Sankyo Seiki (America) v. SS Korean Leader

• Decision Date: 26 October 1982
• Docket Number: No. 81 Civ. 3071 (CBM).,81 Civ. 3071 (CBM).
• Citation: 556 F. Supp. 337
• Parties: SANKYO SEIKI (AMERICA), INC., Plaintiff, v. S.S. "KOREAN LEADER", her engines, boilers, etc., v. ORIENT OVERSEAS CONTAINER LINE, INC., and Korean Shipping Corp., Ltd., Defendants and Third-Party Plaintiffs, v. CONSOLIDATED RAIL CORPORATION (CONRAIL), Burlington Northern, Inc., Delaware and Hudson Railway Co., and Norfolk and Western Railway Co., Third-Party Defendants.
• Court: U.S. District Court — Southern District of New York

556 F. Supp. 337

SANKYO SEIKI (AMERICA), INC., Plaintiff, v. S.S. "KOREAN LEADER", her engines, boilers, etc., v. ORIENT OVERSEAS CONTAINER LINE, INC., and Korean Shipping Corp., Ltd., Defendants and Third-Party Plaintiffs, v. CONSOLIDATED RAIL CORPORATION (CONRAIL), Burlington Northern, Inc., Delaware and Hudson Railway Co., and Norfolk and Western Railway Co., Third-Party Defendants.

No. 81 Civ. 3071 (CBM).

United States District Court, S.D. New York.

October 26, 1982.^*

Dwyer, Peltz & Walker by Alexander Peltz, New York City, for plaintiff.

Dougherty, Ryan, Mahoney, Pellegrino Giuffra & Zambito by John Ciraldo, New York City, for defendants and third-party plaintiffs.

Bleakley, Platt, Remsen, Millham & Curran by Hyman Hillenbrand, Kenneth Fremont, New York City, for Third-Party Defendants, CONRAIL, Burlington Northern, Inc., Norfolk and Western Ry. Co.

Kenga M. Lachapelle, Albany, N.Y., for third-party defendant Delaware and Hudson Ry. Co.

Richard H. Stokes, Forest Hills, N.Y., for third-party defendants.

MEMORANDUM OPINION

MOTLEY, Chief Judge.

Plaintiff and third-party defendants moved, pursuant to Rule 56, Fed.R.Civ.P., for summary judgment against defendants. For the reasons set forth below, both motions are granted.

Facts

Plaintiff moves for summary judgment for the short delivery of 113 cartons of audio components by defendants. The affidavits and exhibits annexed thereto disclose the following facts.

On or about October 28, 1977, plaintiff tendered at Yokohama, Japan a shipment of audio components for carriage by defendants. (Def.Ans. ¶ 5). The goods were "stuffed" by defendants into container No. OOCL-260409, seal No. OOCL-52222, and loaded aboard the S.S. Korean Leader, operated by defendants. (Def.Ans. ¶¶ 3, 6.) An intermodal bill of lading No. OOCL-005M, dated October 31, 1977, was concededly issued by or on behalf of defendants. (Def. Ans. ¶ 5; Def.Ans. to Pl.Interr. ¶ 1). By the terms of the bill of lading, defendants agreed to carry the goods "by ocean vessel between port of loading Yokohama and port of discharge Seattle," and agreed to arrange for or procure "pre-carriage from place of receipt and on-carriage to place of delivery New York." (Aff. in Supp. of Pl.Motion, Exh. 1; Third Party Def. Supplemental Aff.).

The terms of the bill recite in pertinent part: "The containers, goods, or packages said to contain Goods as specified below in apparent good order and condition unless otherwise stated." Id. Noted in the column NO. OF PKGS. is the entry "1 container (384 cartons)." In the column marked DESCRIPTION OF PACKAGES AND GOODS is the entry "SHIPPER'S LOAD & COUNT," "SANKYO AUDIO PRODUCTS," "TOTAL: ONE (1) CONTAINER ONLY." Id. No notations appear in the margin of the bill to qualify the number or condition of the goods received.

Defendants admit that only 271 cartons of the subject shipment were delivered to plaintiff in New York. (Def.Ans. to Pl.Interrog. ¶ 35). A security report prepared by employees of the third-party defendants, and submitted by defendants, reports that three men were observed dismounting from the flatbed car on which the container carrying the subject shipment rested. (Def. Reply Aff. in Opp., Exh. D). Inspection revealed that the original seal had been broken, but no seal was found on the car bed. Several cartons of the shipment were recovered near the container. The railroads' investigating officer estimated that the container was one-third empty, and that the container, judging from the amount of snow which had accumulated had been open for some time. Id.

These facts, not controverted by defendants, must be deemed admitted. S.D.N.Y. Local Rule 3(g). On March 8, 1978, defendants filed a written claim with third party defendant CONRAIL. (Third Pty.Def. Statement Pursuant R. 3(g) ¶ 11). On May 20, 1978, third-party defendant CONRAIL disallowed defendants' claim. Id. ¶ 12. The instant action was commenced by plaintiff on May 20, 1981 against defendants. Thereafter, on July 2, 1981, defendants filed a third-party complaint against third-party defendants. Id. ¶ 14.

