Petition for Writ of Certiorari — Pauling v. Misevic

Office-Supreme Court, U.S.

FILED

MAR 2 1965

JOHN F. DAVIS, CLERK

In the Supreme Court of ihe

United States

OcroBerR TERM 1964

No. y 45

Strares STEAMSHIP Co., a Corp.,

Petitioner

VS.

‘ > 1 ‘ (

AMERICAN SMELTING & REFINING Co.,a Corp.,

Respondent

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

Graypon S. STARING

$11 California Street

San Franciseo, California 94104

Attorney for Appellant

Linuick, GEARY, WHEAT, ADAMS & CHARLES

GILBERT C, WHEAT

fH. DonaLp Harris, Jr.

511 California Street

San Franeiseo, California 94104

Of Counsel

SORG PRINTING COMPANY OF CALIFORNIA, 180 FIRST STREET, SAN FRANCISCO 5

SUBJECT INDEX

Pace

Opinion Below .0..00.00..0000..... EN LOE See SARIS is OR AERC SAO Bohne

I ccactre a he es eo eae

Gk os RNRNS fats <A DAE Re a rp oA END RE ERIC z

Provisions of Constitution, Treaty and Statute Involved... 3

Statement of the Case.. ssoseeneetaessteeneeeeeeecceeteneennesnneeny sey apieesenusansea +

rE a eo DERE IE ne ae peces 6

ee See OP CE ee 6

Bee ee nn en ea nie 3 7

RUIN Sl soe cnt a a nde cs igs ed ee 10

TABLE OF AUTHORITIES CITED

CASES Pages

Corporation of the Royal Exchange Assurance vy. United

States, 75 F. 2d 478, 1935 A.M.C. 278 (2d Cir. 1935)... ... Biv

Il. Herfurth v. Acker, 177 F. 2d 38 (D.C. Cir. 149) 0000... 8. 9, 10

Gelwerke Tuetonia v. Erlanger, 248 U.S. 521, 68 L. ed. 399.

BD B, Cr. BBD CIDID) .nnccevcccveccescesceceseccccencsccsosnssecencnnsneceneasesceseceres 8,9

The Sabine (1879) 101 U.S. 384, 25 L. ed. 982.0... s

Wileox v. Plummer, + Pet. (29 U.S.) 172, 7 L. ed. 821 (18380) 8, 10

STATUTES

Carriage of Goods by Sea Act, 1936:

46 U.S.C. 1800-1315, 49 Stat. 1207-1213................ Cited throughout

46 U.S.C. 1903(6) 49 Stat. 1206....................0.-..-.200....--- wnincty 8

28 U.S.C.:

§ 1251(1), G2 Stat. 928... ecececceeereeeeesneeeeesneneees phenom aS z

§ 1333, G3 Stat. LOD. eceeecesceeesesessesensneeceaseneneseenenessenensenens 2

CONSTITUTION

Constitution of the United States:

Re Pn I 2 snnensinnaevaenalodteesieneiovipeaehestanbentonse a

Art, VI, pete. Bo nceccnnnces.-ncecec-seesncceosececenneoseneeseeressancessccsneseeeateseseves 3

TEXTS

British Shipping Laws, 1963, Vols. 2 and 3 pp. 1291.0... b

Imiernational Convention for the Unitication of Certain Rules

of Law Relating to Bills of Lading; Brussels August 15,

1924, 51 Stat. 233, U. S. Treaty Series No. 951.................... 2, 3, 5,

Norris, Law of Salvage, (1958) § 300.0... ee. Reaehak 8,9

In the Supreme Court of the

United States

Ocroser TERM 1964

No.

States STEAMSHIP Co., a Corp.,

Petitioner

*'S.

AMERICAN SMELTING & Rerinine Co., a Corp.,

Respondent

Petition for Writ of Certiorari to the

United States Court of Appeals

for the Ninth Circuit

Petitioner prays for a Writ of Certiorari to review the

judgment of th: United States Court of Appeals for the

Ninth Cireuit entered in the above entitled case.

OPINION BELOW

The Findings at Fact, Conclusions of Law and Decree of

the United States District Court for the Northern District

of California, Southern Division are not reported but are

printed at Record, Volume 1, pp. 24-20.

2

The opinion of the United States Court of Appeals for

the Ninth Cireuit in this matter is reported at 539 F. 2d

6 (9th Cir. 1964); a copy is appended hereto as Appendix

A.

