Petition for Writ of Certiorari — M/V Torvanger v. Quaker Oats Co.

NO.

IN THE

Supreme Court of the Mnited States

OCTOBER TERM, 1984

M/V TORVANGER

and

WESTFAL LARSEN & CO., A/S,

Petitioners

V.

THE QUAKER OATS COMPANY,

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

ROBERT M. JULIAN

P. O. Box 79518

Houston, Texas 77279

713/827-9990

Attorney for Petitioners

Westfal Larsen & Co., A/S

Of Counsel:

GLENN R. LEGGE

a

Alpha Law Brief Co., Inc.—5606 Parkersburg—Houston, Texas 77036—223-3003

I

QUESTIONS PRESENTED FOR REVIEW

Under 46 U.S. Code § 1304(2)(m) which excepts

an ocean carrier from liability due to the inherent

vice of a cargo, must the ocean carrier prove the

specific cause of the cargo damage, or may the

carrier establish the probability of inherent vice, thus

shifting the burden to the shipper of disproving the

exception.

In reversing the district court, did the Court of

Appeals for the Fifth Circuit err in holding that the

ocean carrier must bear the burden of proof under

the 46 U.S. Code § 1304(2)(m) inherent vice

exception to the ocean carrier’s liability.

II

CERTIFICATE OF INTERESTED PERSONS

The undersigned, counsel of record, certifies that the

following list of parties have an interest in the outcome

of this case.

1. Respondent, The Quaker Oats Company;

2. Tokio Marine & Fire Insurance Company, Ltd.;

3. Petitioner, Westfal Larsen & Co., A/S; and

4. Assuranceforeningen Skuld (Gjensidig) Oslo.

RoBERT M. JULIAN

Attorney of Record for Petitioners

Westfal Larsen & Co., A/S

Il

TABLE OF CONTENTS

Questions Presented for Review ..............cc0eceeee

Certificate of Interested Persons ................cccc0ce

ES ne

Daas wad cbs b 004 WEEE L Ses ced eicderceecns

A coos koe Gach ous Gdn aeddencdebbees

MD 6 a5 CCeC CNS se scen debi svevacacdies

UL EEINS 6s ccc 5 cha8 0600 0bgleboseue desde

P

eee as os ee

—

°> oOo

IV

TABLE OF AUTHORITIES

CASES Page

American Tobacco Company v. Goulandris, 281 F.2d 179

fd SR WEIN cd.nnenehs<anscapmbensatbeanensects 6

American Tobacco Company v. The Hadjipatera, 81 F.Supp.

438 (S.D.N.Y. 1948), mod. on other grounds, 194 F.2d

449 (2nd Cir. 1951) ........ cc ccc cee cee cenececesees 6

Hecht, Lewis and Kahn, Inc. v. The SS. PRESIDENT

BUCHANAN, 236 F.2d 627 (2nd Cir. 1956) .......... 6

The Neil Maersk, 91 F.2d 932 (2nd Cir. 1937), cert. denied,

i Oe WE oo sca schudene tvtes 6,7

Schnell v. The Vallescura, 293 U.S. 296, 79 L.Ed. 373

Eh CRE. ERIE L DELTAS FES 4,5,6,7,8

Shin Fa Oil Mill Co., Ltd. v. M/S NORMA, 1976 AMC.

Bi, | Beer ePTeTT TTT TTT TT Te Ter Tee 8

United States v. Central Gulf S.S. Corp., 340 F.Supp. 473

(E.D. La. 1972), aff'd per curiam, 456 F.2d 1281 (Sth

Cir. 1972), vacated on other grounds, 517 F.2d 687 (Sth

Ce. GOREN kn ce ceduencnee snuss scéuedebasscncueesss 7,8

U.S. Steel International, Inc. v. M/V GRANHEIM, 540

Fium. 2256 (DIED. 1008)... «<0 s.000~sscsscuss: 6, 7,8

STATUTES

Carriage of Goods by Sea Act, 46 U.S. Code § 1304(2)(m),

Oe vicki sanahancd ss sn6h con ks bcasenndacs’ cose I, V, 4, 6, 7, 8,9

3B US. Cote SRBRSCR) onan cv cdvescccessesccscasscess Vv

UNITED STATES CONSTITUTION

Agthehe THE, Goatham B x o.oo. seas cne cee ccccccesecascces 3

ade BL MRD sete so

Vv

OPINIONS BELOW

The opinion of the Court of Appeals is included in the

Appendix. The opinion of the United States District Court

for the Southern District of Texas is included in the

Appendix.

JURISDICTION

The judgment of the Court of Appeals was entered on

June 15, 1984. The Defendant’s Petition for Rehearing

and Suggestion for En Banc Consideration were denied

on July 13, 1984, and this petition for certiorari was filed

within 90 days of the date. The jurisdiction of this Court

is invoked under 28 U.S. Code § 1254(1).

STATUTE

This case involves the interpretation of 46 U.S. Code,

Section 1304(2)(m). The complete provisions of this

statute are set forth in the supplement.

——

ls sicidhiieteinidaaiatea

IN THE

Supreme Court of the Hnited States

OCTOBER TERM, 1984

M/V TORVANGER

and

WESTFAL LARSEN & CO., A/S,

Petitioners

V.

THE QUAKER OATS COMPANY,

Respondent

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

STATEMENT OF THE CASE

The Quaker Oats Company purchased approximately

five hundred metric tons of tetrahydrofuran from Mitsu-

bishi Corporation of Tokyo, Japan. Mitsubishi arranged

for the shipment of the cargo to Quaker Oats by charter-

ing the M/V TORVANGER to carry the cargo from

Kobe,-Japan to Houston, Texas. The cargo was shifted

from a shore tank in Kobe, part of the cargo being trans-

ferred to tank cars and part to a small tanker. The cargo

2

was then taken to the TORVANGER at anchorage in

Kobe Harbor and loaded onboard the vessel. The trip

from Kobe to Houston was the TORVANGER’s maiden

voyage. The ship’s tanks had never before been used by

any cargo which might affect the tetrahydrofuran and

furth *, the tanks were inspected, approved as proper for

transportation of tetrahydrofuran by the shipper prior to

loading of the cargo. Tetrahydrofuran naturally forms

peroxides; in this instance peroxide formation was sup-

posedly inhibited by the shipper by the addition of buty-

lated hydroxytoluene. In addition, while the cargo was

carried on the M/V TORVANGER a nitrogen “blanket”

was maintained over the tetrahydrofuran to further inhibit

peroxide formation. The ship’s records show that this

nitrogen “blanket” was fully maintained throughout the

voyage.

Quaker Oats’ purchase order specified a maximum

peroxide content of 150 parts per million (ppm) in the

tetrahydrofuran. Samples were taken of the cargo from

the tanks of the M/V TORVANGER in Kobe, Japan,

and they revealed an acceptable peroxide level of 10 ppm.

