## Facts

- Stratford International Tobacco Company (Stratford) sold duty-free cigarettes and liquor in New York through its salesman, Alfred Parodi.
- Luis E. Saavedra was the master of the S.S. *Napo*, a vessel owned by Corporacion Peruana de Vapores (Peruana).
- Saavedra arranged with Parodi to purchase approximately $13,000 worth of cigarettes and liquor for delivery to the *Napo* in the Port of New York.
- The quantities ordered exceeded what could reasonably be used by the *Napo*’s crew; evidence suggested Saavedra planned to transfer excess goods to other vessels once the ship returned to Peru.
- Peruana did not authorize Saavedra to make the purchase and did not send Stratford any purchase order (directly or through an agent) for the goods.
- Parodi delivered the goods to the *Napo*. Saavedra lacked sufficient cash to pay in full, and Parodi extended roughly $7,000 in credit for the unpaid portion.
- Saavedra repeatedly failed to pay the outstanding balance. Stratford then invoiced Peruana for the remaining amount (about $7,206.50).
- Peruana refused payment, stating Saavedra lacked authority to bind the company. Stratford sued Peruana in admiralty to recover the unpaid balance.

## Issues

1. Whether the master had express authority from the shipowner to purchase cigarettes and liquor on credit in the amounts ordered.
2. Whether the shipowner’s conduct created apparent authority for the master to bind the shipowner to this transaction.
3. Whether maritime agency principles gave the master implied authority to bind the shipowner for this purchase as “necessaries” for the *Napo*.
4. Whether any claimed trade usage could supply authority (or expand it) for a large duty-free purchase, including amounts intended for vessels other than the *Napo*.

## Decision

- Judgment for the defendant shipowner; Peruana was not liable for Stratford’s unpaid balance.
- No express authority was shown: Peruana did not authorize the purchase and did not issue any purchase order for it.
- No apparent authority was shown: Stratford did not prove manifestations by Peruana that would reasonably lead a supplier to believe Saavedra could place an order of this size, partly on credit, for duty-free cigarettes and liquor.
- No implied authority was shown: even if a master may bind an owner for genuine ship “necessaries” for his own vessel in proper circumstances, the size and nature of this purchase—and evidence that excess was meant for transfer to other vessels—placed the transaction outside that limited rule.
- Alleged trade practice was not proven with sufficient certainty to charge Peruana with liability for this type of credit sale.

## Legal Principles

- A shipowner is bound by a master’s contract only if the master acted with express authority, apparent authority based on the owner’s manifestations, or limited implied authority recognized by maritime law.
- Apparent authority cannot be created by the master’s own statements; it must rest on conduct attributable to the shipowner that would justify a supplier’s reliance.
- A master’s ability to bind an owner for “necessaries” is confined to purchases reasonably connected to the needs of the vessel he commands and does not extend to unusual, excessive, or speculative acquisitions.
- Supplying goods intended in part for distribution to other vessels is not treated as a routine shipboard procurement chargeable to the owner without specific authorization.
- Trade usage can affect agency questions only when it is shown to be definite, established, and known (or chargeable) in the relevant market; uncertain or sporadic practice will not substitute for proof of authority.

## Conclusion

The court held that Corporacion Peruana de Vapores was not responsible for Stratford’s unpaid balance because the evidence failed to show that Captain Saavedra had express, apparent, or implied authority to place a large, partly credit-funded order of duty-free cigarettes and liquor—particularly where the quantities exceeded the *Napo*’s needs and appeared intended for transfer to other vessels.


Epstein v. Corporacion Peruana de Vapores, 325 F. Supp. 535 (1971)