US Steel Intern., Inc. v. SS. Lash Italia

• Decision Date: 18 July 1977
• Docket Number: No. 76 Civ. 414-CSH.,76 Civ. 414-CSH.
• Parties: UNITED STATES STEEL INTERNATIONAL, INC., Plaintiff, v. SS. LASH ITALIA, etc., and Prudential Lines, Inc., Defendants and Third Party Plaintiffs, v. The NORFOLK AND WESTERN RAILWAY COMPANY, Third Party Defendant.
• Court: U.S. District Court — Southern District of New York

439 F. Supp. 365

UNITED STATES STEEL INTERNATIONAL, INC., Plaintiff, v. SS. LASH ITALIA, etc., and Prudential Lines, Inc., Defendants and Third Party Plaintiffs, v. The NORFOLK AND WESTERN RAILWAY COMPANY, Third Party Defendant.

No. 76 Civ. 414-CSH.

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

July 18, 1977.

Graham & Simon, P.C., New York City, for B.F. Goodrich; Jeffrey Lee Neandross, New York City, of counsel.

Bleakley, Platt, Schmidt & Fritz, New York City, for Louisville & Nashville; Hyman Hillenbrand, New York City, of counsel.

Lilly, Sullivan & Purcell, New York City, for Prudential Lines; George Sullivan, New York City, of counsel.

Bleakley, Platt, Schmidt & Fritz, New York City, for Third-Party Norfolk; Hyman Hillenbrand, New York City, of counsel.

MEMORANDUM DECISION AND ORDER

HAIGHT, District Judge.

Plaintiff United States Steel International, Inc. ("U.S. Steel") seeks recovery for contract and cargo damage arising out of a transatlantic shipment of steel by defendant Prudential Lines, Inc. Paragraphs five (5) and six (6) of plaintiff's complaint set forth the relevant factual information underlying plaintiff's claim:

"5. On or about January 22, 1975 plaintiff delivered 496 packages of electrical steel sheets to defendant as common carrier at the port of Norfolk in good condition for delivery to Constanza, Roumania in consideration of an agreed freight and pursuant to the valid terms of bills of lading issued by defendant and the S.S. `LASH ITALIA'.

"6. Thereafter the S.S. `LASH ITALIA' arrived at Constanza where the cargo was delivered in a damaged condition."

On March 7, 1977, defendant Prudential, as a third party plaintiff, served a third party summons and complaint on Norfolk & Western Railway Company ("N & W"), who it is alleged:

"was the inland carrier of part, or all, of the cargo described in paragraph 5 of the plaintiff's Complaint and delivered such cargo to the port of Norfolk where it was loaded aboard the third party plaintiff's vessels; and, that if the plaintiff's cargo was damaged as alleged in paragraph 6 of the Complaint, then such damage was due in whole, or in part, to the fault or neglect or want of due care of the Norfolk & Western Railway Co. . . ." (See ¶¶ five (5) and six (6) of Prudential's third-party complaint).

Issue was joined on April 29, 1977; and N & W now moves for summary judgment pursuant to Fed.R.Civ.Proc. 56, asserting that the claim for indemnity or contribution averred in the third party complaint is time barred under Section 2(b) of the Bill of Lading Contract issued by N & W to U.S. Steel. Section 2(b) provides that:

"As a condition precedent to recovery, claims must be filed in writing with the receiving or delivery carrier, or carrier issuing this bill of lading, or carrier on whose line the loss, damage, injury or delay occurred, within nine months after delivery of the property (or, in case of export traffic, within nine months after delivery at port of export) or, in case of failure to make delivery, then within nine months after a reasonable time for delivery has elapsed; and suits shall be instituted against any carrier only within two years and one day from the day when notice in writing is given by the carrier to the claimant that the carrier has disallowed the claim or any part or parts thereof specified in the notice. Where claims are not filed or suits are not instituted thereon in accordance with the foregoing provisions, no carrier hereunder shall be liable and such claims will not be paid."

The above-cited language appears in the form approved by the Interstate Commerce Commission, and is used by all common carrier railroads engaged in interstate commerce. See Section 20(11), commonly known as the Carmack Amendment (set forth verbatim, infra).

This Court need not elaborate on the fact that U.S. Steel did not file a written claim pursuant to Section 2(b) of the bill of lading —a fact which Prudential does not dispute. See pages 2 and 3 of the Sullivan affidavit. Such a failure, even if unintentional, would strictly preclude U.S. Steel from succeeding in a cause of action for damages in a court of law. See B. A. Walterman v. Pennsylvania Railroad Company, 295 F.2d 627 (6th Cir. 1961).

Prudential, on the other hand, asserts that it was not a party to the Bill of Lading Contract between U.S. Steel and N & W, and is therefore not bound by the conditions precedent to suit set forth in paragraph 2(b). Additionally, Prudential urges that since its third party complaint speaks of indemnity, the statute of limitations does not commence to run until Prudential is required to make payment to U.S. Steel for the damages alleged.

