Kilthau v. Int'l Mercantile Marine Co.

• Decision Date: 31 May 1927
• Citation: 157 N.E. 267,245 N.Y. 361
• Parties: KILTHAU v. INTERNATIONAL MERCANTILE MARINE CO.
• Court: New York Court of Appeals Court of Appeals

245 N.Y. 361

157 N.E. 267

KILTHAU

v.INTERNATIONAL MERCANTILE MARINE CO.

Court of Appeals of New York.

May 31, 1927.

Controversy between Raymond F. Kilthau and the International Mercantile Marine Company, submitted on an agreed statement of facts. From a judgment of the Appellate Division, Second Department (217 App. Div. 22, 215 N. Y. S. 718), for plaintiff, defendant appeals.

Affirmed.

See, also, 217 App. Div. 758, 216 N. Y. S. 857.

Appeal from Supreme Court, Appellate Division, Second Department.

Harrington Putnam and Ray Rood Allen, both of New York City, for appellant.

Neil P. Cullom and James E. Freehill, both of New York City, for respondent.

LEHMAN, J.

The defendant carrier received in San Francisco several thousand bags of flour consigned to New York. The plaintiff is the owner of the flour through purchase of the bills of lading. The flour was stowed in a cargo space in defendant's steamer Kroonland. Part of the flour was found and delivery in New York ‘to be tainted with the odor of said shingles, and was thereby damaged.’ The defendant does not dispute liability for such damage. The controversy concerns the measure of its liability. The parties have submitted the controversy upon agreed facts.

[1][2] The plaintiff was entitled to receive the flour in New York in good condition. He received it in damaged condition. It is not questioned that, in the absence of stipulation in the bill of lading fixing other measure of recovery, the plaintiff should recover damages computed on the basis of market value of the flour at destination. St. Johns N. F. Shipping Corporation v. S. A. Companhia Geral Commercial Do Rio De Janeiro, 263 U. S. 119, 44 S. Ct. 30, 68 L. Ed. 201, and cases there cited. In the present case the bill of lading does contain such stipulation. It provides that:

‘The freight on the cargo carried hereunder is regulated in consideration of all the terms of this contract and is based purely on the value of the cargo. Unless a greater value shall be declared and written in the bill of lading as a basis for adjustment of freight and freight paid thereon accordingly, the value of general cargo does not exceed $100 per package, and of household goods or personal effects does not exceed $5 per 100 pounds, and in computing any liability of the carrier, no value shall be placed thereon higher than $100 per package of general cargo or $5 per 100 pounds of household goods or personal effects (but in no case higher than invoice value) or the proportionate part of such value in case of any partial loss or damage.’

According to the statement of agreed facts, ‘the plaintiff's damages computed on the basis of market value at destination amount to $1,802.08,’ while plaintiff's damages computed on the basis of invoice value in accordance with the terms of the bill of lading hereinbefore set forth amounts to $832.58. The Appellate Division, upon the submission of the controversy, has given judgment for the plaintiff for damages suffered, computed on the basis of the market value of the flour at destination, and has held that the clause of the bill of lading providing for lesser damages may in this case be given no effect. We are in accord with its conclusion.

The clause of the bill of lading now under consideration provides for limitation of damages to $100 per package, unless greater value is declared. The defendant offered shippers of commodities of greater value than $100 per package two different rates of freight; ‘a lower one based on the bill of lading valuation and a higher ad valorem rate applicable if the shipment is declared to be of a value higher than the bill of lading valuation.’ Here the value of the flour was much less than $100 per package. For shipments of goods of value less than $100 per package, the defendant had in effect only one rate, applying to shipments between San Francisco and New York, Namely, 30 cents per hundredweight, the rate paid in this case. The limitation of value, for the purpose of fixing damages, to $100 per package, was inconsequential here, since the goods were in fact worth less than that sum. Higher rates for carriage, if paid, were intended as consideration for assumption of greater risk. No alternative rate was made for restriction of liability below the limit of value of $100 per package. The recital in the bill of lading that the freight is based partly on the value of the cargo may be given no other effect. We are concerned upon this appeal only with the question whether in such circumstances a restriction of recovery to the invoice value of the goods, though actual damage suffered is determined by the value of the goods at the point of destination, is enforceable.

The rule is well established, at least in this state, that a carrier may limit its liability for damages caused even by its own negligence, if the parties agree that recovery shall be limited to an agreed valuation which forms the basis of the charges fixed by the carrier, or where limitation is the consideration for other benefit to the shipper. Boyle v. Bush Terminal R. Co., 210 N. Y. 389, 104 N. E. 933;Tewes v. North German Lloyd S. S. Co., 186 N. Y. 151, 78 N. E. 864,8 L. R. A. (N. S.) 199,9 Ann. Cas. 909. Here the agreement that liabilities shall not exceed the invoice value of the goods did not result in a reduction of charges to the shipper. Limitation imposed without choice of rates between limited and unlimited liability is not valid. Union Pacific R. Co. v. Burke, 255 U. S. 317, 41 S. Ct. 283, 65 L. Ed. 656. At least in the absence of other special consideration moving to the shipper for a limitation of liability for negligence on the part of the carrier, such limitation is without effect.

Here the effect of the valuation clause is solely to limit liability. If market value at place of destination should prove less than the invoice value, the shipper could not under its terms recover larger...