Gilbert Imported Hardwoods, Inc. v. 245 Packages of Guatambu Squares, More or Less

• Decision Date: 28 February 1975
• Docket Number: No. 73-3674,73-3674
• Parties: GILBERT IMPORTED HARDWOODS, INC., and Norris Cattle Co., Inc., etc., Plaintiffs-Appellees-Cross-Appellants, v. 245 PACKAGES OF GUATAMBU SQUARES, MORE OR LESS, in rem, Companhia de Navagacao Lloyd Brasileiro, in personam and the M/V ALMIRANTE GRACA ARANHA, in rem, Defendants- Appellants- Cross-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1116

508 F.2d 1116

GILBERT IMPORTED HARDWOODS, INC., and Norris Cattle Co Inc., etc., Plaintiffs-Appellees-Cross-Appellants, v. 245 PACKAGES OF GUATAMBU SQUARES, MORE OR LESS, in rem Companhia de Navagacao Lloyd Brasileiro, in personam and the M/V ALMIRANTE GRACA ARANHA, in rem Defendants- Appellants- Cross-Appellees.

No. 73-3674.

United States Court of Appeals, Fifth Circuit.

Feb. 28, 1975.

Victor T. Hudson, Mobile, Ala., Thomas B. Wheeler, James L. Wheeler, New Orleans, La., for defendants-appellants.

G. Hamp Uzzelle, III, Mobile, Ala., for plaintiffs-appellees.

Appeals from the United States District Court for the Southern District of Alabama.

Before THORNBERRY, GOLDBERG and GODBOLD, Circuit Judges.

GOLDBERG, Circuit Judge:

Plaintiff-appellee A & H Lumber Sales Company (A & H) ¹ is a Mobile, Alabama, firm which imports and sells various sorts of South American hardwoods. Defendant-appellant Companhia de Navagacao Lloyd Brasileiro (Lloyd) is a Brazilian steamship company. In the seven years that A & H has been in operation, A & H has imported great quantities of Latin lumber, much of it in Lloyd ships. On July 18, 1972, Lloyd received a quantity of rough-cut guatambu lumber aboard its vessel M/V ALMIRANTE GRACA ARANHA at Itajai, Brazil, for shipment to Mobile. A & H purchased the bills of lading for the lumber while the ship was en route, and when the ALMIRANTE GRACA ARANHA arrived at Mobile on August 18, 1972, A & H proffered $13,295.23 to Lloyd's agent in payment for the freight charges, as specified in the bills of lading. Lloyd contended, however, that the bills understated the amount of lumber actually carried on its vessel, and demanded that a survey of the cargo be made. This survey purported to show that the bills of lading were in fact incorrect, and Lloyd claimed an additional fee of $3,549.30. ² When A & H refused to pay this amount, Lloyd refused to deliver 245 of the 1,081 packages of lumber. A & H then filed this suit in admiralty on September 15, 1972, asking the district court to adjudge A & H the proper owner of the disputed cargo, free of Lloyd's claim for freight; A & H also demanded compensation for certain physical deterioration allegedly suffered by the guatambu in the course of this dispute. Lloyd answered with a counterclaim against A & H for the additional freight fees. After a trial, the district court found that A & H owed Lloyd no additional fees, but found also that Lloyd was not liable for any damage to the disputed lumber. Both A & H and Lloyd appeal. We believe that the district court properly refused to hold Lloyd responsible for the damage to the cargo, but we find that the court erred in tis determination that A & H paid the correct amount of freight.

I

The origins of this dispute lie in the dissimilarity of standards for the measurement of lumber utilized by buyers and sellers on the one hand, and by shippers and carriers on the other. Buyers and sellers of lumber employ a measure called the board foot, which equals a piece of lumber one foot square and one inch thick, or any other configuration with a total volume of 144 cubic inches. When an American dealer such as A & H determines to purchase a quantity of South American hardwood, therefore, it specifies the number of board feet desired. Ocean carriers of this same lumber, however, deal in terms of the cubic meter, and their tariff schedules employ that standard in place of the board foot. At first glance, this difference in standards would seem to have little practival effect, for any dictionary conversion table will reveal that 424 board feet equal one cubic meter, so that in order to convert any quantity of board feet to cubic meters, one would merely have to divide by 424.