Samples were taken from the TORVANGER’s tanks in

Houston prior to discharge, and they revealed peroxide

levels in two of the ship’s tanks within acceptable limits

of 62 ppm and 142 ppm, the third tank sample reading

742 ppm. After the vessel arrived in Houston, the cargo

was transferred to railcars which transported it to Mem-

phis, Tennessee, where the peroxide contamination was

discovered.

In transferring the cargo from the ship to rail tank

cars in Houston according to the shipper’s instructions,

the cargo from the various tanks was not kept segregated,

but rather the quantities of acceptable and unacceptable

3

tetrahydrofuran were combined thereby adversely affect-

ing the entire shipment.

On January 3, 1978, The Quaker Oats Company, filed

its Complaint against the M/T TORVANGER and its

owner and operator, Westfal Larsen & Co., A/S, seeking

to recover damages for contamination of Quaker Oats’

cargo of tetrahydrofuran which was transported in bulk

from Kobe, Japan to Houston, Texas on the M/V

TORVANGER. The court of first instance heard this

case based upon its admiralty and maritime jurisdiction,

Article III, Section 2 of the Constitution of the United

States.

Answer was filed by Westfal Larsen & Co., A/S on

February 16, 1978, and the case was tried before the

Honorable James DeAnda without a jury on June 23,

1980. On May 12, 1983, the Trial Court filed its Memo-

randum Opinion dated April 25, 1983 entering Final

Judgment for Westfal Larsen & Co., A/S and taxing

costs against Quaker Oats. Quaker Oats filed its Notice

of Appeal on May 24, 1983, appealing from the final

Judgment filed on May 12, 1983.

Briefs were filed by the parties, but no oral argument

was conducted. The case was decided on June 15, 1984

by a panel consisting of Circuit Judges Brown, Taw and

Higginbotham. Judge Tate wrote the opinion, a copy of

which is includsd herein as the Appendix. In reversing

the lower court the opinion held that none of the

specific excepting causes in 46 U.S.C. § 1304(2)(a)-

(p), were proved by the carrier, and so the burden of

proof never shifted back to shipper to prove that the

carrier’s negligence contributed to the damage. In sup-

port of this opinion the panel found that the carrier’s

a

4

proof was inadequate to establish the excepted cause of

inherent vice, 46 U.S.C. § 1304(2)(m), because the

carrier did not show some defect, quality, or vice ad-

hering to the individual cargo of the chemical in question.

In regard to the catch-all exception to liability 46 U.S.C.

§ 1304(2)(q) the opinion stated that the carrier must

prove what the cause of the cargo damage was. The burden

of proof required of the carrier under 46 U.S.C. § 1304

(2)(m)(q) was inaccurately described in the opinion

and case law of the Fifth Circuit was mistakenly applied.

Westfal Larsen & Co., A/S submitted a Petition for

Rehearing and Suggestion for En Banc Consideration to

the Court of Appeals for the Fifth Circuit. Both the

Petition and Suggestion were denied without opinions.

ARGUMENT

REASONS FOR GRANTING THE WRIT

I.

The decision of the Court of Appeals for the Fifth

Circuit is in direct conflict with decisions of this Court

and decisions of the Second and Fifth Circuits, and is

also in conflict with well settled cases as applied and

followed in the courts of this country.

In 1934 Mr. Justice Stone of this Court wrote the

opinion of Schnell v. The Vallescura, 293 US. 296

(1934). In that case the carrier was held liable for the

decay of a cargo of Spanish onions. The evidence indi-

cated that the damage was the result of poor ventilation

caused by the closure of hatches for long periods, some

time necessitated by bad weather and some time during

a neni

5

fair weather. Although the case dealt with exceptions to

liability under the Harter Act, the precedential value of

the opinion applies equally as well to COGSA cases such

as the instant case. In regard to the exception for inherent

vice of the cargo the court stated: “To such exceptions

of law itself annexes a condition that they shall relieve

the carrier from liability for loss from an excepted cause

only if in the course of the voyage he has used due care

to guard against it.” 293 U.S. at 304.

Both the District Court and the Court of Appeals

agreed that the carrier, Westfal Larsen, exercised due

diligence in the care of the cargo, or at least that evidence

of such due care was not contradicted. In light of the

quote above from Schnell v. The Vallescura, 293 U.S.

at 304 it is apparent that by proving that the cargo was

handled with due care while in its legal and physical

possession, Westfal Larsen has established that the cargo

contamination was a result of the excepted cause of in-

herent vice. Mr. Justice Stone’s opinion went on to state:

It is comr only said that when the carrier succeeds

in establishi..g that the injury is from an excepted

cause, the burden is then on the shipper to show

that that cause would not have produced the injury

but for the carrier’s negligence in failing to guard

against it. Such we may assume the rule to be, at

least to the extent of requiring the shipper to give

evidence of negligence where the carrier has sustained

the burden of showing that the immediate cause of

the loss or injury is an excepted peril.

293 US. at 305.

In this particular case the plaintiff never introduced

evidence of negligence on the part of Westfal Larsen in

6

caring for the cargo. It would appear that, according to

the opinion of Mr. Justice Stone in Schnell v. The Vallescura,

Westfal Larsen has sufficiently established the exception

to liability under 46 U.S. Code § 1304(2)(m), and that

the shipper has not presented evidence to disprove the

“inherent vice” argument.

The Fifth Circuit reversal of the District Court in this

case is contrary not only to Schnell v. The Vallescura,

but is also contrary to opinions of the Second and Fifth

Circuits. Recently, in U.S. Steel v. M.T. Granheim, 540

F.Supp. 1326 (S.D.N.Y. 1982), the court stated that:

The older case law in this Circuit, however, has

placed the burden of disproving inherent vice upon

shipper. See American Tobacco Company v. Goulan-

dris, 281 F.2d 179, 182 (2nd Cir. 1960); Hecht,

Lewis & Kahn Inc. v. The S.S. President Buchanan,

236 F.2d 627, 631 (2nd Cir. 1956), American

Tobacco Company v. The Katingo Hadjipatera, 81

F.Supp. 438, 466 (S.D.N.Y. 1948), modified on

other grounds, 194 F.2d 449 (2nd Cir. 1951).

In view of the clear holdings of these older Second

Circuit cases which have never been overruled, this

Court is bound to apply the burden of proof as

stated therein.

