Petition for Writ of Certiorari — Sklut Hide & Furs v. Prudential Lines, Inc.
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i985
In The MAY 28
Supreme Court of the Un
ALEXANDER LL. STev
ay
October Term, 1984
SKLUT HIDE & FUR
A DELAWARE CORPORATION,
Petitioner,
vs.
PRUDENTIAL LINES, INC.,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
THOMAS P. HARTNETT
Counsel of Record
HALLEY & CHALOS
Attorneys for Petitioner
300 East 42nd Street
New York, New York 10017
(212) 697-8118
2227
tz *NJ (201) 257-6850eNY (212) 840-9494°PA (215) 563-5587
ters.ime. MA (617) 542-1114*DC (202) 783-7288°USA (800) 5 APPEAL
US.
AS |
QUESTIONS PRESENTED
1. Whether this Court should now answer the frequently
litigated conundrum as to the definition of a maritime package,
in order to promote uniformity and predictability for the maritime
industry and the various courts regularly confronting this issue?
2. Whether a Bill of Lading is a contract of adhesion?
il
THE PARTIES
The parties before this Court are those set forth in the
caption.’
1. Pursuant to Rule 28.1 there are no other first generation subsidiaries
or affiliates. Accordingly, Petitioner is not a corporate parent.
iit
TABLE OF CONTENTS
Page
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Constitutional and Statutory Provisions Involved ........ 2
ea vk we cde ce sa tee ecine evens ts 3
Argument:
A uniform definition of what is a maritime package must
Oe Poememmeee OP ths COUrt. .. ww. ccc cece ees 6
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TABLE OF CITATIONS
Cases Cited:
Allied International American Eyle Trucking Corp. v. S.S.
Yang Ming, 672 F. 2d 1055 (2d Cir. 1982) ......... 7
iv
Contents
Page
Binladen BSB Landscaping v. M/V Nedlloyd Rotterdam,
No. 84-77110, slip opinion (2d Cir. April 3, 1985)
Re SE a a ee per SP une ee enter Ea 7
Croft and Scully Inc. v. M/V SKULPTOR VUCHETICH,
See Bu ee, Gre Ges Bs TED. Wie ok ae oa eens cc 8
Commonwealth Petrochemical Inc. v. S.S. Puerto Rico,
455 F. Supp. 310 (D. Md. 1978), rev’d on other
grounds, 607 F. 2d 322 (4th Cir. 1979)............. 7
Denial of Petition of Dow Chemical for Definition of
Maritime Package, Federal Maritime Commission (April
Fi NG Ris oA cKa wc escek bes eee bee e eek aeweans « 7
Koppers Co. Inc. v. S.S. DEFIANCE et al, 542 F. Supp.
1356 (D.M.D. 1982), aff’d 704 F. 2d 1309 (4th Cir.
DRG GLib hace eene de Guhekerb ed Rika eka OREN 4
Leather’s Best v. S/S Mormaclynx, 451 F. 2d 800 (2d Cir.
4) ee b RNR a's toa tatiiels cela eats eer ok J 7
Mitsubishi International Corp. v. S.S. Palmetto State, 311
F. 2d 382 (2d Cir. 1962), cert denied 373 U.S. 922
Suk G ews ecue cub ia vet eer caw h eens ck ewnddaewes 6, 7
Matter of Norfolk, Baltimore and Carolina Line, 4 2d F.
ee, Dae es Ws, Sl eb dnenen bok vasa cues 8, 9
Parnell v. United States Lines, Inc., 263 F. 2d 497 (2d Cir.
(1959) cert denied, 359 U.S. 1013 (1959)............ 7
Smithgreyhound v. M/V EURYGENES, 1980 A.M.C. 2270
(SDNY 1980), 666 F. 2d 746 (2d Cir. 1981) ......... 5, 8
Contents
Page
United States v. Schooner Betsy & Charlotte, 8 US (4
Se Me EE ca yk o bis 6 oe kes ak Views ae ee 6
Statutes Cited:
pS a) | er rere rer ere meat Ste ee re re 2
Be Meee OOO 8s kin oe Sa 00 S44 065 5 Os Cee tees caeeene 3, 4
Se es Ie a a a hs eee eee re ewes 6
a ee eres te rerrey yee as ere 6
Rule Cited:
eM oo a aa ei o-w le aha e ee eet ask ae ii
United States Constitution Cited:
United States Constitution, Article III, Section 2........ 2
Other Authority Cited:
Gilmore & Black, The Law of Admiralty, (2 ED 1975)
APPENDIX
- Appendix A—Decision Denying Summary Judgment
vi
_ Contents
Appendix C—Order of Third Circuit ...............
Appendix D—Order of Third Circuit ...............
Appendix E—Front and Back of Bill of Lading......
No.
In The
Supreme Court of the United States
oo
October Term, 1984
SKLUi HIDE & FUR
A DELAWARE CORPORATION,
Petitioner,
VS.
PRUDENTIAL LINES, INC.
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
Petitioner, Sklut Hide & Fur, respectfully prays that a writ
of certiorari issue to review the order of the United States Court
of Appeals for the Third Circuit entered in these proceedings.
OPINIONS BELOW
The District Court’s opinion denying summary judgment was
officially reported at 537 F. Supp. 266 (D. Del. 1982) and is
annexed hereto as Appendix A. The District Court’s trial opinion
was not officially reported and is annexed hereto as Appendix
B. The order of the Circuit Court of Appeals was reported at
755 F. 2d 923 (3rd Cir. 1985) and is annexed hereto as Appendix
C. The Court of Appeals’ denial of reargument or rehearing en
banc is unreported and is annexed hereto as Appendix D.
JURISDICTION
The order of the Court of Appeals was entered on January
29, 1985. Denial of reargument and rehearing e.. anc was entered
on February 26, 1985. A certified copy of the original order of
the Court of Appeals was issued in lieu of a formal mandate on
March 6, 1985. This petition for certiorari was filed within 90
days from that date.
The Court’s jurisdiction is predicated upon 28 U.S.C.
§1254(1).
CONSTITUTIONAL AND STATUTORY PROVISIONS
INVOLVED
Article III, Section 2, Clause 1 of the United States
Constitution provides that:
The judicial power shall extend to all cases, in Law
and Equity, arising under this Constitution, the
Laws of the United States, and Treaties made, or
which shall be made, under their Authority; —
to all Cases affecting Ambassadors, other public
Ministers and Consuls; — to all Cases of admiralty
and maritime jurisdiction; — to Controversies to
which the United States shall be a Party; — to
Controversies between two or more States; —
between a State and Citizens of another State; —
between Citizers of different States, — between
citizens of the same State claiming Lands under
3
Grants of different States, and between a State
or the Citizens thereof, and foreign States, Citizens
or Subjects.
Section 1333 of the Judicial Code, 28 U.S.C. §1333, provides
that:
‘he district courts shall have original jurisdiction,
exclusive of the courts of the States, of:
(1) Any civil case of admiralty or maritime
jurisdiction, saving to suitors in all cases all other
remedies to which they are otherwise entitled.
(2) Any prize brought into the United States
and all proceedings for the condemnation of
property taken as prize.
STATEMENT OF THE CASE
Petitioner Sklut Hide & Fur Company (hereinafter ‘‘Sklut’’)
is a Delaware dealer and exporter of cattle hides to Europe and
the Far East. On or about March 27, 1980 Sklut entered into
a contract of carriage with Prudential Lines, Inc. (hereinafter
‘**PLI’’), an American flag operator of ocean going vessels. PLI
contracted to transport 400 bundles of wet, salted cattle hides?
on its vessel SS LASH ATLANTICO. Carriage was to be a ‘‘house
to house’’ move’ from the Port of New York to the consignee
2. A bundle of hides is traditionally measured as approximately eighteen
inches by eight inches bound with thistle.
