Petition — South African Marine Corp. v. Elgie & Co.

Supreme Court brief1980

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IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

No.

pa sey 5D la,

e * 24 .

SOUTH AFRICAN MARINE CORPORATION, LTD.,

Petitioner,

—_—V—

ELGIE & COMPANY,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

M. E. DEORCHIS

Counsel for Petitioner

BRIAN D. STARER,

HAIGHT, GARDNER, PooR & HAVENS

One State Street Plaza

New York, New York 10004

Of Counsel

SUBJECT INDEX

PAGE

a bss eciee oes 1

EE ES 2

i wc we tc ene s es 2

ee a oo ns ss a os 3

EE Oe 5

Reasons for granting the writ................ 12

1. The Decision Below Has Failed to

Consider the Intent of Congress, and As

a Result Has Created an Unprecedented

Conflict Between Two Federal Statutes

Which Had Previously Been in Harmony

for Perep-ameee Teere...........-..... 12

2. The Circuit Court's Half-hearted

Attempt to Apply Principles of Devia-

tion Places It in Conflict with the Law

Both Before and After COGSA........ 22

aes SS Egg er 24

Appendix A (Opinions of the District Court).... la

First Opinion of the District Court.......... la

Remand by the Circuit Court............... 22a

Second Opinion of the District Court........ 25a

Appendix B (Opinion of the Circuit Court)...... 1b

Appendix C (Denial of Rehearing by the Circuit

ERG IS OO 2 Oe el a lc

TABLE OF AUTHORITIES CITED

Cases: PAGE

Atlantic Mutual Insurance Company v. Poseidon

Schiffahrt, 206 F. Supp. 15 (E.D. Ill. 1962)

aff'd, 313 F.2d 872 (7th Cir. 1963).......... 23

Bailey v. U.S., 511 F.2d 540 (Ct. Cl. 1975)..... 18

The Citta Di Messina, 169 F. 472 (S.D.N.Y.

re dere tae Sue eet a ae 24

Friedlander v. Texas Pacific Railway, 130 USS.

NT EE 6 cups cd wk ek ae Ke et tases b 13

Illigan Integrated Steel Mills, Inc. v. S.S. JOHN

WEYERHAUSER, 507 F.2d 68 (2d Cir. 1974),

cert. denied, 421 U.S. 965 (1975) ......... it.

Inter-Continental Promotions, Inc. v. MacDonald,

367 F. 2d 293 (5th Cir. 1966), cert. denied

sub nom. Miami Beach First National Bank v.

Inter-Continental Promotions, Inc., 393 U.S.

834 (1968), appeal after remand, 441 F.2d

1356 (5th Cir. 1971), cert. denied, 404 US.

850 (1971), rehearing denied, 404 U.S. 961

SG Re geet Pra eas a ee 20

Mitsui & Co. v. M/V EASTERN TREASURE, 466 F.

oe oe ae ey Se ee rr re 20

Olivier Straw Goods Corporation v. Osaka

Shosen Kaisha, 47 F.2d 878 (2d Cir. 1931),

cert. denied, 283 U.S. 856 (1931) ......... 22. 23

Page Communications Engineers, Inc. v. Hellenic

Lines, Ltd. 365 F.Supp. 456 (D.C. 1973) ..... 21

ill

PAGE

Portland Fish Co. v. State Steamship Co., 510

eR BS RRs | | Reena a 13, 18

Toho Bussan Ltd. v. American President Lines,

155 F. Supp. 886 (S.D.N.Y. 1957), affd, 265

ae Oi Oe Se) TE hk ceo eee cede. 11, 19

STATUTES

» Bip fe oe | A) ra 2

The Carriage of Goods by Sea Act

46 U.S.C. Section 1303 (4) .......... 3, 8, 17, 20

46 USC. Gectiom 1904 (4)... . oie ees 3, 23

46 U.S.C. Section 1304 (5) ........... 2, 4, 6, 20

The Pomerene Bills of Lading Act

ee ee EU ow ns ei ce es San ves 5, 8,9

TEXTS

G. Gilmore and C. Black, The Law of Admiralty

ER en ae ne ere Tee 22, 23

A. Knauth, The American Law of Ocean Bills of

Lading (4th ed. 1953)............. 13, 18, 19, 21

W. Poor, Poor on Charter Parties and Ocean

Bills of Lading (5th ed. 1968).............. 19

MISCELLANEOUS

Hearings on S. 1152 Before the Comm. on Com-

merce, United States, Senate, 74th Cong., 1st

PI here's ob wks be das Wes a 8's 14, 15, 16

S. REP. No. 742, 74th Cong., Ist Sess. (1935)... 17

eee

IN THE

Supreme Court of the United States

OCTOBER TERM, 1979

No.

SOUTH AFRICAN MARINE CORPORATION, LTD.,

Petitioner,

—_—V.—

ELGIE & COMPANY,

Respondent.

_—

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioner prays that a writ of certiorari issue to

review the judgment of the United States Court of

Appeals, Second Circuit, first entered in this case

June 11, 1979, as to which rehearing was denied

August 10, 1979.

Opinions Below

The opinions of Judge G. Goettel of the United

States District Court for the Southern District of

New York, neither being officially reported,’ are set

forth in chronological order in Appendix A, infra, at

pages la and 25a, respectively. The opinion of the

United States Court of Appeals, Second Circuit,

reported at 599 F.2d 1177 (2d Cir. 1979), is set

forth in Appendix B, infra, at page 1b. The Order of

the Court of Appeals which denies Appellant’s peti-

tion for rehearing is set forth in Appendix C, infra,

at page lc.

Jurisdiction

On June 11, 1979, the Court of Appeals entered

its judgment reversing the decision of the District

Court insofar as it limited Petitioner’s liability to

$500 under the provisions of the United States Car-

riage of Goods by Sea Act, 46 U.S.C. § 1300 et seq.

A timely petition for rehearing en banc was denied

on August 10, 1979, and this petition for certiorari

was filed within ninety days of that date. This

Court’s jurisdiction is invoked under 28 U-S.C.

§ 1254(1) (1976).

Question Presented

1. Is the Carriage of Goods by Sea Act’s package

limitation provision, providing that “Neither the car-

rier nor the ship shall in any event be or become

liable for any loss or damage to . . . goods in an

amount exceeding $500 per package... ,” 46 U.S.C.

‘Judge Goettel’s two opinions are reported at 1976 A.M.C.

2446 (S.D.N.Y. 1976), and 1978 A.M.C. 2189 (S.D.N.Y. 1978),

respectively.

§ 1304(5), totally vitiated by the preservation in

COGSA of the Pomerene Bills of Lading Act, which

provides that a carrier is liable for his agent’s

actions in misdescribing goods in a bill of lading, 49

U.S.C. § 102, when the goods were in fact received

and loaded on a previous vessel and the bill of

lading provided for substitution of vessels?