540 F.Supp. at 1333.

Citing the holdings of Schnell v. The Vallescura, supra,

and The Neil Maersk, 91 F.2d 932 (2nd Cir. 1937),

cert. denied, 302 U.S. 753 (1937) the court in American

Tobacco Company v. The Katingo Hadjipatera, stated:

This would suggest that whenever cargo damage

could have been caused by internal defects, the

7

shipper must disprove such defects in order to re-

cover even if the carrier’s failure to exercise due

diligence in stowing or caring for the cargo may

have caused or contributed to the damage; The Neil

Maersk, supra.

81 F.Supp. at 446.

The Court of Appeals for the Second Circuit requires

the shipper to disprove the issue of inherent vice once

established by the carrier. The degree to which a carrier

must establish inherent vice appears to be a relatively low

evidentiary standard. The introduction of uncontradicted

and credible evidence of a cargo’s propensity toward in-

herent decay is sufficient to establish the exception of

inherent vice under 46 U.S. Code § 1304(2)(m). U.S.

Steel v. M.T. Granheim, 540 F.Supp. 1326 (S.D.N.Y.

1982).

The appellate decision in Quaker Oats Company v.

M/V TORVANGER is also in conflict with precedent

from fhe very same Court of Appeals for the Fifth Circuit.

In regard to the burden of proof under 46 U.S. Code

§ 1304(2)(m) the Court stated in U.S.A. v. Central Gulf

S.S. Corp., 340 F.Supp. 473 (E.D. La. 1972), aff'd per

curiam, 456 F.2d 1281 (Sth Cir. 1972), vacated on

other grounds, 517 F.2d 687 (Sth Cir. 1975): “If the

carrier offers evidence which demonstrates the probability

that damage was caused by an inherent defect, then it is

incumbent upon the shipper to prove that the carrier was

negligent before the carrier can be held liable.” U.S.A.

v. Central Gulf S.S. Corp., 340 F.Supp. at 481.

Like the Court of Appeals for the Second Circuit, the

decisions from the Fifth Circuit also rely on Schnell v.

The Vallescura, 293 U.S. 296. 303 (1934) to interpret

8

the burden of proof requirements under 46 U.S. Code

§ 1304(2)(m). Applying Schnell v. The Vallescura, supra,

to a fact situation similar to the instant case, the Fifth

Circuit stated:

We interpret the dictum from Schnell and Folmina

to mean that if a carrier offers evidence which

demonstrates the probability that damage was caused

by an inherent defect, then it is incumbent upon the

shipper to prove that the carrier was negligent before

the carrier can be held liable.

340 F.Supp. at 481.

The Court of Appeals for the Fifth Circuit places the

burden on the shipper to disprove the exception of in-

herent vice once it has been established by the shipper.

The weight of authority in the Fifth Circuit, like that in

the Second Circuit, indicates that to establish the excep-

tion of inherent vice, the evidence need not be dispositive

but rather the evidence need only establish the probability

of inherent vice. U.S. v. Central Gulf S.S. Corp., 340

F.Supp. at 481; United States Steel International Inc.

v. M/T GRANHEIM, 540 F.Supp. at 1332; Shin Fa Oil

Mill Co., Ltd. v. M/S NORMA, 1976 A.M.C. 936, 939

(S.D.N.Y. 1976).

The reversal of the District Court by the Court of

Appeais in this case was based primarily on the Court of

Appeals’ reasoning that: “None of the specific excepting

causes (including the ‘inherent defect’ exception, . . .)

46 US.C. § 1304(2)(a)-(p) were proved by the carrier,

so the burden did not shift back to the shipper to prove

that carrier negligence contributed to the damage.”

Quaker Oats Company v. M/V TORVANGER, No. 83-

2314. p. 4189 (1984).

9

As revealed by the precedent cited above from both

the Second and Fifth Circuits the appellate opinion in

this case is contrary to the case law of both circuits.

The burden does not rest upon the carrier to prove the

precise cause of the cargo damage, but rather to establish

the probability of inherent vice. This the carrier has done.

THE ISSUE IS OF SUBSTANTIAL IMPORTANCE

TO THE INTERNATIONAL SHIPPING INDUSTRY

Petitioner would not hazard a guess as to what per-

centage of annual international shipping involves the

carriage of perishable or inherently defective cargo. How-

ever this percentage is indeed substantial.

The shipping community relies upon uniform legislation

such as the Carriage of Goods by Sea Act for the orderly

conduct of business.

This legislation provides the shipping community with

a reasonable amount of certainty in regard to legal reme-

dies and obligations involved in international commerce.

Within the Court of Appeals for the Fifth Circuit, in

regard to the carriage of perishable or inherently defective

goods, there exists no such certainty.

CONCLUSION

It is submitted that the petitioner’s interpretation of

the burden of proof under 46 U.S. Code § 1304(2)(m)

represents the meaning intended by the legislature and

defined by the Courts of Appeals for the Second and

Fifth Circuits. Historically the ocean carrier’s burden has

been to establish the probability of inherent vice, at which

point the burden shifts to the cargo interests to disprove

10

the exception. The reliance of the international shipping

community upon this burden of proof procedure is both

established and sound. These questions are of vital im-

portance to international shipping and the uniform ad-

miralty law of the United States, therefore, petitioner

respectfully prays that its petition for a Writ of Certiorari

be granted.

Respectfully submitted,

ROBERT M. JULIAN

P. O. Box 79518

Houston, Texas 77279

713/827-9990

Attorneys for Plaintiffs-Appellees

Of Counsel:

JULIAN & SEELE

CERTIFICATE OF SERVICE

I do hereby certifv that a true and correct copy of the

foregoing Petition for a Writ of Certiorari was served up-

on opposing counsel Kenneth G. Engerrand, Brown, Sims

& Ayre, 23rd Floor Post Oak Central, 2000 South Post

Oak Blvd., Houston, Texas 77056-4496 on this the 11th

day of October, 1984.

ROBERT M. JULIAN

la

APPENDIX A

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CIVIL ACTION NUMBER H-78-05

THE QUAKER OATS COMPANY

Vv.

M/V TORVANGER, her engines, tackle, etc.,

and Westfal Larsen & Co., A/S

(Filed May 12, 1983)

Brown, Sims & Ayre (Kenneth G. Engerrand) of

Houston, Texas for Plaintiff.

Robert M. Julian, of Houston, Texas for Defendant.

MEMORANDUM OPINION

The Plaintiff, the Quake: Oats Company, seeks recovery

of damages resulting from contamination of one of its

cargos which was carried by the Defendant M/T TOR-

VANGER, owned and operated by the Defendant Westfal

Larsen & Co., A/S. Pursuant to Rule 52, FED. R. CIV.

P., the Court presents the following factual findings and

legal conclusions which support judgment for the De-

fendant.

