Petition for Writ of Certiorari — M/V "Albert F" v. Industria Nacional del Papel, C. A.

CASE NO. —

in the

Supreme Court

of the

United States

INDUSTRIA NACIONAL DEL PAPEL, CA.,

Respondent,

VS.

M/V “ALBERT F”, Jn Rem,

Petitioner

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF

APPEALS, ELEVENTH CiRCUIT

JOHN D. KALLEN, of

HAYDEN AND MILLIKEN, P.A.

5915 Ponce De Leon Boulevard

Suite 63

Miami, Florida 33146-2477

(305) 662-1523

Attorneys for Petitioner

QUESTIONS PRESENTED FOR REVIEW

I

WHAT CRITERIA, IF ANY, SHOULD THE

COURTS USE TO INTERPRET THE

INCONSISTENT STATUTORY RESULTS

OBTAINED WHERE AN INNOCENT OCEAN

CARRIER IS PROHIBITED BY SECTION 22

OF THE POMERENE ACT FROM IMPEACH-

ING A BILL OF LADING, BUT IS IMMUNE

FROM LIABILITY BY REASON OF SECTION

1304(5) OF THE CARRIAGE OF GOODS BY

SEA ACT, WHERE THE NATURE AND

VALUE OF THE GOODS SHIPPED HAVE

BEEN KNOWINGLY AND FRAUDULENTLY

MISSTATED BY THE SHIPPER IN THE BILL

OF LADING?

II

CONSIDERING THAT SECTION 22 OF THE

POMERENE ACT CODIFIES THE COMMON

LAW ESTOPPEL PRINCIPLE THAT A

CARRIER IS ESTOPPED FROM IMPEACH-

ING A FALSE BILL OF LADING AS

AGAINST A HOLDER IN DUE COURSE, IS

A VESSEL SIMILARY ESTOPPED BY

REASON OF SECTION 22, AND LIABLE JN

REM, EVEN THOUGH THE GOODS

DESCRIBED IN THE BILL OF LADING

WERE NEVER RECEIVED BY OR

DELIVERED TO THE VESSEL OR ITS

AUTHORIZED AGENT?

LISTING OF PARTIES TO THE PROCEEDING

1. Industria Nacional Del Papel CA

9. Fairwind Container Express, Ltd.

Arthur Hunter

Ian Boxall

Edgar Woods

M/V ALBERT F

il

INDEX TO AUTHORITIES (Continued)

- CASES: PAGE

Osaka Shosen Kaisha v. Pacific Export Lumber

Company,

260 U.S. 490, 43 S.Ct. 172 (1922). ............ 6

Portland Fish Company v. States Steamship

Company,

510 F.2d 628 (9th Cir. 1974) ................ 7,8,9

Strohmeyer and Arpe Co. v. American Line S.S.

Corp.,

97 F.2d 360 (2d Cir. 1988). .................. 5

THE CAPITAINE FAURE,

10 F.2d 950 (2d Cir. 1926) ................... 7

THE FREEMAN vw. Buckingham,

18 HOW.182, 15 L.Ed. 341 (1856) ............ 7

OTHER AUTHORITIES:

Ee 1

oe ed as 5 4 44 ARMAS N00 s4 04 oe

28 U.S.C., Supreme Court Rules, Part V,

ee eo ch iy kn nbc v acd 1

The Carriage of Goods by Sea Act,

46 U.S C.A. 1300-1315 (West 1975)... 2.2. 4,8

INDEX TO AUTHORITIES (Continued)

OTHER AUTHORITIES:

The Federal Bills of Lading (Pomerene) Act,

49 U.S.C.A. 81-124 (West 1951)

Gilmore and Black, The Law of Admiralty,

FR ere Perey eee ee

vi

REFERENCES TO REPORTS AND OPINIONS

The opinion sought to be reviewed of the United

States Court of Appeals for the Eleventh Circuit is

reported at 730 F.2d 622 (11th Cir. 1984), and appears in

the Appendix to this Petition. (A.10-22).

JURISDICTIONAL STATEMENT

The opinion of the lower court was entered on

April 20, 1984 and rendered upon deniai of rehearing

on July 9, 1984. Certiorari has been instituted pursuant

to 28 U.S.C. 1254 (1); 28 U.S.C., Supreme Court Rules,

Part V, Rules 19, 20 and 21.

The Petitioner believes this Honorable Court should

exercise its certiorari discretion as this case presents:

A. A substantial federal question involving the

construction and application of the Pomerene Act and

the Carriage of Goods by Sea Act;

B. An appellate court decision which has decided

important questions of law which have not been, but

should be settled by the Supreme Court of the United

States.

STATUTES INVOLVED IN THE CASE

‘Statutes cited in the opinion sought to be reviewed

and in this Petition are the following:

1. Section 1304(5), of the Carriage of Goods by

Sea Act (COGSA), 46 U.S.C.A. Section 1300-1315 (West

1975).

“Amount of liability; valuation of cargo

(5)* * * * .

Neither the carrier nor the ship shail 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.”

2. Section 1303/4), COGSA:

“Bill as prima facie evidence

(4) 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 (3a), (b) and (c), of this section:

Provided, That nothing in this chapter shall

be construed as repealing or limiting the

application of any part of sectons 81 to 124 of

Title 49."

3. Section 22 of The Federal Bills of Lading

(Pomerene) Act, 49 U.S.C.A. 81-124 (West 1951).

“Section 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 authcrity

includes the reeeiving of goods and issuing

bills of lading therefor for transportation in

commerce among the several States and with

foreign nations, the carrier shall be liable to

(a) the owner of goods covered by a straight

bill subject to existing 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 AND FACTS

The Respondent, INDUSTRIA NACIONAL DEL

PAPEL (INDUSPAPEL) ordered 1500 metric tons of

soft wood kraft pulp from SANCA STEEL

CORPORATION (Sanca), the Shipper. In February, 1979,

Sanca delivered and had loaded aboard the M/V “ALBERT

F” 505 bales of waste paper. Sanca’s freight forwarder

prepared a clean on-board bill of lading—which was

signed by the Charterer — describing the cargo as 1035

bales of soft wood kraft pulp. The vessel sailed the

following day and on the same date, INDUSPAPEL

paid Sanca $324,746.11. Upon arrival in the Dominican

Republic, the M/V ALBERT F delivered the 505 bales

of practically worthless waste paper.

