Morse Electro Products Corp. v. SS Great Peace

• Decision Date: 07 September 1977
• Docket Number: Civ. A. No. 74-457.
• Citation: 437 F. Supp. 474
• Parties: MORSE ELECTRO PRODUCTS CORP., Plaintiff, v. S. S. GREAT PEACE, her engines, etc., TA Cheng Marine Co., Ltd., Norton Lilly & Co., Inc., Maher Terminals Company, Inc., W. J. Byrnes & Co. of New York, Inc., Ultimate Distributions Systems, and Interport Trucking Co., Defendants. MAHER TERMINALS COMPANY, INC., Third-Party Plaintiff, v. SULLIVAN SECURITY SERVICE, Third-Party Defendant.
• Court: U.S. District Court — District of New Jersey

437 F. Supp. 474

MORSE ELECTRO PRODUCTS CORP., Plaintiff, v. S. S. GREAT PEACE, her engines, etc., TA Cheng Marine Co., Ltd., Norton Lilly & Co., Inc., Maher Terminals Company, Inc., W. J. Byrnes & Co. of New York, Inc., Ultimate Distributions Systems, and Interport Trucking Co., Defendants.

MAHER TERMINALS COMPANY, INC., Third-Party Plaintiff, v. SULLIVAN SECURITY SERVICE, Third-Party Defendant.

Civ. A. No. 74-457.

United States District Court, D. New Jersey.

September 7, 1977.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Martin B. Mulroy, Edison, N. J., for plaintiff; Bruce J. Hector, New York City, of counsel.

Thomas G. Aljian, Warren, N. J., for defendant Ta Cheng Marine Co., Ltd., and Norton Lilly & Co., Inc.; Dougherty, Ryan, Mahoney, Pellegrino & Giuffra, New York City by Peter J. Zambito, New York City, of counsel.

Gurry & Conlon by Thomas P. McHugh, South Orange, N. J., for defendant Maher Terminals Company, Inc.; McHugh, Heckman, Smith & Leonard by James M. Kenny, New York City, of counsel.

Lum, Biunno & Tompkins, Newark, N. J. by Raymond W. Troy, Newark, N. J., for defendant W. J. Byrnes & Co. of New York, Inc.

M. Keith Marshall, West Orange, N. J., for defendants Interport Trucking Corp. and Ultimate Distribution Systems, Inc.; Leo Howard, New York City, of counsel.

OPINION

COOLAHAN, Senior District Judge.

Plaintiff, Morse Electro Products Corp. (hereinafter Morse), is the consignee of 466 cartons of 8-track tape recording/playing decks shipped f. o. b. from Kobe, Japan, to Port Newark, New Jersey, aboard the vessel S.S. Great Peace. Plaintiff claims it failed to receive 432 of these cartons because of a "misdelivery" of the cargo to an unknown thief. This admiralty action¹ requires that a determination be made as to who among the parties should bear the loss of the cargo.

Plaintiff moves for summary judgment pursuant to Fed.R.Civ.P. 56(a) against defendant Ta Cheng Marine Co., Ltd. (hereinafter Ta Cheng), the carrier and owner of the S.S. Great Peace. Ta Cheng moves to dismiss the complaint, and moves, in the event it should be held liable to Morse, for summary judgment on the issue of indemnification against defendant Maher Terminals Company, Inc. (hereinafter Maher), the terminal operator. W. J. Byrnes & Co. of New York, Inc. (hereinafter Byrnes), plaintiff's customs broker-freight forwarder, moves for summary judgment against plaintiff. Interport Trucking Corp. (hereinafter Interport) and Ultimate Distribution Systems, Inc. (hereinafter Ultimate), the designated truckmen, move for summary judgment against plaintiff and cross-claimant defendants Maher and Byrnes.² All of these motions have been submitted on the papers in accordance with Fed.R.Civ.P. 78.³

On February 14, 1973, Ta Cheng, the carrier, issued an on-board bill of lading (No. TRSKN-12) at Kobe, Japan, which acknowledged receipt in apparent good order and condition of 466 cartons containing six 8-track tape recording/playing decks per carton. The cartons were to be delivered at the Port of New York to the order of First National City Bank, whose assistant cashier endorsed the reverse side of the bill of lading over to plaintiff, Morse. See Exhibit 1 to plaintiff's answer to Ta Cheng's interrogatories. Ta Cheng agreed to notify Morse, the consignee of the cargo, of the arrival date. Norton Lilly & Co. acted as Ta Cheng's New York agent.

Byrnes had been for several years prior to and at the time of the misdelivery the customs broker for Morse. Byrnes would pay both customs and freight duties and clear the import. It would also issue delivery orders to the trucking company designated by Morse (deposition of Robert W. Hughes, Byrnes' import manager, pp. 64-65). Since 1972 Morse's designated truckmen had been Interport and Ultimate.⁴ Herbert Reader of Ultimate provided the messenger to pick up Morse's delivery orders. (Affidavit of Anthony Firrielo, vice president of Byrnes, ¶ 5.)

On April 1, 1973, the cargo arrived at Port Newark. The day before, March 31, Morse was notified of the expected date of arrival. (Traufield deposition, pp. 25-26.) The entire shipment of 466 cartons was received by Maher and placed in shed No. 141 at the terminal. (Deposition of Frank Jadach, senior vice president of Maher operations, p. 41, lines 8-9, 24-25; p. 52, lines 1-3.) Maher arranged the security at the terminal. (Jadach deposition, p. 58, lines 11-14).⁵ None of Norton Lilly's personnel was physically at the pier or the terminal. (Jadach deposition, p. 56, lines 23-25.)

