Trans World Airlines, Inc v. Franklin Mint Corporation Franklin Mint Corporation v. Trans World Airlines, Inc

• Citation: 466 U.S. 243,80 L.Ed.2d 273,104 S.Ct. 1776
• Decision Date: 17 April 1984
• Docket Number: 82-1465,Nos. 82-1186,s. 82-1186
• Parties: TRANS WORLD AIRLINES, INC., Petitioner, v. FRANKLIN MINT CORPORATION et al. FRANKLIN MINT CORPORATION, et al., Petitioners, v. TRANS WORLD AIRLINES, INC
• Court: United States Supreme Court

466 U.S. 243

104 S.Ct. 1776

80 L.Ed.2d 273

TRANS WORLD AIRLINES, INC., Petitioner,

v FRANKLIN MINT CORPORATION et al.

FRANKLIN MINT

CORPORATION, et al., Petitioners,

v. TRANS WORLD AIRLINES, INC.

Nos. 82-1186, 82-1465.

Supreme Court of the United States

Argued Nov. 30, 1983.

Decided April 17, 1984.

Rehearing Denied June 4, 1984.

Syllabus

The Warsaw Convention (Convention), an international air carriage treaty that the United States ratified in 1934, sets a limit on an air carrier's liability for lost cargo at 250 gold French francs per kilogram, which sum may be converted into any national currency. In 1978, Congress repealed the Par Value Modification Act (PVMA), which set an "official" price of gold in the United States. Nevertheless, the Civil Aeronautics Board (CAB) continued to sanction the use of the last official price of gold as a conversion factor. As a result, a $9.07-per-pound limit of liability remained codified in the CAB regulations governing international air carriers' tariffs filed under the Federal Aviation Act of 1958. Franklin Mint Corp. brought suit in Federal District Court against Trans World Airlines (TWA) to recover damages in the amount of $250,000 for the loss in 1979 of packages containing numismatic materials delivered to TWA for transport from Philadelphia to London. The parties having stipulated that TWA was responsible for the loss, the only dispute was the extent of liability. The District Court ruled that under the Convention the liability was limited to $6,475.98, a figure derived from the weight of the packages, the Convention's liability limit, and the last official price of gold in the United States. The Court of Appeals affirmed, but also ruled that 60 days from the issuance of the mandate the Convention's liability limit would be unenforceable in the United States, since enforcement of the Convention required a factor for converting the liability limit into dollars and there was no United States legislation specifying a factor to be used by United States courts.

Held:

1. The Convention's cargo liability limit remains enforceable in United States courts, and was not rendered unenforceable by the 1978 repeal of the PVMA. Pp. 251-253.

(a) Legislative silence is not sufficient to abrogate a treaty. Here, neither the legislative histories of the various PVMA's, the history of the repealing Act, nor the repealing Act itself, make any reference to the Convention, the repeal being unrelated to the Convention and intended to give formal effect to a new international monetary system. Since the Convention is a self-executing treaty, no domestic legislation is required to give it the force of law in the United States. And neither Congress nor the Executive Branch has given the required notice to other parties to the Convention that the United States planned to abrogate the Convention. To the contrary the Executive Branch continues to maintain that the Convention's liability limit remains enforceable in the United States. Pp. 251-253.

(b) When the parties to a treaty continue to assert its vitality, a private person may not invoke the doctrine of rebus sic stantibus to assert that a treaty ceases to be binding when there has been a substantial change in conditions since its promulgation. Accordingly, the erosion of the international gold standard and the 1978 repeal of the PVMA cannot be construed as terminating or repudiating the United States' duty to abide by the Convention's liability limit. P. 253.

2. A $9.07-per-pound liability limit is not inconsistent with domestic law or with the Convention itself. Pp. 254-260.

(a) It is clear that such limit does not contravene any domestic legislation, absent any suggestion by Congress when it repealed the PVMA that the CAB should thereafter use a conversion factor different from the official price of gold or that either of the political branches expected or intended the repealing Act to affect the dollar equivalent of the Convention's liability limit. P. 255.

(b) Tying the Convention's liability limit to today's gold market would fail to effect any purpose of the Convention's framers, and would be inconsistent with well-established international practice. A fixed $9.07-per-pound liability limit represents a choice not inconsistent with the Convention's purposes of setting some limits on a carrier's liability, of setting a stable, predictable, and internationally uniform limit that would encourage the growth of the air carrier industry, and of linking the Convention to a constant value that would keep step with the average value of cargo carried and so remain equitable for carriers and transport users alike. Pp. 255-260.