INDUSPAPEL sued the M/V ALBERT F in rem

in the United States District Court for the Southern

District of Florida for the non-delivery of the 1035

bales of soft wood kraft pulp, as described in the bill of

lading. Although the District Court found that the

shipper Sanca defrauded everyone involved with the

shipment by loading worthless cargo aboard the M/V

ALBERT F, without any knowledge or participation

therein by the vessel owner, her master, or charterer,

the M/V ALBERT F was held to be estopped from

impeaching the terms of the bill of lading. Accordingly,

the District Court held the M/V ALBERT F liable in

rem to INDUSPAPEL for the non-delivery of the cargo

specified in the bill of lading. The claim was within the

admiralty and maritime jurisdiction of the District Court.

28 U.S.C. 1333. (A.7)

FAIRWIND CONTAINER EXPRESS, LTD. as

claimant/owner of the M/V ALBERT F, appealed to the

Court of Appeals for the Eleventh Circuit which affirmed

the final judgment of the District Court. (A.i0-22) A

timely petition for rehearing and/or suggestion for

rehearing on banc was thereafter denied. (A.23-24)

ARGUMENT

The Eleventh Circuit has decided important issues

of Federal (maritime) law which have not been, but

should be settled by the Supreme Court. The opinion

sought to be reviewed holds that a vessel is estopped

to impeach a bill of lading frauduler.tly prepared by the

Shipper, in spite of the fact that COGSA Section 1304(5)

specifically exonerates a vessel from liability where

the nature of the goods is “fraudulently and knowingly

misstated by a shipper in the bill of lading.” This Honorable

Court should have in mind that the vessel and her

owners were defrauded by the shipper; that respondent

INDUSPAPEL itself chose to deal with this shipper;

and that the vessel and her owners were blameless.

The holding is premised upon the construction and

application of the Federal Bills of Lading (Pomerene)

Act, 49 U.S.C.A. 81-124 (West 1951), as decided by the

Eleventh Circuit.

Petitioner submits that the construction and

application of the Act to the facts in this case was not

only legally erroneous but also far »xceeded the legis!ative

intent and purpose of the Act. The practical result is

that there now exists arbitrary and conflicting standards

of care that are to be imposed on carriers and vessels

in foreign trade, simply depending upcn the location of

the port of issuaace of the bill of lading.

No auttority has been previously cited, nor has

any been found, that is squarely on point with the facts

in this case or that supports the decision of the Eleventh

Circuit. Indeed, with respect to the estoppel issue, the

cases cited and reiied upon by the Eleventh Cireuit in

the opinion sought to be reviewed are clearly i

both factually and legally. See, Elgie & Co. wu. S.S.S.A.

NEDERBURG, 599 F.2d 1177 (2d Cir. 1979), cert. den.

sub nom, South African Marine Corp., Lid. vu Elgie &

Co., 444 U.S. 1972, 100 S.Ct. 1016 (1980); Strohmeyer

and Arpe Co. vu. American Line SS Corp., 97 F.2d 360

(2d Cir. 1938). Very simply, neither one of these cases

involved the in rem liability of the vessel, as in this

case. While it is conceded that as a general statement

of the law, a “carrier”, as against a holder in due

course, is bound by the description of cargo in a clean

bill of lading and is estopped te show that the cargo

receipted for was in fact of a different kind, quality and

quantity, Cummins Sales and Service, Inc. vu. London

and Overseas Insurance Company, 476 F.2d 498 (5th

Cir. 1973); 49 U.S.C.A. Sec. 102, this is far from a

sufficient premise in which to conclude that a vessel

will be similarly bound even where the cargo as described

in the bill of lading is never even delivered to or received

by the vessel.

To hold otherwise, as did the Eleventh Circuit in

this case, is to ignore the very concept of the maritime

lien. The long established principle as set forth by the

Supreme Court is that the law does not bind the vessel

as security for the performance of the contract to transport

cargo until a lawful contract of affreightment is made,

and the cargo to which it relates has been received by

or delivered to the vessel or its authorized ageni. Keokuk,

76 U.S. 517, 519 (1870). Until such time that the cargo

that is described in the bill of lading is “delivered” the

contract remains unexecuted and the remedy for any

breach is in personam only. Gilmore and Black, The

Law of Admiralty (2d Ed.) Ch.9, p. 635. In short, the

mere issuance of the bill of lading, without more, does

not bind the vessei as security for the performance of

the contract, but rather, there must be “union of ship

and cargo”. Krauss Brothers Lumber Co. v. Dimon S.S.

Corp., 290 U.S. 117, 54 S.Ct. 105 (1933); Osaka Shosen

Kaisha v. Pacific Export Lumber Company, 260 U.S.

490, 43 S.Ct. 172 (1922).

In this case, there was no such “union of ship and

cargo” because the cargo that was described in the bill

of lading—1,035 bales of soft wood kraft pulp—was

never delivered to or received by the vessel or its agent.

The Eleventh Circuit held otherwise; that the vessel

was estopped (by reason of Sec. 22 of the Pomerene

Act) from showing the non-receipt and/or non-delivery

of these goods, and, the maritime lien therefore attached

when the (wrong) goods were loaded on the vessel.

Section <2 codifies the common law estoppel principle,

Portland Fish Company v. States Steamship Company,

510 F.2d 628 (9th Cir. 1974), that has been applied in

cases finding a vessel liable in rem. However, in each

case, the fundamental basis for finding the vessel liable

was finding that there was “union of ship and cargo”.

Thus, in Demsey and Associates v. S.S. SEA STAR,

461 F.2d 1009 (2d Cir. 1972) the vessel “became liable to

the Plaintiffs once the coils were aboard”. /d. at 1015.

Similarly, in Olivier Straw Goods Corporation v. Osaka

Shosen Kaisha, 27 F.2d 129 (2d Cir.), cert. den., 278 U.S.

