Facts
- Mercator Line, Inc. (Mercator) entered into a vessel charter arrangement with Witte Chase Corp. (Witte Chase).
- The charter documentation included the clause: “Acct Witte Chase or nom, if nom then same to be gur by Witte Chase.”
- The clause contemplated performance either by Witte Chase itself or by a nominated substitute; if a nominee performed, Witte Chase would “gur” (guarantee) the nominee’s performance.
- Witte Chase nominated Ferromet Inc. (Ferromet) to perform under the charter.
- Ferromet allegedly failed to perform its charter obligations.
- Mercator sued Witte Chase for damages, asserting Witte Chase was liable based on the nominee-guaranty clause.
- Witte Chase argued New York law controlled and that, under New York’s Statute of Frauds, a guaranty/surety obligation must be evidenced by a sufficient writing.
- Witte Chase contended Mercator’s pleading theory depended on an oral agreement and moved to dismiss.
Issues
- Whether the nominee-guaranty clause in the charter materials stated an enforceable guaranty by Witte Chase for Ferromet’s nonperformance.
- Whether the claim was barred at the pleading stage by New York’s Statute of Frauds, given the maritime character of the charter-party guaranty.
Decision
- The court treated the alleged guaranty as part of a charter-party transaction and therefore as a maritime contract for admiralty purposes.
- Applying maritime-contract principles, the court rejected dismissal based on the New York suretyship Statute of Frauds theory.
- Witte Chase’s motion to dismiss was denied.
Legal Principles
- A charter party is a maritime contract, and obligations closely connected to charter performance—such as a promise to guarantee a nominee’s charter performance—may also be maritime in nature.
- When payment of money is itself the promised performance of a maritime obligation (e.g., charter hire), a related guaranty can fall within admiralty contract jurisdiction rather than being treated as a purely land-based financial arrangement.
- Federal maritime law generally permits enforcement of maritime agreements without importing state Statute of Frauds rules that would defeat maritime contract enforcement at the pleading stage.
- A “nominee” clause stating that performance by the nominee is to be “gur by” the nominating party may be construed as a guaranty undertaking, supporting guarantor liability if the nominee defaults.
Conclusion
Mercator Line, Inc. v. Witte Chase Corp. holds that a charter-party clause providing that a nominee’s performance would be “gur by” the nominating charterer states a maritime guaranty claim, and the court refused to dismiss the action on a New York Statute of Frauds theory because the guaranty was treated as a maritime contract governed by maritime-law principles.