Statutes Involved

The Carriage of Goods by Sea Act, Title 46:

§ 1303(4). Bill as prima facie evidence

Such a bill of lading shall be prima facie

evidence of the receipt by the carrier of the

goods as therein described in accordance with

paragraphs (3)(a), (b), and (c) of this section: Pro-

vided, That nothing in this chapter shall be con-

strued as repealing or limiting the application of

any part of the Act of August 29, 1916, com-

monly known as the “Pomerene Bills of Lading

Act” [49 U.S.C. 81 et seq.]

§ 1304(4). Deviations

Any deviation in saving or attempting to save

life or property at sea, or any reasonable devia-

tion shall not be deemed to be an infringement

or breach of this chapter or of the contract of

carriage, and the carrier shall not be liable for

any loss or damage resulting therefrom: Pro-

vided, however, That if the deviation be for the

purpose of loading or unloading cargo or passen-

gers it shall, prima facie, be regarded as

unreasonable.

§ 1304(5) Amount of Liability; valuation of cargo

Neither the carrier nor the ship shall in any

event be or become liable for any loss or damage

to or in connection with the transportation of

goods in an amount exceeding $500 per package

lawful money of the United States, or in case of

goods not shipped in packages, per customary

freight unit, or the equivalent of that sum in

other currency, unless the nature and value of

such goods have been declared by the shipper

before shipment and inserted in the bill of lad-

ing. This declaration, if embodied in the bill of

lading, shall be prima facie evidence, but shall

not be conclusive on the carrier. [Emphasis

added].

By agreement between the carrier, master, or

agent of the carrier, and the shipper another

maximum amount than that mentioned in this

paragraph may be fixed: Provided, That such

maximum shall not be less than the figure above

named. In no event shall the carrier be liable for

more than the amount of damage actually sus-

tained.

Neither the carrier nor the ship shall be

responsible in any event for loss or damage to or

in connection with the transportation of the

goods if the nature or value thereof has been

knowingly and fraudulently misstated by the

shipper in the bill of lading.

The Pomerene Bills of Lading Act, Title 49

§ 102. Liability for nonreceipt or misdescription

of goods

If a bill of lading has been issued by a carrier

or on his behalf by an agent or employee the

scope of whose actual or apparent authority in-

cludes the receiving of goods and issuing bills of

lading therefor for transportation in commerce

among the several States and with foreign na-

tions, the carrier shall be liable to (a) the owner

of goods covered by a straight bill subject to ex-

isting right of stoppage in -transitu or (b) the

holder of an order bill, who has given value in

good faith, relying upon the description therein

of the goods, or upon the shipment being made

upon the date therein shown, for damages

caused by the nonreceipt by the carrier of all or

part of the goods upon or prior to the date

therein shown, or their failure to correspond

with the description thereof in the bill at the

time of its issue.

Statement of the Case

This case centers on an issue of vital importance

to the maritime and insurance industries of the

United States because it involves the applicability of

the United States Carriage of Goods by Sea Act’s

(hereinafter “COGSA”) package limitation to a fre-

quent occurrence in maritime commerce—the short-

age of one or two packages from a shipment of

cargo. In a startling and radical departure from

other decisions of the Second Circuit Court of

Appeals, as well as a decision from the Supreme

Court of the United States, the Second Circuit Panel

has created a new category of absolute liability for a

simple short delivery of packages of cargo at a port

of discharge and which totally deprives the ocean

carrier of its right to the $500 per package limita-

tion of liability found in COGSA §4(5), 46 U.S.C.

§ 1304(5).

The facts in this case are simple. In late 1973, a

South African corporation ordered certain optical

equipment from a New York manufacturer. Eventual-

ly, the order was prepared and packaged into eleven

cartons and one crate. The shipper then arranged

through its freight forwarder for the carriage of the

goods from New York to Durban, South Africa, and

the cargo was booked with Petitioner’s line. Peti-

tioner is the owner and operator of South African

Marine Corporation which is one of the many ocean

carriers that service South Africa with ocean

transportation.

When the shipment was received by the Petitioner

at its pier, a Dock Receipt was obtained by the ship-

per’s agent for the twelve packages. The actual

receipt was issued by International Terminal Oper-

ating Company, Inc. (hereinafter “ITO”) which was

the terminal operator and the contract stevedore

loading vessels for and on behalf of Petitioner. Even-

tually, a bill of lading was issued to the shipper indi-

cating that the twelve packages had been “received

for shipment.” This bill of lading was dated March

15, 1974. The cargo at the time the bill of lading

was issued was scheduled to go on board the S/A

MORGENSTER, the first of Petitioner’s vessels to be

sailing to Durban after the cargo arrived on the pier.

¥) CA ee ee eer

ee i i a ee aL aes at 18h

es aes ate een a Make sRemsees ated 8 BO

BO AOE ia mtn A sae

para lasenies Jee

However, ITO subsequently informed Petitioner that

all twelve pieces had been “shut out” for lack of

space from the MORGENSTER and that they would

have to be carried on the next vessel, the S.A.

NEDERBURG, which was plying the same trade

route one week later. The S.A. NEDERBURG arrived

in New York and loaded various cargoes the next

week. After the S.A. NEDERBURG’s departure, Peti-

tioner reviewed ITO’s Dock Receipts and issued a bill

of lading stamped “on board” for all twelve pieces.

This “on board” stamp signified that the cargo stated

in the bill had in fact been loaded on the indicated

vessel, in this case the S.A. NEDERBURG.

When the S.A. NEDERBURG aarrived in Durban,

South Africa, only eleven pieces could be located on

that vessel, and as a result, the plaintiff in this ac-

tion, the consignee of the shipment, was notified

that one piece was short, a crate containing an op-

tical generator. Some evidence (a loading tally) was

introduced by ITO indicating that the missing crate

was loaded on the prior vessel, the S.A. MOR-

GENSTER, and the Court so found. The crate, how-

ever, was never located at Durban.

The case was tried before Judge G. Goettel of the

Southern District of New York who awarded judg-

ment for Elgie & Company but limited recovery to

$500 in accordance with the terms of the bill of

lading, which contained a $500 per package limita-

tion clause, and the Carriage of Goods by Sea Act,

which was incorporated in the bill of lading and also

contains a $500 limitation.

The decision was appealed to the Second Circuit

Court of Appeals by the Petitioner. The Second Cir-

cuit heard argument on appeal and remanded the

case for specific findings concerning the applicability

of the Pomerene Bills of Lading Act, 49 U.S.C.

§§ 81-124 (1976) (hereinafter “Pomerene Act”), an

issue raised sua sponte by the Court. Neither cargo’s

attorneys nor the carrier’s attorneys had made any

reference to such act. In addition, the Court of Ap-

peals requested a specific finding as to whether the

optical generator had gone forward on the S.A.

MORGENSTER.

Judge Goettel’s second opinion specifically found

the Pomerene Bills of Lading Act inapplicable and

that the optical generator did in fact go forward on

the MORGENSTER. (page 32a infra).

The Court of Appeais for the Second Circuit

reviewed the case after the District Court’s second

opinion. This time the Second Circuit revised the

District Court’s conclusion that the $500 limitation

applied as the Second Circuit found the Pomerene

Act §22, 49 U.S.C. § 102, nullified the $500 lmita-

tion granted by Congress “in any event” in COGSA.

