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Ltd. v. Navigator

decided: December 6, 1968.

ALUMINIOS POZUELO LTD., PLAINTIFF-APPELLANT,
v.
S. S. NAVIGATOR, HER ENGINES, BOILERS, ETC., AND CIA MAR. UNIDAD S.A. AND MARINA MERCANTE NICARAGUENSE S.A., DEFENDANTS-APPELLEES



Lumbard, Chief Judge, Waterman and Moore, Circuit Judges.

Author: Moore

MOORE, Circuit Judge:

Aluminios Pozuelo Ltd. (Aluminios), the plaintiff, appeals from an order granting summary judgment in favor of plaintiff to the extent of $500, thus limiting liability to this amount, against the defendants Cia Mar. Unidad S.A., owner of the S.S. NAVIGATOR, and Marina Mercante Nicaraguense S.A., the charterer of the vessel, in an action for damage to a machine shipped by Aluminios on the NAVIGATOR, D.C., 277 F. Supp. 1008.

The facts are stipulated. Aluminios shipped on defendants' ship a toggle press weighing over 3 tons. The press was some 11 feet in height, 55 x 46 inches at its base, and 98 x 67 inches at its top. It was bolted to a skid, consisting of two parallel pieces of lumber 130 inches in length with 3 cross pieces 96 inches in length. The Bill of Lading described the press under the headings " NO. OF PKGS" and " SHIPPER'S DESCRIPTION OF PACKAGES AND GOODS" as ONE (1) SKID MACHINERY -- 2812 (GROSS WEIGHT IN KILOS) -- 6200 (GROSS WEIGHT IN POUNDS)." The press was delivered to the carrier in perfect condition, but after shipment was discovered to have become a total loss. The machine was valued at nearly four thousand dollars.

The defendants admit responsibility for the damage but maintain that their liability is limited to $500 by the provision limiting liability in Section 4(5) of the Carriage of Goods by Sea Act (herein referred to as COGSA). Whether Aluminios' recovery is limited to $500 depends on whether the skidded toggle press is a "package" or a "customary freight unit" as specified in Section 4(5) of the Act.

Section 4(5) of COGSA

The statute provides:

Neither the carrier nor the ship shall * * * be liable for any damage * * * to goods in an amount exceeding $500 per package * * * or in case of goods not shipped in packages, per customary freight unit, * * * unless the nature and value of the goods have been declared by the shipper before shipment and inserted in the bill of lading. 46 U.S.C. ยง 1304(5).

In short, if the cargo damaged is a "package," the maximum liability of the carrier is $500, unless the shipper makes the carrier its insurer by specifying beforehand in the bill of lading the nature and value of the item being shipped. Where the goods damaged are "not shipped in packages" and where no specification of value is made as required, the carrier's liability is limited on the basis of $500 per "customary freight unit."

Unfortunately, no definition of "package" or "customary freight unit" is included in the statute. Due to the absence of any guides either in the statute or in the legislative history as to these terms, the decisions reveal little consistency. See Mitsubishi International Corp. v. S.S. Palmetto State, 311 F.2d 382, 94 A.L.R.2d 1412 (2nd Cir. 1962). While the number of cases has increased in recent years, surprisingly there is still a relative dearth of decided cases in this field, and those which do exist often are conflicting. Despite this evident lack of clarity and although we have reiterated the desirability of clarifying the situation, Congress has not yet formulated a definition, nor has the Court been offered any suggestions from outside. In the absence of any assistance, the Court must struggle with the cases as they arise.

Black's Law Dictionary (4th ed. 1951) defines "package" as a "bundle put up for transportation or commercial handling; a thing in form to become, as such, an article of merchandise or delivery from hand to hand." It denotes "a thing in form suitable for transportation or handling." As ordinarily understood in the commercial world, it means a shipping package or unit.

The term "package" was first considered by courts, in the context of a statute limiting a carrier's liability, at least as far back as 1874 when Whaite v. Lancashire & Yorkshire Rlwy. Co., L.R. 9 Ex. 67, held that a four-wheeled wooden wagon without a top in which oil paintings were packed was a "package or parcel" and, hence, limited the shipper to a maximum recovery of pound 10 per package.

Since that date, the decisions have presented no reliable guide as to what constitutes a package, although more recently the "put up for transportation" aspect has been emphasized. Thus, in Standard Electrica, S.A. v. Hamburg Sudamerikanische, etc., 375 F.2d 943 (2 Cir., 1967), we held that fifty-four cardboard cartons, each containing forty TV tuners, strapped to nine separate pallets, formed nine, and not fifty-four, packages because each pallet constituted an integrated unit, capable of and intended for handling. There is no need to repeat the discussion therein of the technological advances in the transportation industry, particularly with reference to cargo being shipped in palletized or containerized form. When hundreds of items can be shipped in a single container which, in turn, can be loaded as a unit on board a vessel, it is obvious that the "package" as a descriptive term, is quite out-moded and utterly meaningless. In Standard Electrica, supra, we said (p. 947):

"Only if 'package' is given a more predictable meaning, will the parties concerned know when there is a need to place the risk of additional loss on one or the other ...


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