3. A ‘‘house to house’’ move requires a shipper to pack the container and
deliver it to the ocean going carrier at the port of loading for further loading
aboard a vessel and shipment to the port of destination. At such a port the
(Cont'd)
at San Croce Sull Arno, Italy via the Port of Leghorn, Italy. As
evidence of the contract of carriage, PLI issued its standard form
ocean Bill of Lading. A copy of the front and back of the Bill
of Lading is set forth as Appendix ‘‘E’’, which is annexed hereto.
In the ‘‘No of PKGS’’ column there was listed the Number
**1”’ and partially ‘‘400’’. In the next column ‘‘Description of
Packages and Goods’’ on corresponding lines read:
““CONTAINER STC’”’ AND ‘“‘BUNDLE: WET
SALTED CATTLE HIDES’’.
Sklut paid ocean freight to PLI in the amount of $1,538.57
for transportation from the Port of New York to San Croce Sull
Arno. At PLI’s insistence the goods were stuffed into one container
and loaded on board the vessel.
On or about April 20, 1984 the vessel arrived not at Leghorn
but rather at Genoa, Italy. PLI discharged the cargo there and
turned it over to its local trucker, Aido Spinelli, S.A. for
transportation to San Croce Sull Arno.
On June 1, 1980 the goods were stolen, while in Spinelli’s
possession. Several days later, the container was found empty.
On November 20, 1980 Sklut instituted a civil action in the
United States District Court for the District of Delaware.
Jurisdiction was predicated in admiralty pursuant to 28 U.S.C.
§1333. In its complaint Sklut alleged that PLI breached its contract
of carriage because of the nondelivery of the goods.
(Cont’d)
container is unloaded from the vessel and taken to a container yard where it
is picked up by a trucking company for delivery to the ultimate consignee. See
Koppers Co. Inc. v. S. S. DEFIANCE, et al, 542 F. Supp. 1356 (D.Md.) ,
aff'd, 704 F. 2d 1309 (4th Cir. 1983).
On November 23, 1981 PLI moved for summary judgment
dismissing the complaint pursuant to Clause 2 of its Bill of Lading.
The District Court Judge denied PLI’s motion. This decision
denying summary judgment is annexed hereto as Appendix ‘‘A’’
On September 20, 1983 a trial was held. On December 23,
1983 the District Court issued a memorandum opinion, which
is annexed hereto as Appendix ‘‘B’’.
The District Court held PLI liable to Sklut for the nondelivery
of the cargo. However it found that, as the loss had occurred
subsequent to discharge from the vessel, any type of package
analysis would not apply. Instead, the District Court claimed that
the loss would be limited to $500, since the parties had apparently
contracted to this in Paragraph 17 of PLI’s preprinted form. The
Court did concede that, had the loss occurred prior to discharge,
a package analysis, as set forth in Smithgrevyhound v. M/V
EUR YGENES, 666 F . 2d 746 (2d Cir. 1981), would have applied
and would have given Sklut its requested ad damnum.
Notwithstanding this fact, the Court refused to use any type of
package analysis and awarded Sklut only $500 plus interest from
the date of loss.
Sklut then appealed to the United States Court of Appeals
for the Third Circuit. PLI also crossappealed. On January 29,
1985 the Third Circuit issued a memorandum order, affirming
the various decisions and final judgment of the Disirict Court.
Sklut then moved for rehearing or reargument en banc. On
February 26, 1985 the Third Circuit denied both requests. Sklut
now petitions this Court for a writ of certiorari.
ARGUMENT
A UNIFORM DEFINITION OF WHAT IS A MARITIME
PACKAGE MUST BE FORMULATED BY THIS COURT.
Since the earliest days of this Republic and because of the
constitutional grant of maritime jurisdiction to the federal
judiciary, Article If] courts have been given broad powers to
determine maritime issues. United States v. Schooner Betsy &
Charlotte, 8 U.S. (4 Cranch) 443 (1808). Furthermore, the
international scope of maritime transactions has necessitated
concerted judicial attempts for uniformity and predictability in
maritime affairs.
Perhaps no other issue in contemporary maritime law has
generated so much writing, be it adversarial, judicial or scholarly,
than that ‘‘troublesome conundrum ‘when is a package not a
package?’ ’’ Mitsubshi International Corp. v. S.S. PALMETTO
STATE, 311 F. 2d 382, 383 (2d Cir. 1962), cert. denied, 373 U.S.
922 (1963). At the core of the problem lies 46 U.S.C. §1300, ef
seq., Carriage of Goods by Sea Act (hereinafter ‘“COGSA’’), and
most especially §1304 (5), the so called ‘“‘package limitation’’.*
Judicial decisions, both on the trial and appellate level, have
frequently heen gnostic in their quest to answer this maritime
variation of the Sphinx’ legendary riddle. They have furthermore
become almost hermeneutical in their analysis of the statutory
basis of the ‘‘package limitation’”’ in the hope of gleaning ‘‘what
4. When COGSA was enacted in 1936, it reflected the conventional value
of a package shipped at that time. Consequently, even for moves not totally
covered by COGSA, carriers generally inserted the $500 package limitation into
their Bills of Lading. However, with the advent of containerization and the
internationalization of commerce, this figure has become hopelessly unrealistic
and nugatory in value. See Gilmore & Black, The Law of Admiralty (2d Ed.
1975).
a a
Congress would have thought about a subject about which it never
thought or could have thought’’. Commonwealth Petrochemicals
Inc. v. SS Puerto Rico, 455 F. Supp. 310, 313 (D. Md. 1978),
rev’d on other grounds, 607 F. 2d 322 (4th Cir. 1979). Even
requests to the Executive Branch to fashion a proper formulary
have also come to nought. See Denial of Petition of Dow Chemical
for definition of package, Federal Maritime Commission, (April
5, 1985).
To complicate this quagmire, courts like the District Court
in the instant action have also had to deal with permutations where
COGSA does not apply ex propio vigore and where two different
and contradictory results may arise, depending on the situs of
the loss and its relative proximity to the vessel. Pannell v. United
States Lines, Inc., 263 F. 2d 497 (2d Cir. 1959), cert. denied,
359 U.S. 1013 (1959). Thus, due to lack of ultimate judicial
guidance from this Court, courts nationwide have literally struggled
to formulate a hard and fast test in order to ascertain what is
a maritime package. Is it solely the container as defined, for
example, in PLI’s Clause 17, or is it, as was asserted by Sklut
at the trial and appellate levels, the contents of the container?
The most common and widely recognized standard has been
set forth by the Second Circuit. Starting with Leather’s Best v.
S/S Mormaclynx, 451 F. 2d 800, 815 (2d Cir. 1971) through Mitsui,
supra, and Allied International American Eagle Trucking Corp.
v. SS Yang Ming, 672 F. 2d 1055 (2d Cir 1982) to the recently
decided Binladen BSB Landscaping v. M/V Nedlloyd Rotterdam,
No. 84-7710 (2d Cir. April 3, 1985), the Second Circuit has
attempted to offer practical guidelines to deal with the package
quandry. As noted in Bin/aden, supra, slip opinion at 2993-2996,
four criteria have been and should be used by the judicial forum
in determining what is a package. The touchstone should be a
review of the contractural agreement between the parties, as set
forth in the Bill of Lading. Jd. at 2994. The second element should
be an analysis of the preparation of the cargo for transportation.