This surprising interpretation comes sixty-three

years after the enactment of the Pomerene Act and

forty-three years after the enactment of COGSA. It

is frankly inconceivable that Congress would have

specifically preserved the Pomerene Act in § 3(4) of

COGSA, 46 U.S.C. § 1303(4), had it intended § 22 of

that act to nullify the $500 package limitation. As

the District Court stated in its second opinion:

If the package limitation of COGSA is inappli-

cable because of the Pomerene Act in a negligent

loss of cargo case, the burden of proof and the

relationships among the parties to these

-— athe na

maritime commercial transactions would be dra-

matically altered some 62 years after the

Pomerene Act was first passed. The Act’s scope

was not intended to be so great since its purpose

lay in curbing deliberate fraud.

(page 30a infra).

The Second Circuit’s new interpretation of § 22 is

based on their review “of that section in _ its

historical context.” (page 5b infra). The legislative

history of the Pomerene Act, discussed infra, does

not in any way support the Second Circuit’s conclu-

sion, and, in fact, the text of §22 by itself

demonstrates that the section is inapposite in the

present case.

According to its plain meaning, § 22(b) cannot ap-

ply in the present case. It is not enough that the

holder of a bill of lading has relied upon the descrip-

tion of goods in the bill of lading; § 22(b) also re-

quires that his damages be caused by either (1)

nonreceipt of the goods as of the date stated in the

bill of lading, or (2) the failure of the goods to cor-

respond with their description in the bill of lading at

the time of issue. There can be no doubt that the

carrier (Petitioner herein) received all twelve

packages, including the crate containing the optical

generator, prior to issuing its “received for shipment”

bill of lading on March 15, 1974. This was clearly

evidenced at the trial by the Dock Receipt and has

not been disputed by any of the parties in this case.

Therefore, the first causal element, nonreceipt by the

carrier, obviously does not exist. A reasonable con-

struction of the alternative cause, failure of the

goods to correspond with their description in the bill

of lading at the time of its issue, also deprives the

statute of application here, since the “received for

shipment” bill of lading dated March 15, 1974, was

perfectly accurate in its description of the nature and

number of packages received into Petitioner’s custody

on that date, as well as the marks and weight.

Section 22 of the Pomerene Act does not require

that the goods correspond to their description in an

“on board” bill; it makes no distinction between an

“on board” and a “received for shipment” bill because

the carrier fulfills its duty under this section of the

act by taking custody of the goods, whether or not

they are actually loaded on a particular vessel. The

bill of lading contained the usual clause allowing a

carrier to substitute vessels, and since one crate had

gone on an earlier vessel, there can be no doubt that

all packages were on board a vessel as of the date

that the “on board” stamp was placed on the bill of

lading. It becomes quite clear when the statutory

language is interpreted in light of the purpose and

historical text of the Pomerene Act that the preser-

vation of the Pomerene Act in COGSA was not in-

tended to nullify the limitation of COGSA which was

enacted to bring the U.S. into step with the many

maritime nations which had adopted the Hague Rules

in an effort to unify international maritime law

relating to carriage of goods.

The Circuit Court’s opinion examined the history

of the Pomerene Bills of Lading Act and found it to

override COGSA. Consequently, the Court of Appeals

ruled that the plaintiff was entitled to recover full

damages.

tem © ae

In so doing, the United States Court of A

Second Circuit: car

1. totally ignored the nearly fifteen year legisla-

pe history of the Carriage of Goods by Sea

ct;

2. for the proposition of unlimited recover, mis-

takenly placed its reliance on Toho Bussan

Kaisha Ltd. v. American President Lines, 155 F.

Supp. 886 (S.D.N.Y. 1957), affd, 265 F.2d 418

(2d Cir. 1959), a case ultimatel

New York law; —

3. misinterpreted its own opinions as to quasi-

deviation in Illigan Integrated Steel Mills, Inc. v.

SS, JOHN WEYERHAUSER, 507 F.2d 68 (2d

Cir. 1974), cert. denied, 421 U.S. 965 (1975);

4. attempted to give new life to ancient common

law principles long since intentionally laid to

rest by the Carriage of Goods by Sea Act.

REASONS FOR GRANTING THE WRIT

The decision below has failed to consider the intent

of Congress, and as a result has created an un-

precedented conflict between two _ federal statutes

which had previously been in harmony for forty-three

years.

The Circuit Court’s opinion in this case creates for

the first time in forty-three years a conflict between

two federal statutes: the Pomerene Bills of Lading

Act, and the United States Carriage of Goods by Sea

Act. This conflict, if permitted to continue, will

significantly alter and disrupt the statutorily defined

relationships between shippers and carriers in inter-

national export trade. It will play havoc not only

with maritime commerce from the United States (the

Pomerene Act applies only to outbound bills of

lading, 49 U.S.C. § 81) but also will throw into con-

fusion the insurance carriers who cover cargo, on one

side, and carriers and their contractors on the other.

Thus, the measure of liability for cargo being

shipped from the United States will be in conflict

with that for cargo moving between other maritime

nations as well as with that for cargo coming into

the United States.

The Circuit judges very ably analyzed the

vicissitudes of the day sixty-three years ago which

generated the Pomerene Bills of Lading Act, 49

U.S.C. §§ 81-124 (1976). It is fundamental, however,

that the Pomerene Act has effect only so long as it

is not modified by subsequent legislation. Since the

Carriage of Goods by Sea Act succeeded the Pomer-

ene Act by twenty years, it is necessary to analyze

COGSA in order to determine what portion of the

Pomerene Act remains. As the legislative history of

COGSA indicates, specific attention was given to the

Pomerene Act, and the Pomerene Act was specifical-

ly retained only insofar as it changed the common

law so as to bind the carrier to the ultra vires act of

the carrier's agent. Nowhere is there any indication

that Congress intended to permit a non-fraudulent

mistake in a bill of lading to oust an international

body of law which had taken more than thirteen

years to be enacted.

The Pomerene Act became federal law in 1916,

and it is undisputed that Section 22 of the Pomerene

Act is entirely remedial in nature. A practice had

grown up in the Texas cotton trade whereby shippers

and the agents of carriers fraudulently issued bills of

lading for goods which the carrier never received

whereupon these fraudulent bills of lading could then

be traded to innocent third parties. The defrauded

third parties were then precluded from proceeding

against the carrier for non-delivery as the act of the

carrier's agent in fraudulently issuing the bill of

lading was held at common law to be ultra vires.

Friedlander v. Texas Pacific Railway, 130 U.S. 416

(1888). |

Accordingly, the Pomerene Act was enacted to

bind carriers to the acts of their agents, in essence

“a codification of the estoppel principle.” Portland

Fish Co. v. State Steamship Co., 510 F.2d 628, 631

(9th Cir. 1974); A. Knauth, The American Law of

Ocean Bills of Lading, 388-394 (4th ed. 1953).

COGSA, 46 U.S.C. § 1300 et seg. (1976), arose out

of an international desire to establish a uniform for-

mat for the ocean bill of lading to be used in inter-

national commerce.” The bill which ultimately became

COGSA in 1936 was introduced in the Senate of the

United States as S. 1152, 74th Cong., 1st Sess.