In response to the statute of limitations argument pressed by Prudential, N & W directs this Court to three recent decisions (Brumley-Donaldson Co., Inc. v. Shipping Corp. of India, Ltd., et ano., (S.D.Ala. no date) 7020-72H; Yeromex v. S.S. Tendo v. Maritime Containerline v. Old Dominion Freight Lines, 75 Civ. 376 (S.D.N.Y. Pollack, J.); Union Carbide v. Lifschultz Fast Freight v. Union Pacific Railroad Company, 71 C 2379 (Ill.1972)—all involving third party actions by either a steamship company or freight forwarder against a railroad company —which held that a claim for indemnity is governed by the restrictions contained in the Carmack Amendment, 49 U.S.C.A. § 20(11). (Two of these decisions which are unpublished, are set forth in their entirety in the footnotes.)¹ In other words, the nine months' notice of claim provision of the Carmack Amendment inures to the benefit of the carrier, and no claim, whether for indemnity or otherwise, can be asserted unless a written claim is made with the carrier within nine months after delivery.

Prudential's reliance on Federal Commerce & Navigation Co. Ltd. v. Calumet Harbor Terminals Inc., 542 F.2d 437 (7th Cir. 1976) is inapposite to the instant discussion. The Court of Appeals in Federal Commerce reversed a lower court ruling granting summary judgment to a third party defendant on a claim for indemnity. The facts in Federal Commerce were straightforward: Federal was a charterer and operator of vessels engaged in the carriage of goods for hire between ports on the high seas and the Great Lakes, including Chicago, Illinois. Federal retained Calumet Harbor Terminals Inc. to perform stevedoring and terminal services for cargo to be discharged from Federal's vessel at Chicago. During the period November 30-December 2, 1971, certain cargo carried aboard the Federal vessel was damaged as the result of improper handling by Calumet. The owner of the damaged cargo made a claim against Federal. After settling the claim, Federal sought indemnification from Calumet, who objected, citing Item 170(c) and 170(d) of its Terminal Tariff No. 3, duly filed with the Federal Maritime Commission pursuant to the Shipping Act, 1916, 46 U.S.C. §§ 801-842, and General Order 15 of the Federal Maritime Commission. Item 170(c) of the above-noted tariff contained a limitation of liability proviso which provided that:

"No claim will be recognized for loss or damage to cargo unless notice of such loss or damage is given to Terminal Operator within three (3) days of delivery of cargo to vessel owner or consignee. Suits must be filed within one year of delivery of cargo, or within one year of the date when cargo should have been delivered."

Having failed to fulfill the conditions set forth in Item 170(c), Federal's suit against Calumet was dismissed. In reversing, the Court of Appeals noted:

"It is manifest from a perusal of the Shipping Act that its scheme of things in its pertinent parts is to regulate and provide for fair and reasonable rates and charges for services of carriers and `wharfage, dock, warehouse, or other terminal facilities' operators and the prevention of discrimination in and rebating of such rates and charges. Nowhere in the language of the Shipping Act or the General Order 15 appears any language, express or implied, regarding any regulatory measures concerning stevedoring services or limitations upon admiralty causes for indemnification from a defaulting stevedore." (emphasis added) (542 F.2d 437 at 439).

Further on, the court observes that:

"The record on appeal gives no verified facts or circumstances surrounding the who, when, or where of the mishap that allegedly caused the damage to the cargo, specifically at the hands of Calumet, the stevedore, or Calumet, the terminal operator. In any case, we hold that neither Item 170(c) nor Item 170(d) of Calumet's Terminal Tariff No. 3 is, in the absence of actual notice or contract, applicable or enforceable to bar or restrict the alleged claims of Federal for indemnity.

"Concededly, but for the tariff, Item 170(c), the doctrine of laches or the appropriate statutes of limitation would not be affected nor would Item 170(d) restrict the common law or statutory duties of the terminal operator. Calumet says that the tariff gave constructive notice to Federal of the restricted time limitations and liability under the provisions of the Shipping Act . . .. It is settled however, that such filing gives constructive notice only `. . . of everything contained in such published tariff schedules which is by law required to be therein inserted . . .' Port of Tacoma v. S.S. Duval, 364 F.2d 615, 617 (9th Cir. 1966), citing Pacific S.S. Co. v. Cackette, 8 F.2d 259, 260 (9th Cir. 1925), cert. denied, 269 U.S. 586, 46 S.Ct. 203, 70 L.Ed. 426 (1925).

"As the court could not in Pacific, we cannot here find any provision of the Shipping Act which authorizes the time limitation and restriction of liability under the tariff Items 170(c) and 170(d), respectively, as against a shipowner. The items are simply not rate or charge related under the scheme of the Shipping Act. Port of Tacoma v. S.S. Duval, supra; City of Nome v. Alaska Steamship Co., 321 F.Supp. 1063 (D.Alaska 1971); Bernard v. U.S. Aircoach, 117 F.Supp. 134 (S.D.Cal. 1953). See Middle Atlantic

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