Id. at 2995. The third should be a judicial refusal to accept the
container as the sole package if the contents and the number of
packages or units are disclosed on the face of the Bill of Lading.
Id. Finally, there should be a tacit judicial classification that goods,
not separatelv packaged, should be classified as goods not shipped
in packages, for which the $500 limit would be per ‘‘customary
freight unit’’. Jd. at 2996.
Outside the Second Circuit other courts, usually on the trial
level, have used other tests for package determination. The most
notable was set forth in Matter of Norfolk, Baltimore & Carolina
Line, 478 F. Supp. 383 (E.D. Va. 1979). See also, Croft & Scully
Co. v. M/V SKULPTOR VUCHETICH, 508 F. Supp. 670 (S.D.
Tx. 1981). But see, Smithgreyhound v. M/V EURYGENES, 1980
A.M.C. 2270 (SDNY 1980). In NBC, supra at 392, the trial judge
set forth the following twelve criteria that should assist the trier
of fact in any package analysis.
(1) Whether the carrier actually possesses
superior bargaining strength sufficient to coerce
the shipper’s agreement to an adhesion contract;
2) Whether the parties treated the container
as a single unit in their negotiations, on the
document of contract, and in determining the
shipping rate;
(3) Whether the shipper, or at least one other
than the carrier, chose to ship the goods in
container;
(4) Whether the shipper or carrier procured
the container;
ee
(5) Whether the goods were delivered to the
carrier previously loaded into the container;
(6) Whether the goods were loaded by the
shipper or by the carrier;
(7) Whether the carrier actually observed the
contents of the container before it was sealed for
shipment;
(8) Whether the container was loaded with
the shipper’s goods only, and not those of any
other shipper;
(9) Whether the markings on the container
provided a complete and accurate indication of the
contents and their value;
(10) Whether the bill of lading contained any
declaration of the nature of the container’s
contents and their value;
(1!) Whether the bill of lading provided the
shipper with an adequate opportunity to declare
the value of the container and its contents, and
to obtain financial protection for any excess value;
(12) Whether the shipper took advantage of
this opportunity. NBC, supra at 392.
A comparison of the holdings in this litigation, when
scrutinized under the various tests discussed supra, evidences that
both the Trial Court and the Third Circuit opted for a simplistic
answer to the question as to what was the maritime package here.
Furthermore, the Third Circuit, unlike other Circuit Courts of
10
Apneal, has never directly confronted the issue of package
definition. This is true, even though the Third Circuit includes
the major Ports of New Jersey, Philadelphia, Wilmington and
others of lesser size. Sklut contends that the Third Circuit
deliberately refrained from answering the package question and,
by so doing, tacitly accepted the clearly erroneous holding of the
Trial Court. Judgment of only $500 was erroneously awarded
by reliance upon invocation of the microscopic, preprinted, and
adhesive language of PLI’s Clause 17. Sklut believes that this
false conclusion was primarily based upon the uncertain state of,
and confusion over, package analysis.
Accordingly, petitioner respectfully requests that this Court
finally intervene, put to rest this long standing dispute and give
authoritative guidance to the maritime industry and to the federal
judiciary who have both struggled over this matter.
CONCLUSION
For the foregoing reasons, a writ of certiorari should be issued
to review the judgment of the United States Court of Appeals
for the Third Circuit.
Respectfully submitted,
THOMAS P. HARTNETT
Counsel of Record
HALLEY & CHALOS
Attorneys for Petitioner
la
APPENDIX A — DECISION DENYING SUMMARY
JUDGMENT
SKLUT HIDE AND FURS, a Delaware corporation,
Plaintiff,
PRUDENTIAL LINES, INC., a Delaware corporation,
Defendant
Civ. A. No. 80-552
United States District Court,
D. Delaware.
April 2, 1982
Shipper brought action in admiralty for loss of cargo carried
in Ocean transportation from United States to Italy by carrier.
On carrier’s motion for summary judgment, the District Court,
Steel, Senior District Judge, held that: (1) bill of lading exculpatory
clause was null and void under Harter Act, and (2) shipper’s
written notice of loss or damage was timely.
Motion denied.
1. Shipping key 140(1)
Although Carriage of Goods by Sea Act provided that its
terms would not prevent carrier or shipper from entering into
agreement as to liability for loss of or damage to goods prior
to loading on and subsequent to discharge from ship, where it
2a
Appendix A
also provided that it was not to be construed as superseding any
other law relating to liabilities of ship after time when goods are
discharged from ship, COGSA was enacted in 1936, and Harter
Act, which was enacted in 1893, made null and void exculpatory
words or clauses in bills of lading purporting to relieve vessel owner
of liability for loss or damages for failing to make proper delivery
of property transported, COGSA could not be applied to render
enforceable exculpatory clause in bill of lading. Carriage of Goods
by Sea Act, §§ 7, 12, 46 U.S.C.A. §§ 1307, 1311; Harter Act,
§ 1, 46 U.S.C.A. § 190.
2. Shipping key 140(1)
Under Harter Act, exculpatory clause of bill of lading between
shipper and carrier was null and void and of no effect insofar
as it purported to relieve carrier from responsibility for loss to
shipper’s cargo prior to delivery to cargo destination. Harter Act,
§ 1, 46 U.S.C.A. § 190.
3. Shipping key 142
Although shipper’s goods were stolen from possession of
inland carrier on or about June 2, 1980, before delivery to cargo
destination, shipper was officially informed by carrier on Jenc
4, 1980, that container was stolen, and shipper’s written notice
of loss or damage was allegedly not received by carrier until June
9, 1980, such notice was timely where, under bill of lading, three-
day notice requirement had application only if loss was not
apparent, theft was obviously apparent inasmuch as shipper was
officially informed by carrier that container was stolen, and, under
the circumstances, it would be inequitable to bar shipper’s claim.
3a
Appendix A
Kester I. H. Crosse, Wilmington, Del., for plaintiff.
Thomas Herlihy, III, of Herlihy, Herlihy & Harker,
Wilmington, Del., for defendant; Douglas H. Riblet, of Rawle
& Henderson, Philadelphia, Pa., of counsel.
STEEL, Senior District Judge.
Plaintiff, Sklut Hide and Furs (‘‘Sklut’’) has brought this
action in admiralty for the loss of cargo carried in ocean
transportation from the United States to Italy. Jurisdiction is based
upon 28 U.S.C. § 1333. Now before the Court is the motion of
the defendant, Prudential Lines, Inc. (‘‘Prudential’’) for summary
judgment pursuant to Fed.R.Civ. P. 56(b).
On March 27, 1980, plaintiff and defendant entered into a
contract of carriage, Bill of Lading No. 1001, for the
transportation of a container of 400 wet salted cattle hides aboard
the SS Lash Atlantico, an oceangoing vessel owned by Prudential.
The bill of lading stated that the ‘‘port or place of loading’’ was
New York, the ‘‘port or place of discharge’’ was Leghorn, and
bore the following legend:
“CLEAN ON BOARD—FREIGHT PREPAID
BEYOND CHARGES TO SAN CROCE SULL
ARNO PREPAID HOUSE TO HOUSE
CONTAINER SERVICE”’
Plaintiff paid defendant a total of $1,538.57, which included
prepaid freight for house to house container service between New
York and San Croce Sull Arno.
