Philip Morris v. American Shipping Co., Inc.

• Decision Date: 10 December 1984
• Docket Number: No. 83-5461,83-5461
• Citation: 748 F.2d 563
• Parties: PHILIP MORRIS, Plaintiff-Cross-Defendant-Appellee, v. AMERICAN SHIPPING CO., INC., Defendant-Appellant, Maritime Terminal, Inc., Defendant-Cross-Plaintiff-Appellant, M/V CRUZ DEL SUR, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 563

748 F.2d 563

1986 A.M.C. 276

PHILIP MORRIS, Plaintiff-Cross-Defendant-Appellee, v. AMERICAN SHIPPING CO., INC., Defendant-Appellant, Maritime Terminal, Inc., Defendant-Cross-Plaintiff-Appellant, M/V CRUZ DEL SUR, Defendant-Appellant.

No. 83-5461.

United States Court of Appeals, Eleventh Circuit.

Dec. 10, 1984.

Arthur Roth, Miami, Fla., for Maritime Terminal, Inc.

Thomas E. Fotopulos, Fowler, White, Gillen, Boggs, Villareal & Banker, Jacob J. Munch, Tampa, Fla., for American Shipping.

Smathers & Thompson, Christian D. Keedy, Miami, Fla., for Philip Morris.

Appeals from the United States District Court for the Southern District of Florida.

Before FAY and VANCE, Circuit Judges, and MACMAHON ^*, District Judge.

PER CURIAM:

Appellants American Shipping Company ("American") and Maritime Terminals, Inc. ("Maritime") appeal the district court's finding of liability in favor of appellee Philip Morris Incorporated ("Philip Morris"). Two separate matters are raised by the appellants. American contends that the district court erred in concluding that American was not entitled to limit its liability to $500 per package pursuant to 46 U.S.C. Secs. 1300-1315, the Carriage of Goods by Sea Act ("COGSA"). We find that the COGSA limitations incorporated in American's bills of lading were inapplicable to the post-discharge period and American was unable to meet its burden of proof regarding when the cargo was damaged; consequently, the Harter Act, 46 U.S.C. Secs. 190-196, controls the question of liability, and the decision of the district court is affirmed. Maritime contends that the district court erred in requiring the remission of certain storage costs to Philip Morris. We disagree, and the decision of the district court regarding this issue is likewise affirmed.

I. BACKGROUND

This dispute arose as the result of damage sustained by a cargo of tobacco owned by Philip Morris. In 1979, Philip Morris had agreed to repurchase from its former franchisee Compania Columbiana de Tobaco, S.A. ("Coltabaco") certain material, consisting mostly of tobacco. In June and September of 1979, two Philip Morris employees inspected the material at the Coltabaco warehouses in Columbia and found no damage to the tobacco, but some damage to the hogshead staves.

In late September, 1979, American was contacted regarding the carriage of the cargo from Baranquilla to Miami. American's agent thereupon issued "clean" bills of lading, which represented that the cargo was not damaged. The cargo, however, was not loaded on to the CRUZ DEL SUR until December 3rd and 4th, 1979. At that time, Captain Navas, the master of the ship, observed some damage to the cargo, including signs of waterstaining. As a result, he registered a formal Master's Protest on December 5, 1979. The district court made a finding that except for the broken hogshead staves, the cargo was generally in good condition in late September 1979, when last inspected by Philip Morris. Therefore, since this factual finding is not clearly erroneous, Terman Foods, Inc. v. Omega Lines, 707 F.2d 1225, 1228 (11th Cir.1983), we must accept the conclusion that the cargo was damaged between late September and the time when it was actually loaded on the CRUZ DEL SUR. During that period of time, the cargo was in the custody of American's agents.

The district court found that the cargo was not damaged any further during the voyage to Miami. Upon arrival in Miami, however, Maritime unloaded the cargo and stored it in its unprotected yard. The unloading was completed on December 12, 1979, but the cargo was not removed from Maritime's premises until mid-January, 1980. Between January 21 and 24, 1980 Central Truck Lines Cargo picked up the cargo and eventually transported it to Richmond, Virginia. The district court found that the cargo sustained additional damage while in Maritime's possession.