FINDINGS OF FACT

The Plaintiff purchased approximately five hundred

metric tons of tetrahydrofuran from the Mitsubishi Cor-

2a

poration of Tokyo, Japan. Mitsubishi chartered the

“TORVANGER?” to carry the chemical cargo from Kobe,

Japan to Houston, Texas. The Plaintiff purchased the

cargo C.I.F. Houston, and was the consignee and owner

of the cargo pursuant to the bill of lading issued by the

vessel’s owner. (Plaintiff's Exhibit 1).

Section H, 1 of the voyage charter party provided that

the “[o]wners undertake to clean vessel’s tanks, pipes

and pumps to Charterers’ Inspector’s satisfaction.” (Plain-

tiff's Exhibit 2). Although the tanker was on her first

voyage, a glycol cargo had been carried in the number 1

port deck tank. That tank and the two other stainless

steel tanks that were to be used by Mitsubishi, numbers

1 and 2 starboard, along with their lines, pipes and pumps,

were cleaned and inspected by the vessel’s chief officer.

Mitsubishi retained the services of Nippon Kaiji Kentei

Kyokai, Japan Marine Surveyors and Sworn Measurers’

Association, to inspect the tanks and cargo. The tanks

were approved and prepurged with nitrogen gas on March

13, 1976. About ninety percent of the cargo was trans-

ferred directly from its shore storage tank to the coastal

tanker “SHINKAWA MARU” and the remainder was

transferred from the tank to six tank trucks, which then

delivered it to the “SHINKAWA MARU.” The cargo was

taken to the anchored “TORVANGER” and transferred

from the “SHINKAWA MARU” through one line into

the three “TORVANGER” tanks. Mitsubishi’s inspector

took cargo samples from the three tanks. These were

combined and, when analyzed, found to contain ten parts

per million peroxide. The Plaintiff's purchase order (Plain-

tiff’s Exhibit 6) specified a maximum peroxide content

of one hundred fifty parts per million. Tetrahydrofuran

naturally forms peroxides, particularly when exposed to

3a

oxygen. Peroxide formation is inhibited by the addition

of butylated hydroxytoluene; this cargo had been so “in-

hibited” by Mitsubishi. In addition, a nitrogen “blanket”

was injected in the tanks and maintained by the vessel’s

officer pursuant to Section H, 6 of the charter party.

The vessel reached the General American Transporta-

tion Corporation terminal at Galena Park, Texas on May

24, 1976, and was met by representatives of the Plaintiff

and its inspection firm, Charles Martin, Inspectors of

Petroleum, Inc. Under the charter agreement the Plaintiff

had twelve hours within which to remove the cargo before

demurrage of $400.00 per hour had to be paid. In addi-

tion, ten railroad tank cars were standing waiting for the

cargo. The inspector examined the “TORVANGER”

tanks and took samples of the cargo from each of them.

The cargo samples were analyzed for water content which

was determined to be at an acceptable level. Because the

acceptable water content indicated that the cargo was

sound generally and that the nitrogen blanket had been

maintained properly, more detailed chemical analyses

were not performed prior to the cargo’s discharge. Tests

for peroxide content would have taken between eight and

ten hours and there was no reason for the Plaintiff's

representatives or inspectors to suspect that the cargo did

not meet their specifications in any way. With the Plain-

tiff’s approval the vessel and dock crews began to unload

the cargo through one line into the railcars which was

the normal procedure.

The cargo was transported to the Plaintiff's plant in

Memphis, Tennessee where it was discovered that eight

of the ten railcars contained tetrahydrofuran with per-

oxides in excess of one hundred fifty parts per million.

The samples taken from the “TORVANGER” tanks be-

4a

fore discharge were then analyzed, and peroxide contents

determined as follows: number 1 port, one hundred forty-

two parts per million; number 1 starboard, sixty-two parts

per million; and number 2 starboard, seven hundred forty-

two parts per million. The number 1 tanks, both port and

starboard, had been filled; the number 2 starboard tank

had contained less than a fifth of the total cargo.

The cargo had an invoice value of $637,005.64. By

that time eighty percent of it had peroxides in excess of

the specifications; it could not be used by the Plaintiff

and was not even marketable except to firms who would

recondition it for resale by eliminating the peroxides. The

Plaintiff instead performed the reconditioning process it-

self at a total cost of $39,421.00. This figure includes

laboratory expense, labor, salvage expense and loss of

product, all of which were reasonably and necessarily

incurred by the Plaintiff in its successful effort to mitigate

its damages.

CONCLUSIONS OF LAW

The Court has jurisdiction over the Defendant Westfal

Larsen & Co., A/S and the subject matter of this action,

which is governed by the Carriage of Goods by Sea Act

(“COGSA”), 46 U.S.C. § 1300 eft seq.

The Court concurs with the Plaintiff that the Defend-

ant’s obligation to the Plaintiff under COGSA is not

limited by the charter party provision that the tanks,

pipes and pumps be cleaned to Mitsubishi’s inspector’s

satisfaction. See Jamaica Nutrition Holdings v. United

Shipping, 643 F.2d 376, 379 (Sth Cir. 1981). The fact

that the Defendant cleaned the system to the satisfaction

of Mitsubishi’s inspector is relevant to resolution of the

Sa

COGSA claim, however. The Plaintiff made a prima facie

case for cargo damage liability by producing evidence

that the cargo was delivered to the vessel within the

purchase order specifications and that at least a portion

of it was no longer in that condition when tendered to

the Plaintiff. The burden thereby shifted to the Defendant

to show that this cargo damage falls within one of the

COGSA exceptions set forth in 46 U.S.C. § 1304(2).

The Defendant produced evidence that peroxide forma-

tion is an “inherent vice” of tetrahydrofuran, 46 U.S.C.

§ 1304(2)(m), and that the Defendant exercised due

diligence to avoid any other possible causes of peroxide

formation for which it would be responsible, 46 U.S.C.

§ 1304(2)(q).

It is undisputed that tetrahydrofuran tends to form

peroxides. The Plaintiff argues, however, that because

the inhibitor was added the cargo was no longer inherently

susceptible to peroxide formation. Surely the presence of

the inhibitor affects the weight of the “inherent vice”

evidence and would preclude, for example, shifting the

burden back to the Plaintiff on that evidence alone. How-

ever, the presence of the inhibitor does not completely

negate the fact that the damage suffered is an inherent

vice of this cargo. This tetrahydrofuran did form per-

oxides despite the addition of the inhibitor, and the

question is whether or not it was caused to do so at least

in part by the Defendant’s negligence. Because no one

knows what caused the cargo to form peroxides in the

way it did, the COGSA burden-shifting mechanism de-

termines the outcome of this case. The Defendant cannot

be expected to show that the inhibitor did not work prop-

erly; that evidence is not within its realm. Rather, to carry

its burden the Defendant augmented the non-dispositive

6a

evidence of inherent vice/inhibitor with evidence negating

other arguable causes.

