Toshiba Intern. Corp. v. M/V Sea-Land Express, 91 Civ. 8609 (PNL).

• Decision Date: 10 January 1994
• Docket Number: No. 91 Civ. 8609 (PNL).,91 Civ. 8609 (PNL).
• Citation: 841 F. Supp. 123
• Parties: TOSHIBA INTERNATIONAL CORP., Plaintiff, v. M/V "SEA-LAND EXPRESS," her engines, boilers, etc., Sea-Land Service, Reynolds Leasing Corp., and Burlington Northern Railroad Company, Defendants.
• Court: U.S. District Court — Southern District of New York

841 F. Supp. 123

TOSHIBA INTERNATIONAL CORP., Plaintiff, v. M/V "SEA-LAND EXPRESS," her engines, boilers, etc., Sea-Land Service, Reynolds Leasing Corp., and Burlington Northern Railroad Company, Defendants.

No. 91 Civ. 8609 (PNL).

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

January 10, 1994.

Bigham Englar Jones & Houston, New York City (John E. Cone, Michael K. Rappaport, of counsel), for plaintiff.

Haight, Gardner, Poor & Havens, New York City (Chester D. Hooper, A. Andrew Tsukamoto, of counsel), for defendants Sea-Land Service, Inc. and Reynolds Leasing Corp.

Gutterman & Carcich, New York City (Barry N. Gutterman, of counsel), for defendant Burlington Northern R. Co.

OPINION AND ORDER

Findings of Fact and Conclusions of Law.

LEVAL, Circuit Judge.^*

Toshiba International Corp. brings action against Sea-Land Service, an ocean carrier, and Burlington Northern Railroad Company, a rail carrier, for damage in the amount of approximately $272,000 sustained by cargo in transit. Trial has been submitted on a written record on the question whether the $500 per package damage limitation provided in the bill of lading effectively limits the exposure of the defendants.

Background

In late 1990, Toshiba shipped two cartons containing a turbine generator and related equipment (collectively "the turbine") from Yokohama, Japan, to New York. On November 24, 1990, Sea-Land issued a bill of lading to Toshiba which listed the destination of the cargo as New York. The cargo was received by Sea-Land in Yokohama in good condition, and the goods were carried aboard the SEA-LAND EXPRESS from Yokohama to Tacoma, Washington. On December 5, 1990 in Tacoma, the cargo was transferred to Burlington Northern (BN) for transportation by rail to Chicago, where it was to be transferred by truck to Conrail for rail transportation to New York and delivery to the consignee.

A trucking company was employed to transport the cargo across Chicago from BN's terminal to Conrail's terminal. During this cross-town transportation, on December 9, 1990, the container was apparently "low-bridged," resulting in substantial damage to the turbine.¹ Conrail refused to accept the container because it was visibly damaged, and it was redelivered by the trucker to the BN hub. The cargo was then recoopered, recrated, and redelivered to Conrail, which accepted it for shipment to New York. The trucker that hit the bridge is not a party to the action.²

Discussion

The provisions of the Carriage of Goods by Sea Act, (COGSA) 46 U.S.C.App. § 1300 et seq., govern the shipment of goods from foreign ports to the United States and expressly provide for a $500 per package liability limitation. COGSA covers "the period from the time when the goods are loaded on to the time when they are discharged from the ship." 46 U.S.C.App. § 1301(e). However, the provisions of COGSA may contractually be extended past the time of discharge of the cargo from the ship. Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 314 (2d Cir.1983). It is also well-settled that the protections of COGSA and other provisions of the bill of lading may contractually be extended to third party agents of the carrier, such as inland carriers. See, e.g., Lucky-Goldstar v. S.S. California Mercury, 750 F.Supp. 141 (S.D.N.Y.1990) and cases cited therein. See also Seguros Illimani S.A. v. M/V POPI P, 929 F.2d 89, 93 (2d Cir.1991) (extension of bill of lading protections to stevedores upheld);³ Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.2d 518, 520 (2d Cir.1975) ("It is axiomatic that parties to a bill of lading may extend the $500 limitation of liability to third parties.") The clause in a bill of lading that extends the carrier's protection to such other entities is referred to in the admiralty bar as the "Himalaya clause."⁴

A. Sea-Land's Liability

Paragraph 17 of the bill of lading, under the caption "Valuation," provides:

In the event of loss, damage or delay to or in connection with goods exceeding in actual value the equivalent of $500 lawful money of the United states, per package, or in case of goods not shipped in packages, per shipping unit, the value of the goods shall be deemed to be $500 per package or unit, unless the nature and higher value of the goods have been declared by the shipper and higher charges paid as provided in Carrier's tariff ... When the U.S. Carriage of Goods by Sea Act does not apply of its own force to goods not shipped in packages, the $500 limitation shall apply to each shipping or customary freight unit or piece, provided always that any compulsorily applicable limitation shall apply in place of the $500 limitation.

