author: KEVIN THOMAS DUFFY, District Judge:

text:
    DOW CHEMICAL PACIFIC LTD., Plaintiff, v. RASCATOR MARITIME S.A.; IntraSpan, Inc.; Mahmud Ahmed, a/k/a Mahmud Sipra; Miles A. Galin, M.D.; the Sanko Steamship Co., Ltd.; Sanko Kisen (U.S.A.) Corp.; M/V OGDEN FRASER, her engines, boilers, etc. Ogden Fraser Transport, Inc., Defendants. MANUEL INTERNATIONAL INC., and Manuel International D.I.S.C., Inc., Plaintiffs, v. RASCATOR MARITIME S.A.; IntraSpan, Inc.; Mahmud Ahmed, a/k/a Mahmud Sipra; Miles A. Galin, M.D.; the Sanko Steamship Co., Ltd.; Sanko Kisen (U.S.A.) Corp.; M/V OGDEN FRASER, her engines, boilers, etc.; Ogden Fraser Transport, Inc., Defendants.
    Nos. 79 Civ. 3131 (KTD), 80 Civ. 0359 (KTD).
    United States District Court, S.D. New York.
    Oct. 9, 1984.

      Hill, Rivkins, Carey, Loesberg, O’Brien & Mulroy, New York City, for plaintiffs Dow Chemical Pacific Ltd., Manuel Intern., Inc. and Manuel D.I.S.C. Intern., Inc.; Raymond P. Hayden, Philip Keith Yachmetz, New York City, of counsel.
    W. Shelby Coates, Jr., New York City, for defendants Rascator Maritime, S.A. and Miles A. Galin, M.D.

      Anderson, Russell, Kill & Olick, P.C., New York City, for defendants Intra-Span, Inc. and Mahmud Sipra; John H. Gross, New York City, of counsel.
    Zock, Petrie & Curtin, New York City, for defendants Sanko Kisen (U.S.A.) Corp. and Sanko S.S. Co., Ltd.; Philip J. Curtin, New York City, of counsel.
    Burlingham, Underwood & Lord, New York City, for defendants Ogden Fraser Transport Inc. and M/V Ogden Fraser; Michael Marks Cohen, G. Elizabeth Reese, New York City, of counsel.
   OPINION

KEVIN THOMAS DUFFY, District Judge:

Old fashioned piracy on the high seas and overwhelming greed are at the heart of this case. What makes the case unusual, however, is that the leader of the pirates is not a swashbuckling Long John Silver, but a grasping avaricious New York ophthalmologist who used other people and corporate shells to work his nefarious schemes. Once placed in th'e position where he might have to face justice, like a story-book pirate, the villain has lied and hidden in his attempt to avoid the repayment of the damages he has caused. His contempt for the law is truly astounding. This is the unusual situation where simple fairness demands that villain repay not only the plaintiffs’ damages ordinarily cognizable at law but also the expenses the plaintiffs and innocent third parties incurred by the prosecution of this case.

In this consolidated action, plaintiffs Dow Chemical Pacific Ltd. (“Dow” or “Dow Chemical”) and Manuel International Inc. and Manuel International D.I.S.C., Inc. (referred to collectively as “Manuel”) seek to recover the costs of the transshipment of their cargo between Cadiz, Spain and Bombay, India and for damage to their cargo. A three-day bench trial was held June 26, 1984 through June 28, 1984. The following shall constitute my findings of fact and conclusions of law.

FACTS

In 1974, defendant Ogden Fraser Transport, Inc. (“Ogden”), owner of defendant in rem Liberian flag bulk carrier vessel the M/V Ogden Fraser (“Ogden Fraser”), entered into a contract of time charter with defendant Sanko Steamship Co., Ltd. (“Sanko”) for a period of about six years. See Plaintiffs’ Exh. A34. Sanko is a Japanese corporation with its principal place of business in Tokyo, Japan. It conducts business in the United States through defendant Sanko Kisen (U.S.A.) Corp. (“Sanko Kisen”) which is incorporated in New York and has its principal office in New York City. See Sanko Exh. A(3) (agency agreement).

On November 17, 1978, Sanko, as disponent owner of the Ogden Fraser, sub-time chartered the vessel to defendant Rascator Maritime, S.A. (“Rascator”), a Liberian corporation. See Sanko Exh. A(l) (time charter party between Sanko and Rascator). Rascator was incorporated on February 17, 1978. See Court Exh. 1001. In October of 1978 Rascator opened a bank account at Sterling National Bank with an initial deposit of $483,926.53. See Plaintiffs’ Exh. A3. Defendant Dr. Miles A. Galin, an ophthamologist who resides and maintains a practice in New York City, was the only individual who had signature rights for Rascator. Id. Defendant Intra-Span, Inc. (“Intra-Span”) was assertedly Rascator’s agent for conducting business in the United States. Defendant Mahmud Sipra was officer and director of Intra-Span.

The sub-time charter party between Rascator and Sanko provided for a “time charter trip via safe port[s] ... with redelivery D.O.P. Japan-Singapore Range.” ‘ Sanko Exh. A(l). The charter hire was $5,400.00 per day to be paid “semi-monthly in advance in U.S. dollars via telegraphic transfer to Owner's bank account.” Id. As partial security for the charter hire, Sanko procured an irrevocable commercial letter of credit in the amount of $167,400.00. Plaintiffs’ Exh. Al. The letter of credit was dated December 21, 1978 and would expire if it was not presented for payment at Sterling National Bank on or before March 19, 1979. Id. The letter of credit was “by order of Rascator Maritime, S.A. c/o M. Galin, 180 East End Avenue, New York, N.Y.” Id. By letter dated December 29, 1979 the letter of credit expiration date was extended until April 19,1979. Id.

The Ogden Fraser was delivered to Rascator at the port of Seven Islands in Canada on November 19, 1978. She proceeded to Montreal, Canada, where Dow’s cargo of approximately 2,440,066 pounds of bagged high density polyethelyene resin was loaded aboard the Ogden Fraser. See Plaintiffs’ Exhs. A38 (cargo manifest); B1 at 1 (survey report, January 13, 1979). Clean-on-board bills of lading stamped December 30, 1978 were issued for Dow’s cargo. Plaintiffs’ Exh. A21 (nineteen bills of lading numbered 7 through 25). The booking note dated December 28, 1978 provided for freight of $110.00 per metric ton prepaid plus wharfage. Plaintiffs’ Exhs. A18, A44. The booking note provided that Dow’s cargo would be shipped from Montreal, Canada to Bombay, India and that transshipment was not allowed but it incorporated the terms of the bill of lading. Id. Although the booking' note disallowed transshipment, the bills of lading provided:

[w]hether expressly arranged beforehand or otherwise, the Carrier shall be at liberty to carry the goods to their port of destination by the said or other vessel or vessels either belonging to the carrier or others, or by other means of transport, proceeding either directly or indirectly to such port and to carry the goods or part of them beyond their port of destination, and to transship, land and shore the goods either on shore or afloat and reship and forward the same at Carrier’s expense but at Merchant’s risk.

See, e.g., Plaintiffs’ Exh. A106.

Sanko had no involvement with the negotiations for the shipment of the chemical and steel cargoes or any cargo on the voyage. It did, however, direct the master of the Ogden Fraser to authorize Rascator to issue bills of lading against mate’s receipts. See Sanko Exh. A(12). The “coniine” bills of lading were signed by Rascator’s Canadian agent, Colley Motorships Ltd. “as agents.”

After departing Montreal, the Ogden Fraser proceeded to Quebec where additional cargo was loaded and a “loading, stowing, securing and lashing” survey was performed. See Plaintiffs’ Exh. Bl. Thereafter, the vessel proceeded to New Orleans where approximately 1,487 metric tons of plaintiff Manuel’s steel was loaded. See Consent Pretrial Order (“PTO”) 1113. Manuel’s steel cargo was bound also for Bombay, India. Cymeon Shipping Corporation, on behalf of freight forwarders Black & Geddes, Inc., arranged the shipment of Manuel’s ■ cargo. See Plaintiffs’ Exh. A42 (Manuel’s complete file) (December 26, 1978 letter from Benjamin F. Butler confirming terms of shipment). Manuel’s steel' cargo was to be shipped pursuant to fourteen bills of lading. Transcript (“Tr.”) 80.

The Ogden Fraser was late arriving in New Orleans and Manuel wanted to draw down on a letter of credit but was unable to do so until its cargo was loaded and bills of lading were issued. See Tr. 74, 77 (testimony of Manuel Feingold). Ogden Exh. 3. Thus, Manuel procured from Rascator the premature issuance of four of the fourteen bills of lading. Id. The four bills are dated December 31, 1978 and stamped “on board,” yet the vessel did not arrivé in New Orleans until January. Tr. 71, 74, 77.