The Plaintiff suggests that the cause of the peroxide

formation most likely was a contaminant in the “TOR-

VANGER?” tank and/or lines. The Defendant produced

evidence that it exercised due diligence to prevent any

contamination of the cargo. Due diligence requires that

the ship owner take normal precautions to ensure that

his ship is seaworthy, and “is essentially the same as

exercising reasonable or ordinary care.” Yawata Iron &

Co., Ltd. v. Anthony Ship Co., Ltd., 396 F. Supp. 619,

627, n.10 (S.D.N.Y. 1975), citing Peter Paul, Inc. v.

Rederi A/B Pulp, 258 F.2d 901 (2d Cir. 1958). The

Defendant cleaned the system to the satisfaction of Mit-

subishi’s inspector. Although that approval does not

define the Plaintiff's rights under COGSA, as was noted

above, it does indicate that due care was exercised

in preventing contamination. The expertise of Mitsu-

bishi’s inspection firm was not challenged and, in fact, was

relied upon by the Plaintiff for its evidence of the cargo’s

condition upon delivery to the Defendant.

The Defendant also produced evidence that it exercised

due diligence in maintaining the cargo’s nitrogen blanket—

that it was checked periodically and kept at an appro-

priate level. The Plaintiff's evidence further supports the

conclusion that the peroxide formation was not caused

by failure to maintain the nitrogen blanket. The water

content analysis performed upon arrival in Texas indi-

cated to the Plaintiff's experts that the blanket had been

maintained properly. Another of the Plaintiff's experts

testified that a nitrogen blanket is not needed to prevent

peroxide formation when tetrahydrofuran is properly

inhibited, which means that properly inhibited tetra-

7a

hydorfuran would not have been caused to develop per-

oxides solely by some failure of the nitrogen blanket.

The Court concludes that the Defendant’s demonstra-

tion that it exercised due diligence with respect to the

preparation of the loading and storage equipment, the

loading of the cargo, and the care of the cargo during

the voyage, was sufficient to return to the Plaintiff the

burden to show that the peroxide formation was caused

at least in part by the Defehdant’s negligence. Nitram,

supra at 1373. The Plaintiff failed to carry this burden.

The Plaintiff had access to the damaged cargo and

more ability than anyone else to explore the cause or

causes of the peroxide formation. One of the Plaintiff's

experts in Memphis identified traces of a “wet high

boiling liquid subject to air oxidation,” the chemical

composition of which was not identified. Knowing the

“TORVANGER” had carried a prior cargo of di-Butyl-

glycol-ether, the expert hypothesized that the foreign sub-

stance appearing in the bad cargo sample was in fact

the prior cargo and that it could have caused the peroxide

formation. The prior glycol cargo, however, had been

carried in the number | port tank and not in the number

2 starboard tank where peroxides formed so dramatically.

Although contamination from the prior cargo could have

come from the line which apparently was used for both,

the cargo also could have been contaminated in one or

more of the six trucks and/or the coastal tanker used

between the storage tank and the “TORVANGER.” The

fact that peroxides had not yet begun to form when the

initial “TORVANGER” samples were taken does not

negate the possibility that whatever “over-rode” the in-

hibitor was already in the cago at that time. On the other

hand, there is evidence negating the likelihood of contam.-

8a

nation from the “TORVANGER” line—that it was

cleaned and purged.

The Plaintiff's cheinists originally indicated that they

would do further tests to identify the origin of the per-

oxides, but no such evidence was presented. Because the

cargo all came from the same coastal tanker, the dis-

tinguishing feature of the number 2 starboard tank was

that it was only partially full. The Plaintiff did not pre-

sent evidence on the effect, if any, that had on the cargo.

Nor did the Plaintiff present evidence on possible causes

or cynclusions to be drawn from the diminished con-

centration of inhibitor in the damaged cargo.

The answer to. this mystery lay in the damaged cargo.

The Plaintiff had access to it and could not determine what

caused the peroxides to form. The Defendant certainly was

not able to absolve itself by demonstrating the origin of

the peroxides. It did, however, present evidence that it

exercised due care in every way it dealt with the cargo,

and the Plaintiff had no evidence to the contrary other

than the damage itself. The Plaintiff did not carry its

burden under COGSA, and all requested relief is DE-

NIED.

The Clerk shall send a copy of this Memorandum

Opinion to counsel for the parties.

DONE this 25th day of April, 1983.

/s/ JAMES DeANDA

James DeAnda

United States District Judge

9a

APPENDIX B

UNITED STATES DISTRICT COURT

FOR THE SOUTHERN DISTRICT OF TEXAS

HOUSTON DIVISION

CIVIL ACTION NUMBER H-78-05

THE QUAKER OATS COMPANY

V.

M/V TORVANGER, her engines, tackle, etc., and

Westfal Larsen & Co., A/S

(Filed May 12, 1983)

FINAL JUDGMENT

In accordance with the Court’s Memorandum Opinion

in this action, Final Judgment hereby is entered for the

Defendant. All taxable costs are assessed against the

Plaintiff.

This is a Final Judgment.

The Clerk shail send a copy of this Final Judgment to

counsel for the parties.

DONE this 25th day of April, 1983.

/s/ JAMES DeANDA

James DeAnda

United States District Judge

10a

APPENDIX C

The QUAKER OATS COMPANY,

Plaintiff-Appellant,

V.

M/V TORVANGER, her engines, tackle, etc.,

and Westfal Larsen and Co., A/S,

Defendants-Appellees.

No. 83-2314

Summary Calendar.

United States Court of Appeals,

Fifth Circuit.

June 15, 1984.

Shipper brought action against carrier for damage to

cargo under the Carriage of Goods by Sea Act. The

United States District Court for the Southern District of

Texas, James DeAnda, J., dismissed the claim, and

shipper appealed. The Court of Appeals, Tate, Circuit

Judge, held that carrier’s proof of due diligence in prepa-

ration of cargo, its loading, and its care during voyage

was not sufficient to rebut shipper’s prima facie case of

liability for damaged cargo under the Act, absent proof

of what “other cause” of the Camage was, under catchall

no-fault statutory exception to liability.

Reversed and remanded.

lla

Appeal from the United States Court for the Southern

District of Texas.

Beiore BROWN, TATE, and HIGGINBOTHAM, Cir-

cuit Judges.

TATE, Circuit Judge:

The plaintiff, The Quaker Oats Company (“Quaker

Oats”), appeals from the district court’s dismissal of its

claim under the Carriage of Goods by the Sea Act

(“COGSA”), 46 U.S.C. § 1300-1315, for damages to a

cargo of tetrahydrofuran, a white chemical, shipped aboard

the M/V Torvanger, a vessel owned by Westfal Larsen

and Company (“Westfal Larsen”), made defendants here-

in. Quaker Oats contends that the district court erred

as a matter of law in finding that Westfal Larsen, the

defendant carrier, had successfully rebutted the shipper

Quaker Oats’ prima facie case, thus shifting the burden

of proof back to Quaker Oats, without explaining the

cause of the loss. Finding that the court did err in apply-

ing the COGSA burden-shifting scheme, we reverse.