Byrnes was notified of the delivery. On April 3, 1973, Byrnes prepared in quintuplicate a delivery order designating Interport as the truckman for the cargo. Byrnes addressed the order to Maher's terminal delivery clerk of the S.S. Great Peace, who would release the cargo to truckmen bearing a proper delivery order. (Maher's answer to cross-claimant Ta Cheng's interrogatories, ¶¶ 31, 32.)

Byrnes received from Morse the shipping documents before the S.S. Great Peace arrived in port. Delivery orders are routinely prepared by a clerk at Byrnes but are left undated until the cargo is cleared through customs and a permit has been lodged at the pier. On April 3, 1973, identification permit No. 034228 was lodged covering the subject shipment with customs at shed 141. Therefore, on April 3, Lori Eadicicco, Byrnes' clerk, signed and dated the original delivery order (No. 38245) and named Interport and Ultimate as designated truckmen. (Affidavit of Anthony Firrielo, ¶¶ 1-6.)

According to Firrielo, Byrnes' vice president (Firrielo affidavit, ¶ 7), Byrnes followed the routine procedure established by Interport and Ultimate in 1972. This procedure required Byrnes to place several delivery orders designating Interport and Ultimate together in a sealed envelope addressed to them. Interport/Ultimate's messenger would then pick up the envelope. Delivery orders are normally kept in the desk drawer of the preparer. (Byrnes' answers to Ta Cheng's interrogatories, 6.) Blank delivery orders are also kept in Byrnes' warehouse.

Byrnes states that at approximately 4:45 p. m. on April 3, 1973, Interport's messenger, Jack Schwartz, picked up the sealed envelope which contained two copies of the delivery order for the 466 cartons of tape-players, along with two other delivery orders for cargos belonging to Morse.⁶ Another copy of the delivery order for the tape-players was sent to Ann Laona (or Leona), an employee of Morse. (Affidavit of Lori Eadicicco, Byrnes' employee, ¶¶ 1-5; see also, Hughes deposition, p. 77, lines 3-6, 20-25; p. 78, lines 3-5.) Lori Eadicicco placed the sealed envelope along with another sealed envelope addressed to Interport/Ultimate in a pick-up box on her desk. (Eadicicco affidavit, ¶¶ 6-7.)

Interport denies ever having received this delivery order. (Interport's answers to Byrnes' interrogatories, 4-5, 6d, 7a.) Byrnes, however, contends the delivery order was sealed in the envelope which Interport picked up on April 3. Interport's messenger, who was well known to Byrnes' employees, contends that he was not required to sign for the envelopes.

The following day, April 4, two truckmen claiming to be from Allied City Express (hereinafter Allied) presented a delivery order on Byrnes' stationery accurately describing the cargo of 466 cartons of tape-players but designating Allied instead of Interport as truckman. The truckmen first presented the delivery order to customs at the pier and received an authorization for release. However, because the cargo had not yet been discharged, they were not permitted to take the cargo away.

On April 10, 1973, the Allied truck returned, again presenting the delivery order. Maher employees gave the truckmen 216 cartons of the cargo. The next day, April 11, another 216 cartons were loaded onto the Allied truck pursuant to the bogus delivery order. A total of 432 of the 466 cartons were misdelivered.

The bogus delivery order was signed "H. Kingman," a fictitious signature. Allied had no employee by that name and had no knowledge of Morse's cargo. Obviously someone had obtained the original delivery order and a blank Byrnes delivery order form. The blank form was conformed to the original, substituting only Allied for Interport and a fictitious signature for that of the Byrnes employee. Byrnes' employee notes, however, that the fraudulent delivery order lacked a customs identification number. (Hughes deposition, pp. 71-72.)

In the late afternoon of April 12, Ann Laona of Morse called Byrnes to inquire as to when Morse could expect delivery.⁷ A check of Byrnes' records showed that the delivery order had been picked up on April 3. (Firrielo affidavit, ¶ 8.) Byrnes called Interport's president, Horace Schwartz (no relation to Interport's messenger, Jack Schwartz), who denied ever having received the delivery order for the 466 cartons of tape-players. Byrnes claimed that the Interport/Ultimate messenger signed for the order. (Firrielo affidavit, ¶¶ 9-10.) Jack Schwartz denied signing for the order as no signature was normally required. (Byrnes answers to Ta Cheng's interrogatories, 16; Interport answers to Byrnes interrogatories, 2-3.) On April 13 a duplicate delivery order No. 38245 was sent to Interport. Horace Schwartz called Byrnes back on April 17 to advise that 432 of the cartons had already been picked up. Schwartz had been told by Maher's delivery clerk that the cargo had been picked up by Allied on April 10 and 11.

Maher states that its checker was assigned on April 10 and 11 to tally the 216 cartons on each occasion (Jadach deposition, pp. 41, 53) after it received the customs release (Jadach deposition, p. 35). Maher's pier personnel ran a credit check against the name of the truckman, Allied. Approval was received. (Jadach deposition, pp. 45, 59.) Frank Jadach, Senior Vice President of Operations for Maher, stated that the S.S. Great Peace received the usual "clerking" of a vessel; that is,...