I. Plaintiff's Motion for Summary Judgment Discussion

The responsibility of the district court on a motion for summary judgment is to determine whether there exists any genuine issue of material fact to be tried. American Int'l Group, Inc. v. London Am. Int'l Corp., 664 F.2d 348, 351 (2d Cir.1981); Jaroslawicz v. Seedman, 528 F.2d 727, 731 (2d Cir.1975). The court finds that plaintiff, having established a prima facie case as a matter of law, has carried its "preliminary burden" under Rule 56, Fed.R.Civ.P., of showing there is no genuine issue as to any material fact. United States v. Pent-R-Books, Inc., 538 F.2d 519, 529 (2d Cir.1976), cert. denied, 430 U.S. 906, 97 S.Ct. 1175, 51 L.Ed.2d 582 (1977).

A shipper, in order to make a prima facie case, need only show receipt for carriage in good order and non-delivery. M.W. Zack Metal Co. v. S.S. Birmingham City, 311 F.2d 334, 337 (2d Cir.1962), cert. denied, 375 U.S. 816, 84 S.Ct. 50, 11 L.Ed.2d 51 (1963); Lekas & Drivas, Inc. v. Goulandris, 306 F.2d 426, 429 (2d Cir.1962); G. GILMORE & C. BLACK, THE LAW OF ADMIRALTY 183-85 (2d ed. 1975). The court finds that the bill of lading No. YKNY-005M, concededly issued by defendants for receipt of the goods, and defendants' admission of short delivery establish plaintiff's prima facie case against defendants.

A bill of lading is prima facie evidence of receipt by the carrier of the goods therein described. Carriage of Goods by Sea Act (COSGA), 46 U.S.C. § 1303(4). The bill of lading issued by defendants shows that plaintiff delivered 384 cartons to defendants for carriage to New York. The fact that the bill of lading states that the description is "SHIPPER'S LOAD & COUNT" does not relieve the carrier of liability for loss of the goods. Spanish Am. Skin Co. v. The M.S. Ferngulf, 143 F.Supp. 345, 349 (S.D.N.Y.1956), aff'd, 242 F.2d 551 (2d Cir.1957).

Defendants concede that the subject shipment was short delivered in New York. (Def.Ans. to Pl.Interr. ¶ 35.) In view of this admission, the Receiving Report and the United States Customs Discrepancy Report submitted by plaintiff as probative evidence of the short delivery of 113 cartons by the defendants need not be discussed.

Plaintiff has thus established a prima facie case. Defendants "may not now defeat the motion for summary judgment by relying on the contention of its pleadings. Rather defendants must produce `significant probative evidence'" tending to support their position that an issue of material fact exists. United States v. Pent-R-Books, 538 F.2d at 529, (quoting First National Bank v. Cities Service Co., 391 U.S. 253, 289-90, 88 S.Ct. 1575, 1592-93, 20 L.Ed.2d 569 (1968)).

As a matter of law, a shipper does not bear the burden of explaining the loss of the cargo by the carrier. Once plaintiff establishes a prima facie case, the law casts upon the defendant "the burden of the loss which he cannot explain or, explaining, bring within the exceptional case in which he is relieved from liability." Schnell v. The Vallescura, 293 U.S. 296, 304, 55 S.Ct. 194, 196, 79 L.Ed. 373 (1934). The burden is such that defendant may bear "the responsibility for a loss which, in fact, may not be due to his fault, merely because the law, in pursuance of a wise policy casts on him the burden of showing facts relieving him from liability." Id. at 307, 55 S.Ct. at 197. The burden, therefore, rests with defendants to affirmatively show by "significant probative evidence" that the immediate cause of the loss was an excepted cause, or that they exercised due diligence to prevent the loss. M.W. Zack Metal Co., 311 F.2d at 337; Lekas & Drivas, Inc., 306 F.2d at 431. See 46 U.S.C. §§ 190-95, 1304.

Defendants, in referring to the railroad security report, contend that "certain factual issues, if resolved, could provide defendants with a complete valid defense under 46 U.S.C. Section 1304(q) 1304(2)(q) if it is shown that said burglary or theft was unforeseen and not caused by any negligence on the part of the defendants, and that this raises a question as to the defendants' liability to plaintiff in this action." (Def. Reply Aff. in Opp. ¶ 8).

Examining defendants' contention and the annexed security report in light of the inferences that can be drawn most favorably to defendants, the court finds that defendants have failed to raise a genuine issue of material fact. Even if the trier of fact could make the inference that the loss occurred while the goods were in the hands of third-party defendants, such a finding is not controlling as to plaintiff's right of recovery against defendants. An immaterial issue of fact does not preclude summary judgment. Applegate v. Top Associates, 425 F.2d 92, 97 (2d Cir.1970).

The obligations of defendants were governed not merely by COGSA, 46 U.S.C. §§ 1301-1315, but by the Harter Act as well, 46 U.S.C. §§ 190-95. COGSA covers the period "from the time when the goods are loaded to the time when they are discharged from the ship." 46 U.S.C. § 1301(e). The Harter Act is applicable to "the period between the discharge of cargo from the vessel and its proper delivery." Caterpillar Overseas S.A. v. S.S. Expeditor, 318 F.2d 720, 723 (2d Cir.1963), cert. denied, 375 U.S. 942, 84 S.Ct. 347, 11 L.Ed.2d 272 (1963).

If COGSA, 46 U.S.C. § 1304(2)(q) applies, then defendants must produce significant probative evidence that "they exercised ... due diligence to prevent the harm." M.W. Zack Metal Co., 311 F.2d at 337. The fact that the loss may have occurred while in the hands of the third-party defendants is immaterial to the question of whether defendants exercised due diligence to prevent the loss. Defendants have failed to produce any evidence showing that they exercised due diligence to prevent the loss. Only the production of such evidence would raise a genuine issue of material fact.

Defendants contend that "if it was shown that said ......