618, 49 S.Ct. 22 (1928), even though the cargo was not

actually loaded on the vessel, the vessel was held to be

estopped to impeach the bill of lading because the

cargo had been actually delivered into the hands of the

vessel's agent. Jd. at 133. See also, THE CAPITAINE

FAURE, 10 F.2d 950 (2d Cir. 1926) (Vessel became

bound by the description of the cargo in the bills of

lading after the subject cargo was loaded aboard the

vessel). Compare, THE FREEMAN v. Buckingham, 18

{OW. 182, 15 L.Ed. 341 (1856), where notwithstanding

the issuance of a false bill of lading and the detrimental

reliance by the bona fide holder thereof, the Supreme

Court held the vessel not to be estopped and thus not

liable in rem for the non-delivery of the cargo described

in the bill of lading because the cargo was in fact never

delivered to or received by the vessel.

The same results should logically obtain for

shipments subject to the Pomerene Act, to the extent

that Section 22 has been construed to impose the same

standards of care respecting the issuance of bills of

lading that govern the rights (and liabilities) of parties

to bills of lading issued in a foreign port. Portland Fish

Company, supra, 510 F.2d at 632; Elgie & Co., supra,

599 F.2d at 1180. Otherwise, there would exist a significant

inconsistency in the law respecting the issuance of biils

of lading simply dependent upon the location of the

port of their issuance. The Eleventh Circuit Opinion

sought to be reviewed in this case creates such an

inconsistency.

II

Furthermore, in finding that the District Court

was correct in holding the M/V ALBERT F liable in

rem for the non-delivery of the proper cargo, the Eleventh

Circuit ignored the express provision of Section 1304

(5) of the Carriage of Goods by Sea Act (COGSA), 46

U.S.C.A. Section 1300-1315 (West 1975). In pertinent

part, that section immunizes the carrier and the vessel

from liability in the event of “loss or damage to or in

connection with the transportation of the goods if the

nature or the value thereof has been knowingly and

fraudulently misstated by the shipper in the bill of

lading”.

The District Court had specifically found that the

shipper SANCA defrauded every one concerned in this

transaction by preparing the false bill of lading and

commercial invoice, delivering the worthless cargo to

the vessel in containers, which the carrier was not able

to exercise, and thereafter arranging for and supervising

the loading aboard the vessel. These findings were not

disturbed upon appeal by the Eleventh Circuit. In sum,

the sole cause of the loss was the action of the shipper

8

ac

by, among other things, “knowingly and fraudulently”

misstating the nature of the goods in the bill of lading.

Clearly, under such circumstances, the M/V ALBERT

F should be entitled to complete exoneration by reason

of COGSA Sec. 1304 (5). In LA FORTUNE v. S.S. iRISH

LARCH, 1974 A.M.C. 444 (S.D. N.Y. 1973), aff'd, 503

F.2d 952 (2nd Cir. 1974), the vessel interests were

completely exonerated because “the shipper knowingly

misstated the nature and value of the shipment” (1974

A.M.C. at 445). It is submitted that the Pomerene Act

does not sanction a contrary result.

The express legislative intent in enacting the

Pomerene Act was to improve the negotiability of bills

of lading. COGSA was enacted against the backdrop of

the Pomerene Act and one of the primary purposes of

COGSA, was the establishment of uniformity in bills of

lading. Portland Fish Company, supra, 510 F.2d at 631.

This legislative intent is evidenced by the proviso

contained in COGSA Sec. 1303 (4) which expressly

prohibits a construction of Section 1303—dealing with

the responsibilities and liabilities of carrier and vessel —

which would limit or repeal the effect of the Pomerene

Act. Portland Fish Company, supra, 510 F.2d at 632.

However, the same express qualification —

limitation— was not similarly provided for in COGSA

Sec. 13804, which governs the rights and immunities of

the carrier and vessel. The Eleventh Circuit opinion

sought to be reviewed, in effect, has rewritten that

provision and the practical result is clear: Whereas, for

shipments originating in foreign ports destined for a

port in the United States, a carrier and/or vessel will

be immune from liability for loss or damage if the

nature or value of the cargo has been fraudulently

misstated by the shipper in the bill of lading, LA

FORTUNE v. S.S. IRISH LARCH, supra; for shipments

originating in the United States, the same immunity is

not afforded to the carrier and/or vessel. Industria

Nacional del Papel C.A. v. M/V ALBERT F, 730 F.2d

622 (11th Cir. 1984).

iil

The consequence of the Eleventh Circuit opinion

sought to be reviewed is significant and far-reaching.

It effectively abrogates the intrinsic concept of the

maritime lien, and with the same broad stroke, establishes

a conflict between the Pomerene Act and COGSA where

one was never intended. In sum, there are now different

standards of care imposed upon carriers and vessels

depending solely upon the location of the port of issuance

of the bill of lading.

The Petitioner would suggest that given these

circumstances, a review of the Eleventh Circuit opinion

is therefore necessary, not only to re-establish uniformity

in the law respecting issuance of bills of lading, but

also to express clear guidelines in defining the rights,

duties and liabilities of carriers and vessels in foreign

trade.

CONCLUSION

Based upon the foregoing reasons and citations of

authority, the Petitioner respectfully urges this Honorable

Court to take jurisdiction of the instant cause, to review

the instant cause on the merits, and to enter such other

relief as this Court deems advisable under the

circumstances.

~ Respectfully submitted,

JOHN D. KALLEN of

HAYDEN AND MILLIKEN, P.A.

5915 Ponce De Leon Boulevard

Suite 63

Miami, Florida 33146-2477

Telephone: (305) 662-1523

Attorneys for Petitioner

11

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that I have, on this ih

day of September, 1984, mailed a copy of the above

Petition to Luis Bustamonte, Stinson, Lyons & Schuette,

P.A., Attorneys for the Respondent, INDUSPAPEL,

Ninth Floor, 1401 Brickell Avenue, Miami, Florida 33131.

JOHN D. KALLEN

12

Appendix

INDEX TO APPENDIX

Page

Findings of Fact and Conclusions of Law of

USDC for the Southern District of Florida

. enh RODS Males eke Re ERE eee App.2-9

Opinion of Court of Appeals for the

SPI IE, ch oh vt nukaetneaanccs App.10-22

a rE rer App.23-24

App. 1

[FILED FEB 17 1982]

IN THE UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

CASE NO. 79-6137-CIV-JE

INDUSTRIA NACIONAL DEL PAPEL C. POR A.,

a Dominican Republic corporation,

Plaintiff,

Vv.

