Caterpillar Overseas, SA v. SS Expeditor

• Decision Date: 20 June 1963
• Docket Number: Docket 27956.,No. 245,245
• Citation: 318 F.2d 720
• Parties: CATERPILLAR OVERSEAS, S.A., Libellant-Appellant, v. S.S. EXPEDITOR and American Export Lines, Inc., Respondent-Appellee.
• Court: U.S. Court of Appeals — Second Circuit

318 F.2d 720 (1963)

CATERPILLAR OVERSEAS, S.A., Libellant-Appellant, v. S.S. EXPEDITOR and American Export Lines, Inc., Respondent-Appellee.

No. 245, Docket 27956.

United States Court of Appeals Second Circuit.

Argued March 6, 1963.

Decided June 20, 1963.

Bigham, Englar, Jones & Houston, New York City (F. Herbert Prem, New York City, of counsel), for libellant-appellant.

Haight, Gardner, Poor & Havens, New York City (M. E. DeOrchis, Clifford J. Brenner, New York City, of counsel), for respondent-appellee.

Before CLARK and WATERMAN, Circuit Judges, and ANDERSON, District Judge.

WATERMAN, Circuit Judge.

Caterpillar Overseas, S.A. appeals from a final decree in admiralty denying recovery in its action against American Export Lines, Inc., for damage to cargo. The decree was entered in the United States District Court for the Southern District of New York, Metzner, J., where jurisdiction was based upon 28 U.S.C. § 1333.

On December 30, 1959, Caterpillar shipped two tractors from New York to Tripoli, Libya, on appellee's vessel, the S.S. Expeditor. Because the vessel's draft was too deep for a berth at the port of Tripoli, the ship anchored, upon arrival, in the Tripoli harbor. There the tractors were transferred from the S.S. Expeditor, by use of her tackle operated by stevedores, to the deck of a steel lighter which was secured by lines to the ship. The lighter had been hired and the stevedores employed by W. E. Rippon & Sons, appellee's agent in Tripoli for many years. The lighterage was billed to the consignee of the cargo, but, as permitted by the bill of lading, the consignee was neither consulted by the ship's agent concerning the use of the lighter nor notified of the arrival of the ship.

After the tractors had been placed on the deck of the lighter and chocked, and while the stevedores were lifting a sling load of additional cargo from the ship's hold, the lighter listed toward the ship and the two tractors were cast overboard. They were subsequently raised and deposited on the quay in a damaged condition.

At the trial below, American Export Lines sought to escape liability by setting up three exculpatory clauses in the bill of lading,¹ the net effect of which was to excuse the carrier from any liability for loss or damage to the goods when they were not in its actual custody, or when they had been "discharged" onto a wharf or lighter. Moreover, American Export denied that it was negligent in the handling of appellant's cargo. Caterpillar sought to establish defendant's negligence by offering proof that the lighter was unseaworthy and that it was given only a perfunctory examination by American Export's agents before use. Caterpillar also maintained that the exculpatory clauses in the bill of lading, relied upon by appellee, were void under Section 1 of the Harter Act, 46 U.S.C. § 190 et seq., or Section 3(a) of the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. § 1300 et seq. The district court ruled that the Harter Act and COGSA were inapplicable to the facts of this case, gave effect to the exculpatory clauses of the bill of lading, and held that American Export was not liable for the damage to appellant's cargo. We reverse and remand with instructions that a decree be entered in favor of libelant, Caterpillar Overseas, Inc.

Under the general law of maritime carriage, public carriers of goods by sea were absolutely responsible for their safe arrival, subject to certain common law exceptions not here relevant. The Propellor Niagara v. Cordes, 21 How. 7, 16 L.Ed. 41 (1858); Carver, Carriage of Goods by Sea 3-20 (9th ed. 1952). During the Nineteenth Century shipowners sought to limit their stringent liabilities for loss or damage to cargo by inserting exculpatory clauses in their bills of lading. Some of these clauses exempted the carrier from liability for loss due to particularly-described perils and causes. Others went so far as to relieve the carrier from liability for the results of his own negligence. Because of the superior bargaining position of the carriers, shippers of goods were largely powerless to avoid the proliferation of these exceptions to liability, and bills of lading became contracts of adhesion forced upon shippers by carriers. See generally Gilmore & Black, The Law of Admiralty 119 et seq. (1957); Note, 27 Texas L.Rev. 525 (1949).

