Leather's Best, Inc. v. Tidewater Terminal, Inc., 67-C-1027.

• Decision Date: 19 July 1972
• Docket Number: No. 67-C-1027.,67-C-1027.
• Citation: 346 F. Supp. 962
• Parties: LEATHER'S BEST, INC., Plaintiff, v. TIDEWATER TERMINAL, INC., Defendant.
• Court: U.S. District Court — Eastern District of New York

346 F. Supp. 962

LEATHER'S BEST, INC., Plaintiff, v. TIDEWATER TERMINAL, INC., Defendant.

No. 67-C-1027.

United States District Court, E. D. New York.

July 19, 1972.

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

Hyde, Dickerson & Reilly, New York City, by John H. Reilly, Jr., New York City, of counsel, for defendant.

JUDD, District Judge.

FINDINGS, MEMORANDUM AND ORDER

The cause of action for damages against Tidewater Terminal, Inc. as bailee was tried by this court after remand by the Court of Appeals. 451 F.2d 800 (2d Cir. 1971).

The case arose from the loss of a container of leather imported from Germany on the S.S. "Mormaclynx" of Moore-McCormack Lines, Inc. and unloaded onto the pier by stevedores. The terminal area at the pier was operated at the time by Tidewater Terminal, Inc., a wholly owned subsidiary of the shipowner. Tidewater was formed in 1966, after containers came into common use, and was dissolved in 1969 or earlier. The loss occurred between 10:00 a. m. on April 25, 1967 and 9:30 a. m. on April 27, when plaintiff's truckman came to pick up the container.

After the original trial, the court found that the ship, the owner, and Tidewater were all negligent in the custody of the container and were liable for damages of $500 per bale for 99 bales of leather which had been in the container. The Court of Appeals reversed and remanded as to Tidewater on the ground that the proof of negligence against Tidewater was not adequate to sustain the holding. The Court of Appeals held that, since the loss of the container occurred on land, the claim against Tidewater was a state law claim for tortious conduct and was governed by rules different from those applicable to the maritime claim against the vessel and the owner.

The Court of Appeals left open for consideration, if Tidewater was found liable, the further question whether it was entitled to the $500 per package limitation of liability which was set forth in the bill of lading.

The Facts

After the original trial, this court found the facts substantially as set forth in the Court of Appeals opinion (451 F.2d at 806):

The Mormaclynx arrived in Brooklyn on Saturday, April 25, 1967. The container, sealed and undamaged, was unloaded by stevedores and was placed in a large terminal area operated by Mooremac's wholly owned subsidiary, Tidewater Terminal, Inc. ("Tidewater") to await pick up by the shipper. The area was accessible through four gates. Two were open 24 hours a day, supposedly under the continuous supervision of watchmen. The other two were open only from 8:00 A.M. to 4:00 P.M. on weekdays and were similarly guarded at those times. At least one roving watchman was on duty to see that there were no unauthorized persons on the pier and that no one opened any container. Records were kept of all trucks entering and leaving the terminal area.

On Monday, April 27, the shipper's truckman arrived at 9:30 A.M. to pick up the container. It could not be located, although the delivery book at the pier had not been signed. The fence around the area bore no signs of tampering. Next day the police found the container empty, at Freeport, L.I., some 25 miles away. The goods have not been recovered, and the details of the theft have never been reconstructed.

According to Tidewater procedure, a gateman looks at the gate pass and checks off the number of the container before any truck can leave the terminal.

Review of the record and of the calendar now discloses that April 25, 1967 was in fact a Tuesday, and April 27th was a Thursday, so there was no weekend layover of the container. Moreover, the Delivery and Demurrage Record of Moore-McCormack Lines, Inc. (Universal Exhibit A at the original trial) indicates that the container was not discharged until April 26, 1967.

The shipment was under a bill of lading which limited the liability of the carrier to $500 for each container, but which this court and the Court of Appeals construed to mean $500 for every package in the container by virtue of the Carriage of Goods by Sea Act, 46 U.S.C. §§ 1304 (5) and 1303(8).

The term "carrier" was defined in the bill of lading as follows:

The word "carrier" 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; . . .

The bill of lading also states in paragraph 9:

All responsibility of the carrier in any capacity shall altogether cease and the goods shall be considered to be delivered, but subject to the carrier's lien, when put into possession of customs or other authorities, or in public dock or in public warehouse.

