Du Pont de Nemours International SA v. SS MORMACVEGA

• Citation: 493 F.2d 97
• Decision Date: 07 January 1974
• Docket Number: No. 11,Docket 73-1376.,11
• Parties: Du PONT de NEMOURS INTERNATIONAL S.A. and E. I. Du Pont de Nemours & Co., Inc., Plaintiffs-Appellants, v. S. S. MORMACVEGA, her engines, boilers, etc., and Moore-McCormack Lines, Inc., Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

493 F.2d 97 (1974)

Du PONT de NEMOURS INTERNATIONAL S.A. and E. I. Du Pont de Nemours & Co., Inc., Plaintiffs-Appellants, v. S. S. MORMACVEGA, her engines, boilers, etc., and Moore-McCormack Lines, Inc., Defendants-Appellees.

No. 11, Docket 73-1376.

United States Court of Appeals, Second Circuit.

Argued October 1, 1973.

Decided January 7, 1974.

Alan S. Loesberg, New York City (Andrew R. Colmant, Thomas D. Toy, and Hill, Rivkins, McGowan & Carey, New York City, on the brief), for plaintiffs-appellants.

John H. Reilly, Jr., New York City (W. Shelby Coates, Jr., and Hyde, Dickerson & Reilly, New York City, on the brief), for defendants-appellees.

Before HAYS, FEINBERG and TIMBERS, Circuit Judges.

TIMBERS, Circuit Judge:

Once again we have before us for construction the $500 per package limitation of liability clause of Moore-McCormack's ocean carrier bill of lading as authorized by COGSA. This time the issue presented—apparently one of first impression—is whether the stowage of a container on the deck of a modern containerized cargo vessel pursuant to a clean bill of lading, absent a contractual provision or a universal custom to the contrary, constitutes an "unreasonable deviation" from the contract of carriage so as to deprive the carrier of its limitation of liability provided for in the bill of lading. The district court held that it did not. We agree. We affirm.

I.

The action below, invoking the admiralty and maritime jurisdiction of the district court, was commenced July 30, 1968. It was brought by E. I. Du Pont de Nemours & Co., Inc. and Du Pont de Nemours International S.A. (Du Pont), the shipper and consignee, respectively. They sued Moore-McCormack Lines, Inc. (Mormac) and the S.S. Mormacvega. Mormac is the carrier that owned and operated the Mormacvega. Du Pont sought to recover $109,966.18 damages for the loss overboard at sea of an ocean shipping container of 38 pallets of a synthetic resin liquid known as "Teflon". After a bench trial at which Mormac in effect admitted liability but relied on the limitation of liability provision in its bill of lading, a judgment was entered on November 28, 1972 in the Southern District of New York, Charles L. Brieant, Jr., District Judge, awarding Du Pont $19,000 plus interest from May 6, 1967. 367 F.Supp. 793. Du Pont now appeals from the judgment in its favor to the extent that it limited the shipper's recovery against the carrier to $500 per package pursuant to the limitation of liability clause in the bill of lading as authorized by Section 4(5) of the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. § 1304(5) (1970).

The facts as found by the district court may be briefly summarized. In April 1967, Du Pont booked cargo for two 40 foot ocean shipping containers on the Mormacvega bound from New York to Rotterdam. The containers were delivered on April 28 by Du Pont's freight forwarding agent to Mormac's stevedoring department at a pier in New York. Mormac issued a clean bill of lading. The vessel sailed from New York for Europe on April 30. Unknown to Du Pont, the containers were stowed on the Mormacvega's deck in the area of her No. 5 hatch. At about midnight on May 5/6, 1967, one of the containers of 38 pallets of "Teflon" was lost overboard at sea.

The Mormacvega was built in 1964 as one of the "Constellation" class of vessels intended for the carriage of general cargo. Stowage was determined on what is commonly known as a "break-bulk" basis, i. e. various units of freight were received from the shipper and stowed by Mormac with such dunnage as the situation warranted.

In 1966 the Mormacvega was reconstructed, refitted and converted into a combination "break-bulk" and containerized cargo vessel. At that time containerized shipping, although still in an embryonic stage, was gaining acceptance in the North Atlantic trade.¹ Substantial structural changes were made in the Mormacvega to permit on deck stowage of ocean shipping containers. These modifications included installation of a flume tank stabilization system to dampen the vessel's roll, modification and strengthening of the hatches and installation on deck of support pedestals and related fittings which permitted stowage and lashing of containers three tiers high.²

As a result, the Mormacvega in effect was converted into a new vessel fitted in all material respects as if she originally had been designed and constructed as a combination cargo ship. Following her reconstruction, the Mormacvega was surveyed by the American Bureau of Shipping. Its inspection report indicated that the conversion was accomplished in a workmanlike manner and that it was effective for the safe carriage of ocean shipping containers on deck.

