Indussa Corporation v. Ranborg

• Decision Date: 25 April 1967
• Docket Number: No. 332,Docket 30986.,332
• Citation: 377 F.2d 200
• Parties: INDUSSA CORPORATION, Appellant, v. S.S. RANBORG, her engines, boilers, etc. (Erling Hansens Rederi A/S and Skibs A/S Linea, Claimants), Appellee.
• Court: U.S. Court of Appeals — Second Circuit

377 F.2d 200 (1967)

INDUSSA CORPORATION, Appellant, v. S.S. RANBORG, her engines, boilers, etc. (Erling Hansens Rederi A/S and Skibs A/S Linea, Claimants), Appellee.

No. 332, Docket 30986.

United States Court of Appeals Second Circuit.

Argued February 21, 1967.

Decided April 25, 1967.

William R. Vincent, New York City (Charles D. Herak, New York City, of counsel), for appellant.

John J. Nolan, New York City, William A. Wilson, New York City, for appellee.

Before LUMBARD, Chief Judge, and WATERMAN, MOORE, FRIENDLY, SMITH, KAUFMAN, HAYS, ANDERSON and FEINBERG, Circuit Judges.

FRIENDLY, Circuit Judge:

This appeal from orders of the District Court for the Southern District of New York declining jurisdiction in favor of the courts of Norway in a United States consignee's in rem libel against a Norwegian ship raises questions of the applicability and the soundness of this court's decision in William H. Muller & Co. v. Swedish American Line, Ltd., 224 F.2d 806 (2 Cir.), cert. denied, 350 U.S. 903, 76 S.Ct. 182, 100 L.Ed. 793 (1955). The panel that initially heard the appeal, consisting of Circuit Judges Anderson, Feinberg and the writer, concluded that Muller, on which the District Court based its rulings, was wrongly decided and should be overruled. We, therefore, asked our colleagues to consider the appeal in banc on the briefs of the parties, they so voted, and this opinion represents the views of the full court.

Indussa Corporation, a New York corporation, was the consignee of nails and barbed wire shipped by a Belgian agency from Antwerp, Belgium, to San Francisco, California, in May 1963. The bills of lading for shipment "on board the good vessel called the `Ranborg'" were signed by the master and were captioned:

LINEAS NAVIERAS DE CENTRO AMERICA, S. A GLOBAL STEAMSHIP AGENCY INC SUITE 416 408 SOUTH SPRING STREET LOS ANGELES 13, CALIFORNIA

A "Paramount Clause" declared the applicability of "the Hague Rules contained in the International Convention for the Unification of certain rules relating to Bills of Lading, dated Brussels the 25th August 1924, as enacted in the country of shipment," but a "U. S. Trade" clause stated:

"C. U. S. Trade. Period of Responsibility.

In case the Contract evidenced by this Bill of Lading is subject to the U. S. Carriage of Goods by Sea Act then the provisions stated in said Act shall govern before loading and after discharge and throughout the entire time the goods are in the Carrier\'s custody."

A still further clause entitled "Jurisdiction" recited:

"Any dispute arising under this Bill of Lading shall be decided in the country where the Carrier has his principal place of business, and the law of such country shall apply except as provided elsewhere herein."

Finally it was provided that "the contract evidenced by this Bill of Lading is between the Merchant and the Owner of the vessel named herein (or substitute)."

Indussa, having located The Ranborg in American waters, brought a libel in rem in the District Court for the Southern District of New York in March 1965, alleging that the shipment had arrived in San Francisco damaged, primarily by rust, to the extent of $2600. The usual letter of undertaking and agreement to appear were accepted in lieu of arresting the vessel.

In April 1966 the owners of The Ranborg moved for an order declining jurisdiction because of the Jurisdiction clause in the bills of lading. One of the moving affidavits alleged that the owners' principal place of business was Kristiansand, Norway, explained that the vessel had been time-chartered to Lineas Maritimas De Centro America, S. A., a Costa Rican concern, and set forth the Norwegian identity of the crew and of the three members still in the owners' employ; another, by a Norwegian attorney, stated that Norway had ratified the Brussels Convention and that the provisions of Norwegian law governing Indussa's claims were in all substantial respects identical with the Carriage of Goods by Sea Act, 46 U.S.C. § 1300 et seq., with one exception apparently not material in this case.¹ An opposing affidavit stressed the presence in the United States of a number of witnesses "who can give testimony as to the importation of the shipments and the nature of the damage"; it also argued, on the basis of The Monrosa v. Carbon Black Export, Inc., 359 U.S. 180, 79 S.Ct. 710, 3 L.Ed.2d 723 (1959), that the Jurisdiction clause of the bills of lading did not apply to an action in rem. Overruling the latter contention because of the broader language of the instant jurisdiction clause and applying our ruling in William H. Muller & Co. v. Swedish American Line, supra, 224 F.2d at 808, that the forum may respect such a clause if "the agreement is not unreasonable in the setting of the particular case," Judge Tenney granted the motion on condition that if Indussa brought suit in Norway within 120 days, the owners should waive the statute of limitations and post the same security as in the New York libel. Indussa sought reconsideration on the basis of an affidavit of a Belgian lawyer that a Belgian court would not recognize the Jurisdiction clause, but filed a notice of appeal before the motion was decided. Relying on the lack of docketing of the appeal to authorize consideration of the motion, the judge adhered to his original decision.