After Manuel’s cargo was loaded, a check for freight and ten bills of lading obtained from the freight forwarders were presented to Rascator through Sipra and W. Shelby Coates, Esq., attorney for Rascator and Dr. Galin, and ultimately were sent to Rascator’s agent in New Orleans but the bills of lading were returned unsigned to plaintiff on February 12, 1979. See Plaintiffs’ Exh. X9 (transcript of hearing before Judge Goettel on February 14, 1979), at 13. Apparently, underlying Rascator’s refusal to sign the bills of lading was a dispute between Manuel and the Rascator group concerning “deadfreight.” The booking arrangements initially called for a shipment of approximately 6,000 metric tons of steel. See Plaintiffs’ Exh. A44. Manuel, however, had only 1,487 metric tons of steel available for shipment in New Orleans. See Tr. 65. Thus, Rascator refused to issue the remaining ten bills of lading based on a claim of outstanding deadfreight. See id. at 17. I note that the Ogden Fraser had sailed from New Orleans on February 3, 1979 with Manuel’s cargo on board and the dispute over the issuance of the bills of lading did not occur until February 7, 1979. See id. at 14; Plaintiffs’ Exh. A36. In effect Rascator was holding the cargo for ransom and tripling the cost to Manuel of the shipment after it was loaded and at sea.

On February. 13, 1979, Manuel commenced an action against Rascator (among others) and at the same time moved by Order to Show Cause to compel the issuance of the ten bills of lading and the acceptance of the tendered freight. See Complaint, 79 Civ. 0795 (GLG). The following day, Judge Goettel directed the defendants to issue the bills of lading and enjoined defendants from selling or otherwise disposing of Manuel’s cargo except to the proper consignees in Bombay, India. PTO, Exh. A-l. Pursuant to Judge Goettel’s order, Rascator issued the remaining bills of lading.

On February 18, 1979, four days after Judge Goettel’s order, the master of the vessel received a radio message from “Aquaship” New York to proceed to Cadiz, Spain. See Plaintiffs’ Exhs. A36, A37 (telexes in and out of Ogden Fraser). In the meantime, while the vessel was on the high seas a proposal was made by Rascator and Sipra to have Manuel sell the steel cargo then aboard the vessel which steel was owned by others not party to this suit. This larcenous plan was specifically approved by Dr. Galin. Manuel refused. The Ogden Fraser arrived at port in Cadiz on February 20, 1979 where Manuel’s steel cargo and Dow’s chemical cargo were discharged. PTO 1114. Sipra and W. Shelby Coates, Esq., visited the vessel in Cadiz. See Sipra Dep. at 185-86.

Both Ogden and Sanko became aware, shortly before the vessel arrived in Cadiz, that Rascator had diverted the vessel. See Tr. 193-94 (testimony of Charles Nisi, president of Sanko-Kisen (U.S.A.)); Sanko Exh. A24 (telex sent March 1, 1979 to Rascator concerning discharge of cargo in Cadiz). Dow, however, was unaware of the status of its cargo until approximately two months after its cargo had been dumped on the pier in Cadiz. See Plaintiffs’ Exh. X12 at 6 (transcript of April 11, 1979 hearing before Judge Owen in Rascator Maritime, S.A. v. Phillipp Overseas, Inc., et al.).

Upon learning of the discharge in Cadiz of its cargo, Manuel sought the release of its cargo or an order directing transshipment to Bombay by Rascator. Hearings before Judge Owen were held March 30, 1979, April 4, 1979, and May 10, 1979. Finally, Manuel obtained an order from Judge Owen on May 10, 1979 directing Rascator to transship plaintiffs’ cargo to Bombay, India. See PTO, Exh. A-2. The order provided also for fines and the dismissal of Rascator’s action for deadfreight and damages based on the four prematurely issued bills of lading in the event it did not comply with the order. Id. Despite the issuance of the May 10th order as well as of other similar orders, plaintiffs’ cargo was discharged in Cadiz at the direction of Dr. Galin and neither Dr. Galin, Sipra nor the other defendants arranged for transshipment to Bombay, India. On January 6, 1981, a default judgment was entered against Rascator in its action for deadfreight for failure to comply with the court’s order. Final default was entered against Rascator on December 10, 1982. If the orders of this court had been complied with the damages suffered by the parties would have been negligible. The callous disregard of appropriate and lawful court orders has escalated a minor problem into a major case. The evidence shows that the person mainly responsible for these contemptuous decisions was Miles A. Galin.

It is unnecessary to follow the peregrinations of the Ogden Fraser after the plaintiff’s cargoes were dumped in Cadiz. Suffice it to say that Rascator and Dr. Galin did not pay the full charter hire and yet they continued their control over the ship until June 24, 1979. The defendant Sanko on regaining control of the ship then delivered apparently at its own expense the cargo left aboard by Rascator.

Dow Chemical initially commenced its actions on June 15, 1979 against only Rascator, Intra-Span, Sipra and Dr. Galin. On December 14, 1979, an amended complaint was filed in which Sanko and Sanko Risen, Ogden and the Ogden Fraser were added as defendants.

Manuel commenced its action on January 18, 1980 alleging that defendants discharged its steel cargo at the Port of Cadiz in “short and/or otherwise damaged condition.” Manuel Complaint ¶ 13.

DISCUSSION

I.

The Carriage of Goods by Sea Act (“COGSA”) provides that a deviation, “in saving or attempting to save life or property at sea, or any reasonable deviation shall not be deemed to be an infringement or breach of [COGSA] or of the contract of carriage, and the carrier shall not be liable for any loss or damage resulting therefrom.” 46 U.S.C. § 1304(4). However, the Act provides also that “if the deviation is for the purpose of loading or unloading cargo or passengers it shall, prima facie, be regarded as unreasonable.” Id. (emphasis supplied).

It is undisputed that Manuel’s steel cargo and Dow’s chemical cargo was bound for Bombay, India. Furthermore, there is no question that it was offloaded at the Port of Cadiz for nefarious reasons of the defendants Rascator, Dr. Galin and Sipra. There has -been no suggestion by defendants that the deviation was to save life or property at sea and there was no evidence introduced tending to establish that the deviation' was reasonable. There is no question that plaintiffs may recover all those damages flowing from the premature offloading of the steel and chemical cargo. Thus, I conclude that plaintiffs Manuel and Dow may recover reimbursement for (1) transshipment costs, and (2) wharfage costs, dock taxes, tariff charges, warehouse storage costs, repacking costs, trucking and pier charges, and stevedoring charges. Furthermore, miscellaneous expenses for items such as survey costs, official fees and reconditioning costs are .fully compensable. See Aljassim v. S.S. South Star, 323 F.Supp. 918, 923-24 (S.D.N.Y.1971).

II.

I turn to plaintiffs’ claims of physical damage to their cargo. COGSA provides that the carrier has a responsibility to “properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried.” 46 U.S.C. § 1303(2). In order to recover under COGSA, plaintiffs must show that their “goods were damaged while in the carrier’s custody.” Caemint Foods v. Lloyd Brasileiro, Companhia De Navegacao, 647 F.2d 347, 351 (2d Cir.1981). Plaintiffs can sustain their burden by establishing that the cargo was delivered in good condition but discharged in damaged condition. Id. A “clean” bill of lading is prima facie evidence that the cargo was delivered to the carrier in good condition. 46 U.S.C. § 1303(4). The bills of lading issued for Manuel’s cargo and Dow’s cargo were “clean.” There is no evidence to show that there was any damage to Dow’s shipment before it was loaded on the Ogden Fraser.

Notwithstanding the fact that a “clean” on-board bill of lading was issued for Manuel’s steel cargo, the reports for surveys performed upon loading in New Orleans indicate that the steel was rusted and pitted and that the packaging of the steel sheets and coils would make loading, handling, and stowage difficult. See Plaintiffs’ Exh. B5 (survey report by Charles Riemer). Another surveyor, Hugh Graham, remarked that the steel cargo appeared to be rusty and pitted. Plaintiffs’ Exh. A41. The surveyor stated also that “[njumerous tests were made at random with a silver nitrate solution, the result showing negative reactions only or contact with fresh water.” Id. Thus, I find that when it was placed in the carrier’s custody, Dow’s cargo was in sound condition. Manuel’s cargo, however, had rust damage pri- or to being placed in the carrier’s custody.

