U.S. v. Lykes Bros. S. S. Co., Inc.

• Citation: 1975 A.M.C. 2244,511 F.2d 218
• Decision Date: 09 April 1975
• Docket Number: No. 72--1633,72--1633
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. LYKES BROS. STEAMSHIP CO., INC., in personam, and SS MARJORIE LYKES, her engines, tackle, etc., in rem, Defendants-Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 218

511 F.2d 218

UNITED STATES of America, Plaintiff-Appellant, v. LYKES BROS. STEAMSHIP CO., INC., in personam, and SS MARJORIE LYKES, her engines, tackle, etc., in rem Defendants-Appellees.

No. 72--1633.

United States Court of Appeals, Fifth Circuit.

April 9, 1975.

Anthony J. P. Farris, U.S. Atty., B. Stephen Rice, James Gough, Asst. U.S. Attys., Houston, Tex., Anthony W. Gross, Dept. of Justice, Admiralty & Shipping Section, Walter H. Fleischer, Ronald R. Glancz, Morton Hollander, Appellate Sec., Civ. Div., Dept. of Justice, Washington, D.C., for plaintiff-appellant.

Kenneth D. Kuykendall, George W. Renaudin, Houston, Tex., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before BROWN, Chief Judge, and WISDOM and AINSWORTH, Circuit Judges.

JOHN R. BROWN, Chief Judge:

This appeal presents the troublesome and recurring and sometimes confusing problem of properly allocating the burden of proof between Shipper and Carrier in a suit for damages to perishable cargo. The United States (Shipper) brought suit to recover for damage to a shipment of whole wheat flour transported by Lykes (Carrier) from Houston Texas, to Gdynia, Poland. ¹ Upon outturn in Poland, the flour was totally infested by weevils--one of the species bears the name of confused flour beetle--and was rejected as unfit for human consumption. Damage to the cargo amounted to $21,751.78. The District Court in a non-jury trial found the Government failed to discharge its burden of proving the cargo was delivered to the defendant in actual good order and condition and thereupon dismissed the complaint. We conclude the District Court misconstrued Carrier's obligation to Shipper. Therefore, we vacate and remand for further consideration not inconsistent with this opinion.

All Weevils On Board

In attempting to sustain its burden of proving the nine rail carloads of whole wheat flour (8,332 100-pound bags) were delivered to Carrier in good order and condition, the Government presented a detailed description of the milling and transportation processes. A clear understanding of that procedure is helpful to our review of the District Court's factual findings as to the cause and origin of the weevil infestation. ²

The flour was milled by the Kimbell Diamond Milling Company in its Texas mills, three rail carloads at Graham, and six at Seguin. Under the standard practice, when the wheat arrived at the mills, it was initially placed either in a storage tank or an elevator, where it was fumigated. ³ The grain was then run through a series of separators and screeners to remove foreign matter. Then it was milled and mechanically packed in cotton bags. While the flour was being bagged, Government inspectors took samples which were analyzed by local Department of Agriculture laboratories for evidence of filth or insect fragments. ⁴ The Commodity Inspection Certificates issued by the laboratories for all nine carloads showed no findings of insect fragments or other filth.

The bagged flour was loaded into rail cars. ⁵ The cars were sealed with masking tape, fumigated by introducing methyl bromide through a hole, which then was itself Government sealed. The Graham mill used 15 to 20 pounds of methyl bromide per rail car, the Seguin mill used 18 pounds. On direct examination, Dr. Henderson testified fumigation with 15 to 20 pounds of methyl bromide per car would be adequate to kill all stages of infestation in flour. But when pressed by defense counsel to state 15 to 20 pounds would kill 100% of each stage, Dr. Henderson equivocated by saying he did not want to give an exact answer because there are too many other factors affecting infestation, such as the seal on the doors and outside temperature.

James S. Cook, a defense witness, was not so equivocal. An entymologist and former employee of the Department of Agriculture Research Service, he testified a 15 to 18 pound does of methyl bromide would kill insects in each stage, 'but it is not adequate to kill all insects in all stages throughout the car.' Asked what conditions would be required to kill 100% of all stages of all insects, he described the necessity for almost ideal conditions and an average dose of 27 pounds per car. ⁶

Carrier's Custody

The carloads of flour arrived at the Port of Houston on May 26, May 27, June 7, and June 8, 1965. Wharf receipts prepared by Carrier reflect that six of the nine carloads were found to be infested upon opening in Houston. Those cars were then fumigated a second time.

Prior to loading, SS MARJORIE LYKES was inspected by a member of the Houston Merchants Exchange and a certificate was issued stating the vessel's holds were free of live infestation. On June 13 and 14 all the flour was loaded into the ship's No. 4 lower hold. A clean bill of lading was issued by Carrier on June 14.