Quaker Oats purchased approximately five hundred

metric tons of tetrahydrofuran from Mitsubishi Corpora-

tion of Tokyo, Japan (“Mitsubishi”). Mitsubishi chartered

the Torvanger to transport the tetrahydrofuran from Kobe,

Japan to Houston, Texas. Analysis of a composite of

samples of the tetrahydrofuran taken after the cargo had

been loaded on the vessel in Kobe, Japan indicated that

the peroxide content was well within commercially ac-

ceptable levels. Samples taken upon the Torvanger’s ar-

rival in Houston from the three tanks aboard the vessel

in which the chemical was carried, however, revealed

peroxide contamination in one of the tanks beyond com-

12a

mercially acceptable levels. Quaker Oats sued the Tor-

vanger and Westfal Larsen, asserting rights under COGSA

for recovery of expenses incurred in purging the peroxide

from the tetrahydrofuran.

I.

[1] Both parties agree that this dispute is governed by

COGSA, which regulates the rights and liabilities arising

ou of the carrier’s issuance of a bill of lading with respect

to cargo damage or loss.’ “To enforce their respective

rights under the Act, litigants must engage in the ping-

pong game of burden shifting mandated by Sections 3

and 4. [46 U.S.C. §§ 1303 and 1304].” Nitram, Inc.

v. Cretan Life, 599 F.2d 1359, 1373 (Sth Cir. 1979).

The plaintiff establishes a prima facie case by proving

that the cargo for which the bill of lading issued was “loaded

in an undamaged condition, and discharged in a con-

taminated condition.” Socony Mobil Oil Company v.

Texas Coastal and International, Inc., 559 F.2d 1008,

1010 (5th Cir. 1977). The “bill of lading shall be prima

facie evidence of the receipt by the carrier of the goods

as therein described.” 46 U.S.C. § 1303(4).

1. The carrier’s responsibilities and liabilities under the Act are

as follows:

Seaworthiness

(1) The carrier shall be bound, before and at the beginning of

the voyage, to exercise due diligence to—

(a) Make the ship seaworthy;

(b) Properly man, equip, and supply the ship;

(c) Make the holds, refrigerating and cooling chambers, and all

other parts of the ship in which goods are carried, fit and safe

for their reception, carriage, and preservation.

Cargo

(2) The carrier shall properly and carefully load, handle, stow,

carry, keep, care for, and discharge the goods carried.

46 U.S.C. § 1303(1)-(2).

13a

[2] Once the plaintiff has presented a prima facie case,

“the carrier then has the burden of proving that it exer-

cised due diligence to prevent the damage or that the

harm was occasioned by one of the excepted causes de-

lineated in 46 U.S.C. § 1304(2).”? Blasser Brothers, Inc.

2.

The excepted causes are listed in the Act as follows:

(2) Neither the carrier nor the ship shall be responsible for

loss or damage arising or resulting from—

(a) Act, neglect, or default of the master, mariner, pilot, or

the servants of the carrier in the navigation or in the manager

of the ship;

(b) Fire, unless caused by the actual fault or privity of the

carrier;

(c) Perils, dangers, and accidents of the sea or other navi-

gable waters;

(d) Act of God;

(e) Act of war;

(f) Act of public enemies;

(g) Arrest or restraint of princes, rulers, or people, or seizure

under legal process;

(h) Quarantine restrictions;

(i) Act or omission of the shipper or owner of the goods,

his agent or representative;

(j) Strikes or lockouts or stoppage or restraint of labor from

whatever cause, whether partial or general: Provided, That

nothing herein contained shall be construed to relieve a carrier

from responsibility for the carrier’s own acts;

(k) Riots and civil commotions;

(1) Saving or attempting to save life or property at sea;

(m) Wastage in bulk or weight or any other loss or damage

arising from inherent defect, quality, or vice of the goods;

(n) Insufficiency of packing;

(0) Insufficiency or inadequacy of marks;

(p) Latent defects not discoverable by due diligence; and

(q) Any other cause arising without the actual fault and

privity of the carrier and without the fault or neglect of the

agents or servants of the carrier, but the burden of proof shall

be on the person claiming the benefit of this exception to show

that neither the actual fault or privity of the carrier nor the

fault or neglect of the agents or servants of the carrier con-

tributed to the loss or damage.

46 U.S.C. § 1304(2). In exculpating the carrier, the district court

relied on (q), providing in effect that the carrier may escape liability

by proving that the damage occurred “without the fault” of the

carrier.

l4a

v. Northern Pan-American Line, 628 F.2d 376, 381 (Sth

Cir. 1980); accord Nitram, Inc. v. Cretan Life, supra,

599 F.2d at 1373; Socony Mobil Oil Company, supra,

559 F.2d at 1010; Nichimen Company, Inc. v. M/V

Farland, 462 F.2d 319, 325 (2nd Cir. 1972). See also

2A Benedict on Admiralty § 56 (7th ed. 1983).

[3] If the carrier rebuts the plaintiff’s prima facie case

with proof of an excepted cause listed in § 4(2)(a)-(p)

of COGSA, 46 U.S.C. § 1304(2)(2)-(p), the burden

returns to the plaintiff to establish that the carrier’s neg-

ligence contributed to the damage or loss. Blasser Brothers,

Inc. v. Northern Pan-American Line, supra, 628 F.2d

at 382; Cf. Lekas & Drivas, Inc. v. Goulandris, 306 F.2d

426, 432 (2nd Cir. 1962). If the plaintiff is then able

to establish that the carrier’s negligence was a contributory

cause of the damage, the burden shifts to the carrier “to

segregate the portion of the damage due to the excepted

cause from that portion resulting from [the carrier’s] own

negligence.” Nitram, Inc. v. Cretan Life, supra, 599 F.2d

at 1373.

[4] In addition to rebuttal of the prima facie case by

proof of one of the specific exception causes of cargo

damage, 46 U.S.C. § 1304(2)(a)-(p), the carrier may

also rebut the prima facie case by relying on the catch-all

exception in § 1304(2)(q) of COGSA, which provides

that the carrier may exonerate himself from loss from any

cause other than those listed in 4(2)(a)-(p) by proving

that the loss or damage occurred “without the actual fault

and privity of the carrier... .” 46 U.S.C. § 1304(2)(q).

