622 F.2d 851 (5th Cir. 1980), 78-2797, Cook Industries, Inc. v. Barge UM-308

Docket Nº:78-2797.
Citation:622 F.2d 851
Party Name:COOK INDUSTRIES, INC., Plaintiff-Appellant Cross-Appellee, v. BARGE UM-308, her tackle, apparel, etc., in rem, Defendant, Upper Mississippi Towing Corporation, in personam, Defendant-Appellee Cross-Appellant.
Case Date:July 31, 1980
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 851

622 F.2d 851 (5th Cir. 1980)

COOK INDUSTRIES, INC., Plaintiff-Appellant Cross-Appellee,

v.

BARGE UM-308, her tackle, apparel, etc., in rem, Defendant,

Upper Mississippi Towing Corporation, in personam,

Defendant-Appellee Cross-Appellant.

No. 78-2797.

United States Court of Appeals, Fifth Circuit

July 31, 1980

Page 852

Thomas W. Thorne, Jr., New Orleans, La., for plaintiff-appellant cross-appellee.

Faris, Ellis, Cutrone, Gilmore & Lautenschlaeger, J. Y. Gilmore, Jr., New Orleans, La., for defendant-appellee cross-appellant.

Appeals from the United States District Court for the Eastern District of Louisiana.

Before FAY, KRAVITCH and RANDALL, Circuit Judges.

FAY, Circuit Judge:

This appeal concerns the proper measure of damages to compensate a shipper for injury to a cargo of soybeans aboard a carrier's vessel en route from Oklahoma to Louisiana. The shipper accepted the cargo of deteriorating soybeans, blended the beans with a higher grade of soybean, and sold the blend at a price equal to the original market value of the cargo. The shipper then sued the carrier for damages. The district court found the carrier liable for the cargo damage but held that the shipper could recover only the cost of blending the deteriorated soybeans with the higher grade beans. Because the shipper failed to present any evidence of its blending costs, all recovery was denied.

We hold that the district court applied the incorrect rule of damages. The usual measure of damages for injury to goods in the possession of a carrier is the difference between the fair market value of the cargo at the place of destination, in like condition as when it was shipped, and its actual value at the place of destination. This market value test should determine the shipper's damages in this case. We therefore reverse the district court judgment denying recovery to the shipper, and order that damages be awarded in accordance with the traditional rule.

I. The Facts

The facts of the case are clearly set out in the district court's Statement of the Case and Findings of Fact. Record at 176-81. In February, 1973, defendant carrier Upper Mississippi Towing Corporation (UMTC) contracted to carry from Wagoner, Oklahoma to Reserve, Louisiana a consignment of soybeans belonging to plaintiff shipper Cook Industries, Inc. (Cook). On February 27, 1973, UMTC loaded the Barge UM-308 1 with approximately 43,000 bushels of soybeans 2 and issued its bill of lading to the order of Cook in Reserve, Louisiana. The bill of lading noted that the cargo was "in apparent good order" at the time of loading. Record at 5. The cargo was subsequently sampled and an Official Grain Inspection Certificate was issued and transmitted to Cook. The certificate classified the cargo as Grade No. 3 yellow soybeans

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with a moisture content of 14.5%. 3 Plaintiff's Exhibit 2.

Subsequent to loading, the Barge UM-308 was shifted from the loading facility to a fleeting area on the Verdigris River. Because UMTC did not operate its own towboats on the Verdigris River, it customarily arranged for other companies to tow its barges through the McClellan-Kerr Arkansas River Navigation System, of which the Verdigris River is a part. Generally, it took one to three days to obtain towing service for a barge awaiting transit to the Mississippi River. UMTC made daily efforts to secure a tow for the UM-308, but before towage could be arranged the waters in the McClellan-Kerr Navigation System reached flood stage due to heavy rains, and the system was closed to traffic.

Because of the long delay, UMTC hired Muskogee Marine Service to periodically check the UM-308 to insure that her moorings were secure and her hatches tight and seaworthy. No provision, however, was made to inspect the cargo itself or to insure that it was properly ventilated. Although the shipper, Cook, neither requested UMTC to inspect the cargo nor notified the carrier of the soybeans' moisture content, UMTC was aware of the nature of the cargo and knew that soybeans would spoil if left in an unventilated barge for an extended period of time.

In March, Cook notified UMTC by telex to reconsign the UM-308's cargo to Cargill, Inc. at Baton Rouge. The barge remained in the Verdigris River fleeting area until May 12, 1973, seventy-four days after loading, when it was finally towed to the Mississippi River, and then to Baton Rouge, where it arrived on May 25 with hatch covers secure and undamaged.

Cargill, Inc., Cook's consignee, inspected the cargo upon arrival and rejected it as damaged. Cook notified UMTC of the alleged damage and abandoned the entire cargo to the carrier for salvage. A cargo surveyor inspected the cargo for UMTC and found excessive heating 4 but no damage from water leakage. His report indicated that the cargo damage resulted from the moisture content of the soybeans and the extended period of stowage in an unventilated hold. Although the surveyor made no chemical or weight analysis...

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