(1935). As introduced, S. 1152 was virtually identical

to the international protocol concluded at Brussels,

Belgium on June 23, 1925, and which became known

as the Hague Rules. In particular the protocol and S.

1152 each contained the following provision:

Such a bill of lading shall be prima facie

evidence of the receipt by the carrier of the

goods as therein described in accordance with

paragraphs (3)(a), (b) and (c) of this section.

Hearings on S. 1152 Before the Comm. on Com-

merce, United States Senate, 74th Cong., 1st Sess. 2

(1935) {hereinafter cited as Hearings on S. 1152]. In-

deed, this identical provision had been included in

bills which had been introduced in the House of

Representatives and the Senate to implement the

Hague Rules in the United States as early as 1923.

Hearings were held in 1935 at which Mr. A.B.

Barber of the Chamber of Commerce of the United

States appeared on behalf of the Conference on

Uniform Ocean Bills of Lading held in November,

1930. Mr. Barber proposed six amendments to S.

1152, one of which amendments hoped to add the

following to the provision dealing with prima facie

evidence.

? A similar desire among the states of the United States pro-

duced the Harter Act, 46 U.S.C. § 190 et seg. (1976), in 1893

to govern maritime bills of lading in interstate commerce.

Pe ane a ma

Se ee ee

Provided, that nothing in this Act shall be

construed as repealing or limiting the application

of any part of the Act, as amended, “An Act

relating to bills of lading in interstate and

foreign commerce”, approved August 29, 1916

(U.S.C. title 49, secs. 81-124) commonly known

as the “Pomerene Bills of Lading Act.”

Id. at 27. As Mr. Barber represented the drafters of

the amendment and gave the only testimony concern-

ing it, his statements are crucial. _

The foregoing amendment .. . is intended to

preserve in effect the provisions of the Pomerene

Act which hold a carrier liable for receipt of

goods signed for by its representatives, even

though they may not actually have been receiv-

ed, this provision of the Pomerene Act having

been found necessary to prevent certain abuses

that were being practiced with damage resulting

due to the negotiable character of the bill of

lading. The proposed amendment would also

leave in effect provisions of the Pomerene Act in

possible cases where loading of shipments going

by ocean transport may be done by the shippers.

. . . We have to preserve the Pomerene Act in

certain particulars, the most significant one be-

ing that the signature of the carrier that he has

received the goods is conclusive evidence of the

receipt of the goods. Our proposed amendment

would preserve the Pomerene Bills of Lading Act

in that respect because very serious abuses had

arisen before the enactment of the Pomerene

Act, and those abuses would be permitted again,

if that feature of the Pomerene Act was

eliminated. So it is the purpose of our amend-

ment to preserve the Pomerene Act in that par-

ticular. (Emphasis added).

Id. at 27 (statement of A.B. Barber).

Mr. Barber also placed before the Committee a

pamphlet contrasting the then present and proposed

laws and recommending amendments to an earlier

proposal to codify the Hague Rules. The amendment

was explained by the pamphlet as follows.

1. In order to bring the proposed bill into ac-

cord with existing law, it was recommended that

section 3, paragraph 4, providing that the bill of

lading shall be prima facie evidence of the

receipt of the goods by the carrier, be amended

at the proper point in the bill to preserve in full

force and effect the provisions of the Pomerene

Bills of Lading Act, with reference to matters

referred to in this paragraph. (Emphasis added).

Id. at 33. Mr. Thomas B. Paton was on hand to

testify for the American Bankers’ Association and in-

dicated that the bankers were in total support of Mr.

Barber’s proposed amendment.’ /d., at 43 (statement

of Thomas B. Paton).

On May 28, 1935, S. 1152 was reported out of

committee with amendments and accompanied by S.

REP. No. 742, 74th Cong., Ist Sess. (1935). The

* As testified to by Mr. Paton at earlier hearings, even this

limited retention of Pomerene was not considered vital by the

bankers. Relating to the Carriage of Goods by Sea Act, Hear-

ings Before the Comm. on Merchant Marine and Fisheries,

House of Representatives, 68th Cong., 2d Sess. 141 (1925).

ee nn et a

report recommended to the Senate the very same

amendment proposed by Mr. Barber as to the degree

of proof furnished by a signed bill of lading. The

Committee Report stated that the

. amendment is intended to preserve in effect

the provisions of tne Pomerene Act which hold a

carrier liable for receipt of goods signed for by

its representatives even though they may not ac-

tually have been received. . . . The proposed

amendment would also leave in effect prov'sions

of the Pomerene Act in possible cases where

loading of shipments going by ocean transport

may by done by the shippers, cases which are

not otherwise adequately provided for by the

bill.

id. at 1, 2.

The amended bill was subsequently passed by the

House with only grammatical changes and no further

comment on the Pomerene Act. The President signed

the bill into law, and the pertinent provision has re-

mained unamended as follows:

(4) Bill as prima facie evidence

Such a bili of lading shall be prima facie

evidence of the receipt by the carrier of the

goods as therein described in accordance with

paragraphs (3\Xa), (b) and (c), of this section: Pro-

vided, that nothing in this chapter shall be con-

strued as repealing or limiting the application of

any part of the Act of August 29, 1916, com-

monly known as the “Pomerene Bills of Lading

Act” [49 U.S.C. 81 et seq.]

46 U.S.C. § 1303(4) (1976).

A clearer expression of the intent of Congress in

the Pomerene retention could not be expected. All of

the reports and hearings indicate that the reference

to the Pomerene Act is intended specifically to pre-

serve its estoppel effect. In the event of conflicting

statutory provisions it is the duty of the court to

harmonize the provisions in keeping with the full

background of the law. Bailey v. U.S., 511 F.2d 540

(Ct. Cl. 1975).

The Second Circuit, in its misinterpretation of the

statute, has created an undreamed of conflict be-

tween the Pomerene Act and COGSA. The leading

authority on bills of lading has recognized only two

possible conflicts between the statutes. A. Knauth,

Ocean Bills of Lading, supra, at 398, 391. These con-

flicts are easily resolved by Knauth in keeping with

the intent of Congress without a wholesale ouster of

COGSA in applying the Pomerene Act. Jd. Under the

Second Circuit’s unique construction, any mistake in

the bill of lading would have the effect of completely

ousting COGSA, the very statute governing all inter-

national bills of iading. Any unexplainable shortage

(as most are) would result in an inaccurate bill of

lading which could be used to get around the pack-

age limitation which is basic to insurance coverage.

As pointed out in Portland Fish Co. v. State Steam-

ship Co., supra, the Pomerene Act is only a codifica-

tion of the estoppel principle. Accordingly, the

Pomerene Act renders the carrier liable for the mis-

take of his agent, but the measure of his liability is

still subject to his remaining defenses. These defenses

are codified by COGSA and include the package

limitation.

een

The Circuit Court’s reliance on Toho Bussan

Kaisha, Ltd. v. American President Lines Ltd., 155

F. Supp. 886 (S.D.N.Y. 1957), as supporting the

proposition that the Pomerene Act also establishes

the measure of damages will not withstand scrutiny.