M/V “ALBERT F” in rem and

STRAUM STEAMSHIP CO., LTD.,

Defendant.

PARTIAL FINDINGS OF FACT AND

CONCLUSIONS OF LAW

TIS CAUSE was tried before the Court, non-

jury, on November 2 and 3, 1981. Upen consideration of

the evidence presented, the Court enters the findings

of fact and conclusions of law that follow.

FINDINGS OF FACT

1. The Plaintiff, INDUSTRIA NACIONAL DEL

PAPEL C. POR A. (INDUSPAPEL, hereinafter), was

incorporated under the laws of the Dominican Republic

and has its only place of business in the Dominican

Republic. The Defendant vessel, the M/V “ALBERT

F”, is and was during the first three months of 1979,

engaged in the carriage of goods by water for hire. The

Defendant vessel is owned by FAIRWIND CONTAINER

App. 2

EXPRESS, LTD. (FAIRWIND, hereinafter), a corporation

incorporated under the laws of the Cayman Islands.

2. By written purchase order dated January 9,

1979, INDUSPAPEL ordered 1500 metric tons of softwood

kraft pulp from the Intervening Plaintiff, SANCA STEEL

CORPORATION (SANCA, hereinafter), for the total

purchase price of $569,790.00. In order to pay for the

softwood kraft pulp, INDUSPAPEL obtained the issuance

of an irrevocable ietter of credit by the Banco de Reservas

de la Republica Dominicana of Santo Domingo, Dominican

Republic.

3. Banco de Reservas issued its irrevocable letter

of credit no. 1-79-0034, dated January 12, 1979, in favor

of SANCA in the amount of $569,790.00, which was

payable upon presentation of sight drafts drawn on the

Irving Interamerican Bank in Miami, Florida, accompanied

by full sets of clean on board ocean bills of lading

evidencing shipment of the softwood kraft pulp and

the other documents specified in the letter of credit.

The letter of credit permitted SANCA to make partial

shipments of the goods.

4. The Defendant, STRAUM STEAMSHIP CO.,

LTD. (STRAUM, hereinafter), was incorporated under

the laws of the Cayman Islands and its principal place

of business is in the Cayman Islands. By written

agreement with FAIRWIND, STRAUM time chartered

the M/V “ALBERT F” for use in the carriage of goods

by water for a period of three months commencing on

January 12, 1979. During the period of the time charter,

the vessel was under the direction and control of

STRAUM.

App. 3

5. Paragraph 9 of the time charter agreement

provided that the master of the M/V “ALBERT F”

(who was furnished and paid by FAIRWIND) was under

the orders of STRAUM as regards employment, agency

or other arrangements. STRAUM handled the issuance

of all bills of lading during the time charter period.

STRAUM agreed to indemnify FAIRWIND against all

liabilities arising from the execution of bills of lading

by the master or agents appointed by the time charterer.

6. On February 28, 1979, cargo supplied by SANCA

destined for INDUSPAPEL in the Dominican Republic

was loaded aboard the M/V “ALBERT F” at Port Laudania

in the Southern District of Florida. For the carriage of

that cargo, STRAUM issued, on behalf of the master

and the vessel, a clean on board bill of lading for 1,035

bales of softwood kraft pulp, consisting of 854.91 metric

tons, consigned to Banco de Reservas. STRAUM charged

$68,210.00 for transporting the cargo to the consignee.

7. The M’'V “ALBERT F” sailed on February 12,

1979 with the cargo being transported pursuant to the

clean on board bill of lading. On the same date, SANCA

presented the original clean on board bill of lading, its

commercial invoices in the amount of $324,746.11 (for

1,035 bales of softwood kraft pulp, consisting of 854.91

metric tons) and the other required documents to Irving

Interamerican Bank in Miami, Florida for payment under

the letter of credit. The amount of the invoice included

STRAUM's freight charges of $68,210.00.

8. Irving Interamerican Bank paid the $324,746.11

under the letter of credit in the following manner,

pursuant to SANCA's directions:

App. 4

(a) $233,774.80 to Sunshine Pulp & Paper

Company;

(b) $68,210.00 to STRAUM; and

(ec) $22,761.31 to SANCA.

Irving Interamerican Bank then forwarded the clean

on board bill of lading and the other documents to

Banco de Reservas and obtained reimbursement of the

$324,746.11 it funded. In turn, Banco de Reservas charged

INDUSPAPEL’s account the sum of $324,746.11. In

order to satisfy its obligation, INDUSPAPEL executed a

promissory note in that amount in favor of Banco de

Reservas. The bank then transferred the clean on board

bill of lading and the other original documents and

assigned its rights as consignee under the bill of lading

to INDUSPAPEL.

9. Other than the matters set forth on the bill of

lading, the commercial invoices and the other documents

upon which they relied, neither the banks nor

INDUSPAPEL had any knowledge of the circumstances

surrounding the loading of the cargo aboard the M/V

“ALBERT F” or the issuance of the bill of lading.

10. The M/V “ALBERT F” arrived at Port Haina,

Dominican Republic on February 19, 1979. Upon its

arrival, the vessel did not deliver the softwood kraft

pulp described in the clean on board bill of lading.

Instead, it outturned 505 bales of waste paper consisting

of a weight less than 854.91 metric tons. The cargo that

the consignee (Induspapel) received was practically

worthless.

App. 5

11. As of the time of trial, INDUSPAPEL had

not received the softwood kraft pulp nor had it received

payment of the $324,746.11 paid under the letter of

credit to SANCA.

12. The M/V “ALBERT F” was originally arrested

in this cause by SANCA (the original Plaintiff), which

claimed to have acted on behalf of INDUSPAPEL. The

vessel was released upon FAIRWIND’s posting of the

sum of $344,500.00 as substitute security, which is

evidenced by a certificate of deposit held by the Clerk

of this Court. INDUSPAPEL was substituted for SANCA

as the proper party Plaintiff on April 30, 1980.