Before turning to the condition of the cargo at the time plaintiffs regained possession of their cargo it should be noted that under COGSA, a carrier has a non-delegable duty to properly and carefully load, unload, and stow the shippers’ cargo. See Nichimen Co. v. M.V. Farland, 462 F.2d 319, 330 (2d Cir.1972). Dow’s cargo was damaged by forklift trucks during the loading operation in Montreal. See Sanko Exh. A(16). Dow’s cargo was damaged also during and after its discharge in Cadiz. Because Dow did not learn of the discharge of its cargo in Cadiz until approximately two months after the discharge, plaintiff could not take measures to ensure the protection of its cargo until then. The surveyors in Cadiz examined the chemical cargo in a warehouse on April 20, 1979 and May 10-11, 1979. Plaintiffs’ Exh. A59. The surveyors found pallets that had been completely destroyed, ripped and empty bags, warped pallets, and “a great deal of the material spilled all over the warehouse.” Id. Some of the pallets were reconditioned and some of the loose resin were rebagged in “domestic bags.” Id. Before being reloaded for transshipment, Dow’s cargo was packaged in seventy-five containers. Id.; Plaintiffs’ Exh. A63. A second survey was performed on June 5, 1979 in Cadiz and the surveyors estimated that approximately 20,000 kilograms (“kgs”) of the resin was missing from the total cargo of 1,087,200 kgs. Plaintiffs’ Exh. A95.

After Dow’s cargo, had arrived in Bombay on or about September 29, 1979, and it had been unloaded from containers it was examined by surveyors on November 6, 1979. Plaintiffs’ Exh. B3. The surveyor noted that there was a shortage of approximately 190,950 kgs of resin. Id. Manuel’s cargo was also surveyed in Bombay and a shortage of approximately 2,104 kgs was found. Plaintiffs’ Exh. B7. The surveyor attributed the shortage to pilferage in Cadiz or in transit or while awaiting clearance for Bombay. Id.

Thus, while plaintiffs have established that their cargo was delivered “short,” they have not sustained their burden of proving that the delivered cargo was damaged while in the carrier’s possession. For example, Dow has not submitted any evidence tending to show that the resin was contaminated or that it had decreased in value in any way. Likewise, Manuel has not sustained its burden of proving that the condition of the steel had deteriorated once it had been delivered to Ogden Fraser.

m.

I turn to the liability of the individual defendants. Under COGSA, “carriers” are liable for unreasonable deviations and damage to cargo. A “carrier” is “the owner or the charterer who enters into a contract of carriage with a shipper.” 46 U.S.C. § 1301(a); see Trade Arbed, Inc. v. S/S Ellispontos, 482 F.Supp. 991, 994 (S.D.Tex.1980). It is apparent that Rascator through its agents signed the bills and thus became a COGSA. carrier, see 46 U.S.C. § 1301(b). See Sunil Industries v. S/S Ogden Fraser, 80 Civ. 4564 (CBM), Memorandum and Order filed August 26, 1981.

Furthermore, the general rule is that the “responsibility for cargo loss falls on the one who agreed to perform the duty involved---- In the absence of a special provision in the Time Charter, however, the duty to load, stow and discharge cargo ... falls 'upon the ship and her owner.” Nissho-Iwai Co., Ltd. v. M/T Stolt Lion, 617 F.2d 907, 914 (2d Cir.1980), appeal after remand, 719 F.2d 34 (2d Cir.1983). Here, however, the charter party between Ogden and Sanko provided that the captain of the vessel, though appointed by the owners, “shall be under the orders and directions of the Charterers” and that “Charterers are to load, stow and trim and discharge the cargo at their expense under the supervision of the Captain who is to sign Bills of Lading.” Plaintiffs’ Exh. A34 (Time Charter) 118. The same provision appears in the time charter party between Sanko and Rascator. See Sanko Exh. A(l). Thus, Rascator, under the sub-time charter was responsible for controlling the direction of and the loading and discharge of the vessel. See Joo Seng Hong Kong Co., Ltd. v. S.S. Unibulkfir, 493 F.Supp. 35, 40 (S.D.N.Y.1980). Indeed, Rascator in fact directed the Ogden Fraser to Cadiz and was totally responsible for ordering and supervising the unloading of plaintiffs’ cargo at port in Cadiz. Finally, Rascator had the duty, which it failed to fulfill, to deliver plaintiffs’ cargo to Bombay. Rascator’s assertion that in arranging for transshipment themselves, plaintiffs somehow tortiously interfered with Rascator’s contract is totally absurd.

There is a question, however, whether Ogden and Sanko are also liable as carriers under COGSA. They were not parties to the contracts of carriage with plaintiffs and did not sign the bills of lading. See Yeramex International v. S.S. Tendo, 595 F.2d 943, 948 (4th Cir.1979); Demsey & Associates, Inc. v. S.S. Sea Star, 461 F.2d 1009, 1015 (2d Cir.1972). Furthermore, they had nothing to do with soliciting shippers or directing the vessel. Some connection with the shippers or contract of carriage generally has been required as a prerequisite to the imposition of liability on the owner and charterer in addition to the voyage charterer. See Yeramex International, 595 F.2d at 948. Judge Sand, however, in Joo Seng Hong Kong Co., Ltd. v. S.S. Unibulkfir, broadly interpreted “carrier” and held that even absent a contractual relationship the owner was liable to the plaintiff but that the owner could seek indemnification from the charterer. 483 F.Supp. 43, 45 (S.D.N.Y.1979). I find that under the plain language of COGSA, Sanko and Ogden did not “enter into a contract of carriage with [the] shipper^]” and cannot therefore be held liable as “carriers.”

The vessel is liable in rem for plaintiffs’ loss. Once the cargo was loaded on board the Ogden Fraser, she became liable under COGSA as a carrier. This is true even if the master did not sign the bills of lading and even though four of the bills of lading for Manuel’s cargo were issued prior to the vessel’s arrival in New Orleans because by accepting plaintiffs’ cargo, the contract of carriage evidenced by the bills of lading was ratified. See Demsey & Associates, Inc., 461 F.2d at 1015. Ogden, as owner of the Ogden Fraser, however, is fully indemnified by Rascator. See id. at 1017.

IV.

Plaintiffs assert that defendants Sipra and Dr. Galin should be held personally liable for the breach by Rascator and Intra-Span of the contract of carriage. The test for piercing the corporate veil in a maritime context was enunciated in Kirno Hill Corp. v. Holt, 618 F.2d 982, 985 (2d Cir.1980). The individual must have used the corporate entity to “perpetrate a fraud or have so dominated and disregarded” the corporate entity’s form that the entity “primarily transacted [the individual’s] personal business rather than its own corporate business.” Id. It is true, as Dr. Galin and Sipra suggest, that piercing the corporate veil is not justified simply because they are sole owners or in sole control and that individuals may indeed incorporate to avoid personal liability. But I find that there was an abundance of evidence in the record to indicate that Dr. Galin used Rascator and Sipra used Intra-Span to a fraudulent end.

Manuel Feingold, President of Manuel, testified at trial that a meeting was held at Sipra’s office before Manuel was successful in obtaining the last ten bills of lading. Tr. 63. Present at the meeting were Feingold, Anne O’Brien, the Vice President of Manuel, Sipra, and Wajid Mizra who was a business associate of Sipra’s. Tr. 64. Feingold testified:

At that point Mr. Sipra produced for us a spread sheet of all the cargo — all the steel cargo on board that vessel of our three competitors, Philipp Overseas, B.S. Livingston and Doolan Steel, and Doolan Steel was also known as National Steel, and wanted us, meaning Anne O’Brien and myself, to join with Sipra and with Dr. Galin to resell these very same goods from Spain to Pakistan or from — I’m sorry, to resell them at that point from on board the vessel to Pakistan.

Tr. 65. Thereafter, Feingold testified, he and Anne O’Brien went to Dr. Galin’s office on 39th Street where the plan was reconfirmed by Dr. Galin. Tr. 67. O’Brien and Feingold then discussed the meeting with Manuel’s attorney who advised against speaking with Sipra again and two days later Manuel was notified that its goods were offloaded in Cadiz. Tr. 69.

I find that this testimony was totally credible and that Dr. Galin used Rascator and Sipra used Intra-Span in order to further their fraudulent plan by which certain cargo, including plaintiffs’ cargo was to be resold to other than the proper consignees in Bombay.

Dr. Galin’s attempt during his deposition to disavow any knowledge of the shipping industry is incredible in light of his business association with Sipra, see Plaintiffs’ Exh. X4 at 43, and his involvement with Cargo Dispatch, Inc. and Capricorn Commodities, Inc., see Plaintiffs’ Exhs. 31, 32. Furthermore, Sipra’s attempt to represent Dr. Galin as the prime if not sole actor in this whole fiasco, see, e.g., Plaintiffs’ Exh. X6 (Deposition of Mahmud Ahmed Sipra), is equally astonishing when Sipra’s financial condition and relationship with the shipping industry and the testimony of Manuel Feingold is considered. Both Dr. Galin and Sipra played active roles in making the booking arrangements. In addition, the Ogden Fraser, pursuant to Dr. Galin’s orders, transmitted through Rascator and despite the objections raised by Ogden and Sanko, proceeded to Cadiz where it unlawfully discharged plaintiffs’ cargo. Furthermore, once the letter of credit in Sanko’s favor expired (Sanko having unsuccessfully attempted to obtain an extension from Dr. Galin), Rascator ceased paying charter hire. I note also that the letter of credit had been by “Rascator c/o Miles A. Galin” and Dr. Galin had signed the first check which was overdue for charter hire. Indeed, the only individual with signature authority for Rascator was Miles Galin.

