Epstein v. Corporacion Peruana de Vapores
325 F. Supp. 535, 1971 U.S. Dist. LEXIS 13758 (1971)
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Rule of Law:
A ship master's implied authority under maritime law to bind the vessel's owner for the purchase of 'necessaries' is limited to supplies reasonably required for the master's own vessel and does not extend to purchasing supplies for other ships in the owner's fleet.
Facts:
- Stratford International Tobacco Company was in the business of selling tax-free cigarettes and liquor to vessels in New York.
- On May 4 and 5, 1965, a Stratford salesman, Alfred Parodi, had conversations with Luis E. Saavedra, the Captain of the S.S. NAPO, a ship owned by Corporación Peruana de Vapores.
- On May 6, 1965, Captain Saavedra agreed to purchase over $13,000 worth of cigarettes and liquor from Stratford, a quantity far exceeding the needs of the S.S. NAPO.
- The goods were delivered to the S.S. NAPO the same day.
- Captain Saavedra did not have enough cash to pay the full amount, so Stratford extended partial credit, leaving an unpaid balance of $7,206.50.
- Corporación Peruana de Vapores had internal regulations expressly forbidding its captains from making such purchases without prior authorization from the company.
- After Stratford's repeated demands for payment from Captain Saavedra were unsuccessful, it forwarded invoices to Corporación Peruana de Vapores' home office in Peru.
- Corporación Peruana de Vapores disclaimed knowledge of the transaction, refused to pay, investigated Captain Saavedra, and ultimately discharged him on December 1, 1965.
Procedural Posture:
- Stratford International Tobacco Company filed a suit in admiralty against Corporación Peruana de Vapores in the United States District Court.
- The plaintiff sought to recover $7,206.50, the unpaid balance for a sale of cigarettes and liquor.
- The case proceeded to a trial before the court without a jury.
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Issue:
Does a ship's captain possess express, apparent, or implied authority to bind the vessel's owner to a contract for the purchase of supplies that are not 'necessaries' for the captain's own vessel?
Opinions:
Majority - Croake, District Judge
No. A ship's captain does not possess express, apparent, or implied authority to bind the vessel's owner to a contract for supplies not considered 'necessaries' for the captain's own vessel. The court found the captain lacked any form of authority for the purchase. There was no express authority, as internal company regulations specifically forbade such purchases without prior approval. There was no apparent authority, as the owner, Corporación Peruana de Vapores, had no direct dealings with the seller, Stratford, and past transactions did not establish a pattern of the owner approving such purchases. Finally, there was no implied authority, because the maritime law doctrine granting a captain authority to purchase 'necessaries' is strictly limited to the needs of their own vessel, not for redistribution to other ships in the fleet. The court rejected the argument that a business custom existed allowing such purchases, finding the evidence insufficient.
Analysis:
This decision clarifies a significant limitation on the traditional maritime doctrine of a ship master's authority. It establishes that the implied authority to purchase 'necessaries' is not transferable across a fleet but is tethered specifically to the vessel under the master's command. The ruling underscores that third-party suppliers bear a degree of risk and have a duty to inquire when a transaction appears unusual, such as one involving an exceptionally large quantity of goods or an unexpected request for credit. It reinforces the agency law principle that an agent's authority is not limitless and that a principal is not liable for acts committed far outside the scope of employment.
