Matsushita Elec. Corp. v. SS Aegis Spirit

• Decision Date: 30 April 1976
• Docket Number: No. 88-73C3,C74-152S.,88-73C3
• Citation: 414 F. Supp. 894
• Court: U.S. District Court — Western District of Washington
• Parties: MATSUSHITA ELECTRIC CORPORATION OF AMERICA, a corporation, Plaintiff, v. S. S. AEGIS SPIRIT, her engines, etc., et al., Defendants. The SUMITOMO MARINE & FIRE INSURANCE COMPANY, Plaintiff, v. S. S. AEGIS SPIRIT, her engines, tackle, furniture, apparel, and equipment, etc., and Estrella Dischosa Navigation, S. A., Defendants.

414 F. Supp. 894

MATSUSHITA ELECTRIC CORPORATION OF AMERICA, a corporation, Plaintiff, v. S. S. AEGIS SPIRIT, her engines, etc., et al., Defendants.

The SUMITOMO MARINE & FIRE INSURANCE COMPANY, Plaintiff, v. S. S. AEGIS SPIRIT, her engines, tackle, furniture, apparel, and equipment, etc., and Estrella Dischosa Navigation, S. A., Defendants.

Nos. 88-73C3, C74-152S.

United States District Court, W. D., Washington.

April 30, 1976.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Dwight L. Guy, Detels, Draper & Marinkovich, Seattle, Wash., for plaintiffs.

Theodore A. Le Gros, Howard, Le Gros, Buchanan & Paul, Seattle, Wash., for defendant Estrella.

Edward C. Biele, Bogle & Gates, Seattle, Wash., for Tokai Shipping.

OPINION

BEEKS, District Judge.

FACTS

These consolidated cases mark the latest skirmish in the age old war between shippers and carriers over their respective rights and liabilities. The case instituted by Matsushita Electric Corporation ("Matsushita") against the S.S. AEGIS SPIRIT ("Vessel"), Tokai Shipping Company ("Tokai") and Estrella Dischosa Navigation ("Estrella")—the latter defendants being respectively the time charterer and owner of Vessel—concerns damage to cargo transported in containers owned by Tokai.¹ The companion case instituted by Sumitomo Marine & Fire Insurance Company, Ltd. ("Sumitomo"), as subrogee², against Vessel and Estrella concerns damage to the containers. The respective liabilities of the defendants in both causes have been heretofore established by interlocutory judgment rendered by this Court on July 18, 1974, which left for future decision only the measure of damages with attendant issues of fact and law. In Matsushita a further bifurcation of the damage question has been effected whereby the Court will limit its consideration to the difficult legal question herein posed—more specifically, the interpretation and rationalization of the liability limiting provisions of the Carriage of Goods By Sea Act³ ("COGSA") as applied to cargo shipped in metal containers supplied by the carrier.

Matsushita was the consignee of an assorted shipment of color televisions, stereophonic equipment and other electrical appliances which were shipped in containers on board the Vessel from Japan to the United States by Matsushita's Japanese counterpart corporation, Matsushita Electric Trading Company of Japan ("Matsushita/Japan").⁴ This shipment arrived at Tacoma, Washington, on or about May 2, 1973, with the contents of eleven (11) containers in a much deteriorated condition, apparently due to concussive forces and the entry of sea water into the containers during the voyage. The containers themselves also sustained material damage en route. Matsushita's claim against Tokai and Estrella with respect to its consigned goods is clearly embraced by COGSA, but the applicability of COGSA to Sumitomo's consolidated claim for container damage is an issue for determination.

Before turning to the legal questions presented, their factual context must first be fully brought to light. The contract for carriage was negotiated in Japan between representatives of Tokai and Matsushita/Japan. Estrella did not participate in these negotiations, nor did the master or any other Estrella representative endorse the bills of lading. As a product of these negotiations Tokai issued to Matsushita/Japan, in addition to its bills of lading, a so-called "letter of guaranty"⁵ which stated:

Shipment of Electrical goods in Containers

We hereby declared and agreed that your shipment of electrical goods in containers whenever accepted and transported by us, we will undertake our liability to the extent of $500 per package contained in containers in case of loss or damage to goods but subject to the production of the relevant invoice and terms and conditions of bill of lading issued by us.

It would be further noted that other terms and conditions of bill of lading remain inaltered. sic.

The terms and descriptions on the face of each of the bills of lading issued by Tokai in connection with the damaged cargo can best be considered by reproducing relevant portions of one of them⁶ which is fairly representative of all.⁷ The physical orientation of the terms below has, however, been altered for convenience in tabulation.