After hearing the testimony of Salvatore Colonna, Vice President of Sterling National Bank, and after reviewing Dr. Galin’s financial records that Sterling reluctantly produced, see tr. 173-178, there is no question in my mind that Dr. Galin totally ignored Rascator’s corporate form. The financial documents disclose a consistent practice on Dr. Galin’s part of transferring funds between his personal account to Rascator’s corporate account. See Plaintiffs’ Exh. A99. Furthermore, the following colloquy took place between the court and Colonna:

THE COURT: Was the bank looking to Dr. Galin to guarantee the confidence in this instance?
THE WITNESS: Of course, yes.
THE COURT: No doubt about it. As far as you were concerned [Rascator’s] account was Dr. Galin’s account, wasn’t it?
THE WITNESS: He was responsible for the overdrafts. (Tr. 172-73)
THE COURT: Where did you expect to get it?
THE WITNESS: In all probability from charter party monies or if necessary, from Dr. Galin.
THE COURT: As a practical matter, the bank looked at all these accounts like one big lump with Dr. Galin backing the whole thing, right?
THE WITNESS: Without Dr. Galin, I am sure these credits wouldn’t have been made.
THE COURT: Okay, and no loans would be made either?
THE WITNESS: No.

Dr. Galin treated Rascator as his alter ego particularly when he drained Rascator of the profits of his fraud. His bankers, at his instruction, treated Rascator as his alter ego in assisting his iniquitous schemes. Justice demands that the corporate veil be pierced to hold the main culprits liable for their illegal acts.

V.

In conclusion, plaintiffs have sustained their burden of proving a deviation and breach of the contracts of carriage by defendants the M/V Ogden Fraser, Rascator, Intra-Span, Dr. Galin and Sipra. The plaintiffs’ complaints are dismissed as against Sanko, Sanko-Kisen and Ogden. Ogden, on behalf of the Ogden Fraser, is entitled to indemnification from Rascator, Intra-Span, Dr. Galin and Sipra. Plaintiffs are directed to submit a judgment within ten days of the filing of this opinion on five days’ notice. Plaintiffs should also submit documentation of the exchange rate between Spanish pesetas and United States dollars at the time that the expenses were incurred.

Costs and attorneys fees are awarded to the plaintiffs and to Sanko and Ogden based on the bad faith exception to the general rule which precludes an award of attorneys fees to the prevailing party. See Weinberger v. Kendrick, 698 F.2d 61, 80 (2d Cir.1982) (there exists an exceptional power to shift fees where an action has been commenced or conducted in “bad faith, vexatiously, wantonly or for oppressive reasons.”) (citations omitted), cert. denied, — U.S. —, 104 S.Ct. 77, 78 L.Ed.2d 89 (1983); see also Faraci v. Hickey-Freeman Co., 607 F.2d 1025, 1028 (2d Cir.1979) (equitable principles governing award of attorneys fees to do justice are not displaced by legislative authority to award fees.). As I have stated, the intentional and wanton acts of Dr. Galin and Sipra caused plaintiffs’ financial losses as well as the legal expenses incurred by their co-defendants. The callous indifference to the law exhibited by Dr. Galin and Sipra from the inception of these actions in 1979 to the day of trial is only one example of their bad faith. Justice in this case will not be served absent an award of attorneys fees to plaintiffs, Sanko, and Ogden who were the target of and/or innocent bystanders to the scheme perpetrated by Dr. Galin and Sipra. The law firm of Zock, Petrie & Curtin, counsel for Sanko, having submitted adequate' documentation, may recover $84,485.54 from defendants Rascator, Dr. Galin, Intra-Span and Sipra and the law firm of Burlingham Underwood & Lord, having also submitted adequate documentation of expenses and hours may recover $84,411.98 from the same defendants. Sanko and Ogden are directed to submit judgments for their attorneys fees within ten days on five days’ notice. Dow Chemical is directed to submit a proposed judgment on notice for its attorneys’ fees supported by adequate documentation.

SO ORDERED.

      . At a pretrial conference held on June 14, 1984, counsel for defendant Dr. Miles Galin informed me that his client was planning to be in Europe during the time that the trial was to commence. I informed Dr. Galin’s counsel, W. Shelby Coates, Esq., that the trial would proceed as scheduled and that his client should be present. Dr. Galin was also under a valid subpoena. Nevertheless, Dr. Galin failed to appear at any time during the trial. After the trial had concluded, Dr. Galin moved to reopen. That motion was denied. See my Endorsement of July 27, 1984 for a full description of the behavior of Dr. Galin.

      . After the Ogden Fraser left port at New Orleans on February 3, 1979, it proceeded toward Freeport, Bahamas to take on bunker fuel. See Plaintiffs’ Exh. A36. She failed, however, to stop at port in Houston, Texas where she had been scheduled to load cargo. Id. After the vessel had been cleared for Freeport, Dr. Galin through Rascator changed the orders and the Ogden Fraser proceeded to Bridgetown, Barbados where she took on fuel and was visited by Dr. Galin. See Plaintiffs’ Exh. 6 (Deposition of Mahmud Ahmed Sipra ("Sipra Dep.’’)) at 213. After departing Barbados, the Ogden Fraser proceeded supposedly toward Kuwait via the Suez Canal.

      . Sanko-Kisen wrote in its March 1, 1979 telex:
      With respect to NOLA Steel cargoes, once that cargo was loaded aboard, the vessel itself became bound to deliver that cargo to destination. Assuming you have the right to transship, you must do so promptly or risk a finding of deviation which could subject the Ogden Fraser to arrest and consequent serious damage to our principals for which we hold you fully responsible.
      Defendant Sanko Exh. A(24).

      . At the same time that plaintiffs were making efforts to compel the transshipment by the Rascator group of their cargo to Bombay, Sanko was attempting to procure from Rascator an extension of the expiration date of the letter of credit which was due to expire on April 19, 1979. Dr. Galin refused to agree to the extension, the letter of credit expired, and on April 21, 1979, Rascator ceased making charter hire payments to Sanko despite the fact that the vessel was in service until June 24, 1979. See PTO ¶ 17. Sanko then carried the cargo left aboard the Ogden Fraser to destination in the Persian Gulf and India. See id. ¶ 18.

      . Manuel’s costs for transshipment aboard the Maliakos to Bombay were 6,189,398 pesetas (pts). Plaintiffs’ Exhs. A75, A88. Other transshipment costs included bank charges (pts 26,-012), telex expenses (pts 10,269), long-distance telephone charges (pts 27,136), mail expenses (pts 2,060), World Courier charges (pts 23,460) and the fees for an agent in Cadiz, (pts 68,646). Manuel incurred other expenses associated with the transshipment of its cargo. Id. They include watch duty (pts 866,709), area cover, etc., (pts 213,344), truck charges (pts 2,769,780), area space (pts 262,880), space occupation (pts 1,026,-080), rental of tarps in free zone (pts 15,500), check inspection (pts 184,200), moving (pts 669,-500), surface area occupation (pts 42,400), tax, duty and tariff (pts 136,869), iron strapping and classification (pts 185,675), and customs office fees (pts 70,975). See Plaintiffs’ Exh. A76.
      Dow's costs to transship its cargo aboard the Zim Australia are set forth in its exhibits A71, A54, and A62. They include the cost of freight (pts 9,664,789), see Plaintiffs’ Exhs. A62, A71, packing of containers (pts 688,350), transfer, stowing and loading (pts 450,075), other packing and transfer operations (pts 174,735), dock tax (pts 60,363), wharfage (pts 120,726), space (pts 44,000), payments to shipper and customs agent (pts 150,000), and tax (pts 30,737). See Plaintiffs' Exh. A71. In addition, Dow incurred approximately pts 457,276 in warehousing costs. See Plaintiffs’ Exhs. A61, A71.

      . The survey costs incurred by Dow and Manuel are compensable as a natural and foreseeable consequence of defendants’ improper and illegal discharge. Dow’s survey expenses were pts 206,427, see Plaintiffs’ Exhs. A66, A71, and Manuel's survey was pts 40,016, see Plaintiffs’ Exh. A85. Other expenses included tariffs (pts 195,-939), dock tax (pts 50,896), and repacking costs (pts 371,890). See Plaintiffs’ Exh. A71.

      . Dow claims damages for the damage to its cargo and for short delivery in the amount of $42,292.99. I have found that Dow’s delivery was short. See Plaintiffs’ Exhs. B3, A95. Manuel’s cargo was also noted by surveyors to be short by approximately 2,104 kgs. See Plaintiffs’ Exh. B7.

