Georgia Ports Authority v. Servac Intern., s. A91A1996

• Decision Date: 11 February 1992
• Docket Number: Nos. A91A1996,A91A1997,s. A91A1996
• Citation: 415 S.E.2d 516,202 Ga.App. 777
• Parties: , 17 UCC Rep.Serv.2d 869 GEORGIA PORTS AUTHORITY v. SERVAC INTERNATIONAL. SERVAC INTERNATIONAL v. GEORGIA PORTS AUTHORITY.
• Court: Georgia Court of Appeals

Page 516

415 S.E.2d 516

202 Ga.App. 777, 17 UCC Rep.Serv.2d 869

GEORGIA PORTS AUTHORITY v. SERVAC INTERNATIONAL.

SERVAC INTERNATIONAL v. GEORGIA PORTS AUTHORITY.

Nos. A91A1996, A91A1997.

Court of Appeals of Georgia.

Feb. 11, 1992.

Brennan, Harris & Rominger, Edward T. Brennan, Savannah, for appellant.

Clark & Clark, Fred S. Clark, Savannah, for appellee.

SOGNIER, Chief Judge.

Servac International brought suit against Georgia Ports Authority to recover damages arising out of an ammonia leak that contaminated portions of its cargo (frozen beef livers and chicken legs), which was stored in a GPA warehouse awaiting shipment to a purchaser in Egypt. After the trial court entered summary judgment in favor of Servac on GPA's liability for the damage, an issue not contested on appeal, a bench trial was had on the issue of the amount of damages. Both parties appeal from the trial court's judgment.

1. In Case No. A91A1996, GPA argues that the report of a survey conducted after the loss constituted a binding agreement between the parties that the invoice price of the damaged goods, as determined by that survey, reflected the total amount of damages to which Servac was legally entitled. The survey report, which was jointly conducted with GPA and representatives of Servac's interest in the goods, provided that it was issued "without prejudice" and was undertaken "for the purpose of ascertaining the extent of damage alleged to have been sustained due to an ammonia leak in the cold storage warehouse." The report set forth, inter alia, the results of the surveyor's investigation into the cause of the damage; how the surveyor selected representative cartons for examination; the outcome of the examination; the invoice prices of the percentage of cartons determined to be damaged; and the salvage bids received and accepted for the damaged goods.

"The cardinal rule of construction is to ascertain the intention of the parties." OCGA § 13-2-3. " 'The language which the parties have used will be looked to for the purpose of finding that intention, which when it is once ascertained will prevail over all other considerations, in determining the nature of the agreement.' [Cits.]" Goff v. Cooper, 110 Ga.App. 339, 343, 138 S.E.2d 449 (1964). "The language of the contract should be construed in its entirety, and should receive a reasonable construction, and not be extended beyond what is fairly within its terms. Where the language is unambiguous, and but one reasonable construction of the contract is possible, the court must expound it as made." (Punctuation and citations omitted.) Cutledge v. Aetna Life Ins. Co., 53 Ga.App. 473, 475, 186 S.E. 208 (1936). The survey report contained no language expressly stating or implicitly indicating that it was the parties' intent in conducting the survey that the survey figures would conclusively determine all damages to which Servac was legally entitled. Indeed, a contrary intent is indicated by the statement in the survey report that its figures did not reflect certain handling and storage charges incurred by the consignee. While it does appear that the parties to this appeal considered the amounts within the ambit of the survey report, i.e., invoice and salvage prices, to be determinative of those matters, we do not agree with GPA that the survey report is subject to interpretation as determinative of matters not within its ambit, such as whether a definite contract existed between Servac and its Egyptian customer so as to enable Servac to recover its lost profits as an item of damages.

Therefore, because the intention of the parties, as determined from the language of the entire contract, did not reflect that the survey report constituted a binding determination of all of Servac's damages and the admiralty cases cited by GPA do not support its contention that survey reports in the maritime world are construed differently from other contracts, this argument presents no basis for reversing the trial court's judgment.

2. GPA next argues that as a matter of law Servac, as bailor of the goods, was not entitled to recover its lost profits from GPA as a result of GPA's breach of its duty to Servac. See OCGA §§ 11-7-204(1), 44-12-43. This argument is based on GPA's contention that the trial court included lost profits as part of the fair market value of the goods by looking to the port of destination, i.e., Egypt, where the sale of the goods to the purchaser would have been completed, rather than the value of the goods in Savannah, where at the time in issue GPA's position was that of bailee, not carrier of the goods. However, the trial court in its order clearly stated that damages for lost profits were included in its calculations because the trial court found those damages were within the contemplation of the parties and flowed naturally from the breach of GPA's duty to Servac. The record establishes that in determining the fair market value of the goods the trial court applied the proper measure of damages, see generally Harper Warehouse v. Henry Chanin Corp., 102 Ga.App. 489, 495-496 (11), 116 S.E.2d 641 (1960) (approving charge setting forth the proper measure), then added Servac's lost profits into its calculations in the form of consequential damages, not as part of the fair market value of the goods in Egypt.

The question is thus whether lost profits as consequential damages can be recovered by Servac. Article 7 of the Uniform Commercial Code, OCGA § 11-7-101 et seq., did not repeal or affect Georgia bailment law. See A.A.A. Parking v. Bigger, 113 Ga.App. 578, 582 (2), 149 S.E.2d 255 (1966). While the applicability of OCGA § 44-12-43 to this bailment case is unchallenged, the applicability of Article 7 of the UCC, which addresses primarily the use of warehouse receipts, is more problematic since it is unclear whether warehouse receipts were issued in the case sub judice. ¹ However, OCGA § 11-7-204(1) is not limited to situations where warehouse receipts were issued, but instead provides in general that "[a] warehouseman is liable for damages for loss of or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful man would exercise under like circumstances...." Therefore, because OCGA § 11-7-204(1) is not restricted to warehousemen who have issued warehouse receipts, we conclude that OCGA § 11-7-204(1) is applicable in the case at bar.

No Georgia case has addressed the question whether lost profits as consequential damages can be recovered under OCGA § 11-7-204. We are persuaded by Uniform Commercial Code authorities James White and Robert Summers, as well as foreign authority following their position, Indemnity Marine Assur. Co. v. Lipin Robinson Warehouse Corp., 99 Mich.App. 6, 297 N.W.2d 846, 850-851 (1980), that in appropriate cases OCGA § 11-7-204(1) should be construed to cover lost profits as consequential damages. White & Summers, Uniform Commercial Code (3rd ed.), § 21-3, pp. 142-143. As reasoned in White & Summers, "[a] plaintiff may sustain two kinds of damage [to goods stored by a warehouseman]: direct damage in the form of loss or injury to the goods themselves and consequential damage, such as lost profits. A plaintiff may deposit goods in a warehouse expecting to resell them and, after contracting to resell at a profit, find that he cannot do so because of loss or damage to the goods due to the warehouseman's negligence.... A recovery limited by the language of section 7-204(1) to merely [the market value of plaintiff's goods] would not always make the plaintiff whole."

The theory behind Georgia bailment law is in accord with this position. In Bennett v. Associated Food Stores, 118 Ga.App. 711, 715, 165 S.E.2d 581 (1968), a bailment...