13. The Shippers Export Declaration was prepared

by the agent of the Time Charterer (STRAUM). The

vessel owner did not know that the cargo shipped was

not that which was ordered by the consignee.

The Time Charterer (STRAUM) signed, at the

request of the shipper (SANCA) a bil! of lading which

was delivered to the vessel’s master while the vessel

was at anchor off the coast awaiting delivery of the

shipping documents. The vessel was so anchored in

order not to miss a tide and thus have its sailing delayed.

Upon delivery of the documents, the vessel sailed.

14. The Bill of Lading issued by the Time Charterer,

contained the following statement:

“PARTICULARS FURNISHED BY SHIPPER”

(in bold print) and additionally that the shipper,

consignee and owner of the goods were bound

by all the printed provisions on both sides of

App. 6

the Bill of Lading, including paragraphs 2, 3,

4,11 and 20.”

15. The shipper, SANCA, committed fraud upon

all concerned. The shipper’s representatives managed

to place worthless cargo on the vessel and arranged

documentation. When the shipper’s representatives drew

on the letter of credit they disappeared and they have

not since been seen.

CONCLUSIONS OF LAW

1. The subject matter of this cause is within the

admiralty and maritime jurisdiction of the Court. 28

U.S.C. §1333.

2. Title to the cargo, which was shipped C.LF.,

passed upon SANCA’s delivery of it to the M/V “ALBERT

F”. Therefore, INDUSPAPEL, as the assignee of the

named consignee and the holder of the clean on board

bill of lading, is the real party in interest and the

proper party Plaintiff in this cause.

3. By the express provisions of the time charter

agreement, STRAUM was authorized to issue the clean

on board bill of lading on behalf of the master of the

vessel. The M/V “ALBERT F” is bound by the clean on

board bill of lading and INDUSPAPEL is entitled to a

maritime lien for the breach of that contract of carriage.

4. Since the $324,746.11 paid SANCA under the

letter of credit was funded in reliance upon the description

contained in the clean on board bill of lading, the M/V

“ALBERT F” and STRAUM are estopped, as against

INDUSPAPEL, impeaching the clean on board bill of

App. 7

lading; that is, from relying on proof that goods other

than those described in the clean on board bill of lading

were loaded aboard the vessel and transported to the

Dominican Republic.

5. By sailing with the cargo shipped pursuant to

the clean on board bill of lading, for which STRAUM

received payment of transportation charges, the bill of

lading was ratified by the Defendants and this Court

has in rem jurisdiction.

6. STRAUM breached the contract of carriage

by failing to deliver goods conforming to those described

in the clean on board bill of lading and INDUSPAPEL

is entitled to judgment against STRAUM, in personam,

in the amount of $324,746.11, together with interest

and taxable costs.

7. INDUSPAPEL has a valid maritime lien against

the M/V “ALBERT F’” for its failure to deliver goods

conforming to those described in the clean on board bill

of lading and INDUSPAPEL is entitled to judgment

directing payment from the substituted security for

the vessel of its maritime lien in the amount of $324,746.11,

together with interest and taxable costs.

8. FAIRWIND is entitled to recovery against

STRAUM and SANCA.

9. STRAUM is entitled to recovery against

SANCA.

10. SANCA is entitled to no recovery.

11. No party is entitled to recovery against

INDUSPAPEL.

DONE and ORDERED at Miami, Southern Dis:rict

of Florida, this 16th day of February, 1982.

Joe Eaton

United States District Judge

ee: Robert J. Schaffer, Esq.

Reginald M. Hayden, Jr., Esq.

Wiiliam Sayad, Jr., Esq.

David Canning, Esq.

App. 9

INDUSTRIA NACIONAL DEL PAPEL, C.A.,

Plaintiff-A ppellee

Cross-Appellant,

Sanca Steel Corporation, Intervening

Plaintiff,

Fairwind Container,

Counter Claimant-A ppellant,

Cross-A ppellee,

v.

M/V “ALBERT F”, In Ren, etc.,

Defendant

Sanca Steel Corporation, et al.,

Counter Defendants.

NO. 82-5865.

United States Court Of Appeals,

Eleventh Circuit.

April 20, 1984.

Buyer of goods brought in rem action against vessel

to recover for nondelivery of goods. The United States

District Court for the Southern District of Florida, Joe

Eaton, Chief Judge, entered judgment in favor of buyer,

and vessel appealed. The Court of Appeals, Hatchett,

Circuit Judge, held that: (1) vessel was “carrier” within

meaning of Carriage of Goods by Sea Act and Pomerene

Act; (2) vessel was liable for nondelivery of goods under

App. 10

Pomerene Act; (3) statements in bill of lading were

insufficient to escape liability for nondelivery of goods

under Pomerene Act; (4) loading of cargo on vessel

created maritime lien enforceable in rem; (5) mistake

concerning parties’ opinions concerning duration of

litigation was insufficient to compel vessel owner to

post additional security; and (6) buyer \could not obtain

in personam judgment against vessel owner in excess

of amount of security posted by vessel owner to secure

vessel's release from arrest.

Affirmed.

1. Shipping—103

Vessel was “carrier” within meaning of Carriage

of Goods by Sea Act and Pomerene Act where vessel

transported and discharged cargo, bill of lading was

issued for master, and no contractual relationship existed

absolving ship and its owner from liability for cargo.

Carriage of Goods by Sea Act, §§ 1-16, 46 U.S.C.A. §§

1300-1315; Bill of Lading Act, §§ 1-44, 49 U.S.C.A. §§

81-124.

See publication Words and Phrases for other

judicial constructions and definitions.

2. Shipping—115

Where vessel ~eceived certain goods and issued

bill of lading describing goods, but goods received did

not conform to goods described in bill of lading, vessel

was liable under Pomerene Act for nondelivery of goods.

Bill of Lading Act, §22, 49 U.S.C.A. §102.

App. 11

3. Shipping—106(5)

Holder in due course cannot recover under section

of Pomerene Act governing liability of carrier issuing

bill of lading for nonreceipt of goods unless holder in

due course has relied on bill of lading. Bill of Lading

Act, §22, 49 U.S.C.A. §102.