                  Container No. and Seal No.:          SSIU211586-7
                                                       SSIU201108
                  Marks and Nos.:                      Tokai 00653
                                                       Tokai 06686
                  No. of Containers or Pkgs.:          2 containers
                  Kind of Packages; Description of Goods
                  "SHIPPER'S LOAD COUNT AND SEAL"
                  Said to contain
                     CT301      (120 c/t)    Color TV
                     CT911      (120 "  )       "
                     CT772      (100 "  )       "
                     CT201      (220 "  )       "
                     CT398      ( 21 "  )       "
                     CT911      ( 20 "  )       "
                     --------------------------------
                                (601 cartons)
                  Gross Weight:               27,722 lbs
                  Measurement:                3,619' - 3"
                  TOTAL NUMBER OF CONTAINERS OR PACKAGES
                    (in words)—
                  Say: Two (2) Containers only
                  Rate Per:    at US $1,500.-/one container
                               (F. A. K.)
                  Collect:     US $3,000
                

The reverse side of each Tokai bill of lading contains these pertinent provisions:

1. (Definition) The following words on the face and back hereof have the meanings hereby assigned:

(a) "Carrier" means Tokai Shipping Co., Ltd. and the Vessel and/or her owner (b) "Merchant" includes the shipper, consignor, consignee, owner and receiver of the Goods and the holder of this Bill of Lading;

(c) "Goods" mean the cargo described on the face of this Bill of Lading and, if the cargo is packed into container(s) supplied or furnished by or on behalf of the Merchant, include the container(s) as well;

. . . . .

26. (Limitation of Liability) . . .. In case the declared value is markedly higher than the actual value, the Carrier shall in no event be liable to pay any compensation, and (ii) where the cargo has been either packed into container(s) or unitized into similar article(s) of transport by or on behalf of the Merchant, it is expressly agreed that the number of such container(s) or similar article(s) of transport shown on the face hereof shall be considered as the number of the package(s) or unit(s) for the purpose of the application of the limitation of liability provided for herein.⁸

Tokai's status as a COGSA "carrier" in these cases is, of course, beyond doubt.⁹ The bill of lading defines "carrier" to include Estrella,¹⁰ and Estrella conceded at trial, as did all parties, that it was indeed a carrier herein.

Provisions of special interest found in the Tokai Line Tariff which was on file with the Federal Maritime Commission at the time of the subject voyage include:¹¹

RULE NO. 16 Limit of Carrier's Liability

The liability of the carrier as to the value of shipments at the rates herein provided shall be determined in accordance with the clauses of the carrier's regular Bill of Lading form. If the shippers desire to be covered for valuation in excess of that allowed by the carrier's regular Bill of Lading covering such shipments and such additional liability only will assumed sic. to be the carrier's at the request of the Shipper and upon payment of an additional charge of 4% of the total declared valuation in addition to the stipulated rate on the commodities shipped as specified herein.

. . . . .

108. SHIPPER'S LOAD AND COUNT.

(a) Shippers to furnish carrier, at the time of delivery a packed and sealed container, a list of contents in the container showing description of goods and the gross weight and measurements of the contents thereof, and carrier will accept same as "Shipper's Load and Count" and Bill of Lading to be so claused.

. . . . .

(d) Containers will be classed as a single unit for which only one Bill of Lading may be issued. Vessel's liability will be limited accordingly as per terms and conditions of Carrier's Bill of Lading.

The Matsushita electrical goods, having first been packaged for export, were physically packed into the Tokai containers by Matsushita/Japan employees or agents at its own place of business, or, in some cases, at warehouse sites designated by Matsushita/Japan. The containers had earlier been entrusted to Matsushita/Japan to facilitate the stuffing operation unaccompanied by Tokai representatives. For this reason, Tokai was entirely bereft of firsthand knowledge as to the quality and quantity of goods packed in its containers.

There is no dispute concerning the nature of the packaging used by Matsushita/Japan. The various kinds of electrical merchandise were first wrapped in plastic bags, then fitted with styrofoam padding, and finally packed into heavy, double-walled cardboard cartons which were marked to indicate the type of goods and the manufacturer thereof.¹² Matsushita/Japan utilizes lighter, less durable packaging materials for its domestic market.¹³ Although the greater portion of its export shipments are containerized, Matsushita/Japan continues to export a small percentage of its electrical wares break bulk,¹⁴ packaged in a manner identical to that described above.¹⁵ Furthermore, the consistent testimony of numerous witnesses establishes the fact that Matsushita/Japan and other shippers of like goods have traditionally employed packaging materials for the shipment of electrical goods of a strength and quality comparable to the above in their break bulk transoceanic shipments.¹⁶ Finally, the extent of the damage to Matsushita's goods is stipulated to be in excess of $500 per each of the containers.

DAMAGE TO CONTAINERS

The Vessel was time-chartered by Tokai from Estrella utilizing a New York Produce Exchange approved Government form supplemented and, in some instances, modified by typed-in terms and conditions.¹⁷ The charter party is silent as to the rights and duties of the parties respecting the containers which were owned and provided for shipper's use by Tokai....