Unfortunately for simplicity, rough-cut lumber must be more finely cut before it can be used. The custom of the trade, therefore, is for the sawmill operator slightly to overcut the wood, by perhaps one-half an inch per foot, in order to ensure that the ultimate user has a full board foot with which to work. This arrangement makes a great deal of sense as between buyers and sellers of lumber, but carriers are not so much concerned with the ultimate use of the cargo they carry as with the amount of space that cargo occupies in their ships. The impact of the application of the hardwood industry's board foot to the very different concerns of the shipping business is amply illustrated by this case, in which A & H claims that the 189,996 board feet of guatambu evidenced by the bills of lading equal 448.103 cubic meters (189,996 divided by 424), while Lloyd measured the actual cubic dimensions of each package of lumber and claims that the disputed cargo encompasses 578.736 cubic meters. So it is that a tiny differential in each piece of lumber at the sawmill develops into a 20% Difference in the entire cargo at the dock.

Soon after A & H entered the hardwood business and began to deal with Lloyed, the two firms commenced to quarrel over the proper basis for ascertaining freight rates for South American hardwood. A & H maintained that the custom of the hardwood business had always been that the proper basis for freight rates was to be found by dividing the number of board feet concerned by 424. Lloyd argued that because of the practice of overcutting, such a method of computation would force the carrier to transport a greater quantity of lumber than that for which it would be compensated. Accordingly, Lloyd and A & H regularly disputed the cargoes delivered by the one to the other. In December, 1970, the first survey of an A & H cargo was made by Lloyd, but no disparity was discovered. In March, 1971, however, another shipment was surveyed: Lloyd claimed that this survey revealed that the bills of lading understated the actual bulk of the cargo by 50%. After considerable negotiation, A & H offered to pay Lloyd $1,521.16-- one-half of the alleged additional fee-- in settlement of the controversy. A & H accompanied its check with a letter alleging that the settlement was conditioned on Lloyd's promise to adhere in the future to A & H's method of computing freight. Lloyd accepted the check and did not pursue the matter, but denies that such an agreement on rate basis was ever made and states that it so informed A & H at the time. In June, 1971, another dispute arose, but A & H flatly refused to negotiate, referring to the purported March agreement; Lloyd dropped its claim, apparently on the theory that only $50 in additional freight was involved. Between June, 1971, and the beginning of the instant dispute in August, 1972, two or three other Lloyd ships delivered lumber to A & H without incident. Finally, the two parties clashed again after the commencement of this suit, and a compromise akin to that of March, 1971, was reached.

II

Lloyd argues that its tariff requires that the cargo be measured and its carriage charge computed on the overall dimensions of the individual packages of lumber, and that as a matter of law, no custom and usage can modify the tariff. A & H contends that the tariff must be interpreted in accordance with the custom and usage of the South American hardwood trade, which is to say that the volume of the cargo is to be determined by dividing the number of board feet evidenced by the bills of lading by 424, thereby ascertaining the correct number of cubic meters, the standard in which the tariff is couched. At trial, Lloyd introduced evidence tending to demonstrate that no such custom and usage existed between shippers and carriers. A & H produced several witnesses who testified that such a practice was universal in the industry, and who were of the opinion that Lloyd's recent conduct was utterly alien to their business experience. The district court held that the custom and usage urged by A & H did exist and was incorporated sub silentio into the tariff as it applied between A & H and Lloyd, so that the number of cubic meters of cargo to be used as the basis of the freight calculation was to be determined by dividing the number of board feet stated in the bills of lading by 424. This resolution compelled the conclusion that A & H owed no additional freight to Lloyd.

The question we must address in our review of the district court's decision is whether any of the evidence of custom and usage could be utilized to interpret Lloyd's tariff. We note at the outset that a tariff is not an ordinary contract. Section 817(b) of the Federal Shipping Act, 46 U.S.C. 801, et seq., requires common carriers by water in foreign commerce, such as Lloyd, to establish, observe and enforce tariffs of reasonable rates and charges for carriage of goods by sea. Such rates, and changes therein, are subject to approval by the Federal Maritime Commission, and violations of the statute are punishable by fines of not more than $1,000 for each day that the violation continues. ³

Once a tariff is established by the carrier and approved by the Federal Maritime Commission, the tariff binds both the carrier and the shipper with the force of law. See Lowden v. Simonds-Shields-Lonsdale Grain Co., 1939, 306 U.S. 516, 59 S.Ct. 612, 83...