JURISDICTION

The United States District Court for the Northern Dis-

trict of California, Southern Division has jurisdiction of

this admiralty matter under the United States Constitution

Article [tl See. 2 and under the statute implementing that

provision of the Constitution, 28 U.S.C. § 1533, 63 Stat. LOL.

The judgment sought to be reviewed was filed and re-

corded in United States Court of Appeals on December 4,

1964. No requests or orders concerning rehearing or exten-

sion of time within which to petition for certiorari have

been mace.

Jurisdiction of the Supreme Court of the United States

of America to review the judgment in question is granted

by 28 U.S.C. 1254(1) 62 Stat. 928. £9 days have not expired.

QUESTIONS PRESENTED

The immediate issue is whether this Court will correct

a novel and erroneous construction of a United States

Treaty the provisions of which are repeated in a federal

admiralty statute and are of paramount importance to the

carriage of goods by sea in foreign commerce.

The treaty involved is known as the Brussels Convention

of 1924.) The statute is the Carriage of Goods by Sea Act,

1936 (herein “COGSA”).? The collateral question involved

is the construction of COGSA See. 3(6).*

1. International Convention for the Unification of Certain Rules

of Law relating to Bills of Lading; Brussels August 15, 1924, 51

Stat. 233. U.S. Treaty Series No. 931.

2. 46 U.S.C. § 1800-1315, 49 Stat. 1207-12138.

3. 46 U.S.C. 1303(6), 49 Stat. 1208.

3

PROVISIONS OF CONSTITUTION, TREATY

AND STATUTE INVOLYED

The provisions of the Constitution, involved in this case

are as follows:

“This Constitution, and the laws of the United States

which shall be made in Pursuance thereof; and all

Treaties made or which shall be made, under the Au-

thority of the United States shall be the supreme Law

of the Land.” U.S. Const. Art. V1, para. 2.

“The judicial Power shall extend to all Cases, in Law

and Kyuity, arising under this Constitution, the laws

of the United States, and Treaties made, or which shall

be made under their Authority ...—to all Cases of

admiralty and maritime jurisdiction; ...” U.S. Const.

art. 3 § 2.

The provision of the United States Treaty involved is as

follows.

“In any event the carrier and the ship shall be dis-

charged from al! liability in respect of loss or damage

unless suit is brought within one vear after delivery

of the goods or the date when the goods snould have

been delivered.”

International Conveniion for the Unification of Certain

Rules of Law relating to Bills of Lading; Brussels

Aug. 15, 1924 Art. 3(6), 51 Stat. 250, para. 4; U.S.

Treaty Series No. 931.

The provision of the United States Statute involved is

as follows:

“In any event the earrier and the ship shall be dis-

charged from all liability in respect of loss or damage

unless suit is brought within one vear after delivery

of the goods or the date when the goods should have

been delivered... 46 U.S.C. 1305(6), para. 4; 49 Stat.

1208.

4

STATEMENT OF THE CASE

All tacts have been agreed upon by formal stipulation,

(R-1-17-24) and may be summarized as follows:

Petitioner, States Steampship Company (“Shipowner”),

and Respondent, American Smelting & Refining Co., ( “Ship-

per”), entered into a contract of affreightiment under which

shipowner undertook to and did transport a shipload of

ore owned by Shipper from Poro, Philippine Islands, to

Tacoma, Washington. (R-1-22, 23).

The contract of affreightment is evidenced by a vill of

lading which expressly incorporates the provisions of

COGSA (R-1-22 and R-L1-2).

When the goods were laden, the vessel was not properly

prepared to receive them. The vessel was, therefore “un-

seaworthy” and Shipowner thereby violated its contract of

affreightment. (H-]-22-23).

By virtue of this unseaworthy condition the vessel took

a serious list shortly after departure from the ioading

port and was required to put into a port of refuge. Salvors

remedied the unseaworthy condition. (R-I-22). Thereafter

the vessel proceeded to Tacoma, its destination, where the

ods were delivered on February 11, 1957, (R-1-23).

Upon svecesstul performance of the salvage operations

both the Shipowner and Shipper became independently and

lirecily cbligated te saivors for their respective shares of

the salvage services.