      . . It is undisputed that Sanko-Kisen acted as the agent for its disclosed principal Sanko. The law of agency applies to general maritime cases, and under agency principles, an agent for a disclosed principal is not liable to the third party. See Kirno Hill Corp. v. Holt, 618 F.2d 982, 985 (2d Cir.1980); see also Owen Steel Co. v. George A. Fuller Co., 563 F.Supp. 298, 300 (S.D.N.Y.1983). Thus, I conclude that Sanko-Kisen is not liable for any breach of the contract of carriage and. plaintiffs' complaints arc therefore dismissed as against it.

      . One example of Dr. Galin playing the financier and pleading ignorance of the intricacies of the shipping industry is when he stated that he did not understand certain shipping terms, see Plaintiffs’ Exh. X4 (Deposition of Miles A. Galin, M.D.) at 116, and that Mr. Sipra managed and operated the shipping business, see id. at 127-28:


source: Caselaw Access Project

author: SHADUR, District Judge.

license: Public Domain

text:
    CONTINENTAL ILLINOIS NATIONAL BANK AND TRUST COMPANY OF CHICAGO, Plaintiff, v. CONSULTING ENGINEERING GROUP and Nadar Eskander, Defendants.
    No. 84 C 7553.
    United States District Court, N.D. Illinois, E.D.
    Oct. 10, 1984.

      Richard H. Ferri, Continental 111. Nat’l Bank & Trust Co., Chicago, 111., for plaintiff.
    Edward Jepson, Jr., Vedder, Price, Kaufman & Kammholz, Chicago, 111., Daniel Duffy, Cassem, Tierney, Adams, Gotch & Douglas, Omaha, Neb., for defendants.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

Continental Illinois National Bank and Trust Company of Chicago (“Continental Bank”) brings this diversity action against corporate defendant Consulting Engineering Group (“Consulting Engineering”) and individual defendant Nadar Eskander (“Eskander”), both Nebraska citizens for jurisdictional purposes. Defendants move alternatively (1) for dismissal under Fed.R. Civ.P. (“Rule”) 12(b)(2) or (2) to quash the return of service of the summons and complaint. For the reasons stated in this memorandum opinion and order, the action is dismissed (without prejudice) for want of persona] jurisdiction over either defendant.

Facts

In 1980 a Saudi Arabian bank requested the Continental Bank to transfer $70,000 to an Omaha bank for a payment owed to Consulting Engineering. By' mistake Continental Bank processed the payment twice, thus overpaying Consulting Engineering by $70,000.

When Continental Bank discovered the mistake in its wire transfers (nearly two years later!), it tried unsuccessfully to recover the funds from Eskander (Consulting Engineering’s President). Continental Bank is informed and believes Eskander withdrew and spent the money.

Eskander has never been an Illinois resident. He owns no property and conducts no business here, nor has he ever conducted any business with the Continental Bank in Illinois or anywhere else. Consulting Engineering also has no contacts with Illinois: It does no business here, is not registered here, has no offices or clients here, has solicited no business here, has no agent for solicitation of business here and has no property here.

Lack of Personal Jurisdiction

This Court has had recent occasion to deal at some length with the principles underlying Illinois law for bringing nonresident defendants into court, both under the Illinois long-arm statute (Ill.Rev.Stat. ch. 110, ¶ 2-209) and under “doing business” standards. Club Assistance Program, Inc. v. Zukerman, 594 F.Supp. 341 (1984). Though this opinion will not repeat that extended analysis, suffice it to say the wide range of cases in this area of law may best be reconciled in terms of what may be loosely described as whether and in what way defendants intended to affect Illinois interests by their out-of-Illinois conduct.

One of the linchpins in that analysis is Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 56 Ill.Dec. 657, 427 N.E.2d 1203 (1981), which also announced the Illinois Supreme Court’s partial declaration of independence from the full reach of federal constitutional doctrine. Green taught mere economic impact on an Illinois party, occasioned by a defendant’s totally out-of-Illinois conduct, was not enough to subject the defendant to suit in Illinois (id. at 438, 56 Ill.Dec. at 661, 427 N.E.2d at 1207, adapted to the facts of this case):

But the consequences upon which [Continental Bank] reifies] are too remote from the misconduct of [defendants] to support the conclusion that the tortious acts complained of were committed in Illinois. The situs of the last event whose happening was necessary to hold [defendants] liable was in [Nebraska]. It was there that____ the misappropriation and conversion of the [Continental Bank’s funds] occurred____ The tortious acts, if any, and the losses or injury were complete when they occurred in [Nebraska]. That, therefore, was the place of the wrongs; their commission cannot reasonably or justifiably be transferred to Illinois by the rationale that their consequences reduced the amount of corporate assets in this State.

That language obviously might have been written for this case. Defendants have not submitted to the jurisdiction of Illinois courts (or therefore to the jurisdiction of this federal court sitting in Illinois) for long-arm purposes. See First Wisconsin National Bank v. Akin, 403 F.Supp. 1244 (E.D.Wis.1975) (rejecting jurisdiction over guarantors of a bank loan where the only “contact” with the forum state was the bank’s transmittal of funds from that state to the borrower in another state); cf. Northern Trust Co. v. Randolph C. Dillon, Inc., 558 F.Supp. 1118, 1123 (N.D.Ill.1983) (rejecting jurisdiction where defendants’ only “contact” with Illinois was in sending lease payments from another state to plaintiff in this state). And defendants surely have not created the alternative “doing business” basis for jurisdiction, recognized in such cases as Cook Associates, Inc. v. Lexington United Corp., 87 Ill.2d 190, 199-201, 57 Ill.Dec. 730, 734-35, 429 N.E.2d 847, 851-52 (1981). See, e.g., Froning & Deppe, Inc. v. Continental Illinois National Bank & Trust Co., 695 F.2d 289, 291-93 (7th Cir.1982).

Conclusion

No predicate exists for the acquisition of personal jurisdiction over either defendant. It is therefore inappropriate simply to quash service of process. Instead this action is dismissed, without prejudice to its reassertion in a jurisdiction where defendants are amenable to suit.

      . Consulting Engineering is both incorporated and has its principal place of business in Nebraska.

      . Defendants filed their motion and supporting memorandum September 26, so that Continental Bank's answering memorandum was due October 9 under this District Court's General Rule 13(a). Though that memorandum was not timely filed, this opinion has of course not treated the motion as unopposed. But the issue is so clear further briefing was scarcely called for.

      . For current purposes the Complaint’s allegations are assumed true (though of course no findings of fact are made to that effect). Factual statements in the text as to defendants’ lack of relationship with Illinois are based on Eskander's affidavits submitted with defendants’ motion.

      . That Count I allegation alone would appear flawed, ignoring as it does the corporate existence of Consulting Engineering in order to seek recovery against Eskander individually as well. Because (consistently with the next sentence of the text) Continental Bank also sues both defendants in conversion under Count II, and given the procedural deficiency discussed in the next section of this opinion, this Court need not deal with any such possible pleading deficiencies.

      . Illinois principles of acquiring jurisdiction apply to this Court under Rule 4(e).

      . That is of course just a shorthand phrase to summarize a legal concept of greater complexity (see the entire discussion in Club Assistance).

      . This case thus poses a very different problem from the one the Supreme Court has just last week agreed to consider in Burger King Corp. v. Rudzewicz, further consideration of jurisdiction on appeal postponed to hearing on the merits, — U.S. —, 105 S.Ct. 77, 83 L.Ed.2d 25 (1984). That case involves a Florida long-arm statute that extends jurisdiction to persons whose breaches of contract consisted of "failing to perfprm acts required by the contract to be perforated in this state.” At the Court of Appeals level (724 F.2d 1505 (11th Cir. 1984)) the statute was held invalid to the extent it would cover defendants’ simple obligation to remit payments to Florida. By contrast, Green instructs us that the Illinois long-arm statute does not reach so far.


author: McCURN, District Judge.

text:
    Amy AUERBACH, Barbara Shapiro, Andrea Digregorio, Monica Rossi, Mary Ellen Scarpone, Stephen Schreiber, Sharon Sonner, Carrie Newman, Robert Weber, Louis Esbin, Alan Frutkin, on behalf of themselves and all other persons similarly situated, Plaintiffs, v. Raymond J. KINLEY and George Scaringe, Commissioners of the Albany County Board of Elections; Donald Rettaliata and William McKeon, Commissioners of the New York State Board of Elections, Individually and in their official capacities, Defendants. Martha C. PEREZ, Maria S. Ramirez and Gloria A. O’Connell, on behalf of themselves and all other persons similarly situated, Plaintiffs, v. John J. HOGAN and Edwin F. Callahan, Commissioners of the Ulster County Board of Elections, Donald Rettaliata and William McKeon, Commissioners of the New York State Board of Elections, Defendants.
    No. 80-CV-374.
    United States District Court, N.D. New York.
    Oct. 10, 1984.