Even if we were to adhere to Muller, requiring an American consignee claiming damages in the modest sum of $2600 to journey some 4200 miles to a court having a different legal system and employing another language is so harsh a result that we would be strongly disposed to find means for distinguishing the Muller decision if such were fairly available. One basis for distinction has already been suggested — the difference in the practical effect of requiring resort to a distant forum when the claim is for $2600 as against the $55,000 in that case. Another might lie in the fact that whereas in Muller the shipment was not merely on a Swedish vessel, but from a Swedish port and the bill of lading purported to make Swedish law applicable, here the only relationship of Norway was the ownership of the vessel, and the bill of lading appears to make Belgian or, more likely, United States law prevail over Norwegian. Other possible bases would be the failure of the instant bill of lading to identify within its four corners the forum to which litigation was confined, the alleged invalidity of the Jurisdiction clause under Belgian law, and the fact that the Muller Company did not have to call witnesses to establish the amount of its damages since the ship had sunk and the sole issue was her unseaworthiness. We are convinced, however, that Muller is inconsistent with the Carriage of Goods by Sea Act, 46 U.S.C. §§ 1300-1315 (1964), and should be overruled.

Since § 3(8) of COGSA forbids "Any clause, covenant, or agreement in a contract of carriage * * * lessening the carrier's liability for negligence, fault, or dereliction of statutory duties otherwise than as provided in this Act," the district courts in applying Muller have been obliged to forecast the result of litigation in a foreign court or attempt other expedients to prevent a lessening of the plaintiff's rights. The difficulties inherent in the former task are illustrated by the differing results in Pakhuismeesteren, S.A. v. S/S Goettingen, 225 F.Supp. 888 (S.D.N.Y.1963), and General Motors Overseas Operation v. S.S. Goettingen, 225 F.Supp. 902 (S.D. N.Y.1964), both relating to shipments on the same voyage. One district judge declined jurisdiction in favor of the German courts on the basis of Muller, whereas the other, on a showing that German law would be less favorable to the plaintiff and thus contrary to the Carriage of Goods by Sea Act, refused so to decline. Cf. Chemical Carriers v. L. Smith & Co.'s Internationale Sleepdienst, 154 F.Supp. 886 (S.D.N.Y.1957). In still other cases where the district court had declined jurisdiction, it has addressed an admonition to the foreign court that it expected the Carriage of Goods by Sea Act would be applied. See N. Y. Underwriters Ins. Co. v. M. S. Wurttemberg, 235 F.Supp. 909, 910 (S.D.N.Y.1964). Cf. Murillo Ltda. v. The Bio Bio, 127 F.Supp. 13, 16 (S.D.N.Y.), aff'd mem., 227 F.2d 519 (2 Cir. 1955); Takemura & Co. v. S. S. Tauneshima Maru, 197 F. Supp. 909, 912-913 (S.D.N.Y.1961). Pretrial litigation over the place of trial, always to a certain degree undesirable,² becomes especially so when the court is required to make a forecast as to the merits on the basis of conflicting affidavits of experts concerning what a foreign court would decide both as to choice of law and as to substantive law and there can be no real assurance that the prophecy will be validated by the result.

We think that in upholding a clause in a bill of lading making claims for damage to goods shipped to or from the United States triable only in a foreign court, the Muller court leaned too heavily on general principles of contract law and gave insufficient effect to the enactments of Congress governing bills of lading for shipments to or from the United States. This is instanced not only by the reliance on Judge L. Hand's concurrence in Krenger v. Pennsylvania R. R., 174 F.2d 556, 561 (2 Cir. 1947), compare Wood & Selick v. Compagnie Generale Transatlantique, 43 F.2d 941, 942 (2 Cir. 1930), but even more so by the court's statement that it was following Cerro De Pasco Copper Corp. v. Knut Knutsen, 187 F.2d 990 (2 Cir. 1951), which involved a shipment from Peru to Belgium not subject to the United States COGSA. Examination of the Muller briefs shows that counsel had not called the court's attention to Knott v. Botany Mills, 179 U.S. 69, 21 S.Ct. 30, 45 L.Ed. 90 (1900), arising under the Harter Act, where the Supreme Court, dealing with a shipment to the United States, declined to give effect to a clause making the law of the flag applicable. The Carriage of Goods by Sea Act begins by stating that "Every bill of...