4a
Appendix A
In due course the container was loaded on the SS Lash
Atlantico and was later discharged at Genoa, Italy.' Why the
discharge was in Genoa and not Leghorn as required by the bill
of lading is not explained. After its arrival in Genoa the container
was delivered to an inland carrier for transportation to Leghorn
where it was to be forwarded to San Croce Sull Arno. The hides
never reached their intended destination because on or about June
2, 1980, the container and its contents were stolen from the inland
carrier after their arrival in Leghorn. Aldo Spinnelli was the inland
trucker engaged by the defendant to complete the overland portion
of the contract of carriage. Plaintiff did not employ him or
designate him as his agent or servant in connection with the
shipment.
The defendant bases its motion for summary judgment on
two provisions in the contract of carriage set forth in the bill of
lading. Prudential points to Clause 10 in which, it contends, Sklut
agreed that Prudential would not be responsible for any loss or
damage to Sklut’s cargo which occurred while the cargo was not
in the actual physical custody, control or possession of Prudential.
Defendant argues that this provision is enforceable under the
United States Carriage of Goods by Sea: Act, 46 U.S.C. § 1300
et seq. In addition, Prudential argues that Sklut did not provide
notice of the loss or claim in writing within three days of its
occurrence as required by Clause 19 of the bill of lading.
1. The :ffidavit of Joseph C. Benedetti, Secretary of Prudential, relates
that the container was discharged in Genoa on May 28, 1980. In contrast, the
affidavit of Morton Sklut, President of Sklut Hide, affirms that he was advised
by his agent in Italy on May 25, 1980, that the Lash Atlantico actually had
arrived in Italy on or about April 30, 1980. This factual disparity is immaterial
to the Court’s decision.
Sa
Appendix A
Clause iO of the bill of lading provides as follows:
10. TRANSSHIPMENT:
Whenever the carrier or the Master may deem it advisable
or in any case where the goods are consigned to a point where
the vessel is not expected to discharge, the carrier or Master may,
without notice, forward the whole or any part of the goods, before
or after loading at the original or any intermediate port of
shipment, or at any other place or places, even though outside
the scope of the voyage or the route to or beyond the port of
discharge or the destination of the goods, by any vessel, vessels
or other means of transportation by water, land or air, or by
any such means, whether operated by the carrier or by others
and whether departing or arriving, or scheduled to depart or arrive
before or after the ship expected to be used for transportation
of the goods. The carrier, in making any arrangements for
transshipment by any means of transportation not operated by
it, shall be deemed the forwarding agent of the shipper and
consignee without any responsibility whatsoever. The oncarriage
shall be subject to the terms of the oncarrier’s current form of
bill of lading or other contract, whether issued or not, even though
such terms may include a lower valuation of the goods or lower
limitation of liability or otherwise be less favorable to the shipper
or consignee than the terms of this bill of lading. Pending or during
transshipment, the goods may be stored ashore or afloat at their
risk and expense.
When this bill of lading is issued as a through bill of lading,
the cargo described shall be considered to be ‘in transit’ from
the place of original departure or a point where the transportation
begins to the place of final destination, and all arrangements made
for land, water or air transportation of said goods before, or after,
6a
Appendix A
the described ocean transportation carried out by Prudential Lines,
Inc., have been, or will be, made solely as agents for the
shipper/consignee and subject to all of the terms and conditions 8
of the originating, connecting or final carrier’s bill of lading or
other transit document without any responsibility for performance
thereunder being assumed by Prudential Lines, Inc. and without
enlargement or extension of the responsibility or liabililty on its
part to the goods as defined in this bill of lading. It is also expressly
understood and agreed that Prudential Lines, Inc. will not be
responsible with respect to said goods while they are not in its
actual physical custody, control or possessio:
Section 7 of COGSA, 46 U.S.C.A. § 1307, provides:
§ 1307. Agreement as io liability prior to
loading or after discharge.
Nothing contained in this chapter shall prevent
a carrier or a shipper from entering into any
agreement, stipulation, condition, reservation, or
exemption as to the responsibility and liability of
the carrier or the ship for the loss or damage to
or in connection with the custody and care and
handling of goods prior to the loading on and
subsequent to the discharge from the ship on which ’
the goods were carried by sea.
Apr. 16, 1936, c. 229, § 7, 49 Stat. 1212.
[1] Standing alone Section 7 would authorize the exculpatory
provisions in Clause 10 of the bill of lading. Section 7 must read,
however, in the light of Section 12 of Cogsa, 46 U.S.C.A. § 1311,
which provides:
2
ee ee ee ee ee ee
7a
Appendix A
§ J311. Liabilities before loading and after
discharge; effec. on other laws
Nothing in this chapter shall be construed as
superseding any part of sections 190 to 196 of this
title, or of any other law which would be applicable
in the absence of this chapter, insofar as they relate
to the duties, responsibilities, and liabilities of the
ship or carrier prior to the time when the goods
are loaded on or after the time they are discharged
from the ship.
April 16, 1936, c. 229, § 12, 49 Stat. 1212.
This latter provision makes clear that the terms of Section
7 must yield to the extent it is inconsistent with ‘‘any other law
relating to the duties, responsibilities and liabilities of the ship
after the time when they are discharged from the ship.”’
COGSA was enacted in 1936. Section 1 of the Harter Act,
46 U.S.C. § 190, has been the law since it was enacted in 1893.
It makes null and void and of no effect all words or clauses in
a bill of lading which purport to relieve an owner of any vessel
transporting property between ports of the United States and
foreign ports from liability for loss or damages for failing to make
proper delivery of property committed to its charge. 46 U.S.C.A.
§ 190 reads:
§ 190. Stipulations relieving from liability for
negligence
It shall not be lawful for the manager, agent,
master, or owner of any vessel transporting
8a
Appendix A
merchandise or property from or between ports
of the United States and foreign ports to insert
in any bill of lading or shipping document any 4
clause, covenant, or agreement whereby it, he, or
they shall be relieved from liability for loss or
damage arising from negligence, fault, or failure
in proper loading, stowage, custody, care, or
proper delivery of any and all lawful merchandise
Or property committed to its or their charge. Any
and all words or clauses of such import inserted
in bills of lading or shipping receipts shall be null
and void and of no effect. Feb. 13, 1893, c. 105,
§ 1, 27 Stat. 445.
Accordingly, COGSA is without application in this case since
it is inconsistent with Section 1 of the Harter Act.
{2] Two decisions, Isthmian Steamship Co. v. California
Spray-Chemical Corp., 290 F.2d 486 (1961), on reargument, 300
F.2d 41 (9th Cir. 1962); and Caterpillar Overseas, S.A. v. S.S.
Expeditor, 318 F.2d 720 (2d Cir. 1963), are especially relevant
to an interpretation of the Harter Act. Although they arise from
facts dissimilar to those at bar, they establish principles which
ma'<e Clause 10 null and void and of no effect insofar as it purports
to relieve the defendant from responsibility for the loss to 4
plaintiff’s cargo after it was discharged at Genoa and was in transit
via Leghorn to San Croce Sull Arno.