Prior to arrival of the vessel at Tacoma, and prior te

actual delivery of the goods, Shipper was inte .med of the

facts of the salvage operations and the lien thereby created

against the eargo. In order to obtain delivery of the goods

free from such lien, Shipper executed an agreement under

whieh it guaranteed to pay its share of the salvage expense,

(R-1-23 and R-11-16).

5

Thus by virtue of Skipowner’s breach of its contract of

affreightiment Shipper was damaged in the amount of its

salvage obligation. In this suit Shipper seeks to recover for

that damage. Shipper’s suit was not commenced until

March 16, 1959, two vears and one month after delivery of

the cargo. (R-1-23).

As & complete bar to the action Shipowner has asserted

the statute of limitations contained in COGSA and in the

Brussels Convention of 1924. The COGSA provision which

establishes the time limit for commencing suit by a shipper

against a carrier for loss or damage reads as follows:

“In any event the carrier and the ship shall be dis-

charged from all liability in respect of loss or damage

unless suit is brought within one vear after delivery of

the zoods or the date when the goods should have been

delivered. ...” 46 U.S.C. 1303(6) para. 4, 49 Stat. 1208.

That portion of the Brussels’ Convention which limits the

time a shipper may commence suit for loss or damage is

identical with the quoted COGSA provision. Brussels Con-

vention £ 3(6) 51 Stat. 250.

It is conceded that this suit was not commenced within

tle time specified in the statutc and treaty.

To avoid the limitation period prescribed by statute and

by treaty, Shipper has labeled its cause of action one for

“indemnity”. In other words Shipper, in effect, has said,

“Shipowner has broken its contract of affreightment ard has

caused me damage, but since a suit for loss or damage is

time barred 1 designate the action one for ‘indemnity’ and,

on this basis. seek recovery of the amount of my loss.” Ship-

owner, in effect, has said: “Regardless of labels, the grava-

men of Shipper's complaint is that we have violated our

contract of affreightment. A breach of the affreightiment is

conceded and we concede the Shipper has sustained loss and

6

damage, but, because of Shipper’s delay im asserting the

claim, the cause of action is barred.”

Shipper urges that liquidation of the precise amount of

Shipper’s obligation to the salvor was accomplished by arbi-

tration and, although this suit was not commenced within

one vear of dejivery as required by COGSA, it was com-

menced within one vear of the arbitration award and within

one vear of Shipper’s payment to salvors. Shipowner an-

swers this by pointing out that Shipper’s obligation to sal-

vors arose upon the successful performance of the salvage

services; that Shipper sustained loss and damage as soon

as it became obligated to salvors: that Shipper thereupon

had a perfected cause of action against Shipowner; that

these faets all oceurred prior to delivery of the goods and

consequently Shipper’s cause of action accrued prior to

delivery of the goods: that the accrual of a cause of action

and the rignt t. sue thereon are not dependent upon final

determination or liquidation of the amount of one’s dam-

ages and that a statute of limitations is not tolled while

the precise amount of damages is being ascertained.

ARGUMENT

A. Importance of the Issue

‘

Certiorari should be granted because :

1. The statute in question was enacted by “ongress in

conformity with an International Convention entered into

by the leading maritime nations of the world#

The United States, as a leading exponent of this type

of international law, should be particularly careful te avoid

mination of an improper construction of that law.

2. The decision results in a novel, unique and erroneous

4. British Shipping Laws, 1963, Vols. 2 and 3 pp. 1291, 1305-

1305, 1321-1522, 1327.

Ayenttcamen ¢ mer racntenvenRD ASE?

ON RR OER nO tr nn mE ye ee fate comme egy) RE en omen

1 2 AES GEES RTE | SN

ate armeren

7

construction of a federal statute and a United States

treaty.

After nearly thirty years of experience with this statute

the maritime industry is, for ihe first time, presented with

a construction which renders ncertain the time for litigat-

ing claims arising out of the contract of affreightment.

3. The Aecision places an interpretati’ . on the statute

and treats which endorses and invites future litigation

inconsistent with the underlying policy of the statute and

of the treaty in that:

(a) the decision introduces uncertainty whereas the un-

derlying policy sought to achieve certainty in the handling

of maritime claims ;°

(b) the decision threatens diverse interpretations of

treaty and statutory provisions, whereas the underlying

policy of the treaty and of the statute was to promote

uniformity.”

4. The substantial federal question presented has not

been decided Ly this Court.

B. The Error Below

The kev question is: When did Shipper’s cause of action

arise?