4. Shipping—141(1)

Words “particulars furnished by shipper” in bill of

lading failed to relieve carrier of liability under Carriage

of Goods by Sea Act and therefore did not exempt

vessel from liability for nondelivery of goods under

Pomerene Act. Bill of Lading Act, §§ 21, 22, 49 U.S.C.A.

§§ 101, 102.

5. Shipping—141(1)

Preprinted disclaimer paragraph in bill of lading

failed to exempt vessel from liability for nondelivery of

goods under Pomerene Act where paragraph did not

indicate that shipper loaded cargo. Bill of Lading Act,

§§ 21, 22, 49 U.S.C.A. §§ 101, 102.

6. Admiralty—28

Court obtains in rem jurisdiction over vessel when

maritime lien attaches to vessel.

7. Shipping-—133

Maritime lien attaches against ship when valid

claim for cargo loss or damage exists.

App. 12

8. Shipping—133

Right to maritime lien attaches when there is union

of ship and cargo and such union will occur when vessel

is loaded or at least ready to be loaded.

9. Shipping—133

Loading of cargo on vessel created maritime lien

enforceable in rem to secure performance of contract.

10. Admiralty—57

Effect of release of vessel from arrest in exchange

for vessel owner's posting of security was to transfer

maritime lien from ship to fund represented by security.

11. Admiralty—57

Mistake concerning parties’ opinions concerning

duration of action against vessel for nondelivery of

cargo was insufficient to compel vessel owner, which

had posted security in exchange for vessel's release

from arrest, to post additional security. Supplemental

Admiralty and Maritime Claims Rule E(6), 28 U.S.C.A.

12. Admiralty—57

Buyer of goods, which brought in rem action against

vessel to recover for nondelivery of goods, could not

obtain in personam judgment in excess of amount of

security posted by vessel owner to secure vessel's

release from arrest where action did not involve any

mistake in determination concerning value of vessel.

App. 13

Hayden & Milliken, Pa., John D. Kallen, William B.

Milliken, Miami, Fla., for Fairwind Container.

Robert J. Schaffer, Miami, Fla., for Industria Nacional

Del Papel, CA.

Appeals from the United States District Court for

the Southern District of Florida.

Before HILL and HATCHETT, Circuit Judges,

and ALLGOOD*, District Judge.

HATCHETT, Circuit Judge:

In this action, we must determine whether a vessel

may be held liable in rem for non-delivery of its cargo

described in a clean on board bill of lading. We affirm

the district court which held the vessel liable in rem

because it was estopped from impeaching the bill of

lading.

On January 9, 1979, the appellee, Industria Nacional

Del Papel (Induspapel), ordered 1,500 metric tons of

soft wood kraft pulp from Sanca Steel Corporation

(Sanca), costing $569,790. In February, 1979, the cargo

was loaded aboard the appellant vessel, the M/V ALBERT

F, in southern Florida, and the vessel sailed for the

[Dominican Republic. On the same date, Induspapel paid

Sanca.

*Honorable Clarence W. Allgood, U.S. District Judge for the

Northern District of Alabama, sitting by designation.

App. 14

The M/V ALBERT F arrived in Port Haina,

Dominican Republic, on February 19, 1979, without the

cargo specified in the bill of lading. Instead, it outturned

505 bales of wastepaper. Induspapel received practically

worthless cargo, and sued the vessel and its claimant

owner, Fairwind Container Express (Fairwind) to recover

the amount it paid.

Claiming to be acting on behalf of Induspapel.,

Sanca originally arrested the M/V “ALBERT F.”

Subsequently, the vessel was released upon Fairwind’s

posting of $344,500 as security, and Induspapel was

substituted for Sanca as the proper plaintiff. The district

court ruled for Induspapel holding that the vessel was

estopped from impeaching the clean bill of lading, and

therefore, was liable in rem for the non-delivery of the

cargo specified in the bill of lading. The M/V ALBERT

F contends the district court erred in holding that it

was estopped from impeaching the bill of lading and in

finding it liable in rem. Induspapel cross-appeals claiming

that the district court erred in reducing Induspapel’s

prejudgment interest award and in denying it an increase

in the amount of security posted by Fairwind.

A. Estoppel

The Pomerene Act, 49 U.S.C.A. §81-124 (West 1951),

applies to all “[b]ills of lading issued by any common

carrier for the transportation of goods ... from a

place in a State to a place in a foreign country. . .” 49

U.S.C.A. §81. The Pomerene Act fails to define “carrier,”

but the Carriage of Goods By Sea Act (COGSA), 46

U.S.C.A. §1300-1315 (West 1975), defines “carrier” as,

“the owner or the charterer who enters into a contract

of carriage with a shipper.” 46 U.S.C.A. §1301 (West

App. 15

1975). “Since COGSA was enacted against the backdrop

of the Pomerene Act,” we will utilize COGSA’s definition

of “carrier” to determine whether the M/V ALBERT F

is “carrier” within the meaning of the Pomerene Act.

Portland Fish Co. v. States Steamship Co., 510 F.2d

628, 631 (9th Cir. 1974).

[1] The Fifth Circuit has held that a vessel is a

“carrier” as defined in section 1301 of COGSA where

(a) the ship transported and discharged cargo; (b) the

bil of lading was issued for the master, and (c) no

contractual relationship existed absolving the ship and

its owner from liability for the cargo. Compagnie De

Navigation, Etc. v. Mondial United Corp., 316 F.2d 163,

172-73 (5th Cir. 1963). These factual circumstances exist

in this case, and the M/V ALBERT F is a “carrier”

within the meaning of COGSA and the Pomerene Act.

Since the vessel was a common carrier transporting

cargo from the United States to a foreign country, the

Pomerene Act applies to this case. 49 U.S.C.A. §81.

Section 22 of the Pomerene Act provides that a

carrier issuing a bill of lading will be liable “[{to] the

holder of an order bill, who has given value in good

faith, relying upon the description therein of the goods,

. . . 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 to their

description thereof in the bill at the time of its issue.”

49 U.S.C.A. §102 (West 1951). This provision codified

the estoppel principal which held “carriers liable to

consignees and good faith assignees for value for

misrepresentations in their bill of lading.” Elgie & Co.

v. S.S. “S.A. Nederburg,” 599 F.2d 1177, 1179 (2d Cir.