At the outset, that case did not involve suit for a

breach of the contract of carriage, but rather suit for

a fraud knowingly perpetrated by the carrier outside

the contract of carriage. Id. at 889. Accordingly, the

Toho court found COGSA to be inapplicable and the

Pomerene Act to apply independently of COGSA,

facts which the opinion below failed to appreciate.

' The language in the Toho opinion cited by the Court

below is founded in pre-COGSA law and has no bear-

ing on the interplay of the statutes in this case. The

reliance of the Second Circuit on Toho is rendered

totally incomprehensible by a reading of its own opi-

nion affirming that of the district court, Toho

Bussan Kaisha, Ltd. v. American President Lines,

Ltd., 265 F.2d 418 (2d Cir. 1959). A reading of that

opinion reveals no mention of COGSA or the

Pomerene Act. Rather, New York law was held to

govern the action which the court characterized as “a

common law fraud action.” Id. at 421. Clearly, the

Toho opinion is completely irrelevant to the instant

case.

The broad expansion of the Pomerene Act judicial-

ly applied to permeate all aspects of COGSA receives

no support from the commentators or the cases. The

clear implication is that the Pomerene Act is retain-

ed to bind the carrier to the acts of his agents. W.

Poor, Poor on Charter Parties and Ocean Bills of

Lading, §64 (5th ed. 1968); A. Knauth, The

American Law of Ocean Bills of Lading, supra, at

85, 86. It is evident that 46 U.S.C. 1303(4) which ©

preserves the Pomerene Act was not intended to

reach beyond that subsection to invade other COGSA

provisions which are basic to a statute aimed at

international uniformity. Mitsui & Co. v. M/V

EASTERN TREASURE, 466 F. Supp. 391, 395, 396 (E.D.

La. 1979). Certainly the package limitation of

COGSA makes it absolutely clear that that subsec-

tion is to be held inviolate.

Neither the carrier nor the ship shall in any

event be or become liable for any loss or damage

to or in connection with the transportation of

goods in an amount exceeding $500 per package

.. . . [Emphasis added].

46 U.S.C. § 1304(5) (1976). As is amply discussed by

the various hearings and committee reports relating

to COGSA, this provision serves to increase the

measure of the carrier’s liability beyond that existing

at common law to an irreducible minimum. These

same documents show that the language “to or in

connection with the transportation of” extends this

irreducible minimum to all aspects of the contract to

which COGSA has been extended. Furthermore, it is

axiomatic that when two provisions of a statute are

in conflict, the one last in order will control. Jnter-

Continental Promotions, Inc. v. MacDonald, 367 F.2d

293 (5th Cir. 1966), cert. denied sub nom. Miami

Beach First National Bank v. Inter-Continental Pro-

motions, Inc., 393 U.S. 834 (1968), appeal after re-

mand, 441 F.2d 1356 (5th Cir. 1971), cert. denied,

404 U.S. 850 (1971), rehearing denied, 404 U.S. 961

(1971).

6 RN a ann ats ae

Accordingly, the effect of the Pomerene Act here

is only to prevent the carrier from denying receipt of

eleven cartons and one crate; a denial which Peti-

tioner has never interposed. The measure of the car-

rier’s liability in damages is governed by COGSA.

Since the shipper did not state the value of the

cargo in the bill of lading, thereby obtaining a lower

freight rate, the carrier’s liability is fixed by federal

law at no higher than five hundred dollars per pack-

age. As is clear from the statute itself, the proper

route for avoiding the package limitation is a decla-

ration of the value of the cargo in the bill of lading.

The Second Circuit’s holding that a simple error in

the preparation of the bill of lading may void the

provisions of COGSA and reinstate common law not

heard from in over forty years essentially creates a

fight to the death between two statutes. Similar

though not identical cases have offered other courts

a similar problem. Never before has the approach

taken by the Second Circuit been adopted. See Page

Communications Engineers, Inc. v. Hellenic Lines,

Ltd., 365 F. Supp. 456 (D.C. 1973). The approach

taken in the opinion below is clearly repugnant to all

principles of statutory construction and does violence

to the purpose of the retention of the Pomerene Act

in the ratification of the Hague Rules as construed

by the Department of State and communicated to the

international community. A. Knauth, supra, at 77-88.

Such a dramatic reinstatement of common law prin-

ciples may only be properly accomplished by the

legislature which overruled those principles

domestically in implementing an international com-

promise over forty years ago.

The Circuit Court’s Half-Hearted Attempt to Apply

Principles of Deviation Places It in Conflict With the

Law Both Before and After COGSA.

The Circuit Court, justifiably uneasy with its con-

struction of COGSA, then made a brief attempt to

turn the instant case into one of deviation. The reci-

tation in the opinion below of the deviation prin-

ciples enunciated in Olivier Straw Goods Corporation

v. Osaka Shosen Kaisha, 47 F.2d 878 (2d Cir. 1931),

cert. denied, 283 U.S. 856 (1931), is clearly inap-

posite. There it was held that a bill of lading

reciting that goods had been shipped when in fact

they were still in storage would be likened to a

deviation ousting limitation clauses in the contract of

carriage At the outset such a concept of quasi-

deviation has not lasted the ensuing forty-eight

years, particularly in the Second Circuit, which has

severely limited the doctrine. Illigan Integrated Steel

Mills, Inc. v. S.S. JOHN WEYERHAUSER, 507 F.2d 68,

72 (2d Cir. 1974), cert. denied, 421 U.S. 965 (1975).

Furthermore, the entire doctrine of quasi-deviation

has little basis in current law and is properly falling

into disfavor. G. Gilmore and C. Black, The Law of

Admiralty, 177 (2d ed. 1975).

In its recitation of the forty-five year old prin-

ciples of Olivier, the court below failed to confront

the fact that the opinion was rendered five years

before the sweeping changes wrought by the enact-

ment of COGSA. In pertinent part COGSA provides

“ .. . amy reasonable deviation shall not be deemed

to be an infringement or breach of this chapter 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) (1976). The court below

engaged in no discussion as to whether an Olivier

situation would constitute an umreasonable or a

reasonable deviation under current law today, much

less whether inadvertently shipping one package

before the other constitutes such a basic breach. Fur-

thermore, while an unreasonable deviation may be a

breach of the contract of carriage and COGSA, and

at common law may be sufficient to oust the con-

tract of carriage, a federal statutory provision such

as the package limitation of COGSA is not suscept-

ible to a similar ouster. Atlantic Mutual Insurance

Company v. Poseidon Schiffahrt, 206 F. Supp. 15, 19

(E.D. Ill. 1962), affd, 313 F.2d 872 (7th Cir. 1963);

G. Gilmore and C. Black, supra, at 180.

Even on its facts, Olivier is only superficially

similar to the instant case and does not make it sus-

ceptible to a deviation analysis. The foundation of

the analysis in Olivier was a fundamental breach of

the contract of carriage in not shipping the goods at

all. Olivier Straw Goods Corporation v. Osaka Shosen

Kaisha, supra at 879. In the instant case the missing

crate was shipped but on a vessel substituted in

place of that indicated in the bill of lading. Substitu-

tion of vessels was expressly permitted by the long

form bill of lading.