      Lewis B. Oliver, Albany, N.Y., Arthur N. Eisenberg, New York Civil Liberties Union, Jack Lester, New York City, Ronald Sinzheimer, Albany, N.Y., for plaintiffs.
    Robert G. Lyman, Albany County Atty., Albany, N.Y., for defendants, Kinley and Scaringe.
    Robert Abrams, Atty. Gen. of the State of N.Y., Barbara Shultz, Barbara Rottier, Albany, for defendants, Rettaliata and McKeon.

      Francis T. Murray, Ulster County Atty., Kingston, N.Y., for defendants, Hogan and Callahan.
   MEMORANDUM-DECISION AND ORDER

McCURN, District Judge.

Plaintiffs, college students from Albany and Ulster Counties, bring this action under 42 U.S.C. § 1983 on behalf of all students residing in Albany and Ulster Counties for declaratory and injunctive relief against the officials of the State and County Boards of Elections who have the responsibility of interpreting, applying, and enforcing New York State’s Election Law. This action challenges the constitutionality of § 5-104 of the New York State Election Law and Article 2, section 4 of the New York State Constitution, both facially and as applied to plaintiffs.

All parties have moved for summary judgment. For the reasons set forth below the court finds that both § 5-104 and Article 2, section 4 of the New York State Constitution are unconstitutional and, accordingly, the plaintiffs’ motion for summary judgment is granted.

BACKGROUND

The facts of this case as they relate to the Albany County plaintiffs and defendants are fully set forth in this court’s earlier opinion in Auerbach v. Kinley, 499 F.Supp. 1329 (N.D.N.Y.1980). Briefly stated, plaintiffs are students who attend college in Albany and Ulster Counties and who attempted to register to vote there. At the time the complaint was filed each of the named plaintiffs had lived in his or her college community for at least thirty days and was at least eighteen years of age.

Upon receipt of the plaintiffs’ mail-in voter registration forms the County Election Commissioners required the plaintiffs to complete and sign special questionnaires before considering whether plaintiffs should be registered as voters in their college communities. The only basis for requiring students to complete the questionnaires was their status as students. The Albany County Board of Elections (“Board”) denied plaintiffs’ applications to register to vote stating that the students were not residents of Albany County for voting purposes. The plaintiffs appealed the Board’s decision but their appeal was denied and all of the plaintiffs were refused registration in Albany County. The Ulster County plaintiffs were also refused registration.

The plaintiffs then commenced this action under 42 U.S.C. § 1983 on behalf of themselves and all students residing in Albany and Ulster Counties. The complaint asserted, inter alia, that in refusing to permit students to register and vote in their college communities the defendants unconstitutionally abridged plaintiffs’ right to vote in violation of the Fourteenth and Twenty-Sixth Amendments to the United States Constitution. Plaintiffs sought, inter alia, declaratory and injunctive relief holding that the New York statutory and constitutional provisions, pursuant to which their franchise had been abridged, violated the federal constitution.

On October 9, 1980, this court rendered a preliminary decision in this case. Auerbach v. Kinley, 499 F.Supp. 1329 (N.D.N.Y.1980). In that decision the court denied the defendants’ motion to dismiss, certified the action as a class action pursuant to Rule 23(b)(2) of the Fed.R.Civ.P., and granted a preliminary injunction enjoining the defendants “from adopting or pursuing any registration policy or practice ... that directly or indirectly discriminates against students or that requires students to do anything more than is required of other applicants.” Id. at 1343.

DISCUSSION

Perhaps the most fundamental of all our constitutional liberties is the right to vote. As the Supreme Court stated in Wesberry v. Sanders,

No right is more precious in a free country than that of having a voice in the election of those who make the laws under which, as good citizens, we must live. Other rights, even the most basic, are illusory if the right to vote is undermined. Our constitution leaves no room for classification of people in a way that unnecessarily abridges this right.

Wesberry v. Sanders, 376 U.S. 1, 17-18, 84 S.Ct. 526, 535, 11 L.Ed.2d 481 (1964). Equally fundamental, however, is the right of a state to limit the right to vote to bona fide residents. At issue here is a conflict between these two competing constitutional rights. In balancing these rights New York State’s efforts to restrict the ballot to bona fide residents must not violate the equal protection clause of the federal constitution by unfairly burdening the plaintiffs’ right to vote.

The Supreme Court in Dunn v. Blumstein recognized the tension between these competing constitutional rights and concluded that restrictions on the right to vote, including the imposition of residency requirements, must meet “close constitutional scrutiny”:

In decision after decision, this Court has made clear that a citizen has a constitutionally protected' right to participate in elections on an equal basis with other citizens in the jurisdiction. See, e.g., Evans v. Cornman, 398 U.S. 419, 421-22, 426 [90 S.Ct. 1752, 1754-1755, 26 L.Ed.2d 370] (1970); Kramer v. Union Free School District, 395 U.S. 621, 626-28 [89 S.Ct. 1886, 1889-1890, 23 L.Ed.2d 583] (1969); Cipriano v. City of Houma, 395 U.S. 701, 706 [89 S.Ct. 1897, 1900, 23 L.Ed.2d 647] (1969); Harper v. Virginia Board of Elections, 383 U.S. 663, 667 [86 S.Ct. 1079, 1081, 16 L.Ed.2d 169] (1966); Carrington v. Rash, 380 U.S. 89, 93-94 [85 S.Ct. 775, 778-779, 13 L.Ed.2d 675] (1965); Reynolds v. Sims, [377 U.S. 533, 84 S.Ct. 1362, 12 L.Ed.2d 506 (1964)], supra. This ‘equal right to vote,’ Evans v. Cornman, supra [398 U.S.] at 426 [90 S.Ct. at 1756] is not absolute; the States have the power to impose voter qualifications, and to regulate access to the franchise in other ways. See, e.g., Carrington v. Rash, supra [380 U.S.] at 91 [85 S.Ct. at 777], Oregon v. Mitchell, 400 U.S. 112, 144 [91 S.Ct. 260, 274, 27 L.Ed.2d 272] (opinion of Douglas, J.), 241 [91 S.Ct. 323] (separate opinion of Brennan, White, and Marshall, JJ.), 294 [91 S.Ct. 349] (opinion of Stewart, J., concurring and dissenting, with whom Burger, C.J., and Blackmun, J., joined). But, as a general matter, ‘before that right [to vote] can be restricted, the purpose of the restriction and the assertedly overriding interests served by it must meet close constitutional scrutiny.’ Evans v. Cornman, supra [398 U.S.] at 422 [90 S.Ct. at 1754] (1970); see Bullock v. Carter [405 U.S.] 134 at 143 [92 S.Ct. 849 at 855-856, 31 L.Ed.2d 92] (1972).

Dunn v. Blumstein, 405 U.S. 330, 336, 92 S.Ct. 995, 1000, 31 L.Ed.2d 274 (1972).

The statute at issue here is section 5-104 of the New York State Election Law. Section 5-104 reads as follows:

1. For the purpose of registering and voting no person shall be deemed to have gained or lost a residence by reason of his presence or absence while employed in the service of the United States, nor while engaged in the navigation of the waters of this state, or of the United States, or of the high seas; nor while a student of any institution of learning; nor while kept at any welfare institution, asylum or other institution wholly or partly supported at public expense or by charity; nor while confined in any public prison.
2. In determining a voter’s qualification to register and vote, the board to which such application is made shall consider, in addition to the applicant’s expressed intent, his conduct and all attendant surrounding circumstances relating thereto. The board taking such registration may consider the applicant’s financial independence, business pursuits, employment, income sources, residence for income tax purposes, age, marital status, residence of parents, spouse and children, if any, leaseholds, sites of personal and real property owned by the applicant, motor vehicle and other personal property registration, and other such factors that it may reasonably deem necessary to determine the qualification of an applicant to vote in an election district within its jurisdiction. The decision of a board to which such application is made shall be presumptive evidence of a person’s residence for voting purposes.

Plaintiffs contend that the statute is unconstitutional on its face and as applied. Defendants contend that the statute is a proper exercise of the State’s power to determine the bona fide residency of prospective voters.

