Larsen v. AC Carpenter, Inc.
| Decision Date | 15 October 1985 |
| Docket Number | No. 81 CV 4129 (ERN).,81 CV 4129 (ERN). |
| Citation | 620 F. Supp. 1084 |
| Parties | Knud I. LARSEN, Plaintiff, v. A.C. CARPENTER, INC., A.A. Carpenter, Inc., and Associacion De Productores Rurales Del Estado Aragua, Defendants. |
| Court | U.S. District Court — Eastern District of New York |
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DeOrchis & Partners, New York City by Vincent M. DeOrchis, for plaintiff.
Zock, Petrie, Reid & Curtin, New York City by Mary T. Reilly, for defendants A.C. Carpenter, Inc. and A.A. Carpenter, Inc.
Giallorenzi & Campbell, New York City by Renato C. Giallorenzi, for defendant Associacion de Productores Rurales del Estado Aragua.
This suit is brought pursuant to the Court's admiralty jurisdiction. See 28 U.S.C. § 1333; Fed.R.Civ.Pro. 9(h). Plaintiff is Knud I. Larsen ("Larsen"), a Danish corporation owning the M/V JETTE SIF. Defendant Associacion de Productores Rurales del Estado Aragua ("APRA") is a Venezuelan farmer organization, which buys supplies for its members. Defendants A.C. Carpenter, Inc. and A.A. Carpenter, Inc. (together "Carpenter") are New York corporations engaged in potato wholesale buying and selling.
This suit arose from an unsuccessful commercial undertaking. Briefly described, Carpenter purchased seed potatoes in Michigan, contracted for their sale to APRA and hired the JETTE SIF from Larsen for their transport to Venezuela. The ship arrived in Venezuela but was not unloaded; rather, the cargo was eventually dumped in a rotted condition at sea.
Regarding the resultant legal claims, Larsen seeks damages from defendants for demurrage, detention and related expenses stemming from the cargo's nondischarge. APRA, in turn, counterclaims against Larsen for the potatoes' spoilage and connected damages. Additionally, APRA crossclaims against Carpenter for similar losses and for not procuring appropriate insurance. For its part, Carpenter counterclaims against Larsen for a freight refund. Finally, aside from affirmative recovery, each party—if adjudged liable in any respect —seeks indemnification from another.
To resolve these multiple claims, the Court held a bench trial that concluded on March 3, 1983. Having reviewed the trial record (including numerous depositions), the parties' submissions and the law, the Court holds:
1) Larsen prevails on its claim against Carpenter but not on its claim against APRA; 2) APRA's counterclaim against Larsen is dismissed but its crossclaim against Carpenter merits relief; and 3) Carpenter's counterclaim and cross-claim are dismissed.
The findings of fact and conclusions of law underlying these holdings follow. See Fed.R.Civ.Pro. 52(a).
In August 1981, APRA was seeking seed potatoes to plant for the production of table potatoes. Learning of this, Robert Carpenter, a salesman for defendant Carpenter, contacted APRA president Simon Ortega and, thereafter, went to Venezuela for a meeting.
In Venezuela, Ortega took Robert Carpenter to visit potato farms. Robert Carpenter understood that the seed potatoes he might supply would not be consumed but would be planted to grow table crops.
Negotiating, Robert Carpenter offered good quality Michigan produce. For his part, Ortega asked that the purchase arrive not later than the "second week of November." T. 412. Ortega also communicated his desire to inspect before buying.
In accord with that desire, Ortega journeyed to the Gaylord, Michigan area where the potatoes were grown and stored. During that September 8-12, 1981 trip, Ortega was impressed by the produce, much or all of which was already warehoused.
More negotiations ensued. Robert Carpenter informed Ortega that he wanted to receive a letter of credit before shipment and that discharge was APRA's responsibility. Among his requests, Ortega preferred that for better circulation the potatoes be crated, not bagged. Robert Carpenter responded that crates would be difficult to timely obtain.
Concerning the potatoes' transport, Ortega left the ship's chartering to Robert Carpenter. Nothing was explicitly said requiring that the vessel be refrigerated.
The deal was struck at the Detroit airport. Robert Carpenter agreed to sell 30,000 bags of potatoes at $21 per 110 lb. (50 kg.) bag CIF Puerto Cabello, Venezuela, the discharge port.
The agreement's "primary terms" were contained in an October 9, 1981 letter of credit opened by APRA with Banco Provincial de Venezuela ("Banco Provincial"), the issuing bank. Joint Pretrial Order p. 4.1 The letter of credit listed the documents (including a bill of lading) Carpenter had to submit with its sight draft to the Republic National Bank of Miami ("Republic National"), the confirming bank.