Further, in Olivier and its supporting authorities,

the act construed as being a quasi-deviation was

causally related to the loss of the goods—-a key fac-

tor in the opinions. Clearly, there is no such causal

connection here. In attempting to characterize the

error in the bill of lading as a deviation, the Court

below has made the common mistake of having “spo-

ken loosely of deviation” when in reality a simple

breach of the contract of carriage is involved. The

Citta Di Messina, 169 F. 472, 476 (S.D.N.Y. 1909).

In short, the Second Circuit has attempted a

heretofore unheard of extension of the already strain-

ed doctrine of quasi-deviation. It clearly has no place

in current law.

CONCLUSION

For the foregoing reasons, we respectfully submit

that this Court should issue a writ of certiorari to

review the judgment and opinion of the United

States Court of Appeals, Second Circuit.

Respectfully submitted,

M. E. DEORCHIS

Counsel for Petitioner

BRIAN D. STARER,

HAIGHT, GARDNER, PooR & HAVENS

One State Street Plaza

New York, New York 10004

Of Counsel

Appendices

ware oF

APPENDIX A

Opinions of the District Court

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF NEW YORK

74 Civ. 5112 (GLG)

ELGIE & COMPANY,

Plaintiff,

—against—

S. S. “S.A. NEDERBURG”, her engines, boilers, etc.,

and SOUTH AFRICAN MARINE CORPORATION, LTD.,

Defendant and Third-

Party Plaintiffs,

—against—

INTERNATIONAL TERMINAL OPERATING COMPANY, INC.,

Third-Party Defendant.

OPINION!

Appearances:

BIGHAM, ENGLAR, JONES & HOUSTON

Attorneys for Plaintiff

99 John Street

New York, N.Y. 10038

By: J. T. Kochendorfer, Esq.

Of Counsel

‘This case was tried by stipulation before the undersigned

when a U.S. Magistrate. The parties further stipulated that it

could be decided by the undersigned after induction as a US.

District Judge.

HAIGHT, GARDNER, PooOR & HAVENS

Attorneys for Defendant & Third-Party Plaintiff

One State Street Plaza

New York, N.Y. 10004

By: M. E. DeOrchis & B. D. Starer, Esqs.

Of Counsel

HILL, RIVKINS, CAREY, LOESBERG & O’BRIEN

Attorneys for Third-Party Defendant

96 Fulton Street

New York, N.Y. 10038

By: Robert E. Daley, Esq.

Of Counsel

GOETTEL, D. J.

This is another episode in the continuing saga of

the package limitation clause in ocean carriers’ bills

of lading: “no stranger to this court.” Toyomenka,

Inc. v. S.S. Tosaharu Maru, 523 F.2d 518, 519 (2d

Cir. 1975). It is of that particular genus involving er-

roneous bills of lading and, as such, further explores

the ramifications of Miles Metal Corporation v. M.S.

Havjo, 494 F.2d 563 (2d Cir. 1974).

The plaintiff, Elgie & Company, purchased from

Shuron Continental, in 1973, an optical grinding

machine referred to as a generator (since it generates

ophthalmic curves on lenses), along with certain addi-

tional parts and machinery. The goods were packed

in Tampa, Florida for shipment to South Africa. The

generator was packed in a large crate and the parts

were packed in smaller containers or cartons. The

goods were sold pursuant to invoice against an ir-

revocable letter of credit which called for the draft

to be accompanied by an “on board” shipping com-

pany bill of lading marked “freight prepaid.” The

generator itself, exclusive of parts, was invoiced at

$8,670. Including freight and insurance, its value

came to $10,559.47.

The answer admits that the defendant, South

African Marine Corporation, Ltd., is a foreign cor-

poration engaged in international shipping and that

the case is, therefore, governed by the Carriage of

Goods by Sea Act (“COGSA”), 46 U.S.C. § 1300 et

seq. The defendant ship line admits receipt of the

goods in question, the issuance of a bill of lading

covering all of the goods denoted therein, and that

at least one piece of the freight listed was appar-

ently not loaded aboard the S.A. Nederburg (as in-

dicated in the bill of lading) nor delivered to plain-

tiff.

The seller’s freight forwarder testified to the

delivery of the goods from Tampa to the New York

pier and the obtaining of a dock receipt from the

defendant. The invoice, dock receipt and the bill of

lading established that the crate was supposed to

contain the generator purchased by plaintiff. The

crate and the smaller cartons were not opened at any

time en route, but they were weighed and they con-

formed to the original shipment in weight and

volume. (The goods arrived in New York on

December 12, 1973, but were not forwarded to the

pier until March 13, 1974.)

The goods were originally listed for shipment

aboard the S.A. Morgenster, another vessel owned by

the defendant ship line. The terminal to which the

goods were delivered is operated by the third-party

defendant, International Terminal Operating Com-

pany, Inc., (“ITO”), who are also the stevedores. They

issued the dock receipt and had custody of the goods

until they were to be loaded aboard the defendant’s

vessel. While there was considerable confusion in the

testimony, a reasonable conclusion to be drawn from

it was that both the large crate and the smaller

eleven cartons were moved out by the stevedores to

be loaded aboard the Morgenster. The Morgenster,

however, was overbooked. Some cargo was intention-

ally shut out, but it does not appear that any of the

plaintiffs cargo was intentionally shut out. The

records indicate that the one large crate was prob-

ably loaded on the Morgenster.’

A day or two after the Morgenster sailed the

stevedores discovered a number of plaintiff’s cartons,

intended for the Morgenster, still on the pier. They,

therefore, changed the papers to indicate that all of

the cargo would go forward on defendant’s next

vessel, the S.A. Nederburg, which was then com-

mencing loading.’ Tally sheets and other records

make it fairly clear that only the eleven cartons were

actually loaded aboard the Nederburg.

There was a sharp conflict in the testimony be-

tween the defendant shipper and the third-party

defendant stevedore concerning the handling of cargo

2On March 15, 1974, according to its tally sheets, L.T.O.

loaded aboard the “S.A. MorGENSTER” one crate of the subject

shipment pursuant to the shipping request contained in the

dock receipt.

*On March 21, 1974, the S.A. NepERBURG arrived in

Brooklyn, New York and berthed at I.T.O.’s terminal at 59th

Street Pier. From March 21 through March 24, 1974, LT.O.

loaded cargo in all hatches of the S.A. NepersurG for South

and East African ports, including Durban, South Africa. On

March 24, 1974, the S.A. NeperBuRG sailed for South and East

African ports, including Durban, South Africa.

under circumstances such as outlined above, resulting

partly from the fact that the procedures were

changed about this time. The ship line maintains

that the stevedores notified it, by sending them a

copy of the dock receipt which indicated that none

of plaintiff's cargo had been loaded aboard the

Morgenster, that all of the cargo would be placed

aboard the Nederburg. The stevedores, on the other

hand, contend that the system of sending copies of

dock receipts for left behind cargo had been aban-

doned and that an actual list of remaining cargo was

made so that it was the shipper’s responsibility to

know what had been left on the pier. The stevedores

do acknowledge that previously there had been a

duty to call to the attention of the ship line any

“split shipments,” which is apparently what occurred

here.

