Appellant, West India Industries, Inc. (West India) is an ocean carrier which brought these two actions in admiralty seeking recovery of unpaid ocean freight. Defendants-Appellees, Vance & Sons AMC-*1385Jeep (Vance) and Tommie Vaughn Motora, Inc. (Vaughn) are Houston, Texas automobile dealers who were allegedly the shippers of the cargoes of motor vehicles for which freight payments are now sought by West India.
The issue presented to the Court by these consolidated appeals is whether or not an ocean carrier is entitled to recover unpaid ocean freight from a party designated as shipper on the carrier’s negotiable bill of lading by a licensed freight forwarder which was without authority to make such designation. The two courts below to which this question was presented answered in the negative and denied recovery to the plaintiff carrier which now appeals from those adverse judgments. We affirm.
In the latter part of 1978 Mr. David Trejo, a resident of South America, and his brother Raphael Trejo of Houston, Texas were engaged in obtaining vehicles in Houston for shipment to South America. They were assisted in this endeavor by Mr. Marvin Frank, a self employed automobile broker, who upon a request from the Messrs, Trejo, would contact Houston automobile dealerships for price quotations on certain types and numbers of vehicles as specified by the Trejos. In the event that the automobiles were purchased by the Trejos, Mr. Frank was paid a commission for his services.
In connection with both the shipments forming the basis of West India’s claims herein, Mr. Frank contacted the respective automobile dealerships. Through Vance he negotiated the sale of seventeen (17) Jeep Wagoneers which were subsequently carried by West India on board the M/V INAGUA PILOT which departed Houston on September 4, 1978, en route to Puerto Cabello, Venezuela. Through Vaughn he negotiated the sale of fifteen (15) Ford trucks which in December, 1978, were transported on board West India’s M/V JUNO and M/V INAGUA BAY from the port of Houston to Guanta, Venezuela.
In both transactions Mr. Frank represented to the dealership that the only responsibility of the dealership would be that of obtaining the vehicles. The dealers were to have no responsibility for the shipping, of the vehicles which was to be handled by the Trejos through Houston agents other than Mr. Frank (who dealt solely with negotiating the sale of the automobiles). However, the dealers were advised that for reasons of economy the Trejos desired to provide payment for the vehicles, their shipment, and the commissions due persons such as Mr. Frank by means of a single letter of credit. It was understood by both Vance and Vaughn that the entire amount to be drawn on the letter of credit would be in their names as beneficiary and, upon receipt, they agreed to deduct the cost of the vehicles sold and issue their own checks to other involved parties.
In each instance the vehicles were ordered by the dealership and delivered to their places of business in Houston. Upon delivery, representatives of the Trejos physically transported the vehicles from the dealerships to the port facility from which they were to be shipped. In each case the Trejos engaged one Muhammed Paksima and his company, Paxy’s International, Inc. (Paxy’s), a licensed freight forwarder, to handle the shipments. In the Vance case Paxy’s actually performed the freight forwarding services. In the Vaughn case Paxy’s secured the services of another licensed freight forwarder, Cargo Consultants, Inc. (Cargo Consultants) to perform the services.
In each case the freight forwarder contacted West India regarding carriage of the vehicles and advised that the shipment was for the account of Vance and Vaughn. In each case the agreement between the forwarder and the carrier was confirmed .in a booking note. Thereafter the freight forwarders prepared ocean bills of lading and export declarations which indicated that Vance and Vaughn were the shippers of the automobiles.
In each case West India issued its bill of lading “Freight prepaid” although no freight payment had actually been received. West India’s procedure in this regard was apparently in conformity with Rule 7(c) of *1386West India’s applicable tariff which provided:
(e) Freight and other charges provided for in this tariff must be paid in full by the shipper and his authorized freight forwarder, if any, as billed upon receipt of the goods for carriage and tender of the Bill of Lading by the carrier; provided, that the carrier may, at its discretion, extend credit to a shipper or, when credit is requested or accepted by, a freight forwarder who arranges shipment on behalf of a shipper, to the shipper and his authorized freight forwarder jointly and severally for a period not to exceed fifteen (15) working days excluding Saturdays, Sundays and legal holidays from the date of sailing of the vessel from the port at which the cargo is loaded.
In neither case was there a specific request for credit by the freight forwarder either in its own behalf or on behalf of the named shipper. West India’s extension of credit in these instances was apparently its usual course of conduct under the circumstances. At no time did West India make any inquiry as to the credit-worthiness of Vance or Vaughn nor as to the authority of Paxy’s. and Cargo Consultants to act for them.
With regard to both transactions the automobile dealerships were named as beneficiaries of letters of credit procured by the Trejo interests. In each case a representative of the dealership was provided with the supporting documentation required by the letter of credit including the bills of lading, all of which documentation was prepared by the freight forwarder. Upon receiving payment, in accordance with their prior agreements with Mr. Frank, Vance and Vaughan issued their own checks to Mr. Frank and to Paxy’s. Despite payment to Paxy’s of amounts representing the ocean freight, Paxy’s never made payment to West India, or, in the Vaughn case, to Cargo Consultants which in turn never paid West India.
