Leather's Best, Inc. v. SS Mormaclynx

• Decision Date: 29 October 1971
• Docket Number: No. 36,Docket 35562.,36
• Citation: 451 F.2d 800
• Parties: LEATHER'S BEST, INC., Plaintiff-Appellee-Cross Appellant, v. S.S. MORMACLYNX et al., Defendants-Appellants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

451 F.2d 800 (1971)

LEATHER'S BEST, INC., Plaintiff-Appellee-Cross Appellant, v. S.S. MORMACLYNX et al., Defendants-Appellants-Appellees.

No. 36, Docket 35562.

United States Court of Appeals, Second Circuit.

Argued September 22, 1971.

Decided October 29, 1971.

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F. Herbert Prem, New York City (Bigham, Englar, Jones & Houston, New York City, of counsel), for plaintiff-appellee-cross appellant.

John H. Reilly, Jr., New York City (Hyde, Dickerson & Reilly, New York City, of counsel), for defendants-appellants-appellees.

Kirlin, Campbell & Keating, New York City (Walter P. Hickey and Richard H. Sommer, New York City, of counsel), for United States Lines, Inc., as amicus curiae.

Before FRIENDLY, Chief Judge, and MULLIGAN and TIMBERS, Circuit Judges.

FRIENDLY, Chief Judge.

The facts of this case, which has already attracted considerable attention in maritime legal circles,¹ are simple; the legal problems, some of them not apprehended by the parties, are difficult.

Plaintiff Leather's Best, Inc. ("the shipper") purchased some 11 tons of leather in 1967 from Carl Freudenberg, whose plant was at Weinheim, Germany. The seller's employees loaded the leather into 99 cartons, averaging 4' in length, 2' in width, and 1½' in height, and placed steel straps around them, thereby making them qualify as "bales" under the applicable tariff, which provided a fixed price per kilogram for leather in bales or rolls. At the request of the Freudenberg firm, a truckman engaged by the agent of Moore-McCormack (Mooremac) in Germany delivered to the plant a metal container owned by Mooremac which was 40' long, 8' high and 8' wide. With the truck driver watching, the seller's employees loaded the container and sealed it. The truck driver gave a receipt.²

The driver delivered the container to the S.S. Mormaclynx at Antwerp, Belgium. Mooremac's agent at Rotterdam, Holland, issued a bill of lading which described the goods as follows:

                                             Number and kind of
                                            packages; description       Gross       Measurement
                     Marks & Nos.                 of goods              Weight
                  C F W                      1 container s.t.c
                  NEW YORK                   99 bales of leather        10864           kos
                  MADE IN GERMANY
                  2202/1-99
                  Container nr
                  UB 9622 209134
                  HOUSE-TO-HOUSE
                  Seal Nr. 26844
                SHIPPER'S LOAD AND COUNT     IN TRANSIT
                

The lower left hand corner of the bill of lading stated, in legible capital letters:

SHIPPER HEREBY AGREES THAT CARRIER\'S LIABILITY IS LIMITED TO $500 WITH RESPECT TO THE ENTIRE CONTENTS OF EACH CONTAINER EXCEPT WHEN SHIPPER DECLARES A HIGHER VALUATION AND SHALL HAVE PAID ADDITIONAL FREIGHT ON SUCH DECLARED VALUATION PURSUANT TO APPROPRIATE RULE IN THE CONTINENTAL NORTH ATLANTIC WESTBOUND FREIGHT CONFERENCE TARIFF.

The following clauses on the back of the bill of lading are also relevant:

1. This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936, except that when issued to cover carriage of goods to Canada it shall have effect subject to the provisions of the Canadian Water Carriage of Goods Act, 1936. The provisions of each of said Acts which are hereby contracted for, exempt the carrier from liability for loss or damage arising or resulting from: unseaworthiness unless caused by want of due diligence; act, neglect, or default of the master, mariner, pilot or the carrier\'s servants in navigation or management of the ship; fire unless caused by actual fault of privity of the carrier; perils, dangers and accidents of the sea or other navigable waters; act of God; act of war; act of public enemies; arrest or restraint of princes, rulers, or people, or seizure under legal process; quarantine restrictions; act or omission of the shipper or owner of the goods, his agent or representative; strikes or lockouts or stoppage or restraint of labor from whatever cause, whether partial or general; riots and civil commotions; saving or attempting to save property or life at sea; wastage in bulk or weight or any other loss or damage arising from inherent defect, quality, or vice of the goods; insufficiency of packing; insufficiency or inadequacy of marks; latent defects not discoverable by due diligence; any other cause arising without the actual fault and privity of the carrier and without the fault or neglect of its agents or servants. During any period when neither of said Acts applies by its own force the carrier, if responsible in any capacity for the goods, shall not be liable for loss or damage arising or resulting from any of said causes or from any cause whatsoever not proved due to the negligence of the carrier which shall also be entitled to all of the rights, immunities, exemptions and limitations stated in this bill of lading. The carrier shall not be liable in any capacity for any delay, non-delivery, misdelivery or loss or damage occurring while the goods are not in the actual custody of the carrier.

