Denby v. Seaboard World Airlines, Inc., 1127

• Decision Date: 07 June 1984
• Docket Number: D,No. 1127,1127
• Citation: 737 F.2d 172
• Parties: M.E. DENBY, Individually and on behalf of certain other concerned Underwriters at Lloyds, Plaintiffs-Appellants, v. SEABOARD WORLD AIRLINES, INCORPORATED and Flying Tiger Line, Incorporated, Defendants-Appellees. ocket 84-7018.
• Court: U.S. Court of Appeals — Second Circuit

Page 172

737 F.2d 172

M.E. DENBY, Individually and on behalf of certain other

concerned Underwriters at Lloyds, Plaintiffs-Appellants, v. SEABOARD WORLD AIRLINES, INCORPORATED and Flying Tiger Line, Incorporated, Defendants-Appellees.

No. 1127, Docket 84-7018.

United States Court of Appeals, Second Circuit.

Argued April 16, 1984.

Decided June 7, 1984.

Leonard S. Leaman, Lord, Day & Lord, New York City, for plaintiffs-appellants.

Francis A. Montbach, Bigham, Englar, Jones & Houston, New York City, for defendants-appellees.

Before FRIENDLY, PIERCE and WINTER, Circuit Judges.

FRIENDLY, Circuit Judge:

This appeal is from an order of Chief Judge Weinstein in the District Court for the Eastern District of New York, 575 F.Supp. 1134, granting summary judgment to the defendants in an action by the insurers of a shipper for loss of cargo. The basis for the order was the shipper's alleged failure to give notice of the loss within seven days after receipt of the cargo as required by Article 26(2) of the Warsaw

                Convention. 1   The appeal presents important questions concerning the meaning of Article 26(2), particularly in regard to air freight container shipments.  Although we agree with much of Chief Judge Weinstein's scholarly opinion, we believe decision hinges on factual questions that were not appropriate for resolution on the papers before the court and therefore reverse the order granting summary judgment and remand for a trial
                

The Facts

Plaintiff Denby, representing a group of insurance underwriters at Lloyds, brought this action to recover $673,190.16, the market value of thirty-six kegs of silver residue and flake shipped by the subrogor, Kodak Limited (Kodak), from England to John F. Kennedy International Airport in New York City by defendant Seaboard World Airlines, Inc. (Seaboard). ²

On July 11, 1980, ³ a driver employed by Seaboard delivered one of its standard ten-foot fiberglass containers to Kodak's plant outside of London. A Kodak employee loaded the container with forty cartons, consisting of thirty-six kegs of silver flake and residue and four skips of scrap sensitized paper. He then closed the container's doors and affixed a seal. The driver signed a receipt and delivered the container to Seaboard's warehouse at Heathrow Airport where it was stored. On July 14 a Kodak employee delivered an air waybill relating to the shipment, consisting of an original and thirteen copies, to Seaboard's Heathrow office. The air waybill described the number of packages as "1" and stated the weight and charges. Under the heading "Nature and quantity of goods (incl. dimension or volume)," the airway bill said:

SCRAP PAPER & SILVER RESIDUE FOR

SILVER RECOVERY PURPOSES

8.32m 3

SPECIAL INSTRUCTIONS

CONTAINER ARA5661 SB, SAID

CONTAIN 40 PACKAGES No.s KRO1

1/26.KPO53/1-4,KLOO 4/1-10.

In another box, "Handling information", the air waybill stated:

C.A.N. 80172 2 Commercial Invoices

1 CONTAINER ARA 5661

A/F 1/10.

Later Seaboard certified on the air waybill that the container had been shipped on flight 305 on July 16.

Flight 305 arrived in New York at 12:25 a.m. on July 17. The container was stored in Seaboard's warehouse until July 18 when Edward Kochersberger, a driver for Rochester Air Freight, commissioned by the consignee, Eastman Kodak Co. (Eastman), arrived to pick up the shipment. Precisely what happened then is not completely clear, as will be explained below; it suffices here to say that Kochersberger received only four cartons instead of forty.

On August 26 Eastman gave written notice to Seaboard claiming the loss of thirty-six kegs of silver residue and flake. The notice said:

The consignment consisted of 40 pieces. However, when the container was opened at the Seaboard World Airlines warehouse, only four bails of silver flakes were in the container.

Nearly a month later Eastman corrected the notice to say that the four barrels were scrap paper, not silver flakes.