In Isthmian Steamship Co. v. California Spray-Chemical
Corp., supra, 290 F.2d 486, libelant had shipped a quantity of
agricultural chemicals, known as cotton dust, from Houston, Texas
to Alexandria, Egypt on the Steel Architect owned by the
respondent. On arrival at Alexandria the cargo was discharged
9a
Appendix A
into lighters for on-carriage to the quays of the Egyptian Petroleum
Storage Company. The lighterage was made necessary by Egyptian
customs regulations which required that this commodity be landed
only at the ‘‘petroleum quays.’’ Because of the depth of its draft,
the Steel Architect could not come along side the petroleum quays
and further transportation was required. The cargo was put aboard
the lighters which left the ship and were moored along side the
quays. Before delivery of the cargo the lighter sank at her moorings
and the cotton dust was damaged by sea water. Libelant sued
in admiralty for damages. The cargo had been shipped under short
bills of lading which incorporated three ‘‘lighterage clauses.’’ These
were described at 290 F.2d at 488:
*‘These clauses provided that the carrier
should be considered to act solely as the consignee’s
agent to arrange for lightering in Alexandria’s
Harbor and to effect ‘delivery’ of the cargo by
discharging it into lighters.’’ (emphasis added)?
The District Court held tha. the lighterage clauses were invalid
to relieve the carrier of responsibility for negligence in the care
of the goods while they were being lightered from the ship to
the quays. Upon reargument the judgment of the lower court was
affirmed, as modified, in the original opinion.’ Isthmian Steamship
Co. v. California Spray-Chem Corp., supra, 300 F.2d 41. The
Court said that its earlier opinion rested essentially upon the
reasoning embodied in the trial court’s decision and chat both
decisions had held that a carrier could not by contract avoid
2. This is a summarization of the actual clauses set out in 290 F.2d at
488 n.1.
3. The modification is inconsequential and it is unnecessary to discuss it.
liability for negligent injury to cargo when such injury occurs
before the cargo is delivered to a fit and proper wharf. The Court
said:
10a
Appendix A
It would seem, then, that any attempt by the carrier
to avoid liability for losses arising before delivery
must fail. Once proper delivery has been made,
however, the carrier’s liability, as far as the Harter
Act is concerned, is at an end. It is, therefore
essential to determine what a proper delivery is,
and when such delivery is completed. The court
below and this court on appeal held that a proper
delivery as defined by general maritime law,
occurred when the cargo was deposited upon a fit
and proper wharf.
300 F.2d at 43 (emphasis in orginal). And further:
In the instant case, the negligence which
caused the loss occurred before such proper
delivery was accomplished. If, then, the bill of
lading clause involved here is sufficient to save
appellant harmless, the Act will have been
circumvented.
Id. at 46 (emphasis in original). And:
The court’s opinion did not hold, as appellant
seems to believe, that a carrier cannot contract for
authority to arrange for lightering of cargo at the
shipper’s expense; it held only that a carrier cannot
relieve itself of liability occurring during such
lightering or at any time before proper delivery.
Id. at 47.
lla
Appendix A
In Caterpillar Overseas, S.A. v. §.S. Expeditor, 318 F.2d
720, supra, the plaintiff shipped two tractors from New York
to Tripoli, Libya, on the defendant’s vesse!, the Expeditor. Because
the vessel’s draft was too deep for a berth at the port of Tripoli,
the ship anchored upon arrival in the Tripoli harbor. There the
tractors were transferred from the Expeditor to the deck of a steel
lighter which was secured by lines to the ship. After the tractors
had been placed on the deck of the lighter and chocked, the lighter
listed toward the ship and the two tractors were cast overboard.
They were subsequently raised and deposited on the quay in a
damaged condition.
The lighter had been hired and the stevedores empioyed by
W.E. Rippon & Sons, the agent for many years of the defendant.
The lighterage was billed to the consignee of the cargo, but, as
permitted by the bill of lading, the consignee was neither consulted
by the ship’s agent concerning the use of the lighter nor notified
of the arrival of the ship.
Plaintiff sued the American Export Lines for damages to
the cargo. The District Court denied recovery. The decision was
reversed and remanded upon appeal. Export Lines sought to escape
liability by setting up three exculpatory clauses in the bill of lading,
the net effect of which was to excuse the carrier from any liability
for loss or damage to the goods when they were not in its actual
custody, or when they had been discharged onto a wharf or lighter.
The exculpatory clauses relied upon were Clauses 1, 4 and 12 which
are quoted in 318 F.2d at 722 n. 1, as follows:
Clause 1: ‘The Carrier shall not be liable in any
capacity whatsoever for * * * loss of or damages
to the goods occurring while the goods are not in
the actual custody of the Carrier.’
12a
Appendix A
Clause 4: ‘When the goods are discharged from
the ship, as herein provided, they shall be at their
own risk and expense; such discharge shall
constitute complete delivery and performance
under this contract and the Carrier shall be freed
from any further responsibility.’
Clause 12: ‘All lighterage and use of craft in
discharging shall be at the risk and expense of the
goods.’
The Court said:
Under Section 1 of the Harter Act, therefore,
Clauses 1 and 12 of the present bill of lading, taken
by themselves, would appear to be void insofar
as they attempt to shift the risk of lighterage to
the goods.
Appellee relies primarily, however, upon
Clause 4 of its bill of lading which purports to
make delivery of the goods, and thus the
termination of the carrier’s statutory and
contractual liability, concurrent with discharge of
the cargo from the vessel, wherever that discharge
may take place:
(Hereinafter the Court quotes portions of Clause 4).
The purpose of the clause is apparent. By
equating ‘discharge’ with ‘delivery’ the carrier seeks
to eliminate the operation of the Harter Act upon
foreign trade. By fiat it seeks to secure immunity
l3a
Appendix A
from liability which no combination of mere
exculpatory clauses could achieve.’
Id. at 723 (emphasis in original).
The Court then said:
The Harter Act does not define ‘proper
delivery’.
and
It remains to be determined, therefore, whether
such a delivery may be accomplished by the mere
discharge of goods from the vessel, wherever that
discharge may take place.‘
Id. at 723.
The Court then said:
Here, however, the lightei was not selected by the
shipper nor by tiie consignee of the zoods but by
the carrier. Under these circumstances, a proper
delivery requires, at the very least, the selection
of, and the discharge of the goods onto a fit and
safe lighter.
4. Thereafter the Court noted that in the Isthmian Steamship case the Court
held that proper delivery under the Harter Act, in the absence of port customs
and regulations to the contrary, constituted delivery at a fit and customary wharf.
In Caterpillar the Court stated it was not required to determine whether proper
delivery under a port-to-port contract may only be made by discharge onto
a fit wharf. Jd. at 724.
l4a
Appendix A
This obligation, for the negligent performance of
which the carrier bears full responsibility, might
be found as an implied term of the bill of lading
before us; but insofar as the lighterage clauses have
been construed by both the parties and the Court
below so as to relieve the carrier of this duty, we
are constrained to hold the clauses null and void
under Section 1 of the Harter Act.’-
Id. at 724.
In sum, the Court held that under the Harter Act, Clauses
1, 4 and 12, to be invalid to relieve the defendant from the loss
which had occurred before delivery. See also Id. at 724 n.2.
Regardless of whether the bill of lading in the case at bar
is construed to require the defendant to deliver the cargo at San
Croce Sull Arno or only to Leghorn, the cargo loss occurred before
defendant had delivered the cargo at either place. The Jsthmian
Steamship and Caterpillar Overseas cases hold that when a contract
of carriage provides that the carrier shall deliver cargo at a
designated place, the Harter Act makes void any provisions in
the contract which purport to relieve the carrier from responsibility
for a loss which occurs prior to delivery. The bili of lading here
involved contained such exculpatory clauses. Though factually
distinguishable from the present case, the Jsthmian Steamship and
Caterpillar Overseas cases establish the principle which controls
the instant one.
The defendant relies upon Founder’s Insurance Co. v. Pacific
Far East Line, Inc., 1958 A.M.C. 901 (Cal. Super. 1958) and
5. Where a loss occurred before delivery an exculpatory clause is void under
the Harter Act and the carrier is liable without proof of negligence. Jd. at 725 n.3.
