Holden v. S/S KENDALL FISH, 4233-B.

• Decision Date: 30 December 1966
• Docket Number: No. 4233-B.,4233-B.
• Citation: 262 F. Supp. 862
• Parties: A. L. HOLDEN, Irene J. Kozly, Robert M. Paisley, Robert J. Paisley and Kraig Sim, co-partners, doing business under the name and style of R. L. Pritchard & Company v. S/S KENDALL FISH, her engines, boiler, etc., and Lykes Bros. Steamship Company, Inc.
• Court: U.S. District Court — Eastern District of Louisiana

262 F. Supp. 862

A. L. HOLDEN, Irene J. Kozly, Robert M. Paisley, Robert J. Paisley and Kraig Sim, co-partners, doing business under the name and style of R. L. Pritchard & Company v. S/S KENDALL FISH, her engines, boiler, etc., and Lykes Bros. Steamship Company, Inc.

No. 4233-B.

United States District Court E. D. Louisiana, New Orleans Division.

December 30, 1966.

Henry J. Read, Montgomery, Barnett, Brown & Read, New Orleans, La., Hill, Rivkins, Middleton, Louis & Warburton, New York City, for libellants.

Benjamin W. Yancey, Terriberry, Rault, Carroll, Martinez & Yancey, New Orleans, La., for respondents.

HEEBE, District Judge.

Between May 11th and May 28th, 1952, Tanganyika Sisal Marketing Association, Ltd., delivered to respondent, at various ports in Tanganyika, a total of 5835 bales of sisal for carriage aboard the Kendall Fish to New Orleans, covered by various bills of lading. Each of the bales had an actual value at all times of less than $500.

Libellant, Pritchard & Company, pursuant to a contract with General Services Administration (hereafter, "GSA"), purchased the sisal above-mentioned from Tanganyika Sisal, receiving the bills of lading covering the shipment. Before the arrival of the S/S Kendall Fish at New Orleans, libellant sold the sisal and endorsed and transferred the bills of lading covering same to GSA.

On arrival in New Orleans, the Kendall Fish did not deliver the sisal in the same good order and condition in which it was delivered aboard said vessel: 89 bales were found to be missing and 35 others damaged.

The cargo underwriters paid GSA for the loss and damage according to the value of the sisal as stipulated in the invoices and thereafter caused this proceeding against the carrier to be initiated in the name of R. L. Pritchard & Co. as their agent and representative.

This Court previously found the carrier liable for the loss and damage above-mentioned, 212 F.Supp. 106 (1962), but at that time we restricted our decision to the issue of liability and ordered that the issue of the measure of damages be submitted to a Master. The Master has since returned his report and the libellants, representing the cargo interests, have excepted to his determination of damages; respondent has moved that the Master's determination be confirmed.

Libellants (hereafter "cargo") attempted to introduce before the Commissioner the following provision, contained in the bill of lading covering the sisal shipment, as evidence of the extent of damage to cargo:

"Whenever the value of the goods is less than $500.00 per package or other freight unit, their value in the calculation and adjustment of claims for which the carrier may be liable shall for the purpose of avoiding uncertainties and difficulties in fixing value be deemed to be the invoice value, plus freight and insurance if paid, irrespective of whether any other value is greater or less."

Based on the invoice value of the lost and damaged bales, cargo's claim for damage would have been $20,027.73. The Master, however, refused to admit the quoted provision into evidence, and found that the loss sustained should be calculated upon the actual market price of the sisal at the time and place of delivery, or $7,656.84. The question for our determination is simply which of these two valuations is correct.

In the absence of a clause in the bill of lading to the contrary, the basis for fixing damages for cargo loss is the market price of the cargo at the place of destination, in like condition as when it was shipped, on the date when it should have arrived. The Ansaldo San Giorgio I v. Rheinstrom Bros. Co., 294 U.S. 494, 496, 55 S.Ct. 483, 79 L.Ed. 1016 (1935); St. Johns N. F. Shipping Corp. v. S. A. Companhia Geral, etc., 263 U.S. 119, 125, 44 S.Ct. 30, 68 L.Ed. 201 (1923). This has held true under the Carriage of Goods by Sea Act, 46 U.S.C.A. §§ 1300-1315 (hereafter, "Cogsa"), Atlantic Mutual Ins. Co. v. Poseidon Schiffahrt, 313 F.2d 872, 875 (7th Cir. 1963). Before Cogsa was enacted, it was common for the bill of lading to stipulate for "invoice plus disbursements" as the measure of loss. Gilmore & Black, The Law of Admiralty, p. 167. Such stipulations were classified by the courts as of two types: "true limitation" and "true valuation" agreements. With certain qualifications, both were held valid before Cogsa. The Ansaldo San Giorgio I, supra; Smith v. The Ferncliff, 306 U.S. 444, 59 S.Ct. 615, 83 L.Ed. 862 (1939).

With the enactment of Cogsa, the validity of both types has become questionable. Both have been held to be unenforceable by the carrier where they result in a measure of damages based on a value less than the market price at place of destination. American Trading Co. v. Steamship Harry Culbreath, 1952 A.M.C. 1170 (S.D.N.Y.1951); Otis McAllister & Co. v. Skibs, 260 F.2d 181 (9th Cir. 1958). In the Otis case the Court reasoned properly that § 3(8) of Cogsa, which states that "Any clause * * * lessening carrier's liability otherwise than as provided in this chapter, shall be null and void * * *," renders ineffectual any type of clause under which carrier is liable for damages less than those computed on the fair market value of the goods at destination.

Since, as the Master noted (Commissioner's Report, p. 5), the invoice value is rarely greater but often less than the market price at destination, no case reported has involved the type of situation presented here, where the invoice value increases the liability of the carrier rather than decreasing it.

§ 5 of Cogsa states:

"A carrier shall be at liberty to surrender in whole or in part all or any of his rights and immunities or to increase any of his responsibilities and liabilities under this chapter * * *" 46 U.S.C.A. § 1305.

Thus cargo would have us believe that, although carrier cannot decrease his liability for damage below that based on fair market value at place of destination, he can nevertheless increase it above that amount.

§ 4(5) of the Act, however, states in part:

"In no event shall the carrier be liable for more than the amount of damage actually sustained." 46 U.S.C.A. § 1304 (5).

Cargo argues that since the valuation clause was inserted in the bill of lading by carrier for its own benefit, carrier should not be allowed to disclaim the clause merely because it works against carrier in this instance. Such a position overlooks the fact that if § 4(5) of Cogsa does in fact prohibit the carrier from agreeing to liability for more than damages actually sustained, then carrier may not be held estopped from denying the validity of such an agreement simply because he does enter into one. Moreover, the fact is that the clause in the bill of lading before us can never work in carrier's benefit since, as we have seen, § 3(8) of the Act prohibits carrier from thus lessening its liability.

Cargo wishes us to solve the apparent contradiction between § 5 and § 4(5) by the following argument: Cogsa, unlike the Harter Act which simply forbids the inclusion of certain provisions in bills of lading, provides that every bill of lading covering shipments under Cogsa shall be deemed to include Cogsa's provisions. 46 U.S.C.A. § 1302. Thus, argues cargo, when Cogsa states in § 4(5) that "In no event shall the carrier be liable for more than the amount of damage actually sustained," this is simply a provision which is deemed to be part of every bill of lading, but that § 5 allows the...