The proof at the trial after remand was brief and largely documentary.

In answers to interrogatories proposed by the plaintiff after remand, Tidewater stated that the container was last seen about 10:00 a. m. on April 25, that it was not aware of the disappearance of the container until plaintiff's truckman called to take delivery on the morning of April 27, and that its first knowledge of the whereabouts of the container was received in a report from the police of Freeport, Long Island, on April 28. Tidewater further stated that the four terminal gates were attended by eight gatemen whose duty it was to record the entrance and departure of trucks with containers and other cargo, and that it had no record of the departure of plaintiff's container. Only two of the gatemen were still in defendant's employ. A report of an investigation by Tidewater's chief of security, R. C. Jacobsen stated that an all-day search of the terminal failed to locate the container and that law enforcement authorities questioned all persons connected with container movements and terminal operation. The report revealed that the FBI and the Waterfront Commission were not notified of the loss until after 5:00 p. m. on April 27th.

Mr. Jacobsen had testified at the original trial that he went over the gate passes issued for vehicles entering and leaving the pier, that they provided no answer to the disappearance of the container, and that his investigation of how it left the pier was unsuccessful.

There were 12 passes missing from the set of serially numbered gate passes for April 24-27 which were offered in evidence. Defendant Tidewater's answers to interrogatories state that it maintained no book listing the containers. Tidewater's attorney asserts that a truck driver gets his pass, waits his turn and sometimes becomes impatient and leaves without using his pass.

The only relevant missing pass is H 5687, a form for "delivering cargo to trucks." From the times on the preceding and subsequent passes, H 5687 must have been issued about 2:45 p. m. on April 25, 1967, which was between the time when Tidewater says the container was last seen and the time when plaintiff's driver came to pick it up.

Another oddity about the gate pass exhibits is that the pass to the plaintiff's truck driver appears to be pass H 5789, issued to Spruce Trucking at 9:25 on April 27, part of Exhibit 16, and not pass H 5267, which Jacobsen describes as issued to the Spruce driver; No. 5267 should apparently have been issued several days before April 24th.

Tidewater's records are less helpful in solving the mystery than might have been desired.

Tidewater's vice-president testified on deposition with respect to the plaintiff's container that "The only information I have is that it was lost or stolen from 27th Street, Brooklyn." Tidewater's gatemen were not called, but the parties stipulated that if called they "would be unable to add any information with regard to what happened to the container from the time that it was put in the forty-foot lot at 20th Street until it was found in Freeport, Long Island." There was no evidence of any connivance between Tidewater personnel in the putative theft. Tidewater's attorney pointed out that the gatemen were selected from the Waterfront Commission list and therefore that even if the container were stolen with the connivance of employees, Tidewater could not be considered negligent.

Discussion

The ground for reversal of the judgment against Tidewater was stated by the Court of Appeals in the following words (451 F.2d at 814):

In cases of loss due to theft, New York requires the bailee to establish only the fact of theft in order to meet the bailor's prima facie case. The bailee is not required to go on to show that the theft was not the result of its negligence; rather it is for the bailor to demonstrate negligence on the part of the bailee in the context of loss by theft. See Claflin v. Meyer, 75 N.Y. 260, 264 (1878); Procter & Gamble Distributing Co. v. Lawrence American Field Warehousing Corp., 16 N.Y.2d 344, 358-359, 266 N.Y.S.2d 785, 796-797, 213 N.E.2d 873 (1965); Jay Howard, Inc. v. Rothschild, 16 A.D.2d 628, 226 N.Y.S.2d 769 (1962).

. . . Substantial evidence suggesting theft having been presented, the shipper failed to come forward with evidence concerning possible negligence of Tidewater in connection with the theft. On the record before us, we find it impossible to sustain the finding of negligence with respect to the claim against Tidewater.

The Court pointed out that a finding of negligence is not a finding of fact and therefore is not protected by the "clearly erroneous" standard of F.R. Civ.P. 52(a), if the trial court has operated under an incorrect conception of the applicable law.

In determining the sufficiency of plaintiff's proof of negligence as supplemented at the hearing after remand, this court deems it appropriate to consider the limited means which the plaintiff has to prove what occurred during the time the container was in Tidewater's sole custody. The Court of Appeals has not expressly forbidden this court to follow that accepted principle. Alliance Assurance Co. v. United States, 252...