The Court of Appeals decision reaches its conclusion by

assuming the answer. The decision states that Shipper’s

cause of action first arose when payment was made by

Shipper to the salvors: that payment could not be made

until the amount due was liquidated by the arbitration:

that the arbitration award was not made until after the

statutory one year limitation period had elapsed: that

sinee the law will not be construed to bar a cause of action

5. Preamble, Brussels Convention, 51 Stat. 233.

8

before it arises, the COGSA limitation period does not

apply to the case.

This conclusion is based upon a false premise. It is

erroneously assumed that Shipper’s cause of action did not

accrue until the amount of Shipper’s salvage obligation

was liquidated by the arbitration or was actually paid.

Shipowner does not seek a rule which would bar a cause

of action before it accrued. On the other hand Shipowner

points out that Shipper’s cause of action accrued not only

prior to determination of the amount due but actually

prior to delivery of the goods to, Shipper.

Once the salvage services were successfully performed the

cargo and Shipper then and there became obligated to ~al-

vors for cargo’s share of the salvage expense.® By accrual of

this obligation Shipper then sustained the detriment which

constituted Shipper’s loss and damage. Shipper then had a

cause of action against hipowner to recover for that

damage.’ The accrual of that cause of action was long

prior to the expiration of the statutory one vear period.

In fact the cause of action accrued prior to the commence-

ment of the one year period since the statute fixes the date

of delivery as the starting point for the one vear period.

It follows that anv apprehension that Shipper might he

barred before its cause of action aecrued is purely hypo-

thetical and fanciful. If a state of facts could arise where

6. Oclworke Tuetonia v. Erlenger, 248 U.S, 521, 63 L. ed. 399,

39S. Ct. 180 (1919); The Sabine (1879) 101 U.S. 384, 25 Lied. 982;

Norris Law of Salvage (1958) § 20.

i. Wileor v. Plummer, 4 Pet. (29 U.S.) 172, 7 L. ed. 821 (1830) ;

Corporation of the Roval Exchange Assurance v. United States,

75 F. 2d 478, 19385 A M.C. 278 (2d Cir. 1935); H. Herfurth v.

Acker, 177 F. 2d 38 (D.C. Cir. 1949).

s. Carrmage of Goods by Sea Act, 1936, Sec. 3(6), 46 USC.

1303 (6), 49 Stat. 120s.

9

the cause of action would not acerue until this limitation

period had expired, we would expect the Court to protect

the Shipper. But this is not such a case; nor has such a

case been brought to our attention.

It is frequently helpful to consider the converse situa-

tion: suppose the Shipper had sued Shipowner whiie the

arbitration proceedings were pending, but during the one

year period following delivery. if Shinper’s cause of action

had not then acerued, Shipp or’. suit wonld have been pre-

mature and a motion to dismiss would he. We know of no

case so holding.®

To support Shipowner’s contention that Shipper was

damaged and its cause of action accrued before delivery,

we urge the following:

Salvors’ claim is not one against the Shipowner onty. It

is a separate and independent claim against Shipper for

Shipper’s share of the salvage services based upon the

value of the cargo salved.’” Salvor also nas a separate and

independent claim against Shipowner for Shipowner’s share

of the salvage services based upon the value of the vessel.

Salvors’ claim became perfected when the salvage serv-

ices were successfully accomplished.”

From the above it follows that Shipper became obligated

to salvors before the gvods were delivered to Shipper.

The fact that the amount of Shipper’s loss was not de-

termined or liquidated until the arbitration was concluded

is immaterial. It is not essential to the accrual of a cause

of action that the amount of loss be known. The cause of

action accrues when the fact of loss first arises. The lo

9. Cf. Herfurth v. Acker, supra note 7.

10. Oclwerke Tuetonia v. Erlanger, supra; R-11-13.

11. Norris. Law of Salvage (1958), § 300.

10

had occurred when Shipper became obiigated to salvor.

Liquidation of damages is not a condition precedent to the

accrual of a cause of action.’

No equitable issue is involved based upon any lack of

knowledge of the situation on the part of the Shipper. The

performance of the salvage services in the Philippine Is-

lands imposed a lien against the goods in favor of salvors.

Shipper not only knew of that lien before the goods were

delivered at Tacoma, but, in order to obtain the goods

free from that lien, actually posted a guarantee, prior to

delive:v conditioned upon payment of the amount to be

awarded salvors.”’

