Leather's Best Inc. v. SS Mormaclynx

Decision Date05 June 1970
Docket NumberNo. 69-C-1027.,69-C-1027.
Citation313 F. Supp. 1373
PartiesLEATHER'S BEST INC., Plaintiff, v. S.S. MORMACLYNX, her engines, boilers, etc., v. MOORE-McCORMACK LINES INC., Tidewater Terminal, Inc., and Universal Terminal and Stevedoring Corp., Defendants.
CourtU.S. District Court — Eastern District of New York

Bigham, Englar, Jones & Houston, New York City, by F. Herbert Prem, New York City, of counsel, for plaintiff.

Browne, Hyde & Dickerson, New York City, by John H. Reilly, Jr., New York City, of counsel, for defendants S.S. Mormaclynx, Moore-McCormack Lines, Inc. and Tidewater Terminal, Inc.

MEMORANDUM OF DECISION

JUDD, District Judge.

Plaintiff seeks damages for the loss of cargo shipped from Europe to New York in a container. The general admiralty jurisdiction of this court has been invoked. The action was tried to the court. This memorandum includes the required findings of fact and conclusions of law, but the court has also marked plaintiff's proposed findings and conclusions.

The parties are the steamship Mormaclynx, its owner, Moore-McCormack Lines, Inc. and a Moore-McCormack subsidiary, Tidewater Terminal, Inc. which had charge of the pier where the vessel unloaded in Brooklyn, New York. Plaintiff also made the stevedore, Universal Terminal and Stevedoring Corp. a defendant, but consented to a dismissal of its complaint against this defendant during the course of the trial.

The case has been elaborately prepared and briefed as a test of a new bill of lading clause which purports to treat a container as a single package for purposes of statutory limitation of liability. Under the facts of this case, the court holds that the $500 limitation applies to the 99 individual bales shipped in the container and not to the container as a unit.

Facts

The principal facts in this case are undisputed.

Plaintiff purchased approximately eleven tons of leather from Carl Freudenberg, a German leather manufacturer, in 1967. Freudenberg employees withdrew the leather from their warehouse, packed it in cartons and checked it against the packing slips. It was loaded into 99 cartons of an average size of approximately 46 feet long, 2 feet wide and 1½ feet high. Steel straps were placed around each carton, both for protection and in order to qualify them as bales under the applicable tariffs. Gross, tare and net weights were recorded, and the bales were then put aside to wait for one of defendants' containers. The leather was in flawless condition when packed.

At the request of the Freudenberg firm, a truckman engaged by defendant Moore-McCormack's agent in Germany delivered a container to the Freudenberg plant in Weinheim, Germany, on April 14, 1967. The 99 bales of leather were loaded into the container under the supervision of the truck driver, who gave his receipt for 99 bales of leather, helped close the doors, and watched while the container was sealed. He delivered the container without incident to the defendant ship at Antwerp, Belgium.

The bill of lading was issued by Moore-McCormack's agent, naming plaintiff as the one to whom the Arrival Notice was to be addressed.

After the Mormaclynx docked in New York, the container was unloaded on Saturday, April 25, 1967 by Universal Terminal and Stevedoring Corp., an independent stevedore. Employees of Tidewater Terminal, Inc. then placed the container on a bogie, and hauled it to a storage area on the pier to await plaintiff's arrival.

On Monday, April 27, 1967, plaintiff's truckman came to the pier at 9:30 a. m. to pick up the container. The container could not be found, and the police were notified. The next day, the empty container was located in Freeport, Long Island, but the goods have not been recovered.

Plaintiff's traffic manager was familiar with ocean tariffs and bills of lading. He received about one container a week from Freudenberg. The freight rate was computed on a unit rate per thousand kilograms, less a discount for the use of the ship's container. The traffic manager testified that all lines in the North Atlantic Westbound Conference charged the same rates. He did not declare any excess valuation in this case, and in fact, never did so.

The leather was insured under a cargo loss policy. Payment of the loss was received on a loan receipt basis, and the present suit is brought by the cargo insurer in the name of the consignee.

Testimony was introduced establishing the New York sound market value of the goods to be $155,192.47. This figure was not challenged by the defendants, except as they claim that the bill of lading limits their liability.

The Bill of Lading

The bill of lading under the column "Marks & Nos." sets forth the following legends:

"C F W NEW YORK MADE IN GERMANY 2202/1-99 Container nr. 209134 UB 9622 HOUSE-TO-HOUSE Seal Nr. 26844 SHIPPER'S LOAD AND COUNT"

Under the column, "Number and kind of packages: description of goods," the bill of lading states:

"1 container s. t. c 99 bales of leather"

(s. t. c. is the abbreviation for "said to contain.")

Under the column "Gross weight," it states:

"10864 kos."

