Allied Chemical Intern. Corp. v. Companhia de Navegacao Lloyd Brasileiro
| Decision Date | 15 October 1985 |
| Docket Number | No. 1125,D,1125 |
| Citation | 775 F.2d 476 |
| Parties | , 3 Fed.R.Serv.3d 1353 ALLIED CHEMICAL INTERNATIONAL CORP., Plaintiff-Appellee, v. COMPANHIA DE NAVEGACAO LLOYD BRASILEIRO, Defendant-Appellant. ocket 85-7103. |
| Court | U.S. Court of Appeals — Second Circuit |
Richard A. Hagen, New York City (Francis R. Matera, Crowell, Rouse, Varian, Hagen & Matera, New York City, of counsel), for defendant-appellant.
Irving Ronald Storch, Carle Place, N.Y., for plaintiff-appellee.
Before MESKILL, KEARSE and WINTER, Circuit Judges.
Companhia de Navegacao Lloyd Brasileiro (Lloyd), an ocean carrier, appeals from a judgment of the United States District Court for the Southern District of New York, Owen, J., finding Lloyd liable to Allied Chemical International Corporation (Allied), a shipper, for the misdelivery of goods to the consignee, Banylsa Tecelagem do Brasil S.A. (Banylsa). The carrier caused the goods to be delivered without requiring Banylsa to produce the original order bill of lading. Lloyd also challenges the district court's refusal to interpret the Carriage of Goods by Sea Act (COGSA) package limitation, 46 U.S.C. Sec. 1304(5) (Supp. I 1983), which was incorporated into the bill of lading, to reduce Allied's recovery. The court awarded damages equal to the value of the cargo in United States dollars minus an amount that Allied had We affirm the judgment of the district court.
already recovered from Banylsa plus interest.
This case was decided without a trial. The parties submitted to the district court two stipulations of fact; the deposition of Pedro Calmon Filho, an expert on Brazilian law; memoranda, one of which included an appendix; and separate proposed findings of fact and conclusions of law. Allied alleged federal jurisdiction on the basis of admiralty or, alternatively, diversity of citizenship. The pertinent, undisputed facts follow.
In September 1980, Allied, an exporter of chemical products, received from Banylsa an order for a quantity of caprolactam, a crystalline cyclic amide used in the manufacture of nylon. The sale was to be in two lots of 6,000 bags on terms of sight drafts against documents through Banco Bamerindus do Brasil S.A. of Sao Paulo, Brazil (Brazilian bank). The sight drafts were in the amount of the per lot invoice price, $266,756.92 C & F Salvador, Brazil.
In October 1980, Allied delivered to Lloyd at the Port of Norfolk, Virginia two lots of 150 double faced pallets, each lot said to contain 6,000 bags of caprolactam to be shipped to the Port of Salvador, Brazil. The cargo was loaded onto Lloyd's vessel ITAPURA. Lloyd issued clean order bills of lading that described the cargo, listed Allied as the shipper and showed that the goods were consigned to the order of Banylsa. Banylsa was also listed as the notify party. Allied, through its bank, forwarded the shipping documents--including the sight drafts, the original bills of lading and the original commercial invoices--to the Brazilian bank for handling and collection. Allied specifically instructed the Brazilian bank to deliver the documents only against payment of the sight drafts.
On or about November 12, 1980, Lloyd's vessel arrived at the Port of Salvador. In accordance with local custom and usage, the carrier unloaded the caprolactam at a warehouse under the control of the Administration of the Port of Salvador (the port authority), an agency of the Brazilian government. The caprolactam was undamaged.
Banylsa made payment on only one of the two sight drafts and therefore received from the Brazilian bank only one bill of lading. It is the bill of lading not received and the lot to which it related that are the subject of this dispute. Hereinafter, when we refer to the cargo or to the bill of lading, we refer solely to the misdelivered goods and the bill of lading that covered them.
On November 17, 1980, Banylsa through its agent delivered to Lloyd's agent in Salvador a letter explaining simply that the original bill of lading had not been received and requesting Lloyd to issue in accordance with Brazilian import regulations a "carta declaratoria," a letter declaring that the freight had been paid at the port of origin and that the Merchant Marine Renewal Tax had been paid in Salvador. 1 That same day, Lloyd's agent issued the requested document. 2 The parties do not dispute that Allied first became aware that the sight draft had not been paid in January 1981. It was not until several weeks later, however, when Banylsa complained about the quality of the caprolactam, that Allied discovered that Banylsa had, notwithstanding nonpayment, obtained possession of the caprolactam. After an investigation that included an on-site inspection of the goods at Banylsa's facility, Allied rejected Banylsa's quality complaint.
to obtain the release of goods from the port authority, a party would have to produce either the original bill of lading or a carta declaratoria from the carrier. Thus, by virtue of the carta declaratoria, Banylsa was able to obtain possession of the caprolactam although it had not paid for the goods and it was not in possession of the bill of lading.