The fact that the damage involved is measured by a pay-

ment to a third party is immaterial. This device has been

attempted. It has been rejected.* The contract here ex-

pressly incorporates its own statute of limitations. This

condition has not been met by Shipper.

CONCLUSION

The clear meaning of a statute should not be nullified

hy resort to semantic legerdemain. This applies a priori

to a treaty,

The poliey of the United States and the other maritime

nations to achieve uniformity and certainty should sot be

thwarted.

If the reasonable discipline imposed by this statute is to

be ignored in the United States for the benefit of dilatory

shippers, we respectfully submit that our foreign confreres

12. Wileor v. Plummer, supra; Corporation of the Royal Evr-

change Assurance v. U. S., supra; Herfurth v. Aeher, supra, note 7.

18. R-I1-16.

l4. Herfurth v. Acker, supra, note 7.

11

should be so advised by an authority of no less dignity

than this Court.

Dated: March 1, 1965

Respectfully subraitted,

Linuick, Geary, WHEAT, ADAMS & CHARLES

By Givpert C. WHEAT

GRAYDON S. STARING

H. Jionaup Harris, JR.

CERTIFICATE OF SERVICE

Service of the within Petition for Certiorari was made

upon counsel for Respondent in the following manner :

By delivering five copies thereof on March ........ , 1965 te

the offices of Hall, Henry, Olivery & McReavy, 351 Cali-

fornia Street, San Francisco, California, and by mailing,

air mail, two copies thereof on March _...... , 1965, to Sym-

mers, Fish & Warner, attention William G. Symmers, 357

Wall Street, New York, N. Y.

GRAYDON S. STARING

(Appendix A follows)

Appendix A

(nited States Court of Appeals

tor the Ninth Cucuit

No. 19,274

States Steamship Company, et al.,

Appedant,

Vs.

American Smelting & Refining Company,

Appellee.

| Dee. 4, 1964 |

Appeal from the United States District Court for the

Northern District of California

Southern Division

Before: Orr, JerTBERG and Merri, Circuit Judges.

Orr, Cireuit Judge:

in this appeal we have one question for decision, to wit:

Is appeliee’s claim time-harred by the one-vear limitation

provision of Section 3¢0) of the Carriage of Goods by Sea

Aet of 1956 (COGSA)? (46 TIS.C. 1508663). We affirm the

trial court in its determination that it is not.

Libelant- Appellee is the American Smelting and Retining

Company (herein Asare+j. The Respondent-Appellant is the

States Steamship Company (herein States).

The facts have been stipulated. They are:

.o At all times mentioned herem States awn

and operated the vessel formerly known as the SS

Charles FE. Dant.—

to

Appendix

4. On November 27, 1956 approximately 8400 tons

of copper concentrates were laden aboard the SS

Charles E. Dant xt Poro Point. La Union, Philippines,

consigned to Asarco at Tacoma, Washington.

5. Asareo acquired title to said copper concentrates

when they were loaded aboard the SS Charles E. Dant

and at all times hereinafter mentioned was the owner

and consignee of said concentrates.

6. The Bill of Lading constituting the contract of

affreightment which governs the rights and liabilities

of the parties hereto, insofar as it is applicable, is

attached as Exhibit A.

7. Shortly after departure from Poro Point on No-

vember 27, 1956 the SS Charles E. Dant took a serious

list, necessitating saivage services which were rendere '

and which enabled the vessel to continue the voyage.

8. Said salvage services were rendered pursuant to

a Salvage Agreement entered into by States on behalf

of the vessel and her cargo. -. Security was given to

salvor on behalf of the vessel and her cargo in order

to release the vessel and eargo from the salvor’s lien.

9. On January 17, 1957 Asareo entered inio an

Average Agreement with States in order to obtain

possession of the cargo - - .

10. On or before February 11, 1957 said shipment

of copper concentrates was delivered to Asareo at Ta-

coma, Washington.

11. The amount of the salvage award was arbitrated

between salvor on the one hand and Asarco and *tates,

on the other, in accordance with the Salvage Agree-

ment. On October 28, 1958 the Salvage Award became

final. Thereafter Asarco and States each paid to salvor

its respective share of the amount awarded by the

arbitrators.

12. On Mareh 16, 1959 Asareo filed the libel in this

action to recover its portion of salvage paid.

13. States plead, in defense, the one-year statute of

limitations contained in the United States Carriage of

Appendix 3

Goods hy Sea Act of 1986, Section 3(6), 46 USC.

