreed to provide a bond covering the activities of those third parties. Any other interpretation would leave GAIC without any real exposure to liability and the transaction would make no sense.