In 1893 Congress sought to eliminate these abuses by enacting the Harter Act, 46 U.S.C. § 190 et seq. Section 1 of the Act provides that:

"It shall not be lawful for the * * * owner of any vessel transporting * * * property from or between ports of the United States and foreign ports to insert in any bill of lading * * * any clause, * * * whereby it * * * shall be relieved from liability for loss or damage arising from negligence, fault, or failure in proper loading, stowage, custody, care, or proper delivery of * * * property committed to its * * * charge. Any and all words or clauses of such import inserted in bills of lading * * shall be null and void and of no effect."

Section 2 declares of no effect any attempt to lessen, weaken or avoid the obligations of the owner to exercise due diligence properly to make the vessel seaworthy. In 1936, the Harter Act was supplanted, in large part, by the Carriage of Goods by Sea Act, 46 U.S.C. § 1300 et seq., which reaffirmed the carrier's liability for loss or damage to cargo caused by its own negligence. COGSA's coverage, however, extends only to the period, in foreign commerce, "from the time when the goods are loaded on to the time when they are discharged from the ship." 46 U.S.C. § 1301(e). Harter remained applicable, therefore, to the period between the discharge of cargo from the vessel and its proper delivery. Gilmore & Black, supra at 126.

Under general maritime law, a port to port contract of carriage ordinarily requires the carrier to deliver goods into the possession of the consignee, or at least to place the goods upon a fit wharf at the port of destination. See Tan Hi v. United States, 94 F.Supp. 432 (N.D.Cal.1950); The Titania, 131 F. 229, 230 (2 Cir. 1904); The Mary Washington, 16 Fed.Cas. 1006, No. 9,229. This duty of proper delivery is not, of course, conterminous with the duty to transport, Isthmian Steamship Co. v. California Spray-Chemical Corp., 300 F.2d 41, 46 (9 Cir. 1960); nor is it affected by the allocation of costs between carrier and shipper. Ibid. Thus the carrier remains liable for negligence even if, as here, the goods are required to be off-loaded in the harbor and carried to shore by means of a lighter, and even if it is agreed that the shipper shall bear the costs of lighter age. Under Section 1 of the Harter Act, therefore, Clauses 1 and 12 of the present bill of lading, taken by themselves, would appear to be void insofar as they attempt to shift the risk of lighterage to the goods.

Appellee relies primarily, however, upon Clause 4 of its bill of lading which purports to make delivery of the goods, and thus the termination of the carrier's statutory and contractual liability, concurrent with discharge of the cargo from the vessel, wherever that discharge may take place:

"4. In any situation whatsoever and wheresoever occurring * * * which in the judgment of the Carrier or the Master is likely to give rise to * * * delay or difficulty in arriving, discharging at or leaving the port of discharge or the usual or agreed place of discharge in such port, * * * the Carrier or the Master * * * may discharge the goods into depot, lazaretto, craft, or other place; or * * * may discharge and forward the goods by any means * * *. The Carrier or the Master is not required to give notice of discharge of the goods or the forwarding thereof as herein provided. When the goods are discharged from the ship, as herein provided, they shall be at their own risk and expense; such discharge shall constitute complete delivery and performance under this contract and the Carrier shall be freed from any further responsibility. * *" (Emphasis supplied.)

The purpose of the clause is apparent. By equating "discharge" with "delivery" the carrier seeks to eliminate the operation of the Harter Act upon foreign trade. By fiat it seeks to secure immunity from liability which no combination of mere exculpatory clauses could achieve. All of this it purports to accomplish in the name of a freedom of contract which Congress, in enacting Harter and COGSA, found to be largely fictional in view of the disparate positions of the parties.

The Harter Act does not define "proper delivery," however. It remains to be determined, therefore, whether such a delivery may be accomplished by the mere discharge of goods from the vessel, wherever that discharge may take place.

In Isthmian Steamship Co. v. California Spray-Chemical Corp., 290 F.2d 486 (9 Cir. 1961), on reargument, 300 F.2d 41 (9 Cir. 1962), cargo was discharged from the carrier's vessel, in the harbor at Alexandria, Egypt, to a lighter for oncarriage to the dock. In an action for damage to the cargo while it was on the lighter the carrier's defense was based upon two bill...