Otis McAllister & Co. v. Skibs

• Decision Date: 10 October 1958
• Docket Number: No. 15940.,15940.
• Citation: 260 F.2d 181
• Parties: OTIS McALLISTER & CO., a corporation, Appellant, v. SKIBS, a/s MARIE BAKKE, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

260 F.2d 181 (1958)

OTIS McALLISTER & CO., a corporation, Appellant, v. SKIBS, a/s MARIE BAKKE, Appellee.

No. 15940.

United States Court of Appeals Ninth Circuit.

October 10, 1958.

Derby, Cook, Quinby & Tweedt, Carter Quinby, Lloyd M. Tweedt, San Francisco, Cal., for appellant.

Lillick, Geary, Wheat, Adams & Charles, Harry L. Haehl, Jr., George W. Hellyer, Jr., San Francisco, Cal., for appellee.

Before STEPHENS, Chief Judge, and DENMAN Senior Circuit Judge and BARNES, Circuit Judge.

DENMAN, Senior Circuit Judge.

Appellant, an importer of coffee from Callao, Peru, to San Francisco, hereafter Importer, appeals from a decision holding valid an invoice valuation provision in the bill of lading for coffee carried in the Motorship Marie Bakke. It is agreed that the amount recoverable for appellee's admitted negligence in the carriage of the coffee, causing a loss of part of it and injuring some of it, would be lessened under this provision by $3,555.83 below that recoverable if the damage were based on the value on arrival at San Francisco.

The pertinent part of the bill of lading proviso so held valid, reads:

"With respect to goods of an actual value not exceeding $500 lawful money of the United States per package * * * it is agreed that * * * shall be an amount equal to the shipper\'s invoice value * * * plus * * * freight, insurance and duties * * * irrespective of whether any other value is greater or less, and in case of loss of, or damage to, or in connection with such goods, the Carrier\'s liability, if any, shall be determined on the basis of such `agreed value\' * * * and pro rata in case of partial loss or damage * * *" Emphasis added.

The importer contends, and we agree, that this provision of the bill of lading lessening the liability for negligence below that based on destination value is "null and void and of no effect" under Section 3(8) of the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1303(8), hereafter Cogsa, providing:

"(8) Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with the goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this chapter, shall be null and void and of no effect. A benefit of insurance in favor of the carrier, or similar clause, shall be deemed to be a clause relieving the carrier from liability." Emphasis added.

The only lessening of liability provided in that act is that in its section 4(5) to an amount not exceeding $500 per package. That section provides:

"(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

"By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained."

Here there was no declaration of a higher value in the bill and no agreement about another greater maximum amount.

In the admiralty proceeding of the American Trading Co. v. Steamship Harry Culbreath, 1952 A.M.C. 1170 the United States District Court for the Southern District of New York reached a similar conclusion as to an identical clause, confirming an excellent opinion of the Commissioner which summarized the prior decisions, including its prior decision in E. S. Ullmann-Allied Co. v. The George E. Pickett, D.C., 77 F.Supp. 988, 1948 A.M.C. 453.

What Cogsa does is restore the basis of recovery for the usual carriage of goods to the value at the point of destination as it was at common law and in admiralty before the Harter Act, 46 U.S. C.A. § 190 et seq. St. Johns N. F. Shipping Corp. v. S. A. Companhia Geral, etc., 263 U.S. 119, 125, 44 S.Ct. 30, 68 L.Ed. 201.

Subsequently under the Harter Act the carrier and importer could contract for an "agreed value" of the cargo carried which might lessen the carrier's liability below that based upon value at destination. The Ferncliff, D.C., 22 F.Supp. 728, affirmed by the Supreme Court, Smith v. The Ferncliff, 1939, 306 U.S. 444, at page 449, 59 S.Ct. 615, at page 617, 83 L.Ed. 862, which endorses the reasoning of the District Court that,

"In operation the clause only eliminates prospective profit, and limits the damage to the owner\'s actual loss in the transaction. It may even operate to his advantage if the market value at destination is less than the invoice value * * * the invoice value clause as here worded is not against public policy and should be given effect."

However, Cogsa had become effective in the United States on April 16, 1936, after performance of the contract to carry Smith's goods by the Ferncliff, and the court, referring to its holding of the then validity of the Ferncliff's valuation clause, significantly states at page 450 of 306 U.S., at page 617 of 59 S.Ct....