David Crystal, Inc. v. Cunard Steam-Ship Company

• Decision Date: 10 October 1963
• Citation: 223 F. Supp. 273
• Parties: DAVID CRYSTAL, INC., Libellant, v. The CUNARD STEAM-SHIP COMPANY Limited, Respondent Petitioner, and John T. Clark & Son, Respondent-Impleaded Petitioner, and Penson & Company, Respondent-Impleaded.
• Court: U.S. District Court — Southern District of New York

223 F. Supp. 273

DAVID CRYSTAL, INC., Libellant, v. The CUNARD STEAM-SHIP COMPANY Limited, Respondent Petitioner, and John T. Clark & Son, Respondent-Impleaded Petitioner, and Penson & Company, Respondent-Impleaded.

United States District Court S. D. New York.

October 10, 1963.

COPYRIGHT MATERIAL OMITTED

Bigham, Englar, Jones & Houston, New York City, for libellant; John L. Quinlan, New York City, of counsel.

Lord, Day & Lord, New York City, for respondent-petitioner, The Cunard Steam-Ship Company Limited; John F. O'Connell, New York City, of counsel.

Atkins & Weymar, New York City, for respondent-impleaded petitioner, John T. Clark & Son; William Weymar, Jr., Joseph B. McDonald, New York City, of counsel.

Enrico S. Sanfilippo and Keesing & Keesing, New York City, for respondent-impleaded, Penson & Co.; Enrico S. Sanfilippo, John Keesing, New York City, of counsel.

LEVET, District Judge.

This action in admiralty, brought by the libellant, David Crystal, Inc. (Crystal), seeks to recover the value of twenty-eight of its shipment of twenty-nine cases of shirts transported by the respondent, Cunard Steam-Ship Co. (Cunard), pursuant to an ocean bill of lading consigning the goods to Crystal's customs broker in New York, Penson & Company (Penson).

The original libel asserted a cause of action against Cunard for non-delivery of twenty-eight of the twenty-nine cases of shirts. Cunard in its answer denied the material allegations of the libel and asserted the affirmative defenses of limited liability under both The Carriage of Goods by Sea Act, 46 U.S.C. § 1304(5) and the terms of the bill of lading. At the same time Cunard, pursuant to Admiralty Rule 56, impleaded its stevedore, John T. Clark & Son (Clark), seeking "full liability over and indemnity" for alleged breach of its stevedoring and terminal operating contract. Clark answered both Cunard's impleading petition and the libel by denying the principal allegations of both and asserting the affirmative defense of delivery and limited liability. Clark thereafter impleaded the libellant's customs broker Penson, alleging negligence and seeking "full liability over * * * and indemnity." Penson answered both the libel and the impleading petition denying the material allegations in each and asserting as affirmative defenses complete exoneration and limitation of liability resulting from the terms of its contract with the libellant.

It was in this posture that the pleading stood, save for certain amendments by Cunard and Penson, until the completion of the trial, when libellant asked, and was granted, permission to amend its libel to conform to the proof. The resulting amended libel asserted for the first time direct claims against Clark for negligence and Penson for breach of contract and conversion and a second cause of action against Cunard for conversion. Cunard, Clark and Penson all filed exceptions to the amended libel. By memorandum decision, dated June 6, 1963, I overruled the exceptions to the direct claims against Clark and Penson but sustained Cunard's exception to the second cause of action for conversion. The jurisdictional questions raised by the amended libel as well as those raised by the original pleadings were to be determined after submission of further briefs and proposed findings of fact keyed to the testimony and proof.

After hearing the testimony of the parties, examining the exhibits, the pleadings, the briefs and proposed findings of fact and conclusions of law submitted by counsel, this court makes the following Findings of Fact and Conclusions of Law pursuant to Admiralty Rule 46½.

FINDINGS OF FACT

1. At all times herein pertinent, David Crystal, Inc. was and is a corporation organized and existing under the laws of the State of New York with an office and place of business in the County, State and City of New York.

2. At all times herein pertinent, the respondent-petitioner, Cunard Steam-Ship Co. Ltd., was and still is a corporation organized and existing under the laws of the United Kingdom with its principal place of business in Liverpool, England, and an office and place of business in the City, County and State of New York.

3. At all times herein pertinent, respondent-impleaded petitioner, John T. Clark & Son, was and still is a corporation organized and existing under the laws of the State of New York with an office and place of business in the City, County and State of New York.

4. At all times herein pertinent, respondent-impleaded, Penson & Co., was and is a co-partnership of Harvey Penson, Jack Penson and Louis Penson, doing business under the name Penson & Company, with an office and place of business in the County, State and City of New York.