1303(6).

14. If the court concludes that this cause is tiine-

barred, the libel should be dismissed with prejudice.

15. If the court concludes that this cause is not

tiune-barred, States is liabie in personam and as claim-

ant of the SS Charles E. Daut in such amount as may

he determined by t! e Court or agreed by the parties.”

Section 3(6) of COGSA provides:

“Unless notice of loss or damage and the genera!

nature of such loss or damage be given in writing to

the earrier or his agent at the port of discharge before

or at the time of the removal of the goods into the

eustody of the person entitled to delivery thereof under

the contract of carriage, such removal shall be prima

facie evidence of the delivery by the carrier of the

goods as deseribed in the bill of lading. If the loss or

damage is not apparent, the notice must be given

within three days of the delivery.

Said notice of loss or damage may be endorsed upon

the receipt for the goods given by the person taking

delivery thereot

The notice in writing need not be given if the state

of the goods has at the time of their receipt been the

subject of jomt survey or inspection.

In any event the carrier and the ship shall be dis-

charged from all liability in respect of loss or danag

unless suit is brought within one yea! after delivery of

the goods or the date when the goods shouid have heen

delivered: Provided, That if a notice of loss or damage,

either apparent or concealed, is not given as provided

for in this section, that fact shall not affect or prejudice

the right of the shipper to bring suit within one year

after the delivery of tne goods or the date when tne

goods should have been delivered.

In the case of any actual or apprehended loss or

damage the carrier and receiver shall give all reason-

4 Appendtc

able facilities to each other for inspecting and tallying

the goods.” (emphasis provided)

Appellant’s contention is, basically, that “loss or damage”

as used in the above cited statute covers any claim for

damages by a shipper where liability is based upon a

earrier’s breach of its contract of affreightinent. Appellant

cites eases in support of its contention, wherein intangibre

damage to the cargo snterest—such as late delivery or mis-

deliverv—has been held to be loss or damage within the

meaning of Section 3(G6). It argues that this case is one in

which an intangible injury to the eargo appears and hence

it comes within the uninodified and unrestricted “loss or

damage” provision.

Viewing the context in which the limitation provision is

set, we feel that logic and sound analysis require that “loss

or damage” be interpreted in a narrower sense than con-

tended for by appellant. The wording compels the conclu-

sion that said provision was intended to apply only to claims

which relate directly to a breach of a carrier’s duty to make

timely delivery of the goods in g000 order and condition.

The eases are not at variance with this view. The limita-

tion provision of Section 3(6) has been applied mainly to

instances involving damage directly to the cargo. It has

also been applied where there has been delay in, or failure

of, delivery or departure. See Commercio Transito Inter-

nazionale, Ltd. v. Lykes Bros. Steamship Company, 245

F.2d 683 (2d Cir. 1957); Badhwar v. Colorado Fuel and

Iron Corp., 138 F. Supp. 595 (S.D.N.Y. 1955), aff'd, JAH

F.2d 903 (2d Cir. 1957), cert. denied, 855 U.S. 862 (1957) :

Singer Hosiery Mills of New York v. Cunard White Star,

Ltd., 102 N.Y.S.2d 762 (Munie. Ct. N.Y.C. 1951); Albert

Isbrandtsen Company, 160 N.YS8.2d 772 (Sup. Ct. 1957).

In the above cited cases the damage arose directly from and

~

Appendiz 4)

wes related directly to a failure to make a proper delivery

of the cargo owner’s goods.

This Act, derived from the terms of the Brussels Con-

vention of 1924, has been adopted by many nations, but im

no case that has come to our attention has it been held that

an action by a cargy owner to recover salvage paid is withm

the limitation provision here under consideration. A con-

tention similar to this, however, was presented in the case

of Goulandris Bros., Ltd. v. B. Goldman & Sons, Ltd..

[1957] 2 Lloyd’s Rep. 207 (Q.B.D., Com.Ct.), and was

rejected. There, at page 222 the court stated that “the

loss or damage referred to must be loss or damage which

ix re’ ted to the cargo owner's goods.” Appellant states

that the rule in Goulandris was overturned by the subse-

quent House of Lords decision in Anglo-Saxon Petroleum

Company v. Adamastos Shipping Cempany, Ltd., |1957 |

1 Lloyd’s Rep. 79 (Q.B.D.), [1957] 2 All E.R. 311 (C.A.),

f1958} 1 All ER. 725 (H.L.). We do not so read that case.