On April 29, 1974, the Nederburg arrived in Dur-

ban, South Africa, and discharged its cargo, at which

time only the eleven cartons could be located for

delivery to the consignee—the plaintiff, Elgie & Com-

pany. The missing crate containing the generator was

never located.

The defendant, South African Marine, had issued

an on-board bill of lading for all eleven cartons and

the crate which was marked “Received on board

March 22, 1974.” The bill of lading was endorsed

and presented to a bank along with other pertinent

documents and payment was made to the seller,

Shuron Continental. The issued short-form bill of

lading incorporated all the terms and conditions of

the carrier’s regular long-form bill of lading. The

long form extended the application of COGSA to the

entire time that the goods were within the possession

and responsibility of the carrier.‘ (This was not,

therefore, the common “hook-to-hook” bill of lading

in effect from the commencement of loading to

unloading.) The dock receipt, which originally called

for the shipment of goods aboard the Morgenster,

was later changed to indicate that the shipping

vessel would be the Nederburg. It was not estab-

lished when this change was made, by whom, or

under what circumstances.

The contract between the defendant ship line and

the stevedore called for the latter to furnish terminal

‘South African Marine Corporation’s long-form bill of lading

provides, in part:

“1. This bill of lading shall have effect subject to the provisions

of the Carriage of Goods by Sea Act of the U.S. 1936, or of

the Carriage of Goods by Sea or similar Act in force in any

locality where this bill of lading may be issued. All the provi-

sions of such Act are incorporated herein and except as may be

specifically provided herein shall govern throughout the entire

time that the goods are in the custody of the carrier

x**eke*

“13. In case of any loss or damage to or in connection with

goods exceeding in actual value $500. lawful money of the

United States, per package, or, in case of goods not shipped in

packages per customary freight unit, the value of the goods

shall be deemed to be $500. per package or per unit, on which

basis the freight is adjusted and the Carrier's liability, if any

shall be determined on the basis of a value of $500. per

package or per customary freight unit, or pro rata in case of

partial loss or damage, unless the nature of the goods and a

valuation higher than $500. shall have been declared in writing

by the shipper upon delivery to the Carrier and inserted in this

bill of lading and extra freight paid if required and in such

case if the actual value of the goods per package or per cus-

tomary freight unit shall exceed such declared value, the value

shall nevertheless be deemed to be the declared value and any

partial loss or damage shall be adjusted pro rata on the basis of

such declared value.”

Oe a En eh er ee as

and stevedoring services for South African Marine’s

vessels. This included the receiving and checking of

all cargo destined for the vessels. The plaintiff's

goods were in the stevedore’s possession from March

13, 1974 until loaded aboard the defendant’s vessels.

Although the bill of lading indicated that all twelve

pieces of cargo had been loaded on board the Neder-

burg on March 22, 1974, the stevedore’s records

reveal that only eleven cartons were loaded and this

over a three-day period commencing on that date.®

The dock receipt which had been issued by the

stevedore when the shipment in question was de-

livered also incorporates the terms and provisions of

South African Marine’s long-form bill of lading,

which, in turn, extends the limitations of liability of

the ship line to its servants and agents.°

’On March 13, 1974, I.T.O. received twelve packages from

the shipper’s truckers, Coty, and signed Dock Receipt No. 207.

On March 22, 1974, two packages out of the shipment of

twelve were tallied on board the S.A. NEDERBURG by an I.T.O.

checker, A. Renna. On March 23, 1974, five more packages out

of the shipment of twelve were tallied on board the S.A. NEDER-

BuRG. On March 24, 1974, four more packages were tallied on

board the S.A. NeperBurG by I.T.O. checker, A. Renna.

° Paragraph 24 of the long-form bill of lading provides:

“Exemptions and immunities of all servants and agents of the

Carrier. It is hereby expressly agreed that no servant or agent

of the Carrier (including every independent contractor from

time to time employed by the Carrier) shall in any cir-

cumstances whatsoever be under any liability whatsoever to the

Shipper, Consignee or Owner of the goods or to any Holder of

this Bill of Lading for any loss, damage or delay of whatsoever

kind arising or resulting directly or indirectly from any act,

neglect or default on his part while acting in the course of or

in connection with his employment and, but without prejudice

to the generality of the foregoing provisions in this Clause,

every exemption, limitation, condition and liberty herein con-

Before turning to the major issue of the applicabil-

ity of the package limitation clause, two threshold

issues are raised by the defendant and third-party

defendant. Initially they contend that the plaintiff is

not the real party in interest. That is a recurring

claim in these cargo damage cases. It appears,

however, to have no basis here. The generator’s price

included the payment of the freight charge. The

plaintiff was required to make payment upon the

delivery of a clean on-board bill of lading, which it

did. The Uniform Commercial Code, § 2-320, makes

it clear that title passed from the seller to the

plaintiff-buyer upon the delivery of the goods to the

ship line and the issuance of a bill of lading and the

other required documents. Thereafter, the risk of loss

was upon the purchaser. The evidence made it clear

that the risk here was borne by the plaintiff, who

had to pay the seller for the shipment of the replace-

ment generator.

Next the defendants contend that the plaintiff did

not establish the value of the contents of the

undelivered crate since it had no direct evidence that

it did in fact contain the generator. A bailor makes

out a prima facie case merely by showing delivery of

the goods to the bailee (here the shipper) and failure

tained and every right, exemption from liability, defence and

immunity of whatsoever nature applicable to the Carrier or to

which the Carrier is entitled hereunder shall also be available

and shall extend to protect every such servant or agent of the

Carrier acting as aforesaid and for the purpose of all the

foregoing provisions of this Clause the Carrier is or shall be

deemed to be acting as agent or trustee on behalf of and for

the benefit of all persons who are or might be his servants or

agents from time to time (including independent contractors as

aforesaid) and all such persons shall to this extent be or be

deemed to be parties to the contract in or evidenced by this

Bill of Lading.”

to return at the required time. Leather’s Best, Inc. v.

S.S. Mormaclynx, 451 F.2d 800, 812 (2d Cir. 1971);

Miles Metal Corporation v. M.S. Havjo, 494 F.2d

563, 564 (2d Cir. 1974). The plaintiff offered its

proof of value through a representative of the selling

company who testified, on the basis of his companys

records, that the crate contained the generator

(nothing else was ever shipped in crates), and the

size and description of the crate tallied with the dock

receipt issued when the cargo was received by the

steamship companies. The value of the generator was

established both from the company’s records and also

from the amount which had to be paid for the ship-

ment of the replacement generator.

It is true, as argued by the defendants, that plain-

tiff was unable to produce a witness who could

testify to the actual packing of the generator in the

crate. This is not surprising. Indeed, it would be an

unusual case where a witness could be found some

years later who could remember the specific packing

of one of many items shipped daily by a manufactur-

ing company. That it could not trace the generator

itself (as contrasted to the crate it was packed in)

through all the various hands it passed does not

defeat its claim.