The carrier’s burden of establishing “his own freedom

from contributing fault . . . is no mere burden of going

forward with evidence, but a real burden of persuasion,

with the attendant risk of nonpersuasion.” Gilmore and

15a

Black, The Law of Admiralty § 3-37 at p. 168; § 3-43

(2nd ed. 1975). Consequently, the burden of proof does

not return to the plaintiff, but rather judgment must hinge

upon the adequacy of the carrier’s proof that he was

free from any fault whatsoever contributing to the dam-

age of the goods entrusted to his carriage. Id.

II.

The district court in this case found that Quaker Oats

had established a prima facie case by producing evidence

that the tetrahydrofuran was “within purchase order speci-

fications” upon delivery to the Torvanger and that “at

least a portion of it was no longer in that condition when

tendered to [Quaker Oats]” after shipment.

In rebuttal to that prima facie case, the carrier Westfal

Larsen produced evidence by which peroxide formation

could allegedly be considered an “inherent vice” of tetra-

hydrofuran, 46 U.S.C. § 1304(2)(m), and that due dili-

gence was exercised by Westfal Larsen to avoid any other

possible causes of peroxide formation. Though finding the

evidence on the “inherent vice” exception to be “non-

dispositive,”* the district court found that Westfal Larsen

successfully rebutted Quaker Oats prima facie case by

producing evidence of due diligence “with respect to the

3. The “inherent defect” exception to a carrier’s COGSA liability,

§ 1304(2)(m) was not proved by the testimony that the chemical

has a natural tendency to form peroxides when exposed to oxygen.

Here, the uncontradicted testimony was that the chemical was prop-

erly treated by an inhibitor and protected from oxygenization by a

nitrogen blanket during shipment and, thus, shou!d not have formed

peroxides. In order to establish this exception to COGSA liability,

the carrier must show (as it did not here) some defect, quality, or

vice adhering to the individual cargo of the chemical in question.

Horn v. Cia de Navegacion Fruco, S.A., 404 F.2d 422, 435 (Sth

Cir. 1969).

l6a

preparation of the loading and storage equipment, the

loading of the cargo, and the care of the cargo during

voyage ... ,” thus, “return[ing] to Quaker Oats the

burden to show that the peroxide formation was caused

at least in part by [Westfal Larsen’s] negligence.” Finding

that the shipper Quaker Oats failed to carry the burden,

the district court rendered judgment for Westfal Larsen,

the defendant carrier.

III.

Before explaining the error in the district court’s ap-

plication of the COGSA burden-shifting scheme, the na-

ture of the chemical shipped and the reasons for its

peroxide contamination should be noted.

Tetrahydrofuran (“the chemical”) has a natural tend-

ency to form peroxides, especially if exposed to oxygen,

unless it is chemically inhibited. Here, before shipment,

the seller had treated the chemical with an inhibitor, and

in fact the two tanks fully filled with the shipped chemi-

cal arrived without contamination; only the third tank,

partially filled, was found to be peroxide-contaminated

upon arrival. As a further safeguard against exposure to

oxygen, all tanks were injected with a “nitrogen blanket”

of sufficient pressure, designed to insulate the chemical

from oxygen during shipment. The vessel’s officers in-

spected the “nitrogen blanket” periodically and with due

diligence, the district court found, and a water content

analysis performed upor the cargo’s arrival in Texas

indicated that the nitrogen blanket had been properly

maintained. |

We thus have the following situation: If we accept the

testimony offered for :the shipper Quaker Oats (as the

17a

district court did), the chemical was loaded and found

after testing to be free of peroxide contamination when

shipped and when the bill of lading was issued. If we

accept the testimony offered for the defendant carrier, as

the district court equally did, the vessel’s officers per-

formed with due diligence their duty of maintaining the

protective nitrogen cover that should have made exposure

to oxygen and peroxide contamination impossible during

the period that the cargo was entrusted to the care of the

shipper. Consequently, if all the evidence is true, the evi-

dence shows no cause for the peroxide contamination.

However, that contamination must have resulted either

from some defect in the chemical or its processing for

shipment, for which the carrier would not be responsible

—which the evidence does not prove; or else that con-

tamination must have resulted during shipment from some

failure of the vessel’s officers or of the vessel—which

again is not proved.

IV.

[5] The district court held that the carrier’s proof of

due diligence in preparation of the cargo, its loading, and

its care during the voyage “was sufficient to return to

the Plaintiff the burden to show that the peroxide forma-

tion was caused at least in part by the Defendant’s negli-

gence.”* None of the specific excepting causes (including

4. The district court then held that the plaintiff shipper had not

negated the possibility that some ingredient in the chemical, not evi-

dent at time of testing when the cargo was loaded, had during the

voyage overriden the inhibitor.

We pretermit that some doubt may be cast upon this deduction

because the chemical to which the inhibitor had been added at the

plant was from its homogenized bulk loaded into three tanks on

the vessel two of which were completely filled (in which no con-

tamination took place), and one of which only partially filled (in

18a

the “inherent defect” exception, see note 3 supra), 46

U.S.C. § 1304(2)(a)-(p), were proved by the carrier,

so the burden did not shift back to the shipper to prove

that carrier negligence contributed to the damage. Under

COGSA, the carrier’s proof of the remaining general

catch-all exception to liability relied upon, § 1304(2)(q),

is not shown by its simple and to be expected evidence

that its crew did all it was supposed to do (although here,

however, somewhat corroborated as to the nitrogen blan-

ket by testing on arrival). The statute provides, more

stringently, that the carrier shall prove that its fault did

not contribute to the accident: “the burden of proof

shall be on the person claiming the exception to show

that neither the actual fault or privity of the carrier nor

the fault or neglect of the agents or servants of the car-

rier contributed to the loss or damage.” 46 U.S.C. § 1304

(2)(q).

For purposes of this catch-all no-fault exception to

liability, 46 U.S.C. § 1304(2)(q), the presumption of

fault—resulting from the arrival of cargo, damage free

when shipped under bill of lading, but contaminated on

arrival—is thus not rebutted by simple proof of the car-

rier’s own due diligence, evidence peculiarily within its

knowledge and control during the period of the ship-

ment of the cargo entrusted to its care. For the § 1304

(2)(q) exception (see note 2, supra) to come into play,

the carrier must first prove what that “other cause” was.

See, W. Tetley, Marine Cargo Claims 245, 246 (1978).

But the district court found that “no one knows what

which the contamination took place), all three injected with a nitrogen

blanket properly maintained as to pressure and checked periodically

by the vessel’s officers during the voyage. It is sufficient to note only

that, as a matter of law, the plaintiff shipper did not bear the burden

of negating pre-shipment contamination.

19a

caused the cargo to form peroxide in the way it did” (R.

14) and indeed concluded that the cause of the damage

was a “mystery” (R. 12).