690 F.2d 303 (2nd Cir.1982), affirmed.

John N. Romans, New York City, for Trans World Airlines, Inc. Joshua I. Schwartz, Washington, D.C., for U.S. as amicus curiae, by special leave of Court.

John R. Foster, New York City, for Franklin Mint Corp., et al.

Justice O'CONNOR delivered the opinion of the Court.

The question presented in this litigation is whether an air carrier's declared liability limit of $9.07 per pound of cargo is inconsistent with the "Warsaw Convention" ¹ (Convention), an international air carriage treaty that the United States has ratified. As a threshold matter we must determine whether the 1978 repeal of legislation setting an "official" price of gold in the United States renders the Convention's gold-based liability limit unenforceable in this country. We conclude that the 1978 legislation was not intended to affect the enforceability of the Convention in the United States, and that a $9.07-per-pound liability limit is not inconsistent with the Convention.

I

In 1974 the Civil Aeronautics Board (CAB) informed international air carriers doing business in the United States that the minimum acceptable carrier liability limit for lost cargo would thenceforth be $9.07 per pound. Trans World Airlines, Inc. (TWA), has complied with the CAB order since that time. On March 23, 1979, Franklin Mint Corp. (Frank- lin Mint) delivered four packages of numismatic materials with a total weight of 714 pounds to TWA for transportation from Philadelphia to London. Franklin Mint made no special declaration of value at the time of delivery.² The packages were subsequently lost. Franklin Mint brought suit in United States District Court to recover damages in the amount of $250,000. The parties stipulated that TWA was responsible for the loss of the packages. The only dispute concerns the extent of TWA's liability.

The District Court, 525 F.Supp. 1288, ruled that under the Convention TWA's liability was limited to $6,475.98, a figure derived from the weight of the packages, the liability limit set out in the Convention, and the last official price of gold in the United States. The Court of Appeals for the Second Circuit affirmed the judgment, but "rul[ed]" that 60 days from the issuance of the mandate the Convention's liability limit would be unenforceable in the United States. 690 F.2d 303 (1982).

In a petition for certiorari to this Court TWA challenged the Court of Appeals' declaration that the Convention's liability limit is prospectively unenforceable. In a cross-petition, Franklin Mint contended that the Court of Appeals' actual holding should have been retrospective as well. We granted both petitions, 462 U.S. ----, 103 S.Ct. 3084, 77 L.Ed. 1347 (1983). We now conclude that the Convention's cargo liability limit remains enforceable in United States courts and that the CAB-sanctioned $9.07-per-pound liability limit is not inconsistent with the Convention. Accordingly, we affirm the judgment of the Court of Appeals but reject its declaration that the Convention is prospectively unenforceable.

II

The Convention was drafted at international conferences in Paris in 1925, and in Warsaw in 1929. The United States became a signatory in 1934. More than 120 nations now adhere to it. The Convention creates internationally uniform rules governing the air carriage of passengers, baggage, and cargo. Under Article 18 carriers are presumptively liable for the loss of cargo. Article 22 sets a limit on carrier liability:

"(2) In the transportation of checked baggage and of goods, the liability of the carrier shall be limited to a sum of 250 francs per kilogram, unless the consignor has made, at the time when the package was handed over to the carrier, a special declaration of the value at delivery and has paid a supplementary sum if the case so requires. . . .

* * * * *

"(4) The sums mentioned above shall be deemed to refer to the French franc consisting of 651/2 milligrams of gold at the standard of fineness of nine hundred thousandths. These sums may be converted into any national currency in round figures." Reprinted (in English translation) in Note following 49 U.S.C. § 1502.

In the United States the task of converting the Convention's liability limit into "any national currency" falls within rulemaking authority which was, for many years including those at issue here, delegated to the CAB under the Federal Aviation Act of 1958 (FAA), 49 U.S.C. § 1301 et seq.³ International air carriers are required to file tariffs with the CAB specifying "in terms of lawful money of the United States" the rates and conditions of their services, including the cargo liability limit that they claim.⁴ The Act forbids any carrier to charge a "greater or less or different com- pensation for air transportation, or for any service in connection therewith, than the rates, fares, and charges specified in then currently effective tariffs. . . ." ⁵ The CAB, for its part, is empowered to reject any tariff that is inconsistent with the FAA or CAB regulations. 49 U.S.C. § 1373(a). CAB powers are to be exercised "consistently with any obligation assumed by the United States in any treaty, convention, or agreement that may be in force between the United States and any foreign country or foreign countries. . . ." 49 U.S.C. § 1502.

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