No evidence was offered disputing plaintiffs claim

that the missing crate contained the generator. If

damage be established in fact, although uncertain in

exact amount, recovery for damages is not precluded.

Palmer v. Connecticut Ry. Co., 311 US. 544, 561

(1941). As the Supreme Court said in Story Parch-

ment Co. v. Paterson Co., 282 U.S. 555, 562 (1931):

“It is true that there was uncertainty as to the

extent of the damage, but there was none as to

10a

the fact of the damage; and there is a clear

distinction between the measure of proof

necessary to establish the fact that petitioner

has sustained some damage, and the measure of

proof necessary to enable the jury to fix the

amount. The rule which precludes the recovery

of uncertain damages applies to such as are not

the certain result of the wrong, not to those

damages which are definitely attributable to the

wrong and only uncertain in respect of their

amount.”

The cases cited by the defendants are not in op-

position. They all concern goods which arrived in

damaged conditions, or partially short, where the

burden remained on plaintiff to prove the fact that

the damages or the shortages occurred while the

goods were in the defendants’ possession. For ex-

ample, George F. Pettinos, Inc. v. American Export

Lines, 68 F.Supp. 759 (E.D. Pa. 1946), aff'd, 159

F.2d 247 (3d Cir. 1947) involved a damaged and

short delivery of graphite; Royston Distributors, Inc.

v. Moore-McCormack Lines, Inc., 252 F.Supp. 480

(E.D. Pa. 1965), involved uncrated damaged cars; and

Commodity Service Corporation v. Hamburg-Ameri-

can Line, 354 F.2d 234 (2d Cir. 1965), concerned the

spoilage of some of plaintiff's pork products.

The type of proof necessary in those cases differs

completely from that necessary to establish value in

a non-delivery case. It is undisputed that the plain-

tiff paid $9,537 for the replacement generator along

with additional ocean freight, inland freight and in-

surance, as well as freight forwarder’s charges, for

total damages of $10,559.47. It would be both

lla

unrealistic and impractical to expect plaintiff to be

able to establish the value of the goods at all points

in transit, particularly when the loss occurred within

the possession of the defendants.

So the threshold issues raised by the defendants

are resolved in favor of the plaintiff; i.e., the plain-

tiff is a real party in interest and the plaintiff has

adequately proved its damages.

This brings us then to a consideration of the

package limitation issue. It is perhaps worthwhile to

review some of the Second Circuit’s decisions during

the past few years on that subject. In Leather’s Best,

Inc. v. S.S. Mormaclynx, supra, the loss occurred

after cargo was discharged from the vessel and while

in the custody of the vessel owner’s subsidiary

operating a terminal area. (The goods were stolen

from the pier after unloading.) The major issue was

whether, where ninety-nine bales of leather were

placed in a single metal container and then sealed,

the vessel’s liability should be only $500 for the en-

tire container, as prescribed by the bill of lading, or

$500 per bale. The court found the “package” to be

each of the ninety-nine bales and held that a limita-

tion of $500 per container set forth in the bill of

lading was invalid under COGSA. The court noted,

however, that once the container had been unloaded,

COGSA and its package limitation no longer applied.

However, the court found it inequitable to allow the

previously invalid limitation to become revitalized.

(Judge Mulligan dissented on this point.)

The terminal operator was not a party to the con-

tract of carriage. It was merely an agent of the ship-

ping line acting within the scope of its authority

and, as such, was not liable ex contractu for a

12a

breach of the contract between its disclosed principal

and the plaintiff. While plaintiff might assert a

claim in negligence against the stevedore, it would

not be within Federal admiralty jurisdiction. The

court did note, in passing, that under New York’s

law of bailments an agent acting within the scope of

his authority is entitled to the benefit of any con-

tractual limits upon the liability of his principal.

In Miles Metal Corporation v. M.S. Havjo, supra,

the ship owner issued a bill of lading although there

was no evidence that the cargo had ever been on

board the vessel prior to its departure, nor any in-

dication of delivery to another port. The question

then was whether the bill of lading’s limitation of

liability had any effect. The court refused to treat

the bill of lading as prima facie evidence of actual

loading and viewed it merely as evidence of receipt

of the goods by the shipping line. The court noted

that:

“Were the on board bill of lading to be accorded

the evidentiary weight that the defendant here

claims for it, negligent, if not fraudulent

behavior, on the part of carriers would be en-

couraged. By simply stamping the bill of lading

‘on board,’ even before the goods had been

loaded, the carrier could effectively extend the

$500 liability limitation for cargo already on

board a ship, 46 U.S.C. § 1304(5), to goods in its

possession at dockside.” (at 565)

Finally, in Toyomenka, Inc. v. S.S. Tosahura Maru,

supra, the court considered the question of the

stevedore’s negligence causing damage and whether it

was entitled to the benefit of a limitation on the car-

13a

rier’s liability provided for in the bills of lading.

Noting that each case turns on the provisions of the

particular bill of lading, the court gave a rather

restrictive interpretation to the bill of lading before

it:

“In construing the limitation of liability provi-

sion of the bills of lading now before us, as we

have done many times before, it is important to

bear in mind that we are dealing in a field

where recognition of technical precision of

language has been the benchmark of our deci-

sions and those of the Supreme Court. Moreover,

it must be remembered that the effect of this

limitation of liability clause is greatly to reduce

the liability of the beneficiary of the clause

despite that party’s negligence as against a ship-

per whose goods have been lost or damaged

through no fault of his own. In short, in apply-

ing strict rules of construction, we do so without

blinding ourselves to the equities.

“It is axiomatic that parties to a bill of lading

may extend the $500 limitation of liability to

third parties. Herd & Co. v. Krawill Machinery

Corp., 359 U.S. 297, 302 (1959); Cabot Corp. v.

S.S. Mormacscan, 441 F.2d 476, 478-79 (2 Cir.),

cert. denied, 404 U.S. 855 (1971). Such a limita-

tion of common law liability, however, must be

clearly expressed. A bill of lading containing

such a limitation will be strictly construed

against the parties whom it is claimed to

benefit. * * * And we have refused to extend

such limitation of liability where the bill of

lading is ambiguous as to the parties covered.

l4a

Rupp v. International Terminal Operating Co.,

479 F.2d 674, 676-77 (2 Cir. 1973); Cabot Corp.

vu. S.S. Mormacscan, supra, 441 F.2d at 478.

“Applying these well established principles, we

hold that the bills of lading in the instant case

lack the clarity and precision required to permit

an extension of limitation of liability to

McRoberts.” (at 520-521)

The court, however, did not prohibit the inclusion

of such provisions in bills of lading as it commented

in its final footnote (/d., 552, n.8):

“Nothing in this decision is intended to

preclude parties to a bill of lading from further

refining the contract language so as to provide

with clarity and precision their intention to ex-

tend the limitation of liability to specified third

parties. In short, we believe that the problem

with which we have dealt in this case can be

easily averted in the future by the careful

draftsmanship for which the admiralty bar is

noted.”