1979), cert. denied sub nom., South African Marine

App. 16

Corp., Ltd. v. Elgie and Co., 444 U.S. 1072, 100 S.Ct.

1016, 62 L.Ed.2d 753 (1980).

[2, 3] Title 49 U.S.C.A. §102 holds the carrier

liable for goods receipted for by him but not actually

received. Elgie, 599 F.2d at 1179; Strohmeyer & Arpe

Co. v. American Line S.S. Corp., 97 F.2d 360, 362 (2d

Cir. 1938). The M/V ALBERT F received certain goods

and issued a bill of lading describing 854 tons of soft

wood kraft pulp, but the goods received did not conform

to the goods described in the bill of lading.' The vessel,

therefore, is liable for the non-delivery of the goods

pursuant to 49 U.S.C.A. §102. See Elgie, 599 F.2d 1177.

The M/V ALBERT F contends, however, that the

exculpatory provision of the Pomerene Act, 49 U.S.C.A.

§101 (West 1951), exempts it from liability.’ The vessel

‘While Straum actually issued the bill of lading, we conclude

that Straum was acting on behalf of the vessel, and therefore, we

treat the ship as issuing the bill of lading.

*A holder in due course cannot recover from a carrier under

49 U.S.C.A. §102 (1951), unless he has relied on the bill of lading.

See Pacific Micronesian Lines, Inc. vu. New Zealand Insurance Co.,

366 F.2d 333, 335-36 (9th Cir. 1966), aff'd, 397 F.2d 236 (9th Cir.

1968). Induspapei relied on the bill of lading. Only after receiving

the bill of lading did it pay Sanca. See also, T.J. Stevenson & Co.,

Inc. v. 81, 193 Bags of Flour, 629 F.2d 338, 373-374 (5th Cir. 1980).

‘Title 49 U.S.C.A. §101 states in pertinent part:

The carrier may also by inserting in the bill of lading

the words ‘Shippers weight, load, and count, or other

words of like purport, [to] indicate that the goods were

loaded by the shipper and their description of them

made by him; and if such statement be true, the carrier

shall not be liable for damages caused by the improper

loading or by the nonreceipt or by the misdescription of

the goods described in the bill of lading. . ..

App. 17

claims that certain words contained in the bill of lading

free them from liability.‘ The bill of lading declares

that “particulars [are] furnished by shipper,” the bill

also states

the shipper, consignee and owner of the goods

and the holder of this bill of lading agree to be

bound by all the stipulations, exceptions, and

conditions stated herein whether writ .en,

printed, stamped, or incorporated on the front

or reverse side hereof, as fully as if they were

all signed by such shipper, consignee, owner,

or holder.

[4] These statements are insufficient to escape

liability under 49 U.S.C.A. §101. The words “pe-ticulars

furnished by shipper” fail to relieve the carrier of

liability under COGSA, and therefore, they do not exempt

the M/V ALBERT F from liability under the Pomerene

Act. Spanish American Skin Co. v. M.S. Ferngulf, 143

F.Supp. 345, 349 (S.D.N.Y. 1956), aff'd, 242 F.2d 551 (2d

Cir. 1957); George F. Pettinos, Inc. v. American Export

Lines, Inc., 68 F.Supp. 759, 764 (E.D.Pa. 1946), aff'd, 159

F.2d 247 (3d Cir. 1947). Since COGSA and the Pomerene

Act protect the holder in due course from misleading

bills of lading, statements insufficient to avoid liability

under COGSA should not be permitted to avoid liability

under the Pomerene Act. Moreover, the words

“particulars furnished by shipper” fail to indicate that

the shipper loaded the cargo, because COGSA presumes

‘While the words “shippers weight, load, and count” are

absent from the bill of lading, the statute provides for the inclusion

of “other words of like purport” to avoid liability for the non-

receipt of goods. 49 U.S.C.A. §101 (1951).

App. 18

the shipper will furnish the particulars placed in the

bill of lading by the carrier. 46 U.S.C.A. §1303(3) (West

1975).

[5] The preprinted paragraph in the bill of lading

also fails to satisfy the standard in 49 U.S.C.A. §101.

The paragraph does not indicate that the shipper loaded

the cargo, and therefore, such an attempted disclaimer

of liability is ineffective. See Spanish American Skin

Co., 242 F.2d at 552-53.

B. The District Court's Holding the M/V “ALBERT

V” Liable In Rem

{6-9} A court obtains in rem jurisdiction over a

vessel when a maritime lien attaches to the vessel.

Krauss Brothers Lumber Co. u Dimon SS Corp., 290

U.S. 117, 120-21, 54 S.Ct. 105, 106, 78 L.Ed. 216 (1933).

A maritime lien attaches against a ship when a valid

claim for cargo loss or damage exists. G. Gilmore & C.

Black, The Law of Admiralty, §8-45 at 165 (Ist ed.

1957). The right to the lien attaches “when there is

‘union of ship and cargo." Krauss, 290 U.S. at 121, 54

S.Ct. at 106. When the vessel is loaded, or at least

when it is ready to be loaded, the “union of shop and

cargo” will occur. Krauss, 290 U.S. at 121-22, 54 S.Ct. at

106. The loading of the cargo on the M/V ALBERT F

therefore created a maritime lien enforceable in rem to

secure the performance of the contract.

The vessel contends, however, that Sanca delivered

the wrong goods, and therefore, no maritime lien attached.

The district court concluded that the maritime lien

attached because appellants were estopped from asserting

the delivery of the wrong goods. Since we have affirmed

\

App. 19

the district court’s ruling with respect to the estoppel

issue, we also affirm the ruling holding of the M/V

ALBERT F liable in rem. The vessel could not deny

the delivery of goods because they were estopped from

doing so, and therefore, they must be treated as having

the correct goods on board. Therefore, the lien attached

when the goods were loaded on the ship, and the district

court was correct in holding the M/V ALBERT F liable

in rem.

C. The District Court’s Denying an Increase in

Security and In Limiting Induspapel’s Final Judgment

[10] The M/V ALBERT F was released in exchange

for Fairwind’s posting of a $344,500 security. The effect

of the release was to transfer the lien from the ship to

the fund the security represented. “The lien against

the ship [was] discharged for all purposes and the ship

cannot again be liable in rem for the same claim.” G.

