Kuehne & Nagel, Inc. v. Baiden

• Decision Date: 07 May 1975
• Citation: 36 N.Y.2d 539,369 N.Y.S.2d 667
• Court: New York Court of Appeals Court of Appeals
• Parties: , 330 N.E.2d 624 KUEHNE & NAGEL, INC., Appellant, v. F. W. BAIDEN et al., Respondents.

Page 667

369 N.Y.S.2d 667

36 N.Y.2d 539, 330 N.E.2d 624

KUEHNE & NAGEL, INC., Appellant, v. F. W. BAIDEN et al., Respondents.

Court of Appeals of New York.

May 7, 1975.

Nicholas J. Healy, Jr. and Jack A. Greenbaum, New York City, for appellant.

William Warner, New York City, for respondents.

GABRIELLI, Judge.

The record establishes the absence of any defense to the action and, accordingly, plaintiff's cross motion for summary judgment should have been granted.

Plaintiff, as assignee of Amber Maritime Corporation under a ship charterer's liability policy issued to it by defendants, commenced this action for losses sustained as a result of cargo damage during a voyage from Gdynia, Poland to Santa Maria, Colombia. At Gdynia, a cargo of 300 jeeps was booked to Santa Maria by Caribe Manufacturing Co., Ltda. (Caribe), a Colombian corporation. When the jeeps were loaded, 82 were stowed on deck and the bills of lading were invoiced to reflect the on-deck storage providing, in pertinent part that '(t)he shipper represents that the goods need not be stowed under deck unless the shipper informs the Carrier in writing before delivery of the goods to the Carrier that underdeck stowage is required. * * * Goods, whether or not shipped in containers, vans, or trailers, may be carried on deck at Carrier's option and, if carried on deck, all risks of loss or damage by perils inherent in such carriage shall be borne by the shipper.'

En route, stormy weather was encountered and some of the on-deck stowed jeeps were damaged, seven being swept overboard. Upon arrival in Colombia, Caribe withheld payment of the freight due amounting to $60,903.47 against its cargo damage claim of $83,102. Caribe also formally complained that the carrier had breached its contract of carriage by failing to notify it of on-deck stowage of the jeeps.

The assured then promptly notified defendants of the claim and complaint against it and also requested the appointment of Colombian counsel to assist in resisting the cargo damage claim. Defendants, however, refused assistance to the assured and disclaimed liability. Thereupon, plaintiff's assignor sought the advice of American and Colombian counsel whose advice to forego the freight claim in order to avoid a countersuit for cargo damage, was followed.

After disclaimer by defendants, plaintiff commenced this action for the amount of the unpaid freight, not as freight per se but as the amount 'paid' to settle Caribe's claim for cargo damage.

As noted by the Appellate Division, and not here disputed, an insured under a maritime policy may settle claims against it and still recover under its policy so long as the settlement is found to be reasonable and the cause of the liability was an insured risk. That court held that '(f)oregoing the freight charge was a method of settlement and there can be no question of the reasonableness of the amount.' (Kuehne & Nagel v. Baiden, 44 A.D.2d 296, 297, 354 N.Y.S.2d 648, 650.) Nonetheless, summary judgment was granted, in error we think, to defendants on the ground that (p. 298, 354 N.Y.2d p. 650) 'the fault causing the damage was conduct not insured against'.

Plaintiff has urged, and with much logic, that Caribe could easily have proved a prima facie case against the carrier by merely showing delivery of the cargo to the ship in good condition and receipt upon arrival in damaged condition. At that point, as urged by plaintiff, it would have the burden of going forward with evidence to refute the cargo owner's case which, it avers, is lacking. Did Caribe have a cause of action against the carrier sounding in negligence--or--put another way, did plaintiff or the carrier, by refusing to attempt collection of the freight due, in fact settle the tort claim Caribe had against it? Both parties agree that neither the Hague Rules nor the U.S. Carriage of Goods by Sea Act (U.S. Code, tit. 46, § 1300 Et seq.) apply to liability for on-deck storage. Applying the reasoning and logic underlying our decision in Sonnesen v. Panama transp. Co. (298 N.Y. 262, 82 N.E.2d 569), we reach the result that the general law of common carriage is applicable. In that case, we held that a New York court may not take judicial notice of the maritime law of a foreign country and, thus, it its absence, we applied the general rules of maritime law to the case (p. 267, 82 N.E.2d pp. 570--571; see, also, CPLR 4511; McLaughlin, Practice Commentary, McKinney's Cons.Laws of N.Y., Book 7B, CPLR 4511, 1974 Supp., pp. 138--139; cf. Matter of Petrol Shipping Corp., D.C., 37 F.R.D. 437 affd. 2 Cir., 360 F.2d 103, cert. den. 385 U.S. 931, 87 S.Ct. 291, 17 L.Ed.2d 213), and we do likewise in the case before us.

Even though a shipper agrees to or permits on-deck stowage, the carrier is liable if the goods carried are damaged by improper stowage (Pioneer Import Corp. v. The Lafcomo, 2 Cir., 138 F.2d 907, cert. den. Sub nom. Black Diamond Lines v. Pioneer Import Corp., 321 U.S. 766, 64 S.Ct. 523, 88 L.Ed. 1063) and carriers have thus been held liable in tort for inadequately protecting and securing the cargo (Schwinger v. Raymond, 83 N.Y. 192, 200; Virgin Is. Corp. v. Merwin Lighterage Co., 3 Cir., 251 F.2d 872, cert. den. 357 U.S. 929, 78 S.Ct. 1369, 2 L.Ed.2d 1372).

With this background, we address ourselves to the respective claims regarding the burden of proof. Plaintiff has correctly urged that, as in bailment cases, Caribe could have proved a prima facie case by showing delivery of the cargo to the carrier in good condition and its damaged delivery, citing Nichimen Co. v. M. V. Farland (2 Cir., 462 F.2d 319, 325), and that the carrier would then be obligated to prove its freedom from any negligence (Schnell v. The Vallescura, 293 U.S. 296, 55 S.Ct. 194, 79 L.Ed. 373). Conversely, defendants assert that the burden is upon the consignee to establish stowage, citing Globe Solvents Co. v. The California (3 Cir., 167 F.2d 859) and The Monte Iciar (3 Cir., 167 F.2d where, however, the carriers succeeded in establishing damage from an accepted cause. ^*

In Schnell v. The Vallescura (supra), Mr. Justice Stone, writing for a unanimous court, stated that (293 U.S. pp. 303--304, 55 S.Ct. p. 196): 'In...