Wiel
1Sa
Appendix A
Bristol Myers Co. v. Steamship Pioneer Land, 1957 A.M.C. 50
(S.D.N.Y. 1956). Neither case refers to the Harter Act.
In the Founder’s Insurance Company case, plaintiff had
shipped cargo from Long Beach to Hong Kong on the Old Colony
Mariner owned by defendant and at Hong Kong it was
transshipped to Bombay, India by the Ucka, a vessel not owned
by the defendant. The port of discharge was stated to be Hong
Kong and there the defendant delivered the cargo to the Ucka.
The Court held that the defendant was not liable for goods
damaged while in the possession of the Ucka. It said,
This for the reason that the bill of lading excluded
any and all liability on the part of the defendant
if the damage or loss arose while the shipment was
not in the actual custody of the defendant carrier.
Such a limitation is permissible, as I read Section
7 of the Carriage of Goods by Sea Act of 1936
(46 U.S.Code, sec. 1307).
The decision is understandable since the point of discharge in
the bill of lading was Hong Kong where defendant had discharged
the cargo and delivered it to the Ucka.
In the Bristol Myers case no decision was referred to. It is
not necessary to distinguish Bristol Myers from the present case.
It was decided in 1956, prior to the decision in 1963 of Caterpillar
Overseas. Bristol Myers was decided by a District Court in the
Second Circuit whereas Caterpillar Overseas was decided by the
Court of Appeals and, of course, it is the controlling authority.
Defendant also claims that the action should be dismissed
under Clause 19 because of the failure of plaintiff to give notice
l6a
Appendix A
of the loss or damage in writing within three days of the delivery
of the cargo. Clause 19 provides:
19. NOTICE AND SUIT TIME:
Notice of loss or damage or any other claim
of whatsoever description and its general nature
must be given in writing to the carrier or its agent
at the port of discharge before or at the time of
the removal of the goods into the custody of the
person entitled to delivery; if the loss or damage
is not apparent, the notice must be given within
three days of the delivery. In any event, the carrier
and the vessel shall be discharged from liability
in any capacity unless suit is brought within one
year after delivery or, if the goods are not delivered
within one year after the date they should have
been delivered.
[3] The container and its contents were stolen from the
possession of the inland carrier on or about June 2, 1980, after
the container and its co.itents had arrived but before deliver in
Leghorn, Italy. (Aff. Benedetti, Doc. 10). On June 4, 1980,
plaintiff was officially informed by defendant that the container
was stolen. (45, Exh. D. attached to Plaintiff’s Brief, Doc. 14).
Defendant asserts in its brief that written notice required by Claiise
19 was not received until June 9, 1980, which was more than three
days after the date of the theft and hence the notice was untimely
and defendant’s motion for summary judgment should be granted.
The argument is rejected. The three day notice requirement
in Clause 19 has application only if the loss is not apparent. This
is what Clause 19 says. Obviously the theft was apparent because
17a
Appendix A
on June 4, 1980, plaintiff was officially informed by defendant
that the container was stolen. Furthermore, under the
circumstances, it would be inequitable to bar plaintiff’s claim.
See Delaware Steel Co. v. Calmar Steamship Corp., 378 F.2d
386 (3d Cir. 1967).
The motion of defendant for summary judgment will be
denied..
18a
APPENDIX B — DECISION AFTER TRIAL
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF DELAWARE
Civil Action No. 80-552 WKS
SKLUT HIDE AND FURS,
a Delaware Corporation,
Plaintiff,
PRUDENTIAL LINES, INC.,
a Delaware Corporation,
Defendant.
Kester I.H. Crosse, Esquire, Wilmington,
Delaware, attorney for plaintiff and Halley &
Chalos, New York, New York of counsel.
Richard H. Bayard, Esquire, of Bayard, Brill &
Handelman, P.A., Wilmington, Delaware,
attorney for defendant and F. W. Meeker, Esquire,
of Prudential Lines, Inc., New York, New York,
of counsel.
MEMORANDUM OPINION
Wilmington, Delaware
December 23, 1983
STAPLETON, District Judge:
19a
Appendix B
In this admiralty case,' plaintiff Sklut Hide and Fur Company
(Sklut) has sued Prudential Lines, Inc. (Prudential), an ocean
carrier, for the value of certain goods shipped on Prudential’s
vessel the S.S. Lash Atlantico. Sklut alleged that the goods were
delivered to Prudential in New York for shipment to San Croce
Sull Arno, Italy, via the Italian port of Leghorn. Sklut charged
that its consignee never received the goods. Prudential, for its
part, says the goods were stolen in Leghorn. This theft precludes
any finding that Prudential is liable for Sklut’s loss, Prudential
says. The parties tried the case and submitted post-trial briefing.
This opinion constitutes my findings of fact and conclusions of
law.
The Facts
In the latter part of March, 1980, Sklut shipped four hundred
bundles of wet salted cattle hides to San Croce Sull Arno, a town
in Italy. The hides were to be shipped to the port of Leghorn
and then carried overland to San Croce Sull Arno. Sklut contracted
with Prudential for house to house shipping (i.e., Prudential was
to handle the transportation of the hides from its terminal in New
York to their destination in San Croce Sull Arno, including the
_ overland portion of the journey).
The hides were in four hundred bundles. Each bundle
measured approximately eighteen inches by twelve inches by eight
inches. Morton Sklut, Sklut’s president, testified that when bundles
of hides are shipped without some kind of large container for
all of them, Sklut wraps each individual bundle. Even though
these hides were wet and quite odiferous Sklut did not wrap each
bundle. Instead, the bundles were placed in a large metal
1. Plaintiff invokes the Court’s jurisdiction pursuant to 28 U.S.C. § 1333.
20a
Appendix B
freight container measuring some twenty feet in length. Prudential
supplied the container to Sklut. After the bundles of hides were
loaded into it, the container was taken by truck to Prudential
at the 39th Street pier in Brooklyn. The container was loaded
onto Prudential’s ship the S.S. Lash Atlantico. Prudential issued
a bill of lading for the container dated March 28, 1980. The face
of the bill identified Sklut as the shipper, New York as the place
of loading, the S.S. Lash Atiantico as the ship, and Leghorn as
the place of discharge. Under ‘‘PARTICULARS FURNISHED
BY SHIPPER’”’ the following appeared:
SHIPPER’S GROSS
MARKS NO. DESCRIPTION OF WEIGHT
AND OF PACKAGES KILOS
NUMBERS PKGS. AND GOODS POUNDS
CONTAINER 1 (20°) CONTAINER S.T.C.: 25000#
NO. 400 BUNDLES: (11340-KILOS)
13CU-366-368-5 WET SALTED
CATTLEHIDES
CLEAN ON BOARD - FREIGHT PREPAID
BEYOND CHARGES TO SAN CROCE SULL ARNO
PREPAID HOUSE TO HOUSE CONTAINER SERVICE
When the Lash Atlantico eventually reached Italy on April ’
29, 1980, it did not dock in Leghorn, as scheduled. It put in instead
2t Genoa, which lies some distance to the north of Leghorn up
Italy’s western coast. Prudential proferred no explanation for this
change. Prudential unloaded the container in Genoa, and delivered
it to a trucker for overland shipment from Genoa to San Croce
Sull Arno.
2la
Appendix B
The hides never reached their appointed destination. While
the truck sat parked in Leghorn on June J}, 1980, thieves took
both the truck and the container carrying the hides. The Italian
police recovered the truck and the container on June 11, 1980.
