United States v. Lykes Bros. Steamship Co., 27717.

• Decision Date: 06 October 1970
• Docket Number: No. 27717.,27717.
• Citation: 432 F.2d 1076
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. LYKES BROS. STEAMSHIP CO., Inc., in personam, and the SS THOMPSON LYKES, her engines, tackle, etc., in rem, Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

432 F.2d 1076 (1970)

UNITED STATES of America, Plaintiff-Appellant, v. LYKES BROS. STEAMSHIP CO., Inc., in personam, and the SS THOMPSON LYKES, her engines, tackle, etc., in rem, Defendants-Appellees.

No. 27717.

United States Court of Appeals, Fifth Circuit.

October 6, 1970.

William D. Ruckelshaus, Asst. Atty. Gen., Louis C. LaCour, U. S. Atty., Alan S. Rosenthal, Raymond D. Battocchi, Attys., Dept. of Justice, Washington, D. C., for plaintiff-appellant.

Benjamin W. Yancey, M. D. Yager, New Orleans, La., for defendants-appellees; Terriberry, Carroll, Yancey & Farrell, New Orleans, La., of counsel.

Before AINSWORTH, DYER and SIMPSON, Circuit Judges.

SIMPSON, Circuit Judge:

The United States, plaintiff-appellant, appeals the judgment of the court below which denied the government relief on its claim for damages allegedly incurred when appellee, Lykes Bros. Steamship Co., Inc., and its vessel the SS THOMPSON LYKES (Lykes), delivered three shipments of bagged wheat flour and corn meal at the port of Kunsan, Korea in October, 1966, in a wet and damaged condition. At the trial the government attempted to establish a prima facie case by showing, with documentary evidence only, that Lykes received the cargo in good order and condition and discharged the same in a damaged condition caused by the failure of Lykes to properly care for it. The district judge having ruled as inadmissible each document submitted by the government to prove the cargo was discharged in damaged condition, there was no evidence to support a prima facie case and judgment was entered for Lykes. We hold that several of the documents were erroneously excluded and accordingly we reverse and remand for further proceedings.

As to the admissibility of evidence, we emphasize at the outset that the liberal construction properly given Rule 43(a), F.R.Civ.P., favors admission of evidence rather than its exclusion if it is of probative value and that generally doubts should be resolved in favor of admissibility. Butler v. Southern Pacific Company, 5 Cir. 1970, 431 F.2d 77. We further note the particular applicability of such a construction in admiralty cases which are tried by a judge without a jury.¹ The documents proffered by the government to show that the cargo was delivered in a damaged condition, and excluded by the district judge consisted of an Over, Short and Damage Report (OSD Report), a Survey Report, three Cargo Boat Notes, an Out-turn Report and a Certificate of Condemnation. Various Phytosanitary Reports purporting to show that when the cargo was loaded it was free of injurious diseases and pests and in good condition were also excluded. Three Bills of Lading, apparently allowed in evidence without objection,² indicated the quantity and type of the goods delivered to Lykes for shipment and contained no exceptions as to their "apparent good order and condition".

We follow the above order in considering these documents. First, regarding the OSD Report and Survey Report, it is undisputed that each was prepared by an agent of Lykes. The government contends that the reports constitute admissions by Lykes' agents and as such are admissible the same as Lykes' own admissions would be. In holding these reports inadmissible, the lower court emphasized that in this case the agents' authority allowed them only to report to their principal (Lykes) and stated that only if the principal authorized the agent to speak to third persons for him can he make no valid exception to the reception of the agent's statements against him.

Admittedly, the law is unsettled as to whether an agent's statement, made within the scope of authority, but made only to the principal himself, is admissible against the principal as an admission. Professor McCormick notes that many courts would refuse to admit it while an equal number would let it in. McCormick, Evidence § 78, page 160, and cases cited. The cases relied on by the lower court as to this point include Dilley v. Chesapeake & O. Ry. Co., 6 Cir. 1964, 327 F.2d 249, cert. den. 379 U.S. 824, 85 S.Ct. 47, 13 L.Ed.2d 34 (1964); Standard Oil Company of California v. Moore, 9 Cir. 1957, 251 F.2d 188, cert. den. 356 U.S. 975, 78 S.Ct. 1139, 2 L.Ed.2d 1148 (1958); Nuttall v. Reading Company, 3 Cir. 1956, 235 F.2d 546. Although the above cases from other circuits support the holding of the district court, we adhere to the law as declared by this circuit. In Brown and Root, Inc. v. American Home Assurance Co., 5 Cir. 1965, 353 F.2d 113, the report of a marine surveyor hired to investigate and report to the principal as to the cause of the grounding of a barge was allowed in evidence as an admission of the principal. In Compagnie De Navigation, etc. v. Mondial United Corp., 5 Cir. 1963, 316 F.2d 163, the court, again sitting in admiralty, and holding the report of a surveyor made to his principal regarding the amount of damage to cargo admissible as an admission, stated:

"We do not rest this on a holding that the surveyor had authority to make any binding agreement as such. Rather it is a classic case of an admission in its true sense. The law of admissions is primarily the law of agency, not evidence. The surveyor was hired to inspect and report his conclusions and recommendations. In reporting he was doing exactly what he was employed to do. Since part of his acts were to be reported words, his statement was within his authority. As such it is admissible as an admission from which the trier could draw inferences." (Emphasis supplied)³ 316 F.2d at 171, n. 10.

We hold that the OSD Report and the Survey Report here involved should have been allowed into evidence.

We next consider the district court's exclusion of the three cargo boat notes. The court, after commenting that the notes did not indicate when they were prepared or from what sources of information they drew, stated: "the court is unable from examining these `Cargo Boat Notes' to determine the nature of the documents, their purpose, by whom they were prepared or for whom they were prepared". Each note identifies the cargo and sets out the kind and extent of damage. On two of the notes appear three signatures identified by typed lettering as "Chief Checker, SS Thompson Lykes V-31 in Port of Kunsan, Korea", and "Representative, Korea Express Co., Ltd., Kunsan Korea". The signatures are the same for the third except that the signature for the "Thompson Lykes" is identified as the "Master or Chief Officer".⁴ Despite a liberal construction of Rule 43(a) and the several arguments advanced by the government that these notes constituted exceptions to the hearsay rule, we are constrained to agree with the trial judge. As it was pointed out, an examination of the notes does not reveal either when they were prepared, by whom they were prepared, for whom they were prepared, or from what source of information they drew. The notes therefore, of themselves, do not overcome the lack of a proper foundation which the government otherwise failed to provide. Upon retrial the lower court should allow the United States an opportunity to remedy this deficiency by further proof of authenticity.

We now turn to the several documents certified by the Department of Agriculture as being authenticated government documents. These consisted of an out-turn report, a certificate of condemnation...