While still in Houston, 714 bags of milo (animal feed) were stowed in the No. 4 hold, directly on top of the flour cargo. Only large sheets of cardboard, separated the cargoes. ⁷

The District Court based its critical finding that the Government failed to 'discharge its burden of demonstrating actual good order and condition of the cargo upon its arrival in Houston' on both the expert witnesses' testimony and the infestation found in the rail cars. The Court found (i) there had not been a 100% kill, (ii) live eggs therefore infested the flour when delivered to Lykes, and (iii) they constituted an inherent vice in the cargo.

The Strike Delay

SS MARJORIE LYKES departed Houston at 0500 hours June 15, 1965 and arrived in Beaumont at 1900 hours that evening. Additional cargo was to be loaded in Beaumont, and later in other Gulf ports. At midnight on June 15, the Marine Engineers Beneficial Association declared a strike which prevented the ship from departing Beaumont. ⁸ The strike lasted until August 28, 1965 and SS MARJORIE LYKES remained strike bound in Beaumont until September 8. Subsequently she loaded more Cargo in New Orleans and Mobile, and finally arrived in Gdynia, Poland October 13, 1965.

Discovery Of Infestation

While the SS MARJORIE LYKES was idle in Beaumont, a shore-based inspector was employed to check the ship's mooring lines and cargo. The inspector, John Young, testified that he checked the vessel's holds every 7 to 10 days during the strike. On August 19, 1965 he discovered the flour cargo in hold No. 4 was infested with live weevils. Young notified an official of Carrier on August 19, but no attempt to notify Shipper was made until August 26.

Even then, Carrier merely sent a letter, notifying Shipper of the discovery of weevil infestation and requesting instructions. Shipper did not respond, but Carrier decided to fumigate the shipment anyway. A second letter was sent on August 31 to notify Shipper of that decision. Finally, on September 6 the cargo was fumigated.

The District Court found Carrier's care of the cargo was not free from negligence. From the testimony, the Court found Young actually entered hold No. 4 only once, on August 19, when he discovered the live weevil infestation. It was negligent of Carrier to fail to notify CARE, Inc. until 7 days had passed, and then only by letter through the regular mails. The Court found Carrier compounded its negligence by failing to fumigate the cargo until September 6, 18 days after the initial discovery of infestation.

Discharge Of The Flour In Poland

One day prior to departing Beaumont on September 8, 1965, a portion of the milo cargo was discharged from hold No. 4 due to dampness acquired during the vessel's stay in Beaumont. When the flour cargo was discharged in Gdynia, from October 13 to 15, 1965, inspectors for both Carrier and Shipper examined the flour and found it was infested and unfit for human consumption. ⁹ The entire cargo was rejected by Shipper and sold as animal fodder. The Shipper's loss totaled $21,751.78.

District Court Findings Of Fact And Conclusions Of Law

The District Court made four critical findings of fact: (i) Shipper failed to establish the actual good order and condition of the cargo upon its arrival in Houston; (ii) there was insufficient evidence to show what part of the infestation, if any, occurred because of the milo's proximity to the flour; (iii) Carrier adequately brought itself within the strike exception to liability provided in COGSA § 4(2)(j), 46 U.S.C.A. § 1304(2)(j); and (iv) the Carrier failed to demonstrate its freedom from negligence in caring for the cargo.

The District Court isolated Shipper's failure to establish actual good order and condition of the cargo at the time of delivery to Carrier as the fatal element in its claim. It held Shipper's failure to discharge that burden of proof defeated any prima facie case and, therefore, precluded any recovery.

Burden Of Proof

Modern disputes over ocean-going freight are governed by COGSA,46 U.S.C.A. § 1300 et seq. A Shipper complaining of cargo-damage must prove delivery in good order and condition, and outturn by the vessel in damaged condition to make out a prima facie case. Zack Metal Co. v. S.S. Birmingham City, 2 Cir., 1962, 311 F.2d 334, 337, 1962 A.M.C. 925; Daido Line v. Thomas P. Gonzalez Corp., 9 Cir., 1962, 299 F.2d 669, 671, 1962 A.M.C. 1299. As an initial step in demonstrating good order and condition Shipper relied on the clean bill of lading issued by Carrier. But a clean bill of lading merely attests to apparent good condition of cargo, based on external inspection. In Compagnie de Navigation v. Mondial United Corp., 5 Cir., 1963,316 F.2d 163, 170, 1963 A.M.C. 946, 951, we held, '(w)here because of the perishable or intrinsic nature of the commodity, the internal condition is not adequately revealed by external appearances, cargo may have a considerable burden of going further to prove actual condition.'

While standing by the clean bill of lading, Shipper admitted, indeed was forced to admit, due to the discovery of infestation in the rail...