In early April 1981, Banylsa filed a voluntary receivership proceeding in the Civil Court of the District of Salvador, Brazil. On May 8, 1981, Allied made a demand on Lloyd for losses incurred as a result of the carrier's failure to request proper documentation before authorizing the release of the caprolactam. J.App. at 160. The demand letter stated that Allied had been advised by Lloyd that the goods were released on Banylsa's promise to deliver the original bill of lading within 90 days. Id. Negotiations between the shipper and the carrier proved unavailing and Allied filed this suit in September 1981.
In May 1981, Allied filed a claim against Banylsa in the receivership proceeding. In September 1983, Banylsa deposited with the Salvador court 20,414,907 cruzeiros to pay Allied's share of the receivership distribution. The amount was equal to Allied's claim in United States dollars at the exchange rate of 76.53 cruzeiros to the dollar, the rate in effect when Banylsa filed its petition. Allied argued that it was entitled to payment at the rate in effect on the date of Banylsa's deposit, 671 cruzeiros to the dollar. On advice of counsel, Allied abandoned its appeal and accepted a sum in cruzeiros equal to less than $40,000 as of September 1983.
In its complaint against Lloyd, Allied charged that the ocean carrier had breached its contract of carriage with Allied. It also claimed that Lloyd was liable for conversion of the cargo because Lloyd authorized the delivery of the cargo to a party not entitled to possession. The district judge decided in Allied's favor and adopted Allied's proposed findings of fact and conclusions of law virtually verbatim. The findings and conclusions cited no cases and contained not a single reference to the brief but adequate record.
On appeal, Lloyd preliminarily argues that because the district court decided this case on submission and because the court simply adopted the prevailing party's proposed findings verbatim, our review should not be limited by the clearly erroneous standard but should be de novo. On the issue of liability, Lloyd raises four challenges. First, it claims that it fully discharged its responsibility under the contract of carriage when it delivered the cargo as dictated by local custom and usage to the government controlled port authority. Second, Lloyd claims that it cannot be liable for conversion either because that would be contrary to Brazilian law or because the rights and liabilities under COGSA, 46 U.S.C. Sec. 1300 et seq. (Supp. I 1983), are exclusive. Third and fourth, Lloyd raises related arguments, payment and waiver, based on Allied's claim and partial recovery against Banylsa in the receivership proceeding. Finally, Lloyd contends that even if it is liable, the COGSA package limitation, incorporated into the bill of lading, should reduce Allied's recovery to $500 per pallet or $75,000. For the reasons that follow, we reject Lloyd's arguments.
The Supreme Court recently and unequivocally rejected the standard of review We certainly do not wish to in any way condone the verbatim adoption of proposed findings of fact. While recognizing the time pressures on district court judges, we have expressed our displeasure with this procedure in the past. E.g., International Controls Corp. v. Vesco, 490 F.2d 1334, 1341 n. 6 (2d Cir.), cert. denied, 417 U.S. 932, 94 S.Ct. 2644, 41 L.Ed.2d 236 (1974). In this we are not alone. E.g., Bessemer City, ---- U.S. at ----, 105 S.Ct. at 1509; United States v. Marine Bancorporation, 418 U.S. 602, 615 n. 13, 94 S.Ct. 2856, 2866 n. 13, 41 L.Ed.2d 978 (1974); United States v. El Paso Natural Gas Co., 376 U.S. 651, 656-57, 84 S.Ct. 1044, 1047-48, 12 L.Ed.2d 12 (1964). Nonetheless, we are bound to uphold the findings of the court below unless, on the basis of the entire record, we are convinced that they are clearly erroneous. We are not persuaded that the findings below fall short of this familiar benchmark. We therefore leave them undisturbed.
that Lloyd urges us to employ. In Anderson v. City of Bessemer City, --- U.S. ----, ----, 105 S.Ct. 1504, 1508, 84 L.Ed.2d 518 (1985), the Court reversed a Fourth Circuit decision on the ground that the appeals court "misapprehended and misapplied the clearly-erroneous standard." The circuit court had reasoned that an essentially de novo review of the record was justified because the district court had adopted, albeit with some variation, the prevailing party's proposed findings of facts. The Supreme Court adamantly disagreed. Emphasizing that "review of factual findings under the clearly-erroneous standard--with its deference to the trier of fact--is the rule, not the exception," id. at ----, 105 S.Ct. at...To continue reading
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