II. THE LAW

A. American Shipping and the COGSA $500 Limit

American contends that the district court erred in concluding that it was not entitled to limit its liability to $500 per package, pursuant to the provisions of COGSA. American's bill of lading extends the COGSA provisions to the entire period of time in which the cargo is in the custody of the carrier. The district court held, however, that the COGSA provisions were not applicable to the period of time after the cargo was unloaded in Miami and American had not met its burden of proof regarding when the cargo was damaged. ¹ We agree. Under these particular circumstances, the Harter Act controls, and American is liable for the total amount of damages sustained while the cargo was in its custody. ²

By its terms, COGSA applies to the carrier only "in relation to the loading, handling, stowage, carriage, custody, care and discharge of" goods, and not to those periods unrelated to loading and unloading. 46 U.S.C. Sec. 1302. The Harter Act applies to the entire period of the contract of carriage, except for those periods covered by COGSA. 46 U.S.C. Sec. 1311. In effect, then, the Harter Act applies to those extended periods of time before and after the loading of the cargo on and off the vessel. The parties may agree to extend the COGSA limitation provisions to cover the entire period of time in which the carrier has custody of the cargo. 46 U.S.C. Sec. 1307. See Brown & Root, Inc. v. M/V Peisander, 648 F.2d 415, 420 (5th Cir.1981); Baker Oil Tools, Inc. v. Delta Steamship Lines, 562 F.2d 938, 940 n. 3 (5th Cir.1977), modified, 571 F.2d 978 (1978). However, such stipulations limiting the carrier's liability under the Harter Act will be strictly construed against the carrier. Cabot Corp. v. S.S. Mormacscan, 441 F.2d 476, 478 (2d Cir.), cert. denied, 404 U.S. 855, 92 S.Ct. 104, 30 L.Ed.2d 96 (1971). The carrier in the instant case included the following language in the terms and conditions of the bill of lading:

The provisions stated in said Act [COGSA] shall ... govern before the goods are loaded on and after they are discharged from the ship and throughout the entire time the goods are in the custody of the carrier.

Despite this language extending the liability limitations of COGSA, the district court held that the COGSA limitations were inapplicable to the post-discharge period.

To establish a prima facie case of liability against the carrier, the shipper must show that the cargo was received in good condition by the carrier and the cargo was unloaded at its destination in a damaged condition. Blasser Brothers v. Northern Pan-American Line, 628 F.2d 376, 381 (5th Cir.1980). Accord, Terman Foods, Inc. v. Omega Lines, 707 F.2d 1225, 1227 (11th Cir.1983). A clean bill of lading is prima facie evidence that the carrier received the cargo in good condition. Blasser, 628 F.2d at 381. Philip Morris has clearly established a prima facie case here. A clean bill of lading was issued by American, and there was no finding by the district court that the bill of lading was issued with an intent to misrepresent the condition of the cargo. As the trial court correctly concluded, American's proffered evidence of the damaged cargo--the Master's Protest--was not relevant to the question of the condition of the cargo when received by American's agents, but rather was relevant to the condition of the cargo in December, 1979, when it was loaded on to the CRUZ DEL SUR. Therefore, the cargo sustained some damage between the time that the cargo was received by American's agents in late September and December when the cargo was finally loaded on to the ship.

Once the shipper has established a prima facie case, the burden of proof shifts to the carrier to prove that the loss or damage falls within one of the COGSA exceptions or that the carrier exercised due diligence in preventing damage to the cargo. Terman Foods, 707 F.2d at 1227. Cf. Maggard Truck Line v. Deaton, Inc., 573 F.Supp. 1388, 1394 (N.D.Ga.1983) (once prima facie case is established, carrier must show that it was both free from negligence and that the damage was due to an excepted cause). There were no findings by the district court as to the existence of any applicable exceptions.

The district court properly found that delivery by American to Philip Morris was not effected until the cargo was picked up by Central Truck Lines on January 21, 1980. Limitations on the carrier's liability are inapplicable if damage occurs due to negligence in the proper delivery of the cargo. F.J. Walker Ltd. v. M.V. "Lemoncore", 561 F.2d 1138, 1143 (5th Cir.1977). "Mere delivery to a wharf is insufficient." Id. Proper delivery occurs when the carrier places the cargo upon a fit wharf. Id.; Goya Foods, Inc. v. S.S. Italica, 561 F.Supp. 1077, 1085 (S.D.N.Y.1983). To determine whether a wharf is "fit", the court looks to the custom and usage of the port. F.J. Walker, 561 F.2d at 1144. In the instant case, the district court expressly found that Maritime, as American's agent, had not stored the cargo in a warehouse from the time it was unloaded to the time it was picked up on January 21; this was contrary to the custom and practice in the Port of Miami. Because the cargo was not properly delivered to a fit wharf, the Harter Act, not the limitation provisions contained in the bills of lading, controls the question of liability. See Goya Foods, 561 F.Supp. at 1085.

With regard to the lengthy period of time which elapsed between discharge and procurement of the cargo, the district court noted the late arrival of the bills of lading in Philip Morris' offices. Though it was unclear when copies of them were received, the court found that the original bills of lading were not received until December 28, 1979. Without those bills of lading, Philip Morris was unable to clear the cargo through customs. Thus, Philip Morris could not have picked up its cargo until at least this time, even if it had been aware of the damage sustained by the cargo. And, of course, the bills of lading did not reflect any damage to the cargo. Moreover,...