The front of the bill of lading makes clear that Toshiba chose not to declare a higher value for its cargo. No value was entered in the space provided to enter a "declared value." Additionally, a printed provision in the declared value space provided that "If shipper enters a value carrier's `package' limitation of liability does not apply and the ad valorem will be charged." Toshiba chose not to declare a higher value and not to pay a higher ad valorem rate. The terms of the contract between Sea-Land and Toshiba thus provide that Sea-Land is protected by the $500 per package limitation.⁵

The bill of lading furthermore effectively dissipates any contention that the limitation ceased to protect Sea-Land when the goods passed out of its custody into the hands of the rail carrier. The initial clause on the back of the bill of lading provides that the shipper agrees that:

the receipt, custody, carriage, relay, delivery, and any transhipping of the goods are subject to the terms appearing on the face and back hereof, which shall govern the relations, whatsoever they may be, between shipper, consignee, the owners of the goods and any holder hereof and Carrier, its agents, contractors, employees, master and vessel and every contingency occurring and whether Carrier be acting as such or bailee.

Toshiba contends that the "Clause Paramount" renders Sea-Land's damage limitation applicable only to the period when the goods were in Sea-Land's "actual custody." The Clause Paramount provides that:

This bill of lading shall have effect subject to all the provisions of the Carriage of Goods by Sea Act of the United States of America, approved April 36, 1936, as if set forth herein. The defenses and limitations of said act shall apply to goods whether carried on or under deck, to carriage of goods between U.S. ports or between non-U.S. ports, before the goods are loaded on and after they are discharged from the vessel and throughout the entire time the goods are in the actual custody of Carrier whether acting as carrier, bailee or stevedore.

The argument is not persuasive; it misstates the import of this clause. The language in question asserts that the defenses and limitations "of said act shall apply ... when the goods are in the actual custody of Carrier...." It does not say, as Toshiba argues, that the defenses and limitations of the contract of carriage are so limited. Regardless of the applicability of COGSA, Sea-Land's $500 limitation arises out of Clause 17 of its contract of carriage. See United States Fire Ins. Co. v. S.S. Mee May, 1990 AMC 1632, 1638, 1990 WL 154696 (S.D.N.Y.1990). Irrespective of COGSA, the contract expressly limits Sea-Land's liability to $500 per package unless a higher value was declared and higher charges paid.

B. Burlington Northern's Liability

The second question is whether the various provisions in Sea-Land's bill of lading suffice to extend the $500 per package liability limitation to Burlington Northern. In addition to the clauses cited above, two further clauses of the bill of lading are relevant to this inquiry. Paragraph 2, "Parties Covered," provides that:

If the vessel or other craft in use is not owned by or chartered by demise to Carrier Sea-land Service, Inc., this bill of lading shall take effect for purposes of limitation of liability only, as a contract with the owner or demise charterer, as the case may be. If it shall be adjudged that any person other than the owner or demise charterer (including the master, time charterer, agents, stevedores, lashers, watchmen, and other independent contractors) is the carrier or bailee of the goods, or is otherwise liable in contract or in tort, all rights, exemptions, and limitations of liability provided by law and by the terms of this bill of lading shall be available to such other persons in contracting for the foregoing rights, exemptions, and limitations of liability. Carrier is acting as agent and trustee for the persons above mentioned. Particulars of the ownership of the vessel or other craft used may be obtained from Carrier or its agents.

Finally, Section 21, "Through and On Board Bills of Lading," provides in part that:

At all times when goods are in the care, custody or control of a participating land carrier such carrier shall be entitled to all rights privileges, liens, limitations of and exonerations from liability ... granted to any carrier hereunder to the full extent permitted to participating carriers under any rules and regulations and laws relating to carriers.

Plaintiff argues that the phrase "actual custody" in the clause paramount restricts the limitation of liability to the period during which the cargo is in the actual custody of Sea-Land. The cases cited by the plaintiff do not, however, reach the result for which it argues. The district court in Seguros Illimani S.A. v. M/V POPI P, 735 F.Supp. 108 (S.D.N.Y.1990) for example, also considered a clause paramount that contained the phrase "actual custody." The court nevertheless found that the separate Himalaya clause was sufficient to limit the liability of the stevedore — a separate entity — to $500 per package. Id. at 110-11. Similarly, despite the holding of the court in St. Paul Fire & Marine Ins. v. Sea-Land Service, 745 F.Supp. 186 (S.D.N.Y.1990) that the phrase "actual custody of the...