Centraal Stikstof Verkoopkanter, NV v. Walsh Steve. Co.

• Decision Date: 15 August 1967
• Docket Number: No. 22275.,22275.
• Parties: CENTRAAL STIKSTOF VERKOOPKANTER, N. V., Appellant, v. WALSH STEVEDORING COMPANY, Inc., et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

380 F.2d 523 (1967)

CENTRAAL STIKSTOF VERKOOPKANTER, N. V., Appellant, v. WALSH STEVEDORING COMPANY, Inc., et al., Appellees.

No. 22275.

United States Court of Appeals Fifth Circuit.

June 28, 1967.

Rehearing Denied August 15, 1967.

COPYRIGHT MATERIAL OMITTED

Rae M. Crowe, Mobile, Ala., John W. McConnell, Jr., Armbrecht, Jackson & DeMouy, John Grow, Mobile, Ala., for appellant.

Alex F. Lankford, III, Mobile, Ala., Hand, Arendall, Bedsole, Greaves & Johnston, Mobile, Ala., of counsel, for Walsh Stevedoring.

Irwin W. Coleman, Jr., Mobile, Ala., Sam W. Pipes, III, Mobile Ala., for appellee United States Fidelity and Guaranty Co., Lyons, Pipes & Cook, Mobile, Ala., of counsel.

Before RIVES, GEWIN and GODBOLD, Circuit Judges.

GEWIN, Circuit Judge:

Centraal Stikstof Verkoopkanter, N. V. (CSV) brought this suit in the United States District Court for the Southern District of Alabama against Walsh Stevedoring Co., Inc. (Walsh) and United States Fidelity & Guaranty Co. (USF& G), as insurer of the Alabama State Docks at Mobile, for damage to approximately 950 tons of nitrolime, a commercial fertilizer, stored at the State Docks. The district court granted a summary judgment for USF&G and a trial by jury resulted in a verdict for Walsh. The district court entered a judgment in accordance with the verdict and CSV appeals. We affirm.

CSV is a Dutch exporter of nitrolime, a highly corrosive chemical fertilizer composed of ammonium nitrates and calcium carbonate. Nitrolime consists of small particles or "pellets", approximately 1/8th to 1/16th of an inch in diameter. In order for it to be marketable as commercial fertilizer, it is essential that the pellets be free flowing or the nitrolime will clog up the fertilizer drills. When wetted the nitrolime will lump, harden and set up like concrete. In addition, water has a tendency to seep through the fertilizer and if wet nitrolime is not separated from the dry material, the water will contaminate the dry fertilizer and increase the damage.

In the summer of 1959, CSV shipped approximately 10,300 tons of nitrolime from Rotterdam, The Netherlands to Mobile, Alabama, aboard the S. S. Propontis. Walsh, pursuant to a contract entered into with CSV's representative in the United States, Bradley & Baker, unloaded the nitrolime in September 1959, and stored it in bulk in warehouse Center C, Room 9 of the Alabama State Docks at Mobile. A warehouse receipt was issued by the State Docks to Bradley & Baker. On January 16, 1960, the sprinkler system in the warehouse discharged and seriously damaged the 950 tons of fertilizer.

The contract between Walsh and Bradley & Baker was originally entered into in 1956 and was renewed every year until the time the damage here in issue occurred. Under the contract Walsh was to stevedore vessels in Mobile, Alabama, and Gulfport, Mississippi, for Bradley & Baker as owner, agent, or charterer. The contract required Walsh to unload the nitrolime, store it, weigh it if necessary, package it if required, and deliver it to a carrier when needed to meet sales. Specific rates were provided by the contract for each operation. The contract also provided that Walsh's liability for damage to cargo would be limited to physical damage caused by its negligence.¹

Prior to the arrival of the S. S. Propontis in Mobile, the State Docks announced an increase in the storage rates for nitrolime. Bradley & Baker requested Walsh to obtain storage facilities at the former lower rate and Walsh arranged to use the Center C, Room 9 warehouse. Center C, Room 9 is a metal clad frame building equipped with a sprinkler system. The pipes hung approximately 18 inches below the ceiling, and the heads were placed approximately 9 to 10 feet apart. The sprinklers were installed in 1931 and 1932, and, though at the time the nitrolime was stored in the warehouse, the system showed signs of age, neither the pipes nor the sprinkler heads had been replaced since they were installed. In December 1959, one of the sprinkler heads discharged and was replaced. The condition of the sprinkler system and the fact that one head had discharged was, at that time, brought to the attention of the manager of the State Docks. It was known and recognized that repairs were necessary at that time.