The container was empty; the hides were never recovered.
Sklut proffered an invoice showing its loss to be $23,550.00
for the cost of the hides: $165.00 for inland freight, $1,538.57
for ocean freight, and gross profit margin of $3,788.04, for a
total of $29,041.61. Sklut seeks recovery of this entire amount.
Prudential’s lone witness was Mr. Henry O’Shaugnessy of
its Claims Department. Notwithstanding the fact that
O’Shaugnessy began working for Prudential in April of 1982,
Prudential attempted to offer his testimony to show what happened
to the hides. Sk!ut objected to his so testifying. He also testified
that Italian customs practices required the goods be brought to
their original destination to clear customs when they have been
unloaded somewhere else. O’Shaugnessy’s testimony as to
everything except Italian customs practices was stricken under Rule
602 of the Federal Rules of Evidence. Prudential also produced
a translation of an Italian police report on the theft, which read
as follows:
LIVORNO POLICE HEADQUARTERS
MOBILE SQUADRON
CERTIFICATE
At the request of the interested parties and for
the uses in order, it is certified that on June 11,
1980, the articulated vehicle Fiat 690, license plate
LI 232195 and trailer, license plate GF 16502,
object of the theft report lodged on June 1, 1980
22a
Appendix B
by DELLA PIETRA Giorgio, born in Liveri (NS)
on October 23, 1936, and residing in Livorno at
No. 160, S. Carlo Street, was recovered by the
Police Officers of the Calcinaia (PI) Station,
abandonea in the parking lot of the “‘LA
TORETTA WHITE’’ complex, located in
Calcinaia, State Highway No. 439, and that at the
time of recovery it still carried on board the
container emptied of its load. Livorno, on
September 14, 1983.
for THE CHIEF CONSTABLE
/sgd/
This report and its translation were admitted into evidence
pursuant to a stipulation of the parties. The evidence thus shows
that Sklut delivered the container to Prudential, that the Atlantico
went to Genoa instead of Leghorn, that the container was never
received, and that this damaged Sklut in the amount of $29,041.61.
It also shows that the container was stolen in Leghorn. Sklut argues
that under the governing law, it has proven, and Prudential has
failed to rebut, its prima facie case. It also. contends that
Prudential’s deviation to Genoa made Prudential into an insurer
of the safety of the cargo, and that Prudential is therefore
absolutely liable to it for the loss of the hides. Prudential contends
that the fact that the loss was due to theft effectively absolves
it from any finding of negligence and rebuts Sklut’s prima facie
case. It also argues that the deviation did not cause the loss and
is therefore irrelevar.t to the case. Finally, Prudential contends
that even if it is liable to Sklut, its liability is limited to $500 under
the terms of the bill of lading.
23a
Appendix B
The Law
Sklut and Prudential agree that Sklut has established a prima facie
case on the issue of liability by showing that it delivered the hides
to Prudential and that Prudential did not deliver them to Sklut’s
consignee in Italy. Defendant’s Post Trial Opening Brief at 8;
Plaintiff’s Post Trial Opening Brief at 2-3. They also agree that
in the absence of liability based on deviation, Prudential cannot
be held liable for Sklut’s loss if the evidence indicates that the
loss occurred without negligence on Prudential’s part. Defendant’s
Brief, supra, at 8-9; Plaintiff’s Brief, supra, at 3-4. Beyond these
two points of agreement, Sklut and Prudential part company.
A. Deviation
Sklut argues that Prudential’s deviation to Genoa made it
an insurer of the cargo. Once the carrier deviates, Sklut asserts
defenses set forth in the bill of lading and/or the Carriage of
Goods by Sea Act (COGSA) vanish, and the carrier becomes
absolutely liable for any loss the cargo suffers. While it is true
as a general proposition that an unreasonable deviation may
deprive a carrier of its defenses,’ and while I assume for present
purposes that Prudential’s deviation has been shown to be
unreasonabie,’ I nevertheless could not agree that Prudential’s
deviation renderd it liable for Sklut’s loss. A carrier is not liable,
even in the case of an unreasonable deviation, for any loss or
2. General Electric Co. International Sales Division v. $S.S. Nancy Lykes,
706, F.2d 80, 86-88 (2d Cir. 1983).
3. Under COGSA, a deviation for the purpose of loading or unloading
cargo or passengers is regarded as prima facie unreasonable. 46 U.S.C. § 1304(4);
see General Electric v. Nancy Lykes, supra note 2, at 85-86.
24a
Appendix B
damage other that that resulting from the deviation. C. Black
and G. Gilmore, The Law of Admiralty 180 (2d ed. 1975). See
also General Electric v. Nancy Lykes, supra note 2, at 86-88. The
evidence in this case shows that the theft occurred at Leghorn,
the cargo’s original off-loading point. If the deviation had not
occurred, the hides would have been off-loaded onto a truck at
Leghorn anyway. Thus, the deviation was complete before the
theft. There is no reason to think that the circumstances of the
loss would have been any different had the Lash Atlantico gone
to Leghorn instead of Genoa. As such, the deviation did not cause
Sklut’s loss, and I reject Sklut’s deviation argument. ©
B. Liability Based on Negligence
As noted above, the parties agree that Sklut proved a prima
facie case by showing delivery of the hides to Prudential and
Prudential’s failure to deliver the hides to Sklut’s consignee. They
also agree that, as a result, Prudential has the burden of producing
evidence which, if believed, would support an inference that the
loss occurred without fault on its part.‘ I conclude that it has
not carried that burden.
Prudential’s evidence tends to show that the hides, along with
the freight container and the truck, were stolen by a third party.
It does not tell us anything about the circumstances of the theft
and the conduct of the carrier leading up to the theft. While the
evidence of the involvement of a third party tends to rebut
4. The parties have not addressed the issue of whether a shipper or the
carrier has the ultimate burden of persuasion with respect to carrier negligence
and I agree that the issue need not be resolved here because of Prudential’s
failure to carry its burden of going forward with evidence.
25a
Appendix B
the rather strong inference of carrier fault which arises when the
shipper’s evidence indicates possession by the carrier and non-
delivery, the evidence of theft will not alone permit a reasonable
fact finder to conclude that the theft occurred without carrier
negligence. In short, some thefts of goods occur with carrier
negligence, others without, and the evidence produced by
Prudential simply does not permit one to do more than guess
into which of these categories this case falls. Since Prudential
has failed to meet its burden of going forward with evidence of
a want of fault, the issue of liability must be resolved in Sklut’s
favor.
C. Amount of Damages
A final question remains. For how much is Prudentiai liable
to Sklut? Prudential argues that if it is liable for the loss, its liability
is limited to $500.00 under clause 17 of the bill of lading. That
clause reads as follows:
In case of any loss or damage to or in connection
with goods exceeding in actual value of $500,
lawful money of the United States, per package,
or, in case of goods not shipped in packages, per
customary freight unit, the value of the goods shall
be deemed to be $500 per package or per customary
freight unit, on which basis the freight is adjusted
and the carrier’s liability, if any, in any capacity
shall be determined on a value of $500 per package
or per customary freight unit, unless the nature
of the goods and a valuation higher than $500 shall
have been declared in writing by the shipper upon
delivery to the carrier and inserted in this bill of
lading and extra value paid if required and in such
26a
Appendix B
case if the actual value of the goods per package
or per customary freight unit shall exceed such
declared, value and the carrier’s liability, if any,
in any capacity shall not exceed the declared value.