The British authorities, though they now indicate that the

words “loss or damage” in the limitation provision here

involved are broad enough to include loss by delay or

misdelivery, do not go so far as to say that a claim such

as is presented in the instant case constitutes a suit for

“loss or damage” within such provision. See Carver, 2

British Shipping Laws 8s 224-30 (1963).

We conclude that a distinction between the cause of action

presented here and those that have been held te be gov-

erned by Section 3(6) is clearly drawn. The instant action

is in reality one for indeinnifieation, the right to which

arises from the earrier’s alleged violation of the duty of

due diligence imposed upon him by law.’ The gravamen of

1. Article 3 of COSG.A is the source of this duty, a duty which

exists regardless of any provision in the contract of affreightment

6 Appendir

appellee’s claim is that: Appellaut failed to exereise due

diligence in the carriage of appeliee’s goods; because of

this a salvage operation was necessary ani the appel'ee,

in order to get delivery of the goods, was obliged to agree

to pay, and paid, its general average share of the salvage

costs; now it is seeking reimbursement for the amount paid,

which burden, as between it and appeilant, should be borne

by appellant. This spells out an indemnity action—appellee

is seeking indemnification for salvage paid pursuant to the

Average Agreement. See Restatement of Restitution § 76

(1936); Hidick v. Orton Shipping and Trading Company,

157 F. Supp. 477 (S.D.N.Y. 1957): Tice Towing Line v.

James McWilliams Blue Line, 51 F.2d 243 (S.D.N.Y. 1931),

modified, 57 F.2d 183 (2d Cir. 1932).

That it was neither the intent of the Brussels Convention

of 1924 in drafting the section of the Act here under con-

sideration, nor the intent of the Congress in enacting it, to

include such indemnity actions within the claims governed

by Section 3(6) of COGSA is amply supported by the

circumstances involved.

By the terms of Section 3(6) the statute of limitations

begins to run at the tine of delivery. In actions that involve

damage directly to the cargo or relate directly to the cargo

the statute of limitations traditionally and logically begins

to run at the time of delivery. It is at this tine that the

shipper becomes aware of “loss or damage” and generally

at this time that the cause of action accrues. Such is not

the case with the usual indemnity claim, where a cause of

action does not accrue until the indemmnitee has made actual

payment. See Restatement of Restitution $77 (1936); 5

incorporating a requirement of due diligence into the agreement |

between the parties. It would not seem, however, to matter whether

this duty is viewed as arising as a matter of law or by virtue of the

shipping contraet—the indemnity nature of the action here is the

same.

Appendizs ‘

Moore's Federai Practice § 14.09 (2d Ed. 1963); Chicago.

Rock Island & Pacific Railway Company t. United States,

2) F.2d 939 (7th Cir. 1955) + Christianssand Shipping Com-

pany, Lid. v. Marshall, 31 F.2d 686 (3rd Cir. 1929): Hidicl

v. Orion Shipping and Trading Company, supra, pp. 487-88.

ihe date of payment, and thus the date when a perty is in

a position to sue, will seldom coincide with the date of

delivery. Thus imposing a “time of delivery” starting date

upon actions such as we have before us would give rise to

an illogical and often unreasonable situation. For example,

in the instant case payment was made, and the right te

recovery arose, after October 28, 1958. This was some 5

months after the statute of limitations under Section 5(6)

had run. Appellee ceu/d not make payment until] subsequent

to the arbitration of the salvage claim, and therefore ordi-

narily could not sue to recover payment until the amount

of salvage had been determined and payvinent made. By

that time the statute of limitations contained in Seetion

3(6) had run. No equitable result can be found in such an

interpretation.

Appellant urges that a proceedure could be employed that

would allow a suit to be filed in such a case at the time of

delivery, and then stayed until determination of the amount

of the award and payment thereof. To impose such a burden

1 don the claimant to anticipate at the time of delivery the

nature and extent of his claim for damages, and to Impose

a burden upon the courts to indulge in this staying pro-

cedure, cannot be said to have been within the reasonable

contemplation of Congress.

Legislative history is: pointed to for the purpose of sus-

taining the construction which appellant would place on the

provision under consideration. We do not believe it In any

;uanner detracts from the construction we have adopted,

Affirmed.