The Proceedings in the District Court

The complaint of Denby as Eastman's subrogee characterized the shipment as After appropriate further proceedings, Chief Judge Weinstein granted the motion. The bulk of his opinion was devoted to Eastman's claim that the case was not one of "damage", for which Article 26(2) provides a seven day notice requirement, but of loss, for which no time limitation is set. He rejected this largely on the basis of the decision of the House of Lords in Fothergill v. Monarch Airlines, Ltd., [1980] 2 Lloyd's L.R. 295 (hereafter cited by page number only) that the loss of part of the contents of a passenger's suitcase constituted damage to baggage, a claim for which was barred by failure to make a complaint within seven days from the date of receipt. ⁴ He then rejected plaintiff's argument that certain acts of Seaboard's employees with respect to Kochersberger, hereafter discussed, constituted "fraud" within the meaning of Article 26(4), 575 F.Supp. at 1144, as well as arguments, no longer pressed, that Seaboard was barred from relying on the notice provisions of Article 26 by its having accepted the shipment on July 11, three days before issuing an air waybill, see id. at 1145-48, or by its having engaged in willful misconduct under Article 25, see id. at 1148.

having been of thirty-six kegs of silver flake and residue and four skips of scrap sensitized paper; the answer characterized it as a shipment of "one (1) container said to contain 'Scrap Paper and Silver Residue for Silver Recovery Purposes' ". Defendants later moved for summary judgment on the ground that Eastman had failed to give timely notice of the loss as required by Article 26(2) of the Warsaw Convention.

DISCUSSION

(1) Application of Article 26(2) of the Warsaw Convention

As noted in Reed v. Wiser, 555 F.2d 1079, 1082 n. 5 (2 Cir.), cert. denied, 434 U.S. 922, 98 S.Ct. 399, 54 L.Ed.2d 279 (1977), "[i]n order to insure uniformity of interpretation, which was one of the paramount objectives of the Convention," the text, as stated in Article 36, "est redigee en francais en un seul exemplaire" ["is drawn up in French in a single copy"]. It was this text which the Senate ratified and the President proclaimed, 49 Stat. 3000 (1934). Immediately following the French text is an English translation which apparently was before the Senate, id. at 3014.

The French text of Article 26 reads as follows:

(1) La reception des bagages et marchandises sans protestation par le destinataire constituera presomption, sauf preuve contraire, que les marchandises ont ete livrees en bon etat et conformement au titre de transport.

(2) En cas d'avarie le destinataire doit adresser au transporteur une protestation immediatement apres la decoverte de l'avarie et, au plus tard, dans un delai de trois jours pour les bagages et de sept jours pour les marchandises a dater de leur reception. En cas de retard, la protestation devra etre faite au plus tard dan les quatorze jours a dater du jour ou le bagage ou la marchandise auront ete mis a sa disposition.

(3) Toute protestation doit etre faite par reserve inscrite sur le titre de transport ou par un autre ecrit expedie dans le delai prevu pour cette protestation.

(4) A defaut de protestation dans les delais prevus, toutes actions contre le transporteur sont irrecevables, sauf le cas de fraude de celui-ci.

The English translation of this was:

(1) Receipt by the person entitled to the delivery of baggage or goods without complaint shall be prima facie evidence that the same have been delivered in good condition and in accordance with the document of transportation.

(2) In case of damage, the person entitled to delivery must complain to the carrier forthwith after the discovery of the damage, and, at the latest, within 3 days from the date of receipt in the case of baggage and 7 days from the date of receipt in the case of goods. In case of delay the complaint must be made at the latest within 14 days from the date on which the baggage or goods have been placed at his disposal.

(3) Every complaint must be made in writing upon the document of transportation or by separate notice in writing dispatched within the times aforesaid.

(4) Failing complaint within the times aforesaid, no action shall lie against the carrier, save in the case of fraud on his part.

In view of the importance which the district judge properly attached to the decision of the House of Lords in Fothergill v. Monarch Airlines, Ltd., supra, ⁵ we begin with a statement of the simple facts of the case, p. 297, to show how far it controls the case at bar and how far it does not. Mr. Fothergill arrived at Luton Airport in March, 1975, after a flight from Italy to England. When his registered baggage, a suitcase containing his personal effects, was delivered to him, he noticed that it was damaged. He immediately filed a Property Irregularity Report on a printed form; under the heading "Nature of Damage" there was inserted:

Side seam completely parted from the case. Damage occurred on inbound flight.

The damage to the suitcase was later fixed at pounds sterling 12.50, the airline accepted liability, and this did not figure further. After reaching home Mr. Fothergill discovered that some of the contents were missing: a shirt, a pair of sandals and a cardigan, valued at pounds sterling 16.50. He made a claim against his insurers for this amount, which was satisfied. Thereafter, the insurers brought suit to recover this added amount, although Mr. Fothergill had given no further notice of loss to Monarch. The House of Lords agreed that the suit was barred by failure to give notice within the time limited by Article 26(2) of the Convention. ⁶

The House of Lords was applying not the Warsaw Convention as amended by the Hague Protocol but the Carriage by Air Act, 1961, 9 & 10 Eliz. 2, ch. 27, Sec. 1(1) & sched. 1, which adopted these as British law. An English text had been annexed as Part I of a first schedule to that Act, and the French official text as Part II....