Cudahy Packing Co. v. Munson SS Line

• Decision Date: 12 December 1927
• Docket Number: No. 64.,64.
• Citation: 22 F.2d 898
• Parties: CUDAHY PACKING CO. v. MUNSON S. S. LINE.
• Court: U.S. Court of Appeals — Second Circuit

22 F.2d 898 (1927)

CUDAHY PACKING CO. v. MUNSON S. S. LINE.

No. 64.

Circuit Court of Appeals, Second Circuit.

December 12, 1927.

Gilbert H. Montague, of New York City (Joseph W. Goodwin, of New York City, and Thomas Creigh, of Chicago, Ill., of counsel), for plaintiff in error.

Kirlin, Woolsey, Campbell, Hickox & Keating, of New York City (Cletus Keating and Staunton Williams, both of New York City, of counsel), for defendant in error.

Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge (after stating the facts as above).

The first objection made to a reliance upon the clause requiring written notice of claim as a condition of liability for loss is that the failure to comply with it was not pleaded in the answer. It is true that the answer alleged that each through bill of lading was subject to all conditions in the ocean bill of lading, that these two bills of lading constituted the contract of carriage, and that the answer incorporated the provisions of both. But the failure to give a written notice of loss was nowhere alleged, and the defense was apparently based on the congestion at Havana, which was an exception in the ocean bill of lading.

It is argued that the provision requiring notice of claim resembled an exception, and that the failure to give it, if that be relied upon, should have been pleaded as a defense. Much may be said for this contention, on the ground that a shipper ought to be warned of such a matter in advance of trial, so that he may suffer no surprise and be prepared to meet it. In the General G. W. Goethals (D. C.) 298 F. 933, Judge Ward held that compliance with the notice clause was a condition precedent to recovery, and had to be proved by a libelant when seeking damages for breach of a contract of carriage. That decision was affirmed by this court at 298 F. 935. To the same effect are the opinions of Judge Baker in Metropolitan Trust Co. v. Toledo, etc., Ry. Co. (C. C.) 107 F. 628, of Judge Neterer in The Sagadahoc (D. C.) 291 F. 920, and of Judge Carpenter in Brennan Packing Co. v. Cosmopolitan Shipping Co. (D. C.) 14 F.(2d) 971. And the Circuit Court of Appeals for the Third Circuit in The Westminster, 127 F. 680, held that such a notice of claim was a condition precedent, and must be affirmatively established by the party seeking to recover, irrespective of which side pleaded it.

But in the case of Central Vermont R. Co. v. Soper, 59 F. 879, the Circuit Court of Appeals of the First Circuit, while it was not obliged to decide the question and avoided passing upon it, seemed to regard a notice of claim required by a bill of lading as a condition subsequent, which should be pleaded as a defense, and so Judge De Haven held in The Tampico (D. C.) 151 F. 689.

In Southern Ry. Co. v. Mooresville Cotton Mill (C. C. A.) 187 F. 72, there were bills of lading containing time limits of 10 and 30 days in which to file claims for loss. These time limits the trial court found unreasonable and void, but held that, inasmuch as the shipper had contracted to give notice of claim, although upon unreasonable terms, the duty devolved upon him to give such notice within a reasonable time. The action, as in the case at bar, was based upon a common-law liability, and the defendant had not pleaded that the claims were not presented within a reasonable length of time. The Circuit Court of Appeals of the Fourth Circuit held: (1) That the clause requiring presentation of claims was unreasonable; (2) that, as the bills of lading contained no provision other than the one declaring that no claim could be made unless preferred within the 10 or the 30 days, the consignee was not under obligation to prefer his claim in any other time than that fixed by the statute of limitations of the state. The court also said that, if the defendant intended to rely upon the fact that the claims were not preferred within a reasonable length of time, it should have pleaded this defense.

This last was apparently a dictum based upon a decision of the New York Court of Appeals in Hoye v. Pennsylvania R. R. Co., 191 N. Y. 101, 83 N. E. 586, 17 L. R. A. (N. S.) 641, 14 Ann. Cas. 414, to the effect that a provision in a bill of lading that the carrier should not be liable for loss or damage unless a claim be made in writing within a specified time after the delivery of the property to the consignee is not a condition precedent, but a limitation of the claimant's common-law right of recovery, and is therefore a matter of defense, which must be pleaded by the carrier. Yet in New York, where a fire insurance policy required prompt notice of loss by the assured, a declaration which failed to allege compliance with this condition was said to be bad on demurrer. Inman v. Western Fire Ins. Co., 12 Wend. 452. See, also, Meech v. National Accident Soc., 50 App. Div. 144, 63 N. Y. S. 1008; Williams v. Philadelphia Fire Association, 119 App. Div. 573, 104 N. Y. S. 100; Bogardus v. New York Life Ins. Co., 101 N. Y. 328, 4 N. E. 522. Indeed, such seems to be the general rule of pleading in actions to recover upon insurance policies. Doyle v. Phœnix Ins. Co., 44 Cal. 264; McCormack v. North British Ins. Co., 78 Cal. 468, 21 P. 14; United States Lloyds, Inc., v. Savannah Marmon Agency, 29 Ga. App. 683, 116 S. E. 326; Ætna Life Ins. Co. v. Bethel, 140 Ky. 609, 131 S. W. 523; Dolbier v. Agricultural Ins. Co., 67 Me. 180; Johnson v. Phœnix Ins. Co., 112 Mass. 49, 17 Am. Rep. 65; Edgerly v. Farmers' Ins. Co., 43 Iowa, 587; Insurance Co. v. McGookey, 33 Ohio St. 555; Harriman v. Queens Ins. Co., 49 Wis. 71, 5 N. W. 12.

