Cummins Sales & Service, Inc. v. London & Overseas Ins. Co.

• Decision Date: 17 May 1973
• Docket Number: No. 28600.,28600.
• Citation: 476 F.2d 498
• Parties: CUMMINS SALES & SERVICE, INC., Plaintiff-Appellee-Cross Appellant, v. LONDON AND OVERSEAS INSURANCE COMPANY and Provincial Insurance Company Defendants-Appellees-Cross Appellants, v. DEUTSCHE DAMPFSCHIFF. GES. "HANSA", Defendant-Appellant-Cross Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

476 F.2d 498 (1973)

CUMMINS SALES & SERVICE, INC., Plaintiff-Appellee-Cross Appellant, v. LONDON AND OVERSEAS INSURANCE COMPANY and Provincial Insurance Company Defendants-Appellees-Cross Appellants, v. DEUTSCHE DAMPFSCHIFF. GES. "HANSA", Defendant-Appellant-Cross Appellee.

No. 28600.

United States Court of Appeals, Fifth Circuit.

March 21, 1973.

Rehearing and Rehearing Denied May 17, 1973.

Robert M. Julian, Houston, Tex., for defendant-appellant-cross appellee.

Jon W. Montague, Houston, Tex., for defendants-appellees-cross appellants.

Philip C. Wrangle, Houston, Tex., for plaintiff-appellee-cross appellant.

Before GEWIN, THORNBERRY and CLARK, Circuit Judges.

Rehearing and Rehearing En Banc Denied May 17, 1973.

THORNBERRY, Circuit Judge:

Cummins Sales and Service, Inc., brought this suit in admiralty to recover for damage to cargo that was insured by defendants London and Overseas Insurance Company and Provincial Insurance Company ("Underwriters") and that was shipped from Tripoli, Libya, to Houston, Texas, aboard the M/S GOLDENFELS, a vessel owned by defendant Deutsche Dampfschiff. Ges. "Hansa" ("Hansa"). On an earlier appeal from a judgment for Cummins against Under-writers and for Underwriters over against Hansa, this court remanded for entry of findings and conclusions, 5 Cir., 426 F.2d 312. We now affirm the judgment as to liability but remand for a redetermination of damages.

The cargo in question was the component parts of a prefabricated metal building. In January 1967, Mid-East Supply Company, a Libyan corporation forty-nine percent of whose stock was controlled by a Cummins affiliate, contracted to purchase the building from a British concern, Taylor Woodrow, Ltd. Terms of the sale were twenty-five percent cash against documentary sight drafts, with the balance to be paid in four equal six-month installments. Taylor Woodrow shipped the building, in the form of 276 packages, to Mid-East in Tripoli aboard the SS WALTER, which arrived in Tripoli on March 3, 1967, and discharged the cargo in good order and condition. Those components which were in boxes and crates were stowed in an uncovered barge in Tripoli harbor, while the structural steel components were stowed on the dock in the open.

On March 30, 1967, while the cargo remained at Tripoli harbor, Cummins, for reasons not material to the instant appeal, assumed Mid-East's obligation to purchase the building, in return for Taylor Woodrow's arranging to re-ship the building to Cummins in Houston. Acting on instructions from Taylor Woodrow, T. Gargour & Fils, Ltd., the Tripoli firm which had handled the shipment on the outward voyage from London, made arrangements for re-shipment aboard the GOLDENFELS. After the cargo had been loaded aboard the GOLDENFELS on May 6-7, 1967, T. Gargour & Fils issued a Hansa bill of lading covering the cargo. Although the master of the GOLDENFELS did not sign the bill of lading, it was issued on a Hansa form with the master's knowledge. With two minor exceptions not relevant here ("one drum short shipped"; "one crate broken, contents loose"), the bill of lading was "clean": there was nothing in the bill of lading to suggest that the cargo was not taken aboard the GOLDENFELS in good order and condition.

After intermediate stops, the GOLDENFELS reached Houston and discharged her cargo on June 26, 1967. In the meantime, on April 24, 1967, Cummins had paid Taylor Woodrow the twenty-five percent down payment which was then overdue from Mid-East. And on May 24, 1967, while the cargo was still enroute from Tripoli, Cummins accepted sight drafts with the clean bill of lading attached, and agreed to pay them at six-month intervals over two years.

When the cargo was discharged at Houston, it was damaged. Although Cummins claimed a constructive total loss under Underwriters' policy of insurance, the marine surveyors employed by Cummins denied that the cargo was a constructive total loss, and estimated the damage at between $10,690 and $12,500. A construction company executive, Mr. L. J. Howard, testified by deposition that the damage amounted to "seventy-five percent of the cost of the building"; but later in the deposition, Howard stated that the seventy-five percent figure did not represent a monetary estimate of the cost of repairs or replacement, but was only an estimate of the number of components that had suffered any damage, ranging from minor damage to complete destruction. In addition, a marine surveyor employed by Hansa estimated the maximum damage at $20,000. Cummins did not attempt to repair or replace the damaged components, and was able to salvage them for only $11,000, in mid-1969.

After awarding judgment for Cummins, the trial court computed damages by multiplying the revised sale price of the building ($50,307.60) by seventy-five percent (the figure supplied by Mr. Howard), and by subtracting from the resulting figure the $11,000 in proceeds from the salvage sale. Judgment was entered for $26,730.70, together with $500 incidental expenses, plus interest and costs. On appeal, Hansa challenges the determination of the liability question favorably to Cummins, and is joined by Underwriters in contending that the damages awarded were excessive. Cummins, on the other hand, contends that the damages awarded were too low.

In order to make a burden-shifting prima facie case under the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. §§ 1300-1315, Cummins had to show receipt of the cargo by the carrier in good condition and arrival of the cargo at Houston in damaged condition. Demsey & Associates v. S. S. SEA STAR, 9th Cir. 1972, 461 F.2d 1009; Daido Line v. Thomas P. Gonzalez Corp., 9th Cir. 1962, 299 F.2d 669; Mamiye Bros. v. Barber Steamship Lines, Inc., S.D.N.Y.1965, 241 F.Supp. 99, aff'd, 2d Cir., 360 F.2d 774, cert. denied, 385 U.S. 835, 87 S.Ct. 80, 17 L.Ed.2d 70 (1966). The damaged condition of the cargo upon its outturn at Houston is not questioned; and the clean bill of lading covering the cargo shipped on the GOLDENFELS is sufficient proof, for purposes of Cummins' prima facie case, of receipt of the cargo by the carrier in good condition. Demsey, supra; Daido Line, supra. Although Hansa argues that Gargour & Fils, who actually issued the bill of lading on a Hansa form and who signed it, had no authority to do so from the master of the GOLDENFELS, the master's testimony contains no suggestion that Gargour & Fils had no authority to issue the bill of lading.

Hansa attempted to rebut this prima facie showing by offering evidence that the cargo had suffered extensive damage through improper stowage and exposure to the elements at Tripoli before being loaded aboard the GOLDENFELS, but the trial judge...