Gilmore & C. Black, The Law of Admiralty, § 989 at

651 (1st ed. 1957). See also, Continental Grain Co. v.

Federal Barge Lines, Inc., 268 F.2d 240, 244 (5th Cir.

1959), aff'd, 364 U.S. 19, 80 S.Ct. 1470, 4 L.Ed.2d 1540

(1960). Induspapel contends that the district court erred

in not compelling Fairwind to post additional security

because the security had become inadequate as a result

of the party’s mistaken belief of the anticipated duration

of the litigation.

Rule E(6) of the Supplemental Rules to the Federal

Rules of Civil Procedure provides that, “{t]he court

may, on motion and hearing, for good cause shown,

reduce the amount of security given; and if the surety

shall be or become insufficient, new or additional sureties

may be required on motion and hearing.” This provision

App. 20

Te ST

fails to give clear guidance to the district courts on

when to require additional sureties, but, “it seems

reasonably clear that if the vessel is released on too

low a bond as the result of fraud, misrepresentation or

mistakes sufficient to justify the [vessel’s] rearrest,

the court can compel additional security to be posted

as a precondition to avoiding a rearrest.” 7A Moore's

Federal Practice, § E.14 at E-710 (2d ed. 1983). “A

mistake sufficient to justify rearrest requires that it

be tinged with fraud or misrepresentation or that it be

the mistake of the court and not that of the claimant.”

7A Moore's Federal Practice, § E.14 at E-711 n. 30 (2d

ed. 1983).

[11] In this case, the mistake was not tinged with

fraud or misrepresentation and was not caused by the

district court. The mistake concerned the parties’ opinions

concerning the duration of the litigation, and while

their opinions were incorrect, this mistake is insufficient

to compel additional security. Indeed, at the time

Induspapel intervened in this case, its claim exceeded

the amount of the security that had been posted.

Induspapel should have addressed the inadequacy of

the security when it first intervened in the suit.

The district court also limited Induspapel’s lien to

$344,500, the amount of the security Fairwind posted.

Induspapel contends that the district court erred in

limiting the lien to this amount. Since no fraud or

illegalities existed sufficient to justify rearrest, the

question is whether Induspapel can obtain an in personam

judgment in excess of the amount of the security against

Fairwind who secured the vessel's release. “The traditional

rule has been that the admiralty court will not give a

personal judgment against the owner in excess of the

App. 21

amount of the release bond.’ G. Gilmore & C. Black,

The Law of Admiralty, § 9-90 at 652 (1st ed. 1957). This

rule, however, appears to be changing. In The Fazrisle,

76 F.Sunp. 27 (D.Md.1947), aff'd sub non., Waterman

S.S. Corp. v. Dean, 171 F.2d 408 (4th Cir.1948), the

district court granted judgment for $45,000 after the

ship had been released on a $25,000 bond. The district

court held that the award in excess of the bond was

proper because the bond was not determined in relation

to the value of the vessel, and the parties had not

agreed to the value of the bond. Jd. at 32. Utilizing its

equitable powers, the district court granted an award

in excess of the bond. /d. at 34. See also, The Minnetonka,

146 F. 509 (2d Cir.1906), cert. denied sub nom., Atlantic

Transport Co. v. Barnes, 203 U.S. 589, 27 S.Ct. 777, 51

L.Ed. 330 (1906) (ship released for $5,000, the purported

value of jewelry stolen on the ship. Subsequently, jewelry

was determined to be worth more, and the second

circuit awarded the plaintiff the full value of the jewelry).

[12] The present case does not involve any mistake

in determinations concerning the value of the ship.

Both parties agreed to the initial estimation. Therefore,

we find the district court acted properly in prohibiting

an award in excess of the $344,500 security. See Logue

Stevedoring Corp. v. The Dalzellance, 198 F.2d 369,

372-73 (2d Cir.1952) (adhering to the traditional rule

that an in rem action could not be converted to an in

personam action). See also, G. Gilmore & C. Black, The

Law of Admiralty, § 9-90 at 654 (1st ed. 1957).

The judgment of the district court is affirmed.

AFFIRMED.

App. 22

[FILED JUL -9 1984]

IN THE UNITED STATES COURT OF APPEAL

FOR THE ELEVENTH CIRCUIT

NO. 82-5865

INDUSTRIA NACIONAL DEL PAPEL, CA.,

Plaintiff-A ppellee,

Cross-A ppellant,

SANCA STEEL CORP.,

~ Intervening Plaintiff,

FAIRWIND CONTAINER,

Counter Claimant-A ppellant.

Cross-A ppellee,

versus

M/V “ALBERT F”, In Rem, Etc.,

Defendant,

SANCA STEEL CORP., ET AL.,

Counter Defendants.

Appeal from the United States District Court

for the Southern District of Florida

ON PETITION FOR REHEARING AND

SUGGESTION. FOR REHEARING EN BANC

(Opinion April 20, 11 Cir., 1984, ___ F.2d __).

(JUL -9 1984)

App. 23

Before HILL and HATCHETT, Circuit Judges,

and ALLGOC™, District Judge.

PER CURIAM:

(~) The Petition for Rehearing is DENIED and

no member of this panel nor other Judge in regular

active service on the Court having requested that the

Court be polled on rehearing en banc (Rule 35, Federal

Rules of Appellate Procedure; Eleventh Circuit Rule

26), the Suggestion for Rehearing En Banc is DENIED.

( ) The Petition for Rehearing is DENIED and

the Court having been polled at the request of one of

the members of the Court and a majority of the Circuit

Judges who are in regular active service not having

voted in favor of it (Rule 35, Federal Rules of Appellate

Procedure; Eleventh Circuit Rule 26), the Suggestion

for Rehearing En Banc is also DENIED.

( ) A member of the Court in active service

having requested a poll on the reconsideration of this

cause en banc, and a majority of the judges in active

service not having voted in favor of it, rehearing en

bance is DENIED.

ENTERED FOR THE COURT:

/s/ [illegible]

United States Circuit Judge

*Honorable Clarene W. Allgood, U.S. District Judge

for the Northern District of Alabama, sitting by

designation.

App. 24