The distinction between a condition precedent and subsequent is largely formal, and the category in which a particular condition falls is of no great importance, so long as it is clearly understood by the profession who have to deal with it in practice. A notice of claim seems to have been termed a "condition precedent" in the Cummins Amendment to section 20 of the Interstate Commerce Act (49 USCA § 20 Comp. St. § 8604a), and the fact that the bill of lading requires the shipper to give notice if he seeks to recover makes a difference between the notice of claim and exceptions in the contract like perils of the sea, which relieve the carrier from its obligations. The requirement that notice be given by the shipper imposes an affirmative duty on him, and makes him in respect to it an actor.

The question is not one of following state practice, for the state practice does not require a defendant to plead that a plaintiff has not performed a condition precedent. The state Court of Appeals has held as a matter of law that the giving of notice is not such a condition precedent, while we have very recently held in The Gen. G. W. Goethals, supra, the contrary. If plaintiff had sued on the bills of lading instead of in tort sur case, it would have been obliged under the Goethals decision to allege and prove the giving of notice or some excuse for failure to give it. This burden of proof cannot be avoided by suing in tort. When the defendant set up the terms of the bill of lading, which are not disputed, the plaintiff had to prove everything necessary to establish a breach.

It is objected that the method of incorporating in the through bills of lading by reference the conditions of the ocean bills of lading was unreasonable, and that the conditions were therefore not binding upon plaintiff. Documents showing the form of the ocean bills of lading were mailed to the plaintiff about June 12, 1920, long before the cargo was unloaded and apparently about the time the ship sailed from Mobile and the ocean bills were issued.

In some early cases provisions inscribed on the back of bills of lading, shipping receipts and tickets affecting the liability of the carrier were held insufficient communications of the conditions of carriage. Railroad Co. v. Manufacturing Co., 16 Wall. 318, 21 L. Ed. 297; Ayres v. Western R. Corp., 14 Blatch. 9, Fed. Cas. No. 689; N. J. Steam Navigation Co. v. Merchants' Bank, 6 How. 344, 12 L. Ed. 465; Henderson v. Stevenson, 2 H. L. Sc. 470. In The Majestic, 166 U. S. 375, 17 S. Ct. 597, 41 L. Ed. 1039, the notice was in fine type, not referred to in the ticket itself. But it seems established that the provisions in the ocean bills of lading referred to in the through bill of lading were part of the contract of which the shipper was chargeable with notice. Cau v. Texas & Pac. Ry., 194 U. S. 427, 24 S. Ct. 663, 48 L. Ed. 1053; Kansas City Southern Ry. v. Carl, 227 U. S. at pages 652, 653, 33 S. Ct. 391, 57 L. Ed. 683; American Ry. Exp. Co. v. Lindenburg, 260 U. S. 584, 43 S. Ct. 206, 67 L. Ed. 414; South Atlantic S. S. Line v. London-Savannah Naval Stores Co. (C. C. A.) 255 F. 306; The Susquehanna (C. C. A.) 296 F. 461; Brennan Packing Co. v. Cosmopolitan Shipping Co. (D. C.) 14 F.(2d) 971.

It is contended that the provision in the Munson bills of lading that notice of claim of damage should be presented to the carrier in writing within 48 hours after the removal of the goods was void because (a) contrary to the public policy of Iowa, where the contract of carriage was made; (b) contrary to the policy of the laws of the United States, as declared in the Interstate Commerce Act.

There can be no doubt that the statutes of Iowa and the decisions of its courts have no bearing on the validity of the clause. In the first place, they relate only to carriage by rail, and not by water; also there is no question involved here of local state concern (Wilmington Transportation Co. v. Railroad Commission, 236 U. S. 151, 35 S. Ct. 276, 59 L. Ed. 508), and Congress has evinced a general purpose to regulate bills of lading in interstate and foreign commerce. While it has not prescribed a rule for all cases, it has entered a field in which its power to regulate is supreme, and it is highly doubtful whether state regulations would be permissible in such circumstances. Missouri Pacific...