Monroe Systems for Business, Inc. v. Intertrans Corp.
| Decision Date | 28 December 1994 |
| Docket Number | No. 93-1294,93-1294 |
| Citation | 650 So.2d 72 |
| Parties | 20 Fla. L. Weekly D59 MONROE SYSTEMS FOR BUSINESS, INC., Appellant, v. INTERTRANS CORPORATION, Appellee. |
| Court | Florida District Court of Appeals |
Rex B. Guthrie, Miami, for appellant.
Fertig and Gramling and Frank Gramling, Ft. Lauderdale, for appellee.
Before HUBBART, BASKIN and COPE, JJ.
Monroe Systems for Business, Inc., appeals a directed verdict in defendant's favor on Monroe's claim for breach of bailment. The questions presented are (a) whether appellee Intertrans Corporation was the bailee of goods stored in a third party's customs-bonded warehouse, and (b) if so, whether Intertrans is vicariously liable for the negligence of the warehouse operator. On the facts presented here, we conclude that (a) Intertrans was not the bailee of the goods stored in the third-party's warehouse, and (b) even if Intertrans was the bailee, the well-established standard of care is a negligence standard. Since Intertrans was found by the jury not to have been negligent, the judgment is affirmed.
Monroe Systems for Business, Inc., plaintiff below, manufactures calculators and other electronic equipment. In 1987, Monroe decided to move its Latin American distribution center from Panama to Miami. Rather than station its own personnel in Miami, Monroe hired Intertrans, a freight forwarder, to serve as its Miami agent.
Monroe's calculators were made in the Far East and were brought to the Port of Miami by ship. The calculators were stored in warehouses until needed for shipment to Monroe's customers. When Monroe issued shipping instructions, Intertrans would arrange for the designated products to be withdrawn from storage and shipped as directed.
In order to resolve the present case it is necessary to examine more particularly what Intertrans agreed to do and how it agreed to do it. This is so because the Monroe goods which arrived in Miami fell into two groups: (1) those products which were to be imported for domestic sale within the United States, and (2) those products which were to be held in a customs-bonded warehouse for later export to Latin America.
As to the first category of Monroe products--those imported for domestic sale within the United States--Intertrans' own warehouse was suitable for storage. Consequently it was agreed that Intertrans would pick up such shipments at the Port of Miami and store the goods at Intertrans' own facility. 1 While the goods were in the warehouse, Intertrans was clearly the bailee. Upon receipt of shipping instructions, Intertrans would withdraw the goods from its own warehouse and arrange shipping.
As to the second category of goods--those to be held in bond in Miami pending export to Latin America--the agreement was different. In order for Monroe to avoid having to pay United States customs duties, it was necessary for the to-be-exported goods to be held in a customs-bonded warehouse approved by the United States Customs Service. 2 Furthermore, transportation from the Port of Miami to the bonded warehouse could only be accomplished by using a customs-bonded carrier. 3 Similarly, when the in-bond goods were to be withdrawn from the bonded warehouse and exported, they could only be transported back to the Port of Miami by bonded carrier.
Intertrans informed Monroe that Intertrans did not have its own bonded warehouse, nor did Intertrans have bonded trucks. 4 Consequently, it was agreed that Intertrans would select a customs-bonded warehouse for storage of Monroe's in-bond goods. Intertrans was also to arrange for a bonded carrier to transport Monroe's in-bond goods to and from the bonded warehouse. Thus, under the agreement and operative statutes, Intertrans would never obtain physical custody of the in-bond goods because Intertrans could not legally do so.
In accordance with the parties' agreement, Intertrans selected a bonded warehouse operated by International Warehouse Distribution Corporation ("IWDC") for storage of Monroe's in-bond goods. IWDC took its instructions from Intertrans and submitted its bills to Intertrans. Intertrans in turn billed Monroe.
On September 3, 1988, an arsonist set a fire at one end of the IWDC warehouse. 5 The Monroe in-bond goods were stored at the opposite end. The fire ignited toxic chemicals stored in the warehouse. The resulting toxic fumes inhibited the fire department's ability to fight the fire.
Although the blaze did not consume Monroe's calculators, the cartons suffered heat damage and were covered in toxic residue. The in-bond products were declared a loss, valued at trial at approximately $900,000. 6 Monroe settled with its insurer, 7 after which this subrogation action was brought against multiple defendants.
