Hartford Fire Insurance Co. v. Pacific Far East Line, Inc.

• Decision Date: 04 February 1974
• Docket Number: No. 71-2856.,71-2856.
• Citation: 1974 AMC 1475,491 F.2d 960
• Parties: HARTFORD FIRE INSURANCE COMPANY, Plaintiff-Appellant, v. PACIFIC FAR EAST LINE, INC., a corporation, the vessel PACIFIC BEAR her hull, tackle, apparel and furniture and Doe One through Doe Three, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

1974 AMC 1475, 491 F.2d 960 (1974)

HARTFORD FIRE INSURANCE COMPANY, Plaintiff-Appellant, v. PACIFIC FAR EAST LINE, INC., a corporation, the vessel PACIFIC BEAR her hull, tackle, apparel and furniture and Doe One through Doe Three, Defendants-Appellees.

No. 71-2856.

United States Court of Appeals, Ninth Circuit.

February 4, 1974.

Stephen McReavy, John E. Droeger (Argued), Hall, Henry, Oliver & McReavy, San Francisco, Cal., for plaintiff-appellant.

George L. Waddell, Harvey I. Wittenberg (Argued), Dorr, Cooper & Hays, San Francisco, Cal., for defendants-appellees.

Before CHAMBERS, CHOY and WALLACE, Circuit Judges.

CHOY, Circuit Judge:

Appellant, Hartford Fire Insurance Company (Hartford) appeals from an interlocutory judgment limiting the liability of appellee, Pacific Far East Lines (PFEL), to $500 for damage to an electrical transformer shipped aboard appellee's vessel, the SS Pacific Bear. Judgment was granted after a separate trial held pursuant to F.R.Civ.P. 42(b) and jurisdiction resides here under 28 U.S.C. § 1292(b). We reverse.

The sole question presented for review is whether the large electrical transformer, attached by bolts to a wooden skid but not otherwise boxed or crated, constituted a "package" within the meaning of Section 4(5) of the Carriage of Goods by Sea Act (COGSA). 46 U. S.C. § 1304(5).¹

Hartford's subrogor, the Black Construction Company (Black), ordered a 10,000 KV transformer from the General Electric Company. The transformer measured 13 feet 1 inch in height, 11 feet 7 inches in length, 7 feet 8 inches in width, and weighed some 36,700 pounds. Intended for use outdoors, the transformer was designed to stand freely on the ground or other flat surface. As a part of its normal manfacturing process, integral lifting lugs were attached to the transformer's four upper corners for purposes of its movement and transportation. Although it was thus suited and intended for handling and transporting, at the specific request of Black, General Electric also mounted and bolted the transformer to a heavy wooden skid in order to protect it during shipment. Thus fastened to its skid, the transformer was transported by railroad flatcar to San Francisco where it was loaded aboard PFEL's vessel for its destination, Agana, Guam.

The transformer was delivered to PFEL undamaged, but en route to Guam its low-voltage bushings were extensively damaged and water vapor entered the transformer. The cost of repairing this damage, alleged to be in excess of $5,000, was reimbursed by Hartford to Black, for which Hartford now seeks recovery from PFEL. PFEL admits liability, but maintains that because the skidded transformer was a "package" it is liable only up to the $500 maximum limit of the statute, since no value for the cargo in excess of this amount was declared in the bill of lading. Hartford argues that the transformer as skidded was not a "package" within COGSA's definition where the transformer was not attached to the skid for purposes of its handling or transportation, but solely for the protection of the transformer. We do not accept Hartford's rationale for defining a "package," but we nevertheless conclude that the transformer was "not shipped in a package," and accordingly reverse and remand for a determination of PFEL's liability according to the number of customary freight units applicable to the transformer.

COGSA was enacted in 1936,² more than a decade after the principles embodied in the act had been agreed upon and ratified by the United States along with other commercial nations at the Ocean Bill of Lading Convention in Brussels. Commonly known as the the Hague Rules, the central purpose of these earlier agreements was to establish international uniformity in certain matters relating to ocean bills of lading, on a basis fair to ocean carriers, cargo owners, insurers and bankers. Hearings on S.B. 1152 before the Committee on Commerce, U. S. Senate, 74th Cong., 1st Sess. on a Bill relating to Carriage of Goods by Sea, 15 (1935) hereinafter Hearings. Arrived at after long and deliberate negotiations, both the Hague Rules and the later statute were effected by compromise among the various interested parties. Then existing law was modified by COGSA to give greater protection to the cargo interests in several respects. The most significant of these were: (1) when goods were received by the carrier in sound condition but were delivered damaged, the burden of proof was placed on the carrier to show how the damage occurred and that the carrier was not responsible therefor; (2) owners of goods were allowed adequate time within which to file claims against the carriers where damage occurred; and (3) the carriers were to accept greater liability for damages per package without a corresponding increase in freight rates.³ Hearings, supra at 18; see Pan-Am Trade & Credit Corp. v. The Campfire, 156 F.2d 603 (2d Cir.), cert. den. sub nom., Waterman Steamship Corp. v. Pan-American Trade & Credit Corp., 329 U.S. 774, 67 S.Ct. 194, 91 L.Ed. 666 (1946).