Whenever less than $500 per package of other
freight unit, the value of the goods in the
calcuiation and adjustment of claims shall, to avoid
uncertainties and difficulties in fixing value, be
deemed to be the invoice value plus freight and
imsurance paid, whether any other value be higher
or lower. It is agreed that the meaning of the word
‘‘package’’ includes a container, van, trailer, pallet-
unit, animal, piece, article or thing constituting
or containing goods shipped hereunder excep?
goods shipped in bulk.
Prudential points out that under number of packages, in the bill
of lading, Sklut listed ‘‘1.’’ Supra at 2. Further, the bill shows
no valuation of the goods higher than $500.00. Prudential thus
argues that its liability is limited to $500.00. For its part, Sklut
ignores clause 17 and focuses instead on section 1304(5) of COGSA
and interpreting cases. Section 1304(5) reads in relevant part as
follows:
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
27a
Appendix B
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.
Sklut contends that under section 1304(5), each one of the four
hundred bundles constitutes a package rather than the one
container. As such, Sklut contends that it may claim damages
of up to $500.00 per bundle, and Prudential is therefore liable
to Sklut for the full amount of its claim.
Sklut correctly asserts that if COGSA applied, each bundle
of hides would constitute a package, notwithstanding their
shipment inside the container without wrappers, and that the
parties would have been powerless to contract for a result less
favorable to the shipper. See Mitsui and Co. v. American Export
Lines, 636 F.2d 807 (2d Cir. 1981). COGSA applies by its own
terms, however, only to losses occurring between the loading of
the cargo onto the vessel and discharge of the cargo from the
vessel. While Sklut and Prudential agreed in the bill of lading
that the provisions of COGSA would have wider application, they
also contracted that those provisions would not apply when the
shipment was not in Prudential’s custody. Clause 2 of the bill
of lading states, in relevant part:
The provisions of COGSA...are hereby
incorporated herein and shall apply throughout
the entire time the goods are in the carrier’s
custody, including periods of the carrier’s custody,
if any, before loading on or discharge from
the LASH barge or other carrying vessel. The
carrier shall not be liable in any capacity for
any delay, non-delivery, loss or damage occurring
28a
Appendix B
while the goods are not in its actual custody.°*
In Smythgreyhound v. M/V “‘Eurygenes’’, 666 F.2d 746 (2d
Cir. 1981), the Court faced the question whether the cartons
holding stereo equipment or the containers in which the cartons
were placed for shipment were the relevant packages for purposes
of COGSA’s $500.00 per package limitation. While the Court
ultimately held that COGSA applied and that the cartons—not
the shipping container—were the packages for purposes of the
limitation, it considered an argument similar to the one Prudential
raises here.
Appellants argue that...we should look to the intent
of the parties to establish the meaning of the term
5. See also Clause 10 of the bill of lading, ‘‘Transshipment,’’ which stated
in relevant part:
Whenever the carrier or the Master may deem it advisable
or in any case where the goods are consigned to a point where
the vessel is not expected to discharge, the carrier or Master
may, without notice, forward the goods or any part of the
goods, before or after loading at the original or any
intermediate port of shipment, or at any other place or places,
even though outside the scope of the voyage or the route to
or beyond the port of discharge or the destination of the
goods, by any vessel, vessels, or other means of transportation
by water, land or air, or by any such means, whether operated
by the carrier or by others and wheth-r departing or arriving,
or scheduled to depart or arrive before or after the ship
expected to be used for the transportation of the goods. The
carrier, in making any arrangements for transshipment by
any means of transportation not operated by it, shall be
deemed the forwarding agent of the shipper and consignee
without any responsibility whatsoever.
29a
Appendix B
**package.’’ Our attention is directed to Pannell
v. United States Lines Co., 263 F.2d 497 (2d Cir.
1959), which held that ‘‘when COGSA does not
apply ex proprio vigore, effect should be given to
the parties’ definition of package even if it is
contrary to that which would control if COGSA
were directly applicable. [citation omitted]
Were this a case where the parties had defined
what ‘‘package’’ means in the bill of lading, we
would find [the carrier’s] argument persuasive.
Id. at 751. Since the bill of lading did not supply a definition
of package, the Court looked to COSGA and the Mitsui case.
The contract between Sklut and Prudential does define
package. As clause 17 of the bill of lading says, Sklut and
Prudential agreed that ‘‘the meaning of the word ‘package’
includes a container, van, trailer, pallet-unit, piece, article or thing
constituting or containing goods shipped hereunder.”’ I cannot
avoid the conclusion that the container into which Sklut placed
the hides for shipment and which Sklut listed as one package on
the bill of lading constitutes the package for the purpose of clause
17. Parties to a contract may agree that the container will be the
package, where COGSA does not apply. See Smythgreyhound,
supra.
Conclusion
For the reasons stated above, I conclude that Prudential has
failed to rebut Sklut’s prima facie case by producing evidence
that the loss of the hides was not due to Prudential’s negligence.
I find Prudential liable to Sklut, but only in the amount of $500.00.
30a
APPENDIX C - ORDER OF THIRD CIRCUIT
UNITED STATES COURT OF APPEALS FOR THE THIRD
CIRCUIT
Nos. 84-5209 and 84-5239
SKLUT HIDE AND FURS
VS.
PRUDENTIAL LINES, INC.
Sklut Hide and Furs,
a Corporation of the
State of Delaware,
Appellant in 84-5209
and
SKLUT HIDE AND FURS
vs.
PRUDENTIAL LINES, INC.,
Appellant in 84-5239
3la
Appendix C
Appeal From the United States District Court
For the District of Delaware
D.C. Civil No. 80-0552
District Judge: Honorable Walter K. Stapleton
Submitted Under Third Circuit Rule 12(6) January 16, 1985
Before: HUNTER, HIGGINBOTHAM, Circuit Judges, and
KELLY,* District Judge
JUDGMENT ORDER
After consideration of all contentions raised by appellants,
it is
ADJUDGED AND ORDERED that the judgment of the
district court be and is hereby affirmed.
Costs taxed against appellants.
*Honorable James McGirr Kelly, United States District Judge
for the Eastern District of Pennsylvania, sitting by designation
32a
Appendix C
BY THE COURT,
s/ James Hunter ‘
JAMES HUNTER, III, Circuit
Judge
Attest:
s/Sally Mrors
Clerk
Dated: Jan 29 1985
33a
APPENDIX D — ORDER OF THIRD CIRCUIT
UNITED STATES COURT OF APPEALS FOR THE THIRD
CIRCUIT
Nos. 84-5209 and 84-5239
SKLUT HIDE AND FURS
VS.
PRUDENTIAL LINES, INC.
Sklut Hide and Furs,
a Corporation of
the State of Delaware,
Appellant in 84-5209
and
SKLUT HIDE AND FURS
vs.
PRUDENTIAL LINES, INC.,
Appellant in 84-5239
SUR PETITION FOR REHEARING
Present: ALDISERT, Chief Judge, SEITZ, ADAMS, GIBBONS,
HUNTER, WEIS, GARTH, HIGGINBOTHAM, SLOVITER
and BECKER, Circuit Judges
34a
Appendix D
The petition for rehearing filed by
SKLUT HIDE AND FURS
in the above entitled case having been submitted to the judges
who participated in the decision of this court and to all the other
available circuit judges of the circuit in regular active service, and
no judge who concurred in the decision havirg asked for rehearing,
and a majority of the circuit judges of the circuit in reguiar active
service not having voted for rehearing by the court in banc, the
petition for rehearing is denied.
By the Court,
s/ James Hunter
Judge
Dated: February 26, 1985
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