Before considering Monroe's claims against Intertrans it is first necessary to understand Monroe's claim of negligence against IWDC. Monroe contended that its losses stemmed from IWDC's improper storage of toxic chemicals in its warehouse. Monroe alleged that IWDC failed to comply with several relevant fire code regulations applicable to the storage of toxic chemicals. 8 Monroe asserted that the code violations allowed more extensive involvement of toxic substances than would otherwise have been the case, and that by reason of the violations the fire department could not enter the building and use effective fire-fighting techniques. Monroe contended that as a result, the fire was more extensive than it otherwise would have been and resulted in toxic contamination that otherwise would not have existed.
As to Intertrans, Monroe made two claims pertinent here. 9 First, Monroe alleged that Intertrans was negligent in selecting the IWDC warehouse. As Monroe's agent, Intertrans owed Monroe a duty of reasonable care in choosing an in-bond warehouse. According to Monroe, Intertrans should have inspected the non-bonded area of the IWDC warehouse and should have discovered the fire code violations regarding storage of hazardous chemicals. The negligence count went to the jury and Intertrans was exonerated. 10
Second, Monroe alleged breach of bailment. Monroe claimed that Intertrans and IWDC were both bailees of the in-bond goods. In essence Monroe asserted that Intertrans was the bailee, and IWDC was the subbailee. Monroe contended that Intertrans was vicariously liable for the negligence of IWDC, even if Intertrans itself was entirely without fault.
At trial, the court ruled as a matter of law that Intertrans was not vicariously liable for the negligence of IWDC. The court concluded that under the bailment count, Intertrans would be liable only if it was itself negligent. The trial court took the view that since the negligence count and the bailment count would both be governed by a negligence standard, the case should go to the jury solely under the negligence count. The jury found in favor of Intertrans on the negligence theory.
Monroe has appealed, contending that Intertrans is vicariously liable for the negligence of IWDC.
The first issue is whether the relationship between Monroe and Intertrans was that of bailor and bailee (as Monroe contends), or principal and agent (as Intertrans contends).
Bailment must be distinguished from agency. "The terms 'bailment' and 'agency' represent distinct concepts and involve different relationships, even though they may often comprehend some similar facts." 8 Am.Jur.2d Bailments Sec. 28 (1980) (footnote omitted) (citing Lynch v. Walker, 159 Fla. 188, 31 So.2d 268, 271 (1947)). "Agency is the fiduciary relation which results from the manifestation of consent by one person to another that the other shall act on his behalf and subject to his control, and consent by the other so to act." Restatement (Second) of Agency Sec. 1 (1958).
[B]ailment is defined ... "as a delivery of personalty for some particular purpose, or on mere deposit, upon a contract, express or implied, that after the purpose has been fulfilled it shall be redelivered to the person who delivered it, or otherwise dealt with according to his directions, or kept until he reclaims it, as the case may be."
Dunham v. State, 140 Fla. 754, 192 So. 324, 326 (1939) (citation omitted).
The essential element of agency--that one person act for another subject to the latter's control--may be wholly lacking in a bailment, and, in fact, the interests of the parties may be completely antagonistic. The ordinary bailment, undertaken without some special provision, leaves no residue of control in the bailor as to how the bailed property is to be handled....
8 Am.Jur.2d Bailments Sec. 28 (footnotes omitted); cf. Restatement (Second) of Agency Sec. 12 comment c (distinguishing agency from bailment).
The question is how to classify Intertrans' relationship to the goods which were stored in bond at the IWDC warehouse. 11 This dispute must be resolved in Intertrans' favor. From the start Intertrans made clear what services it could--and could not--provide. Intertrans undertook to procure storage for goods that arrived in Miami, and to arrange shipment of the goods whenever Monroe gave shipping instructions. Intertrans made clear, and Monroe knew, that Intertrans did not have a customs-bonded warehouse. As a matter of federal law, therefore, Intertrans could not take physical custody of the goods which were destined to be reimported to Latin America. Instead, federal law required that a bonded trucker take custody of the goods at the Port of Miami and transport the goods to the bonded warehouse. Similarly, federal law required that the goods destined for re-export be stored in a bonded warehouse. When instructions were given to export the goods to Latin America, Intertrans again was required to hire a bonded trucker to transport the goods from IWDC's warehouse to the Port, from whence the goods would be exported.
It is facially clear that with regard to the products held for export, Intertrans undertook only to act as...
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