I. Constitutionality of New York State Election Law § 5-10Jf

The Equal Protection Clause of the Fourteenth Amendment guarantees that individuals similarly situated will be dealt with in a similar manner by government. This, of course, does not mean that government cannot classify groups of individuals, but rather, that when government does classify individuals it cannot do so in an arbitrary or discriminatory fashion. If a state statute classifies individuals in terms of their ability to exercise a fundamental right then the statute is subject to strict constitutional scrutiny. See e.g. Dunn v. Blumstein, 405 U.S. 330, 336-37, 92 S.Ct. 995, 999-1000, 31 L.Ed.2d 274 (1972). In the voting rights context the Supreme Court has recognized that when state action restricts the franchise the state bears a heavy burden of justification for the classification — the state action which restricts the franchise must advance a compelling governmental interest by the least drastic means in order to survive constitutional scrutiny. Dunn v. Blumstein, 405 U.S. 330, 92 S.Ct. 995, 31 L.Ed.2d 274 (1972); Phoenix v. Kolodzieski, 399 U.S. 204, 90 S.Ct. 1990, 26 L.Ed.2d 523 (1970); Evans v. Cornman, 398 U.S. 419, 90 S.Ct. 1752, 26 L.Ed.2d 370 (1970); Kramer v. Union Free School District, 395 U.S. 621, 89 S.Ct. 1886, 23 L.Ed.2d 583 (1969); Cipriano v. City of Houma, 395 U.S. 701, 89 S.Ct. 1897, 23 L.Ed.2d 647 (1969); Harper v. Board of Elections, 383 U.S. 663, 86 S.Ct. 1079, 16 L.Ed.2d 169 (1966); Carrington v. Rash, 380 U.S. 89, 85 S.Ct. 775, 13 L.Ed.2d 675 (1965).

The defendants argue that § 5-104 should not be subject to strict constitutional scrutiny because the statute does not disenfranchise students, it merely affects where they are entitled to vote. The New York Court of Appeals in Palla v. Suffolk County Board of Elections, agreed that “the statute is entirely neutral and has always been construed as such; it disenfranchises no one, but merely determines the place where one may legally vote.” Palla v. Suffolk County Board of Elections, 31 N.Y.2d 36, 48, 334 N.Y.S.2d 860, 286 N.E.2d 247 (1972).

The right to vote, however, is not merely the right to register and vote somewhere, but rather, the right to vote in those elections which bear substantially on an individual’s life. See e.g. Kramer v. Union Free School District, 395 U.S. 621, 89 S.Ct. 1886, 23 L.Ed.2d 583 (1969); Cipriano v. City of Houma, 395 U.S. 701, 89 S.Ct. 1897, 23 L.Ed.2d 647 (1969); Phoenix v. Kolodzieski, 399 U.S. 204, 90 S.Ct. 1990, 26 L.Ed.2d 523 (1970). Compelling students who are bona fide residents of their college communities to vote from their parents’ communities — with which they may have no continuing contact or interest — seriously abridges their right to vote. Proof of total disenfranchisement is not necessary to trigger strict constitutional scrutiny of a residency statute; it is sufficient if the statute deprives individuals of the ability to vote where they are residents. See Evans v. Cornman, 398 U.S. 419, 90 S.Ct. 1752, 26 L.Ed.2d 370 (1970); Carrington v. Rash, 380 U.S. 89, 85 S.Ct. 775, 13 L.Ed.2d 675 (1965).

A. Section 5-104 Creates a Rebuttable Presumption that Students are Not Residents of New York State

In evaluating the constitutionality of § 5-104 this court must consider the statute as it has been construed by the New York Court of Appeals. Thus, the New York Court of Appeals’ interpretation of a New York State statute is binding on this court. The court is not free to interpret the statute in a way contrary to that of the highest state court. See Schad v. Mount Ephraim, 452 U.S. 61, 65, 101 S.Ct. 2176, 2180-2181, 68 L.Ed.2d 671 (1981); Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 160, 101 S.Ct. 446, 450, 66 L.Ed.2d 358 (1980). With this principle in mind, the court finds that § 5-104, as construed by the Court of Appeals in Palla, creates a rebuttable presumption that students are not residents of New York State for purposes of voting. The Court in Palla stated:

Under ordinary circumstances, and at common law, the fact of physical presence within a particular election district may be deemed consistent with the claimed change in permanent residence (citation omitted). In situations involving students, however, physical presence without more, naturally and by constitutional mandate (citation omitted) is deemed evidence merely of an intention to reside temporarily in a particular district for purposes consistent with preparation for a certain calling. The sojourn is said to have no effect whatever upon residence for the purpose of voting.' (emphasis added)

Palla, 31 N.Y.2d at 47-48, 334 N.Y.S.2d 860, 286 N.E.2d 247.

The criterion set forth by subdivision (c) of section 151 [now § 5-104(2) ] are applicable to all prospective registrants, student and nonstudent alike. True, subdivision (a) of the section [now § 5-104(1) ] requires that students along with other transients point to facts extrinsic of their residence at an institution in support of their declarations of domicile, but that requirement, is consonant with the natural inference that their stay is for limited purposes only, (emphasis added).

Palla, 31 N.Y.2d at 50, 334 N.Y.S.2d 860, 286 N.E.2d 247.

The above quoted language clearly suggests that the Palla court considered students “transients” who could be constitutionally subjected to special inquiry by virtue of the temporary nature of their “stay” in New York. This statutory scheme places a greater burden of proof of residency upon students than it does on other citizens. The plaintiffs here are only allowed to register if they submit to questioning above and beyond that required of all other applicants, and only if they overcome the presumption that they are not residents of New York State. Defendants have not come forward with any evidence demonstrating that any other group of individuals is required to submit to additional questioning when they apply to register to vote. Notwithstanding the fact that New York State has the right to ascertain whether applicants for registration are bona fide residents, the State must do so in an evenhanded and nondiscriminatory fashion.

A number of courts in other jurisdictions have struck down state statutes and practices that require students to shoulder a special burden in order to register. See e.g. United States v. Texas, 445 F.Supp. 1245 (1978) aff’d mem. nom. sub. Symm v. United States, 439 U.S. 1105, 99 S.Ct. 1006, 59 L.Ed.2d 66 (1979); Frazier v. Callicutt, 383 F.Supp. 15 (N.D.Miss.1974); Sloane v. Smith, 351 F.Supp. 1299 (M.D.Pa.1972); Newburger v. Peterson, 344 F.Supp. 559 (D.N.H.1972); Johnson v. Darrall, 337 F.Supp. 138 (S.D.Ohio 1971); Ownby v. Dies, 337 F.Supp. 38 (E.D.Tex.1971); Shivelhood v. Davis, 336 F.Supp. 1111 (D.Vt.1971); Bright v. Baesler, 336 F.Supp. 527 (E.D.Ky.1971); Anderson v. Brown, 332 F.Supp. 1195 (S.D.Ohio 1971); Worden v. Mercer County Board of Elections, 61 N.J. 325, 294 A.2d 233 (1972); Jolicoeur v. Mihaly, 5 Cal.3d 565, 96 Cal.Rptr. 697, 488 P.2d 1 (1971); Wilkins v. Bentley, 385 Mich. 670, 189 N.W.2d 423 (1971). These cases stand for the proposition that the equal protection clause of the Fourteenth Amendment prohibits arbitrarily subjecting one group of individuals to burdens not placed on other citizens in the absence of a compelling justification for the classification.

B. Section 5-104 is not necessary to the Advancement of any Compelling Government Interest

Because the additional burden placed upon students pursuant to § 5-104 restricts the availability of their fundamental right to vote, the state must demonstrate that it has a compelling state interest for the challenged statute. Plaintiffs contend, and this court agrees, that the state cannot constitutionally -justify the additional burden placed upon students. In a case remarkably similar to the instant case, the court stated:

The State concedes that it is possible for a student to establish domicile at the university community. There is then, no reason why the State should, as a policy, doubt the veracity of every student who claims to have satisfied the requirements. There is no reason to assume, and the defendants have offered none that would satisfy the compelling interest test, that a person claiming to have fulfilled the domiciliary requirement is not to be believed if he is a student. Moreover, there is no reason to believe that students who have established domiciliary status within the university community will not take a keen and serious interest in the political issues of that area nor is there any reason to believe that they will not exercise their franchise in a responsible manner. Simply put there are no salient reasons to treat registering students differently from .other people merely because they are students ____
Notwithstanding the fact that there may be a significant number of students who do intend to return to their former homes, there is an equally significant number of students who do not intend to return to their former homes, and the presumption against university domicil unfairly discriminates against them.
The court believes that the presumption that all students retain a desire to return to their previous homes following the termination or completion of their college careers is not valid. The court cannot conceive of any reason why it should not be presumed that student applicants for voter registration, like any other applicant, have made their application in good faith.

Bright v. Baesler, 336 F.Supp. 527, 533 (E.D.Ky.1971).