Several other provisions of the bill of lading are relevant to the present dispute. On the face of the bill of lading is stamped the following provision, all in capital letters:

"SHIPPER HEREBY AGREES THAT CARRIER'S LIABILITY IS LIMITED TO $500 WITH RESPECT TO THE ENTIRE CONTENTS OF EACH CONTAINER EXCEPT WHEN SHIPPER DECLARES A HIGHER VALUATION AND SHALL HAVE PAID ADDITIONAL FREIGHT ON SUCH DECLARED VALUATION PURSUANT TO APPROPRIATE RULE IN THE CONTINENTAL NORTH ATLANTIC WESTBOUND FREIGHT CONFERENCE TARIFF."

The printed receipt form on the face of the bill of lading states, among other things:

"Weight, measurement, quality, quantity, contents, condition, marks, numbers and value although declared by the Shipper in this Bill of Lading shall be considered as unknown to the Carrier unless expressly recognized and agreed to the contrary. The signing of this Bill of Lading shall not be considered as such an agreement."

Defendants' agents in Rotterdam signed for the Master that:

"We herewith certify that the within mentioned goods have been actually shipped on board the above vessel."

The continuation of the bill of lading on the reverse side, in fine print, set forth, among other things:

"1. This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936, except that when issued to cover carriage of goods to Canada it shall have effect subject to the provisions of the Canadian Water Carriage of Goods Act, 1936 * * * During any period when neither of said Acts applies by its own force the carrier, if responsible in any capacity for the goods, shall not be liable for loss or damage arising or resulting * * * from any cause whatsoever not proved due to the negligence of the carrier, which shall also be entitled to all of the rights, immunities, exemptions and limitations stated in this bill of lading. * * *"

"Carrier" is defined in clause 2 of the bill of lading, which states that the term:

"* * * shall include the ship, her owner, operator, demise charterer, time charterer, master and any substituted carrier, whether acting as carrier or bailee, and all persons rendering services in connection with performance of this contract;"

Clause 13 of the bill of lading limited the carrier's liability to $500 "per package" unless a higher valuation was declared and an additional freight charge paid. It parallels the liability and valuation provisions of the Carriage of Goods by Sea Act. 46 U.S.C. § 1304(5). The pertinent language reads:

"13. In case of any loss or damage to or in connection with goods exceeding in actual value $500, lawful money of the United States, per package, or, in case of goods not shipped in packages, per customary freight unit, the value of the goods shall be deemed to be $500 per package or per unit, on which basis the freight is adjusted and the carrier's liability in any capacity, if any, shall be determined on a value of $500 per package or per customary freight unit, unless the nature of the goods and a valuation higher than $500 shall have been declared in writing by the shipper upon delivery to the carrier and inserted in this bill of lading and extra freight paid if required;"
Containers

The container in this case was 40 feet long, 8 feet high and 8 feet wide. It was the property of the ship owner. It was first sealed by the Freudenberg firm, in the presence of defendants' agent, and sealed a second time by the German customs officials at the border. It was intended to remain sealed until it was opened for customs inspection in New York.

Containers were developed during World War II in order to reduce pilferage of U. S. Army goods in Europe. They were used to some extent in the Gulf trade beginning in about 1956 and were pioneered by the Sea-Land organization in the Atlantic trade. By 1966, they had become a very important factor in the North Atlantic trade.

The Mormaclynx was constructed in 1964-65 as a seven-hatch general cargo vessel. In the summer of 1966, it was converted for use as a containership, with one hatch enlarged to permit placing the heavier containers below deck, and pedestals and other equipment placed on deck in order to secure containers carried on deck.

Containers are provided primarily for the convenience of the carrier, since they cut down handling time and can save as much as 90% of the time required for unloading and reloading a vessel. Shippers derived some advantage from the use of containers, in that expensive export packaging can be reduced because there is less handling and reloading, and also in that they protect against damage if loaded properly and also against pilferage (unless the whole container is stolen, as took place here). In addition, a 10% discount in freight charges is made in connection with house-to-house delivery of containers.

The shipper pays for the transportation of the...

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    ...Electric Corporation of American v. S. S. Aegis Spirit, 414 F.Supp. 894, 901 & n. 24 (W.D.Wash.1976); Leather's Best, Inc. v. S. S. Mormaclynx, 313 F.Supp. 1373, 1376 (E.D.N.Y. 1970), aff'd in part and rev'd and remanded in part, 451 F.2d 800 (2d Cir. 1971); Simon, More on the Law of Shippi......
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    ...in the bill of lading and that its liability therefore was limited, as was that of the carrier, to $500 per package. 313 F.Supp. 1373, 1382-83 (S.D.N.Y.1970). On appeal, we held that the plaintiff had failed to satisfy its burden of proof as to the terminal operator's negligence, and we fou......
  • Leather's Best, Inc. v. SS Mormaclynx
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    ...sought damages in the amount of the alleged value of the leather from the ship, Mooremac, and Tidewater. In a thorough opinion, 313 F. Supp. 1373 (1970), Judge Judd held (1) that the defendants had been negligent in their custody of the container; (2) that the 99 bales rather than the singl......
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