The language of the Hague Rules was incorporated almost without change into COGSA. However, Congress made one revision with regard to the language of Section 4(5). Whereas the Hague Rules limit a carrier's liability "per package or unit," COGSA more explicitly provides that the $500 limit shall apply "per package . . . or in the case of goods not shipped in packages, per customary freight unit . . . ."⁴ This change delineates more clearly than do the Hague Rules that the limitation on the carrier's liability depends on whether the goods are shipped in a "package," as distinguished from "goods not shipped in packages." In the latter case, based upon the number of customary freight units applicable to the nonpackaged goods, liability could well exceed the statutory limit of $500 per package. It was not the purpose of the act, therefore, to relieve the carrier of its normal responsibility for damage to cargo or to unduly limit its liability for just claims when goods have not been shipped in packages. Stirnimann v. The San Diego, 148 F.2d 141, 143 (2d Cir. 1945).

Although the difference in limitation of liability clearly turns on whether the goods are in a "package," Congress did not define this term, and left no interpretative clues in either the statute itself or in any of the legislative hearings.⁵ But surely Congress was aware of technological advances since the Hague Rules were adopted such as pallets and forklifts, which by the time of the statute's enactment were being utilized by the industry. Yet, despite such progress in the mode of transporting cargo, Congress chose to retain the commonly used term "package" in the statute, adding the alternative phrase "goods not shipped in packages." These industry advancements do not justify any overextension of the statutory term "package." See Leather's Best Inc. v. S. S. Mormaclynx, 451 F.2d 800, 814-815 (2d Cir. 1971) where a large metal container holding numerous small cartons of leather goods was held not be be a "package."

"Legislation when not expressed in technical terms is addressed to the common run of men and is therefore to be understood according to the sense of the thing, as the ordinary man has a right to rely on ordinary words addressed to him." Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607, 618, 64 S.Ct. 1215, 1221, 88 L.Ed. 1488 (1944). Since no specialized or technical meaning was ascribed to the word "package," we must assume that Congress had none in mind and intended that this word be given its plain, ordinary meaning. Malat v. Riddell, 383 U. S. 569, 571, 86 S.Ct. 1030, 16 L.Ed.2d 102 (1966); Bruhn's Freezer Meats v. United States Department of Agriculture, 438 F.2d 1332, 1338 (8th Cir. 1971). See generally 2A Sutherland on Statutory Construction § 47.31 at 155-56 (4th ed. 1973).

The dictionary definitions of "package," though alone insufficient, provide at least a starting point in this inquiry. Webster's Third New International Dictionary 1617 (1966) defines a package as follows: "a small or moderate sized pack: bundle, parcel . . . a commodity in its container . . . a covering wrapper or container . . . a protective unit for storing or shipping a commodity." The word "package" is defined in Black's Law Dictionary 1262 (rev. 4th ed. 1968) as: "a bundle put up for transportation or commercial handling; a thing in form to become, as such, an article of merchandise or delivery from hand to hand . . . . As ordinarily understood in the commercial world, it means a shipping package."

In one of the first British decisions to consider the question of what is a "package," the court interpreted that term in the context of the Carrier's Act, a statute which similarly to COGSA limited the carrier's liability for articles "contained in any parcel or package," unless a greater value was declared for the goods. Whaite v. Lancashire & Yorkshire Railway Co. 1874 L.R. 9 Ex. 67. The case involved a group of oil paintings placed into a four-wheeled wagon which had sides but no top, such that the identity of the paintings themselves was hidden, though it was clear that paintings were being transported. Bramwell, B., stated his opinion as follows:

"I think this waggon with its contents was a `package\' within the meaning of the Act. Although one would not commonly describe it in that way, yet, looking at the object and purpose of the Act, I think we are not only entitled, but compelled to say that it was a `package or parcel\' within the section. It is to be observed that the plaintiff himself and his foreman authorize us in so describing it, for they say they `packed\' the goods in the waggon, and no one would doubt that this expression was rightly used; but if so, then the waggon so packed with goods was a package. Further, the packed waggon had this quality of a package about it, that the pictures were so packed by the plaintiff that, though the defendants could see that there were

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