Following non-receipt of the freight monies, West India initially sought payment from the respective freight forwarders ¿md thereafter attempted to collect from the defendant dealerships. Meeting with no success in either endeavor, West India filed these lawsuits. In two separate proceedings, the trial court found that Vance and Vaughn were not the shippers of the goods in question and denied recovery.
While we do not adopt the reasoning followed by the trial courts, we find that they reached the correct results given the factual situations at issue.
Clearly the naming of Vance and Vaughn as shippers on the bills of lading and export declarations for the shipments was without the knowledge of the dealers, and such action was completely contrary to the vehicle purchaser's representations that the dealerships would have absolutely no responsibility for shipment. The naming of the dealerships as shipper was an action taken by the freight forwarders retained by the purchaser’s agent for the purpose of reducing costs to the purchasers which would be incurred if multiple letters of credit were obtained. In each case the ultimate consignees, acting through their agents, were the shippers of the vehicles which were purchased in Houston from Vance and Vaughn to be exported by the purchasers. Vance and Vaughn were never aware that, by acceding to the wishes of the purchaser with regard to the single letter of credit, they had undertaken to act as shippers of the vehicles. Neither Vance nor Vaughn ever gave anyone authority to name them as shippers and in fact would have denied such authority had it been requested of them.
The Shipping Act of 1916, 46 U.S.C. § 801 et seq. does not define the term “shipper.” However, it has been jurisprudcntially defined as, “. . .the owner or ¡>er-son for whose account the carriage of goods is undertaken." Compagnie Generate Transatlantique v. American Tobacco Co., 31 F.2d 663, 667 (2nd Cir. 1929) cert. den’d 280 U.S. 555, 50 S.Ct. 16, 74 L.Ed. 611 (1929); Norman G. Jensen, Inc. v. Federal Maritime Commission, 497 F.2d 1053, 1056 (8th Cir. 1974).
In-the; insfaint cases the automobile dealerships merely sold the vehicles. Their *1387transport to the dock and their export therefrom were controlled solely by agents of the consignees in Venezuela. Both dealerships were assured that they had absolutely no responsibility for shipment.
Also clear from the evidence is the fact that West India had no knowledge of the nature of the agreements between the dealerships and the purchasers’ agents. West India relied solely upon the representations of the freight forwarders as to the identity of the shipper for whose account the shipment was to be. The carrier accepted the designation of the shipper made by the freight forwarders on the bills of lading and made no further inquiry in that regard as was its custom. The carrier allowed the freight forwarders to prepare the bills of lading and other documentation in order for the freight forwarders to qualify for payments of commissions from the carrier pursuant to 46 U.S.C. § 841b. Finally, the carrier issued “freight prepaid” bills in its own discretion and not at the request of the named shippers, Vance and Vaughn, who were unaware of their designation as such.
Federal maritime law embraces the principles of agency. Kirno Hill Corp. v. Holt, 618 F.2d 982, 985 (2nd Cir. 1980). The facts here present compel the conclusion that the freight forwarders with whom West India dealt lacked authority to enter contracts of carriage on behalf of Vance and Vaughn. However, West India accepted without further inquiry the bare statements of the freight forwarders’ employees to the effect that they represented the dealerships. We hold that in so doing West India acted at its own peril. The mere representation of the fact of agency does not create that relationship and the party to whom such representation has been made bears the burden of inquiring to determine if authority does in fact flow from the alleged principal. Karavos Compania Naviera S.A. v. Atlantica Export Corp., 588 F.2d 1, 10-11 (2nd Cir. 1978). The mere fact that West India customarily took the word of the freight forwarders with which it dealt as to the identity of théir principals cannot serve to bind parties who were so designated without authority and who did not in fact act in the capacity of shippers of goods.
Both the trial courts relied upon the holding of Farrell Lines, Inc. v. Titan Industrial Corp., 306 F.Supp. 1348 (S.D.N.Y.1969) aff’d 419 F.2d 835 (2nd Cir. 1969) cert. den’d 397 U.S. 1042, 90 S.Ct. 1365, 25 L.Ed.2d 653 (1970). However, under the circumstances here present such reliance is misplaced. Farrell addresses itself to the liability of a shipper upon default of a freight forwarder which it has retained. (See, contra., Compania Anonima Venezolana de Navegacion v. A. J. Perez Export Co., 303 F.2d 692 (5th Cir. 1962) cert. den’d 371 U.S. 942, 83 S.Ct. 321, 9 L.Ed.2d 276 (1962)). In the cases before the Court the shipper who retained the freight forwarder is not before the Court and accordingly the question of liability vis a vis the actual shipper and the carrier is not properly addressed at this juncture.
We also note that as an alternative finding one of the courts below held Paxy’s International, a licensed freight forwarder, to be the shipper. Such finding is clearly erroneous as by statute a licensed freight forwarder is precluded from acting in such capacity. 46 U.S.C. § 801; Zanelli v. Federal Maritime Commission, 524 F.2d 1000 (5th Cir. 1975); Norman G. Jensen, Inc. v. Federal Maritime Commission, supra.
In summary we hold that Vance and Vaughn were designated as shippers without authority by agents of the consignee; that they in fact had no responsibility for shipment of the vehicles; and that the carrier relied to its detriment upon the unsupported representations of the freight forwarders as to the principals for whom they acted.
The judgments of the trial courts are AFFIRMED AS MODIFIED.