Court Opinion

ID: 9481477
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:20:05.59269+00
Date Added: 2024-06-11T17:48:20.382881
License: Public Domain

OAKES, Chief Judge,
dissenting:
“Generally speaking, the practical interpretation of a contract by the parties to it for any considerable period of time before it comes to be the subject of controversy is deemed of great, if not controlling, influence.” Old Colony Trust Co. v. City of Omaha, 230 U.S. 100, 118, 33 S.Ct. 967, 972, 57 L.Ed. 1410 (1913); see also 4 Willi-ston on Contracts § 623, at 789-90 (3d ed. 1961). Connecticut law, which governs the instant contract, has long recognized this principle of contract construction. See, e.g., Ruscito v. F-Dyne Elecs. Co., 177 Conn. 149, 170, 411 A.2d 1371, 1381 (1979); Beach v. Beach, 141 Conn. 583, 591, 107 A.2d 629, 633 (1954) (parties’ conduct is “strong presumptive evidence” of contract’s meaning).
A practical construction of the contract in this case indicates that Galveston Light-erage Area and Texas City were both “discharge ports” (or “disports”) within the meaning of the contract.1 Specifically, Galveston Lighterage Area was the discharge port for the approximately 316,000 barrels of lightered oil, while Texas City was the discharge port for the balance of the oil (approximately 515,000 barrels). I base my conclusion on the parties’ statements and conduct during the course of performance, viewed as a whole. In particular, I note the following:
* In a telex dated November 24, 1987, Crescent informed Phibro that it “ha[d] advised [the] owners of [the] final discharge port [was] Texas City” (emphasis added). Use of the qualifier “final” suggests that Crescent considered that there would be another, non-final discharge port, i.e., the lightering area.
* Similarly, in a telex of December 7, 1987, Phibro requested Crescent to inform the Petrol de Oro that, after light-erage, the vessel was to proceed to Texas City “for completion of discharge” (emphasis added), thus suggesting that discharge would commence at an earlier point, i.e., the lighterage area.
* The contract provides for a “mutually agreed independent inspector” to determine the quantity and quality of the cargo “at disport.” At Phibro’s instruction, an inspection was performed not only at Texas City, but also at the lighterage area.
* The contract provides for title and risk of loss to pass to Phibro “when product reaches vessel’s flange connection at discharge port.” In fact, the cargo bound for Corpus Christi passed the Petrol de Oro’s flange at the lighterage area.
Where, as here, a contractual provision is fairly susceptible to more than one interpretation, Connecticut law prefers the interpretation that is most reasonable and equitable. See, e.g., Lanna v. Greene, 175 Conn. 453, 458-59, 399 A.2d 837, 841 (1978); Texaco, Inc. v. Rogow, 150 Conn. 401, 408, 190 A.2d 48, 52 (1963). Under my practical interpretation, the term “discharge port” means precisely “port where the cargo is discharged.” Under Phibro’s interpretation, which my colleagues adopt, the term may have little functional relevance, as the pricing term would be set by the NOR at Texas City — the designated disport — even if one-hundred percent of the oil were dis*55charged at Galveston and transported to Corpus Christi or elsewhere. It is, I believe, more reasonable and equitable that the pricing mechanism be triggered by a meaningful event, such as the delivery of the oil to the exclusive control of the buyer. In the case of the lightered oil, Phibro effectively took control at Galveston, where its agent, Jahre Shipping, took delivery.2 Phibro assumed title and the risk of loss of the lightered oil from the time of lightering, and it seems fair to conclude that Phibro should also have assumed the risk of price fluctuation at that time.
If there were, as I have argued, two discharge ports, then the December 14 NOR (at Galveston Lighterage Area) should control the pricing term for the lightered oil, while the December 17 NOR (at the Texas City pilot station) should control the pricing term for only that portion of the oil actually delivered to Texas City. Accordingly, I would reverse the grant of summary judgment for Phibro, and remand with instructions to recalculate the price of the Galveston and Texas City oil based on separate pricing schedules.

. In concluding that there were, in effect, two discharge ports, I am cognizant of the fact that the contract refers to only a single "discharge port.” However, it is equally true that the contract contemplates only a single NOR. Given that there were indisputably two NORs, it does not seem unreasonable to conclude that there were also two discharge ports.

. That Phibro had full control over the lightered oil is most clearly demonstrated by the fact that Crescent was not even aware that this oil was transported to Corpus Christi until well after the fact.