Opinion ID: 354313
Heading Depth: 1
Heading Rank: 1

Heading: the common facts

Text: 2 The S/T Wafra was stranded and subsequently destroyed pursuant to governmental authority off the coast of South Africa in February or March, 1971, resulting in a total loss of its cargo of crude oil in bulk. One-half of the cargo was owned by Chevron Oil Sales Co. (Chevron) and one-half by Texaco Export, Inc. (Texaco). They were the plaintiffs below and are the appellants here. The owner of the vessel, defendant-appellee (cross-claim defendant below) was Getty Tankers Ltd. (Getty Tankers). The Wafra was operating under a long-term time charter to Getty Oil Co. (Getty Oil), third party defendant-appellant. By a time charter dated April 7, 1970, Getty Oil subchartered the vessel to United Steamship Corp. (United), defendant below and third party plaintiff-appellee here, for five years. United, in turn, subchartered the Wafra to Overseas Tankship Corp. (Overseas), defendant below, under a twelve-month consecutive voyage charter. In January, 1971, Overseas as disponet owner entered into an oral subcharter with Chevron as charterer for the entire capacity of the vessel (Overseas/Chevron charter), for the carriage of a full cargo of crude oil from Ras Tanura, Saudi Arabia, to Capetown, South Africa. Thereafter, Chevron agreed to an oral charter for one-half of the vessel's carrying capacity with Texaco (Chevron/Texaco charter) at the same rate of freight that Chevron was obligated to pay Overseas under the Overseas/Chevron charter. 3 After suit was commenced, the parties reached a settlement on the merits in November, 1975. Getty Tankers agreed to pay 62.5% of the provable damages incurred by Chevron and Texaco from the loss of their cargo. 1 Additionally, Getty Tankers and Getty Oil agreed to pay United 62.5% of its provable damages. Herbert M. Lord was appointed special master to ascertain the damages sustained by Chevron, Texaco and United. The parties thereafter agreed on most of the damage calculations, with the exception of the two questions which constitute the issues on appeal. 4 The principal dispute centered on whether Chevron's and Texaco's damages included freight charges which they in fact paid to Overseas. Resolution of this issue, in turn, necessitated determination of another disputed question whether the Overseas/Chevron or Chevron/Texaco charters, or both, provided that freight would be earned irrevocably upon loading. If both, Chevron was legally obligated to pay Overseas for the carriage of the entire cargo, and Texaco was legally obligated to pay Chevron for the carriage of Texaco's share of the cargo. With regard to the third party appeal, the parties disagreed on whether United was entitled to include in the calculation of its damages profits lost on the voyage in progress at the time of Wafra's destruction. 5 The special master found against Chevron and Texaco, recommending to the district court that the freights be excluded from their damage computations. Without a hearing, the district court approved the special master's conclusions in a memorandum decision. Accordingly, it awarded Texaco and Chevron $463,736.94 (representing 62.5% of the invoice value of the cargo ($737,129.89), plus 62.5% of the fees of a salvage master ($4,849.23)), which did not take into account the freights paid. The district court also followed the special master's report on the third party claim, and awarded United $187,871.01 (representing 62.5% of $164,326.71 lost profits plus 62.5% of $136,266.96 out-of-pocket expenses).