2. In this bill of lading, the word "ship" shall include any substituted vessel, and any craft, lighter or other means of conveyance owned, chartered, operated or used by the carrier in performing this contract; the word "carrier" shall include the ship, her owner, operator, demise charterer, time charterer, master and any substituted carrier, whether acting as carrier or bailee, and all persons rendering services in connection with performance of this contract; the word "shipper" shall include the person named as such in this bill of lading and the person for whose account the goods are shipped; the word "consignee" shall include the holder of this bill of lading, properly endorsed, and the receiver and the owner of the goods; the word "charges" shall include freight and all expenses and money obligations payable by the goods, shipper, consignee, or any of them; the words "at the risk and expense of the goods" or the like mean, in addition, at the risk and expense of the shipper and consignee; the words "government" and "authorities" shall each include the United Nations or any similar international organization, as well as a sovereign state or political subdivision thereof, and any person acting or purporting to act for any such.

13. In case of any loss or damage to or in connection with goods exceeding in actual value $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 unit, on which basis the freight is adjusted and the carrier\'s liability in any capacity, if any, 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 freight paid if required; and in such case if the actual value of the goods per package or per customary freight unit shall exceed such declared value, the value shall nevertheless be deemed the declared value and the carrier\'s liability in any capacity, if any, shall not exceed the declared value. Whenever less than $500 per package or other freight unit, the value of the goods in the calculation and adjustment of claims shall, to avoid uncertainties and difficulties in fixing value, be deemed to be the invoice value, plus freight and insurance if paid, whether any other value be higher or lower.

The Mormaclynx arrived in Brooklyn on Saturday, April 25, 1967. The container, sealed and undamaged, was unloaded by stevedores and was placed in a large terminal area operated by Mooremac's wholly owned subsidiary, Tidewater Terminal, Inc. ("Tidewater") to await pick up by the shipper. The area was accessible through four gates. Two were open 24 hours a day, supposedly under the continuous supervision of watchmen. The other two were open only from 8:00 A.M. to 4:00 P.M. on weekdays and were similarly guarded at those times. At least one roving watchman was on duty to see that there were no unauthorized persons on the pier and that no one opened any container. Records were kept of all trucks entering and leaving the terminal area.

On Monday, April 27, the shipper's truckman arrived at 9:30 A.M. to pick up the container. It could not be located, although the delivery book at the pier had not been signed. The fence around the area bore no signs of tampering. Next day the police found the container empty, at Freeport, L.I., some 25 miles away. The goods have not been recovered, and the details of the theft have never been reconstructed.

In this suit in admiralty in the District Court for the Eastern District of New York, plaintiff sought damages in the amount of the alleged value of the leather from the ship, Mooremac, and Tidewater. In a thorough opinion, 313 F. Supp. 1373 (1970), Judge Judd held (1) that the defendants had been negligent in their custody of the container; (2) that the 99 bales rather than the single container constituted "packages" for the purposes of paragraph 13 of the bill of lading and § 4(5) of the Carriage of Goods by Sea Act (COGSA);³ (3) that the limitation of liability to $500 per container was invalid even though the loss occurred after discharge and was therefore governed by the Harter Act⁴ rather than COGSA; but (4) that because of the definition of "carrier" in clause 2. of the bill of lading to include "all persons rendering service in connection with performance of this contract," the limitation of liability to $500 per bale was available to Tidewater as well as to Mooremac. Accordingly, he rendered judgment for $49,500, together with interest and costs, against all the defendants. They appeal from the holdings numbered (1), (2) and (3); plaintiff appeals from the failure to award full damages, claimed to be...