To rebut the presumption of fault when relying upon

its own reasonable care, the carrier must further prove

that the damage was caused by something other than its

own negligence. Calmaquip Engineering West Hemis-

phere Corporation v. West Coast Carriers Ltd., 650 F.2d

633, 640-41 (Sth Cir. 1981); Socony Mobil Oil Com-

pany, supra, 559 F.2d at 1013. Once the shipper estab-

lishes a prima facie case, under “the policy of the law”

the carrier must “explain what took place or suffer the

consequences.” Companie De Navigation, etc. v. Mondial

Unitea Corporation, 316 F.2d 163, 170 (Sth Cir. 1963);

see also discussion of issue similar to the present in So-

cony Mobil Oil Company, supra, 559 F.2d at 111.

“(T]he law casts upon [the carrier] the burden of the

loss which he cannot explain or, explaining, bring within

the exceptional case in which he is relieved from liability.”

The Vallescura, 293 U.S. 296, 303, 55 S.Ct. 194, 196,

79 L.Ed. 373 (1934).°

Here, contrary to the policy of the statute, the trial

court placed the burden upon the shipper, not the car-

rier, to explain the unexplained or unexplainable loss. Its

judgment must therefore be reversed, and the case re-

5. As stated in Gilmore and Black, The Law of Admira!ty, § 3-43,

p. 185, the carrier

has sooner or later the burden of establishing his own freedom

from fault except where he has shown that the loss was caused

by overwhelming force of third persons, some fault in the shipper

or the goods, or the attempt to save life or property. This leaves

with him the burden of explaining a loss and exonerating himself

trom the imputation of fault in almost all cases in which it has

not been demonstrated that at least a part of the fault lies with

somebody else.

20a

manded for entry of judgment awarding the plaintiff the

damages sustained.

Conclusion

For the reasons stated, the judgment dismissing the

plaintiff's claim is REVERSED, and the case REMAND-

ED for the award of damages.

REVERSED AND REMANDED.

ce Ran tcc

ee ne en ee ee ee et eee eee

2la

APPENDIX D

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 83-2314

THE QUAKER OATS COMPANY,

Plaintiff-Appellant,

versus

M/V TORVANGER, her engines, tackle, etc.,

and WESTFAL LARSEN and CO., A/S,

Defendants-Appellees.

Appeal from the United States District Court

for the Southern District of Texas

ON PETITION FOR REHEARING AND

SUGGESTION FOR REHEARING EN BANC

(Opinion 6/15/84, 5 Cir., 198_, F.2d )

(July 13, 1984)

Before BROWN, TATE and HIGGINBOTHAM, Circuit

Judges

PER CURIAM:

The Petition for Rehearing is DENIED and no member

of this panel nor Judge in regular active service of the

22a

Court having requested that the Court be polled on re-

hearing en banc, (Federal Rules of Appellate Procedure

and Local Rule 35) the Suggestion for Rehearing En Banc

is DENIED.

* * *

ENTERED FOR THE COURT:

/s/ ALBERT TATE, JR.

United States Circuit Judge

23a

APPENDIX E

CARRIAGE OF GOODS BY SEA

46 USCS § 1304 SHIPPING

§ 1304. Rights and immunities of carrier and ship

(1) Unseaworthiness. Neither the carrier nor the ship

shall be liable for loss or damage arising or resulting

from unseaworthiness unless caused by want of due dili-

gence on the part of the carrier to make the ship sea-

‘vorthy, and to secure that the ship is properly manned,

equipped, and supplied, and to make the holds, refrigerating

and cool[ing] chambers, and all other parts of the ship in

which goods are carried fit and safe for their reception, car-

riage, and preservation in accordance with the provisions of

paragraph (1) of section 3 [46 USCS § 1303(1)]. When-

ever loss or damage has resulted from unseaworthiness, the

burden of proving the exercise of due diligence shall be

on the carrier or other persons claiming exemption under

this section.

(2) Uncontrollable causes of loss. Neither the carrier

nor the ship shall be responsible for loss or damage aris-

ing or resulting from—

(a) Act, neglect, or default of the master, mariner,

pilot, or the servants of the carrier in the navigation

or in the management of the ship;

(b) Fire, unless caused by the actual fault or privity

of the carrier;

(c) Perils, dangers, and accidents of the sea or other

navigable waters;

(d) Act of God;

24a

(e) Act of war;

(f) Act of public enemies;

(g) Arrest or restraint of princes, rulers, or people,

or seizure under legal process;

(h) Quarantine restrictions;

(i) Act or omission of the shipper or owner of the

goods, his agent or representative;

(j) Strikes or lockouts or stoppage or restraint of

labor from whatever cause, whether partial or gen-

eral: Provided, that nothing herein contained shall

be construed to relieve a carrier from responsibility

for the carrier’s own acts;

(k) Riots and civil commotions;

(1) Saving or attempting to save life or property at

sea;

(m) Wastage in bulk or weight or any other loss

or damage arising from inherent defect, quality, or

vice of the goods;

(n) Insufficiency of packing;

(o) Insufficiency or inadequacy of marks;

(p) Latent defects not discoverable by due diligence;

and

(q) Any other cause arising without the actual fault

and privity of the carrier and without the fault or

neglect of the agents or servants of the carrier, but

the burden of proof shall be on the person claiming

the benefit of this exception to show that neither the

actual fault or privity of the carrier nor the fault or

neglect of the agents or servants of the carrier con-

tributed to the loss or damage.

25a

(3) Freedom from negligence. The shipper shall not be

responsible for loss or damage sustained by the carrier

or the ship arising or resulting from any cause without

the act, fault, or neglect of the shipper, his agents, or his

servants.

(4) Deviations. Any 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

this Act or of the contract of carriage, and the carrier

shall not be liable for any loss or damage resulting there-

from: Provided, however, That if the deviation is for the

purpose of loading or unloading cargo or passengers it

shall, prima facie, be regarded as unreasonable.

(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 lading. This declaration, if embodied in the

bill of lading, shall be prima facie evidence, but shall

not be conclusive on the carrier.

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 sustained.

26a

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.

(6) Inflammable, explosive or dangerous cargo. Goods

of an inflammable, explosive, or dangerous nature to the

shipment whereof the carrier, master or agent of the

carrier, has not consented with knowledge of their nature

and character, may at any time before discharge be landed

at any place or destroyed or rendered innocuous by the

carrier without compensation, and the shipper of such

goods shall be liable for all damages and expenses directly

or indirectly arising out of or resulting from such ship-

ment. If any such goods shipped with such knowledge and

consent shall become a danger to the ship or cargo, they

may in like manner be landed at any place, or destroyed

or rendered innocuous by the carrier without liability on

the part of the carrier except to general average, if any.

(Apr. 16, 1936, ch 229, Title I, § 4, 49 Stat. 1210.)