In the instant case the defendants have not proffered any justification for the statute. Assuming that the compelling interest the statute was intended to further is the determination of bona fide residency of applicants for registration to vote, the court finds that the statute fails to further that interest. Undoubtedly there are individuals that are not residents of New York that are not questioned concerning their residency and who are allowed to register to vote nonetheless. For example, any individual who is employed on a temporary assignment in New York State would not be questioned about his or her residence. On the other hand, there are presumptively students who are residents of New York State who are burdened with answering questions which are skewed against them. Unless these student residents can answer the questions contained in the questionnaires to the satisfaction of the local Election Commissioners they are not allowed to register, despite the fact that they otherwise meet the requirements for residency.

Many of the questions contained in the questionnaire given to plaintiffs were derived from the factors listed in 5-104(2). The factors listed in 5-104(2), however, are of little assistance in determining the residence of students. The factors, at best, are irrelevant or inappropriate in determining the locus of the students’ primary concern and at worst are clearly designed to discriminate against students. The primary focus of the 5-104(2) criteria is upon financial independence and occupational status. It is not surprising that local registrars have denied students in New York State the right to vote based on these factors. One of -the factors, namely “residence of parents”, seems designed to militate against out-of-town students. Other factors identified in 5-104(2) also seem directed against students, e.g., financial independence, business pursuits, employment, income sources, and residence for income tax purposes. Other factors are simply irrelevant to the determination of anyone’s residence, i.e. age and marital status. It is difficult to understand what an individual’s age or marital status has to do with the locus of one’s voting domicile. The criteria set out in 5-104(2) are simply not tailored to determine one’s residency and consequently the statute cannot be justified as necessary to promote a compelling governmental interest.

Two other governmental interests which are traditionally put forth as justifications for residency requirements are prevention of voter fraud and exclusion of disinterested voters from the electorate. Section 5-104 does not promote either of these interests. Subjecting students to a more exacting line of questioning than other applicants does nothing to insure against voter fraud. There is no evidence that students are more likely to submit a fraudulent application to register than other applicants. The Supreme Court in Dunn v. Blumstein rejected the justification that residency requirements deter voter fraud. Dunn v. Blumstein, 405 U.S. 330, 346-47, 92 S.Ct. 995, 1005, 31 L.Ed.2d 274 (1972). Likewise there is no evidence that § 5-104 advances the desire to insure that those who are insufficiently interested in the political life of the community are excluded from the electorate. There is absolutely no evidence that students are less interested in their college communities than the other members of the electorate. Indeed, this lawsuit is an indication that many students are keenly interested in their college 'communities and want to have the right to be politically involved in them.

Plaintiffs' are obviously subject to the laws of their college communities and are affected in their daily lives by the elected officials chosen to administer those laws. Under New York’s statutory scheme students are almost “automatically” rejected when they apply to register to vote. Section 5-104(1) gives election officials the right to subject students to a more exacting registration process than other citizens, and § 5-104(2) sets out the factors which the election officials should consider. Those factors are impermissibly stacked against students thereby creating an almost irrebuttable presumption against student residency. New York State has not come forward with any justification for the statute which would promote a compelling governmental interest and therefore the court finds that § 5-104 is constitutionally impermissible. The court recognizes that New York State has a right to ascertain whether applicants for registration to vote are bona fide residents, but New York State must do so in a way that does not violate the plaintiffs’ constitutional right to be treated on an equal basis with other citizens.

Even if section 5-104 were neutral on its face the manner in which New York State counties have applied it would nevertheless render it unconstitutional. The defendants claim that the same criteria are applied to all applicants who seek to register to vote and that no additional burden is placed on students. Even if in theory the same criteria for residency were used for all applicants, it is clear that only students are asked to demonstrate that they meet the .criteria. While New York State may look beyond an applicant’s expressed intent to make a place his or her home, the State must do so in a neutral fashion. The State cannot arbitrarily single out one group for additional scrutiny. Although the defendants assert that students as a group are more transient than the rest of the electorate and therefore additional scrutiny of students is justified, they have not presented any evidence that students as a group are more transient than other groups (e.g., construction workers, individuals on temporary job assignments, and law clerks) who are routinely allowed to register and vote without additional questioning.

Finally, the plaintiffs have challenged § 5-104 as failing to provide local officials with sufficiently precise standards for enforcement. Statutes which fail to provide such standards are unconstitutional because they permit local officials unlimited discretion in the area of constitutionally protected rights and invite arbitrary and discriminatory inferences with regard to individuals’ constitutional rights. See United States v. Texas, 445 F.Supp. 1245 (S.D.Tex.1978) aff’d mem. sub. nom. Symm v. United States, 439 U.S. 1105, 99 S.Ct. 1006, 59 L.Ed.2d 66 (1979).

There is no question that § 5-104 grants each county the authority to determine residency for the purpose of voting. As can be seen from the survey of student voting submitted by the plaintiffs each county applies § 5-104 in its own way. The result is a virtual patchwork quilt of student voting across New York State — some counties routinely register students without additional questioning while other counties refuse to register any students. In Wilkins v. Bentley, the Supreme Court of Michigan held that conferring excessive discretion upon local clerks would result in invalidation of Michigan’s student voting regulations:

At trial, the plaintiffs were asked questions concerning bank accounts; where they obtained their support; whether they owned or leased property; and where they spent their vacations. However, these questions concerning wealth, property ownership, and travel, if used as criteria to establish residence for voting purposes are constitutionally impermissible.
We hold that [Michigan’s statute], insofar as it applies to students, does violate the due process clause of the Fourteenth Amendment of the U.S. Constitution____ [The statute] as it applies to students, is overly broad and grants a constitutionally prohibited discretion to local clerks in Michigan. The ability to exercise the precious right to vote cannot depend on whether a student attends school in a large city or a small town.

Wilkins v. Bentley, 385 Mich. 670, 189 N.W.2d 423, 426-27 (1971). New York’s statutory scheme also confers excessive discretion upon local election officials. Thus, § 5-104 could be held unconstitutional on that basis alone. A student’s right to vote should not be contingent upon the whims of the local elections officials. .

II. Relief

The court finds that § 5-104 of the New York State Election Law and Article 2, § 4 of the New York State Constitution are unconstitutional on their face and as applied in that students are denied the fundamental right to vote in their college communities when the burden placed on their right to vote is unnecessary to the advancement of any compelling governmental interest. Accordingly, the following relief is hereby

ORDERED:

1. The defendants are permanently enjoined:

(a) From requiring any additional documentation from any student beyond that required of all other applicants unless defendants have reasonable grounds on which to base a belief that the individual applicant’s claim of residency is untrue; and
(b) From adopting of pursuing any registration policy or practice that directly or indirectly discriminates against students or that requires students to do anything more than is required of other applicants.

2. The plaintiffs are entitled to an award of reasonable attorney’s fees and costs pursuant to 42 U.S.C. § 1988. The plaintiffs are directed to submit documentation of same.

IT IS SO ORDERED.

      . The Ulster County plaintiffs and defendants were added to this lawsuit after the court’s first opinion in Auerbach.

      . New York State'Election Law § 5-102(1) provj£jes.
      No person shall be qualified to register for and vote at any election unless he is a citizen of the United States and is or will be eighteen years of age or over, and a resident of this State and of the county, city or village for a minimum of thirty days next preceding electibn.

      . While the statutes at issue here speak in terms of ?‘ ¡3 clAear that what [s at issue is domicile. A person may have many residences but may have only one domicile.

      . Plaintiffs have also alleged violations of the Voting Rights Act, 42 U.S.C. §§ 1971, 1973. The court finds that the Voting Rights Act is inápplicable to the facts of this case.

      . New York State Election Law § 5-104(1) tracks the language of Article 2, § 4 of the New York State Constitution. Throughout this opinion references to § 5-104 are meant to refer to both § 5-104 and Article 2, § 4 of the New York State Constitution.
      Additionally, plaintiffs have challenged the constitutionality of the definition of residence set out in § 1-104(22) of the New York State Election Law. Section 1-104(22)"' provides:
      The term “residence” shall be deemed to mean that place where a person maintains a fixed, permanent and principal home and to which he, wherever temporarily located, always intends to return.

        This court agrees with the court in Ramey v. Rockefeller, 348 F.Supp. 780 (E.D.N.Y.1972) that the word "permanent" as used in the statute is not meant to be taken literally, but rather, is intended to approximate the test for domicile, i.e. physical presence and an intention to remain for the time at least. In discussing this point New York Jurisprudence states:
      To satisfy constitutional requirements ... the test of a student's intention to remain in the college community must focus on his present intention; he is not required to pledge that he will remain permanently or indefinitely.
      18 N.Y.Jur., Elections § 145 at 195 (1979).

      . Although plaintiffs contend that § 5-104 is unconstitutional under the Twenty-Sixth Amendment the court disagrees. While it is true that a large number of college students are 18-21 years of age there is no evidence that § 5-104 prevents'registration of 18-21 year olds who are not students. The court finds that any relief afforded plaintiffs must be based on the Equal Protection Clause of the Fourteenth Amendment rather than the Twenty-Sixth Amendment.