Upon the arrival of the S. S. Propontis, Walsh unloaded the nitrolime by means of clamshell buckets. The nitrolime was deposited into hoppers on the pier and from there loaded into trucks for the short haul to the warehouse. At the warehouse the nitrolime was dumped into a hopper and carried by means of conveyor belts to a carloader which was used to pile the fertilizer in the warehouse. The carloader propelled the nitrolime some ten or fifteen feet and could be turned in any direction so as to place the material in the desired location. It was admitted that the carloader was capable of piling the nitrolime to the height of, or above the sprinkler pipes.

CSV contended at trial that Walsh negligently loaded the warehouse in that it permitted the nitrolime to come in contact with the sprinkler system, thereby causing the trigger mechanism in a sprinkler head to corrode and eventually discharge the water. It also contended that Walsh breached an implied warranty of workmanlike service in storing the fertilizer improperly. CSV further asserted that USF&G was liable under the policy it issued to the State Docks for the Dock's negligence in allowing the nitrolime to remain improperly stored.

On this appeal CSV argues that as to its claim against Walsh, the verdict is against the great weight of the evidence, and the district court erred in not submitting its implied warranty theory to the jury. It also contends that it is not required under Alabama law to prove its case by a preponderance of the evidence as charged by the district court, that the district court erred in not charging the jury with respect to the legal consequences of Walsh's failure to store the nitrolime as required by Coast Guard regulations, and that the district court's jury charge as to proximate cause was incorrect. With respect to USF&G, it asserts that in granting summary judgment the district court misconstrued the statute authorizing the State Docks to obtain insurance, and the insurance policy itself. In addition, it contends that the district court erred in granting summary judgment because a question of fact existed as to the applicability of the exclusions in the policy.

I

CSV's cause of action against Walsh went to the jury on two theories: one sounding in tort for negligence, and one sounding in contract for negligent breach of contract. CSV alleged that the discharge of the sprinkler system was the result of the corrosion of the trigger mechanism caused by, or accelerated by, the covering of the sprinkler heads by the nitrolime, or the close proximity of the nitrolime to the sprinkler heads. It contended that Walsh had handled nitrolime before and was aware, or should have been aware of its extremely corrosive nature. It argues that as a stevedore Walsh held itself out to be an expert in the handling of such cargoes and that under its contract Walsh was required to exercise an extremely high degree of care in storing the nitrolime. Thus, it concludes Walsh breached its obligation toward CSV when it permitted the fertilizer to be piled in the warehouse in such a manner as to come in contact with, or in close proximity to, the sprinkler heads, and is liable for the damage. Finally, CSV asserts that Walsh owed it a continuing duty to watch over the fertilizer and that Walsh was negligent in allowing the fertilizer to remain stored in an improper manner.

Walsh argues that the nitrolime was properly stored, that it did not come in contact with nor was it dangerously close to the sprinkler system, and that the discharge was the result of the age and condition of the sprinkler system. It asserts that the pipes and the heads were corroded and in need of repair before the nitrolime was placed in the warehouse, and the deterioration of the system due to its age caused the trigger mechanisms to give way and discharge the water. It also contends that it owed CSV no obligation to watch over the cargo and that the nitrolime was in the care and custody of the State Docks at the time the damage occurred.

In support of its argument that Walsh owed it a continuing duty to watch over the nitrolime, CSV relies on the language of the contract which provides that Walsh shall be liable for claims resulting from the fraud of its employees engaged in delivering, receiving, and watching the cargo. CSV asserts that this language implies an obligation on the part of Walsh to watch over the cargo during its storage at the State Docks. We cannot agree. In context, this portion of the contract clearly refers to the actual unloading and storage operations, and does not create a continuing obligation on the part of Walsh to watch over the stored cargo.

The evidence presented at the trial as to the manner in which the fertilizer was stored was conflicting. Not only were there conflicts in the evidence, this is a typical case in which the jury was authorized to make credibility choices with respect to the testimony of the witnesses. CSV permitted the case to go to the jury without moving for a directed verdict. See Rule 50 F.R.Civ.P. No motion was made for a judgment n. o. v., and CSV did not move for a new trial on the grounds that the verdict was against the great weight of the evidence. Absent a motion for a directed verdict this Court may review the sufficiency of the evidence only if it constitutes plain error which if not noticed would result in a miscarriage of justice. United States v. Harrell, 133 F.2d 504 (8 Cir. 1943). Since we are convinced from a study of the record that no such error exists in this case, we are foreclosed from a further examination of the record to determine whether the verdict is against the great weight of the evidence....