5. On October 31, 1957 at Le Havre, France, 29 cases of shirts owned by libellant were received in good order and condition by Cunard for shipment, freight prepaid, aboard Cunard's vessel, SS Trelyon.

6. Penson was the named consignee in the bill of lading (Lib. Ex. 1) and was acting as Crystal's customs broker with regard to this shipment. Crystal as owner of the shipment, was the real party in interest, and has standing to bring this action.

7. The 29 cases of shirts were carried by Cunard aboard the SS Trelyon from Le Havre, France, to New York, N. Y., between October 31, 1957 and November 14, 1957.

8. On November 4 or 5, 1957, prior to the arrival of the vessel, Penson received by air mail from the shipper, W. Wingate & Johnson, two original consolidated bills of lading and several copies of the consular and commercial invoices pertaining to this shipment.

9. Upon receipt of these documents, Penson's documents department prepared a folder for this shipment in which were kept all documents pertaining thereto. (Penson Ex. I) Prior to November 14, 1957, Penson prepared the United States Customs Consumption Permit and submitted it, together with a duplicate original bill of lading, to U. S. Customs. After approval by Customs, the duty was paid by Penson and the entry permit was validated on November 12, 1957. The validated entry permit was forwarded by government messenger on November 14, 1957 to U. S. Customs, Pier 2, Bush Terminal.

10. On November 13, 1957, Cunard mailed to Penson a notice that the SS Trelyon would arrive at Pier 2, Bush Terminal, Brooklyn, on November 14, 1957. This notice was received by Penson on November 14, 1957.

11. Penson endorsed one of the duplicate original bills of lading (Lib. Ex. 1) and presented it to Cunard's Inward Freight Department on November 14, 1957.

12. After receiving the endorsed bill of lading, Cunard advised its terminal operator, Clark, by telephone on November 14, 1957 that all freight had been received and that it was in order to release the goods to the consignee, Penson. upon presentation of Penson's delivery order to Clark.

13. On November 15, 1957, the 29 cases of shirts were discharged from the SS Trelyon in the same good order and condition as shipped and were landed by employees of John T. Clark & Son on the dock at Pier 2, Bush Terminal.

14. Case No. 92 containing 420 shirts was delivered to Public Stores for Customs inspection and the remaining 28 cases were segregated by employees of John T. Clark & Son and kept together on Pier 2, Bush Terminal, Brooklyn, New York, on November 15, 1957.

15. Clark acted as stevedore and terminal operator at Pier 2, Bush Terminal, Brooklyn, pursuant to a written contract with Cunard (Lib. Ex. 4) and undertook to deliver the cargo unloaded from the SS Trelyon to the named consignee in the bill of lading upon receiving advice from Cunard that all freight charges had been paid.

16. On November 14, 1957, after receiving the arrival notice from Cunard and completing clearance of the shipment through Customs, the shipment folder was given to Penson's traffic clerk, Jose Perez, who prepared and signed a delivery order naming Arrow Carriers, one of several trucking firms employed by Penson, as the trucking company to accept delivery of the shirts at the pier. The completed delivery order was to be mailed to Arrow Carriers. As was the custom and practice at Penson, after Perez had signed the delivery order, he marked the shipment folder (Penson Ex. I) to indicate that the delivery order had been mailed on November 14, 1957. He then placed the completed delivery order on the outside of the shipment folder and allowed perhaps five or ten folders to accumulate before placing the delivery orders in the mail basket to await a pick-up by the mail clerk.

Shortly after Perez had signed the delivery order it was surreptitiously taken from Perez' desk by another Penson employee, Louis Segarra, when Perez momentarily stepped away. Segarra also took a blank delivery order and delivered both the original and the blank to one Arthur Schwartz, a former employee of Penson. All of these actions were pursuant to a conspiracy to effectuate a misdelivery of the Crystal shipment in which the co-conspirators were, in addition to Segarra and Schwartz, Andrew Rigley, Salvatore Orlando and Anthony Garite. The only Penson employee among the conspirators was Segarra. In further pursuance of the plan, Schwartz handed the original and blank delivery order to Rigley, who thereupon copied the information from the completed delivery order to the blank form and inserted the name of a fictitious trucking company, C&L Trucking Co., in the place of Arrow Carriers. Another confederate, Orlando, forged Perez' signature to the delivery order. Rigley then destroyed the original. Segarra and Schwartz were given a ring for their participation in the conspiracy.

17. Perez did not physically determine that the order actually was mailed or that the mailroom clerk picked it up. (392, 411) Penson kept no mail book and the only record that the completed delivery order had been sent out was the notation on the shipment folder (Penson Ex. I) which was placed thereon when Perez had signed the delivery order. Perez did not see...