The harvested potatoes underwent by lot joint federal-state inspections while in Michigan. Of the 60 federal-state certificates issued (covering an average of 412 bags per lot), 47 indicate no soft rot.2 But 13 note that such decay was present, although within the allowable .5% regulatory range.3
Allowable then, the potatoes later died from just such soft rot determined to have been induced by erwinia bacteria. The soft rot death came despite the potatoes having a storage life up to "a couple of years." T. 301. In other words, these September 1981 harvested potatoes dying roughly two months later succumbed well short of their life span.4 That rapid soft rot demise necessitates a discussion of erwinia, the fatal agent.
In Michigan and worldwide soils, erwinia is harmless if remaining on a potato's skin. To cause damage, erwinia must enter the pulp via skin cuts, bruises of lenticells (pores). Once in, erwinia attacks cell wall pectin (a glue-like substance), thereby breaking down the potato's infrastructure. About eighty percent water, the potato is unable to retain its moisture and shrinks into a soft rot state.
To elaborate further, a potato is a living vegetable needing oxygen. With respect to erwinia's lenticell entry, when a water film overlays its skin, the breathing potato enlarges those pores facilitating air ingress and carbon dioxide emission. That dilation allows erwinia to swin into the pulp through the pores.
Similarly, when water is present, erwinia can enter through harvest-handling incurred wounds. Access by whatever opening, pulp-penetrated erwinia gives off a strong ammonia-like stench. Lenticells and wounds are the gates but skin water is erwinia's vehicle into the potato. Water, in short, is the key to erwinia generated soft rot.
Possible water sources pertinent to these potatoes were harvest rain, the potatoes themselves, condensation and seawater. Rain at reaping time requires no detailed exposition and seawater is more appropriately dealt with later. See infra pp. 1099-1100. Regarding the potatoes themselves, if subject to heat, they exude their own water through the pores. As to condensation, in a storage setting with dew point higher than pulp temperature, the potatoes become coated with a water film from the cooled ambient air.5
Which prevoyage water source(s) facilitated erwinia entry into these potatoes can only be deduced. Rain probably fell at harvest time.6 But the Gaylord soils are sandy and would not likely retain water long enough (four to five days) for lenticell expansion. Moreover, those soils generally have antibodies competing against erwinia, lessening the infection possibility for an unearthed potato.
That does not preclude entry via lesions received during the postharvest-handling phase, since rain was likely present. In fact, Dr. Potter, a plant pathology professor, flatly stated that entry "occurred after harvest." If so, that ingress period would have coincided with erwinia's usual penetration pattern, Dr. Potter observing that "the greatest loss to the potato industry comes in the post-operative area." T. 318.
Necessarily a deduction, that "post-operative" stage (after harvest but before storage) was apparently the time when erwinia began its intrusion. Along with Dr. Potter's testimony, that deduction is substantiated by the federal-state certificates (upon which he relied) in essence attesting that prior to those Michigan inspections conducted in storage adequate water existed for erwinia's entry into a small percentage of pulps.7
To transport the potatoes to Venezuela, the JETTE SIF was hired pursuant to a Gencon charter party executed on October 13, 1981 between Carpenter and Larsen.8 The agreement was for the entire vessel and one voyage to Puerto Cabello. The initial freight rate was $60 "per 1000 kg fios." Ex. 1, pt. I, cl. 13. Laytime was "6 days of 24 running hours." Id., pt. I, cl. 16(c).
Built in 1975 for general cargo and fruit, the JETTE SIF has two cargo hatches—the no. 1 forward and the no. 2 aft. Without bulkheads separating those hatches, the cargo space runs fore and aft without interruption. Vertically divided, the under space is the lower hold and the upper is the 'tween deck. MacGregor pull covers overlay the hatches.
Four high volume electrical fans propel air through the cargo spaces with two each aft of the lower hold and 'tween deck. Ambient air is received from the main deck outlets constructed to prevent rain or seawater intrusion into the stow areas.
Although not mechanical extractors, four exhaust vents are correspondingly forward of the fans. Air is forced out through those vents by fan pressure and pulled out by suction through the main deck ducts when the ship is underway. Those main deck ducts are also built to resist rain or seawater entry.
The JETTE SIF has a one speed thirty (at least) air change per hour capacity. Through Novo Chartering, a ship broker, Robert Carpenter had requested that capacity, but the charter party only specified twenty-five. Regardless, being only electrically ventilated, the JETTE SIF could not substantially alter the holds' temperatures and humidities.
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