Pan American World Airways, Inc. v. California Stevedore & Ballast Co.

• Decision Date: 30 August 1977
• Docket Number: No. 75-2019,75-2019
• Citation: 559 F.2d 1173
• Parties: PAN AMERICAN WORLD AIRWAYS, INC., a corporation, Plaintiff-Appellee, v. CALIFORNIA STEVEDORE AND BALLAST COMPANY, a corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1173

559 F.2d 1173

PAN AMERICAN WORLD AIRWAYS, INC., a corporation, Plaintiff-Appellee, v. CALIFORNIA STEVEDORE AND BALLAST COMPANY, a corporation,

Defendant-Appellant.

No. 75-2019.

United States Court of Appeals,

Ninth Circuit.

Aug. 30, 1977.

Kent J. Clancy, Derby, Cook, Quinby & Tweedt, San Francisco, Cal., argued, for plaintiff-appellee.

John Mahoney, Cooper, White & Cooper, San Francisco, Cal., argued, for defendant-appellant.

Appeal from the United States District Court for the Northern District of California.

Before CARTER and CHOY, Circuit Judges, and HOFFMAN, ^* District Judge.

PER CURIAM.

The ultimate issue in this case is whether the bill of lading concerned here offered the shipper a fair opportunity to declare a value higher than the $500 per package limitation of liability stipulated in the bill of lading, thus complying with the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. § 1300, et seq. ¹ The district court found and concluded that the provisions of the Barber Line bill of lading purporting to limit the liability of Barber, as carrier, were invalid since Pan American World Airways, Inc. (Pan Am), as shipper, was not given such fair opportunity and, thereby, the choice of obtaining a higher carrier liability by paying an increased freight. ² The district court awarded plaintiff judgment for the full amount sought. We affirm.

The facts are not in dispute. In 1973, Pan Am purchased an aircraft scissors lift, a large machine used in the loading and unloading of cargo from airplanes. Pan Am or its freight forwarding agent, Novo International Corporation, then arranged for the shipment of the scissors lift by water from Alameda, California, to Balboa, Canal Zone, aboard the vessel TUGELA. ³ The other principal of these arrangements was the owner of the TUGELA, the steamship company Barber Lines.

California Stevedore and Ballast Company (CS&B), an expert stevedore, performed the physical work of loading at Alameda. While in the process of being hoisted, the scissors lift fell back onto the pier. The parties stipulated at trial that the resulting damage to the scissors lift amounted to $20,785.00. There is no issue as to liability, but only as to the measure of damages.

Clause 18 of the bill of lading reads:

18. AMOUNT OF LIMITATION

The responsibility of the carrier shall in no case, whether governed by the U. S. Carriage of Goods by Sea Act, the Hague Rules or not, exceed the amount of $500.00 per package or customary freight unit. It is agreed that the word "package" shall include any container, flat pallet, van, trailer, vehicle, animal, pieces and all articles of any description except goods shipped in bulk.

As pertinent, 46 U.S.C., section 1304(5) reads:

Amount of liability; valuation of cargo

(5) Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, or the equivalent of that sum in other currency, unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading. This declaration, if embodied in the bill of lading, shall be prima facie evidence, but shall not be conclusive on the carrier.

CS&B admits that the bill of lading in this case contains no space for an excess valuation declaration. However, CS&B argues that there is no evidence that Pan Am ever attempted to declare a higher valuation. The "Paramount Clause" of the bill of lading incorporated the provisions of COGSA into the contract. ⁴ CS&B argues that there is no evidence that Pan Am, a sophisticated shipper acting through a sophisticated professional freight forwarding company, was ignorant of COGSA or of the terms of bill of lading. In addition, CS&B contends that Pan Am has advanced no reason why COGSA § 1304(5), a term of the contract, should not be given effect. CS&B cites Mamiye Bros. v. Barber Steamship Lines, Inc., 241 F.Supp. 99 (S.D.N.Y.1965), affirmed, 360 F.2d 774 (2 Cir. 1966), cert. den., 385 U.S. 835, 87 S.Ct. 80, 17 L.Ed.2d 70 (1966), as authority embracing the aforementioned procedure where provisions of the bill of lading conflict with its "Paramount Clause."

The district court found Tessler Bros. (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438 (9 Cir. 1974) controlling on this issue. We are in agreement and adopt the district court's language in its unpublished opinion (Civil No. 74-1566):

The doctrine that a carrier may limit its liability only if a shipper is afforded a fair opportunity to declare a higher value for the cargo and pay a correspondingly higher charge has been recognized in this Circuit as recently as last year in Tessler Bros., supra, at 443. That decision held that the language of COGSA § 4(5) regarding declaration of a higher value for goods and the language in the bill of lading to the same effect constituted prima facie evidence of an opportunity to avoid the limitation, and that the burden to prove otherwise was on the shipper. In the instant case, however, the limitation in Clause 18, which does not provide any opportunity for the shipper to declare higher value, in the opinion of this Court is so inconsistent with 46 U.S.C. § 1304(5) as to: (1) render the bill of lading provision null and void; (2) distinguish the instant action from Tessler Bros.; and (3) place on defendant the burden of proving that an opportunity did in fact exist for the shipper to avoid the limitation. Defendant having failed to carry this burden, the Court finds and concludes that the benefit of the limitation is not available to defendant.

The United States Supreme Court has been consistent in its treatment of this issue. In Union Pacific Railroad Co. v. Burke, 255 U.S. 317, 41 S.Ct. 283, 65 L.Ed. 656 (1921), it was held permissible for carriers to limit their liability to agreed values, where a reciprocal benefit of choice of alternative adjustment of freight rate to value was tied to the release. In that case, the plaintiff was able to prove that the defendant had no alternative rates, so the limitation of liability was ineffective. In The Kensington, 183 U.S. 263, 22 S.Ct. 102, 46 L.Ed. 190 (1902), a bill of lading provided that in no event was there to be a recovery of more than fifty francs per unit at which the package was to be valued unless an increased valuation be declared and extra freight paid. The Court held that the limitation in the clause to the words "in no event" was void as against public policy and as against the Harter Act (Comp.St. §§ 8029-8035), the forerunner of COGSA, and that the alternative rate and recovery must be expressed. More specifically, the Court found the arbitrary limitation, unaccompanied by any right...