The Mormacvega was equipped to carry approximately 135 "forty foot equivalent" containers,³ i. e. containers measuring 40 feet in length, 8 feet in height and 8 feet in width. The conversion contemplated that most of these would be stowed on deck. There was space in the hold, however, to accommodate the equivalent of approximately 35 containers.

To determine whether a particular container would be stowed on or below deck, a procedure dictated primarily by the practical necessities of the trade and to some extent by chance was used. If there was a large amount of break-bulk cargo, few if any containers would be stowed below. If the break-bulk cargo permitted container stowage in the hold, Mormac considered other factors in determining container placements. Whenever possible, depending on the port of call at which a given container was to be unloaded and the time of its delivery for onloading, heavier containers were stowed below to maintain optimum stability of the vessel. Containers with flammable or explosive materials generally were stowed on deck. Cargo which was likely to suffer from exposure to the elements was stowed below to the extent possible. Cargo which was delivered to the pier after the loading process had begun of necessity was stowed on deck.

In view of this procedure and the fact that cargo often was received at the pier before a complete stowage plan had been formulated or after initial placements made change impractical, it was impossible for Mormac to determine with any degree of certainty where a given container would be stowed. For this reason, it was Mormac's practice, and that of other carriers, to issue clean bills of lading to shippers even when it was possible or likely that a given container would be stowed on deck. This was so even when a shipper had made a specific request for below deck stowage.⁴ It was therefore consistent with Mormac's established procedure for it to have issued a clean bill of lading with respect to Du Pont's consignment and to have stowed the containers on deck.⁵

II.

The contract of carriage for Du Pont's shipment was subject to the provisions of COGSA.⁶ Since Mormac at trial failed to explain the cargo loss and abandoned all defenses except its claimed limitation of liability, clearly it was liable for the loss.⁷ The issue here, as it was in the district court, is whether, under the circumstances, the carrier may avail itself of the $500 per package limitation of liability provided in the bill of lading⁸ and authorized by Section 4(5) of COGSA.⁹

It is Du Pont's position as the shipper that goods shipped pursuant to a clean bill of lading must be stowed below deck, absent a clear agreement to the contrary or a universal custom of the trade from which the consent of the shipper may reasonably be imputed. On deck stowage, Du Pont contends, necessarily constitutes an intentional and unreasonable deviation from the contract of carriage and precludes the carrier from relying on the statutory limitation of liability. Mormac as the carrier, on the other hand, maintains that on deck carriage of the containerized cargo aboard a vessel specially designed for that purpose, while it may have been a deviation, was not "unreasonable" within the meaning of Section 4(4) of COGSA, 46 U.S.C. § 1304(4) (1970), and therefore did not make it an insurer of the cargo loss.¹⁰

The concept of deviation was rooted in the law of marine insurance long before enactment of COGSA. A marine insurer was deemed to have assumed only those risks inherent in the contemplated voyage. As a result, whenever there was a voluntary and unexcused departure from the intended course, the contract of insurance was "ousted" and the underwriters were totally discharged with respect to any loss occurring thereafter. See Hearne v. Marine Insurance Co., 87 U.S. (20 Wall.) 488 (1874); Oliver v. Maryland Insurance Co., 11 U.S. (7 Cranch) 487 (1813). A related consequence was an "ouster" of the contract of carriage itself. The carrier thereby was precluded from relying on the contractual "exceptions to liability" provided for in the bill of lading. The carrier thus became an insurer against any loss of or damage to the cargo thereafter. See, e. g., S.S. Willdomino v. Citro Chemical Co., 272 U.S. 718 (1927); Niles-Bement-Pond Co. v. Kampkiesa Kieselskabet Balto, 282 Fed. 235 (2 Cir.1922).

While the concept of deviation originally applied to unjustifiable changes of route, American courts long have held that any carrier "misconduct" which amounts to a material breach of the contract of carriage constitutes a "deviation". The consequences to the carrier were the same as in the case of a change of route. See, e. g., Propeller Niagara v. Cordes, 62 U.S. 7, 24 (1858). See generally Prosecution of the Voyage, 45 Tul.L.Rev. 807, 816 (1971); Gilmore & Black, The Law of Admiralty §§ 3-40, 3-42, at 156, 159-60 (1957). Thus, unless warranted by agreement or universal custom, on deck carriage pursuant to a clean bill of lading was held to constitute a deviation sufficiently serious to oust the contract of carriage and to render the carrier an insurer of the cargo.

The traditional rule of deviation was stated in St. Johns Corp. v. Companhia Geral, 263 U.S. 119, 124 (1923):

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