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Mitsui & Co. v. American Export Lines Inc.

decided: January 16, 1981.

MITSUI & CO., LTD. AND ATAKA & CO., LTD., PLAINTIFFS-APPELLANTS-CROSS-APPELLEES,
v.
AMERICAN EXPORT LINES, INC., DEFENDANT-APPELLEE-CROSS-APPELLANT; ARMSTRONG CORK CANADA, LTD., AND ARMSTRONG CORK COMPANY, PLAINTIFFS-APPELLEES, V. AMERICAN EXPORT LINES, INC., DEFENDANT-APPELLANT



Appeals and a cross-appeal from a judgment of the District Court for the Southern District of New York, Constance Baker Motley, Judge, awarding damages for cargo loss and damage. In the Mitsui case the district court found that each of 124 stacks of 15 steel ingots stowed in five containers constituted a "package" within the meaning of 46 U.S.C.§ 1304(5) and reduced plaintiffs' recovery for the loss of the ingots from their C.I.F. value of $369,404.40 to $62,000, plus 8% interest from the date of shipment. Plaintiffs appeal from this reduction; defendant cross-appeals from the court's failure to limit liability to $2,500 on the theory that the containers were the packages, and from the award of prejudgment interest from the date of shipment. In the Armstrong case the court found that each of 1705 rolls of floor covering shipped in 13 containers was a package and awarded damages of $357,946.19, the C.I.F. value of the goods, plus 8% interest from the date of shipment. Defendant appeals on the ground that the containers were the packages and that damages should therefore have been limited to $6,500, and also from the award of prejudgment interest from the date of shipment The judgment is modified so that the award of prejudgment interest shall run only from the anticipated date of delivery and is otherwise affirmed.

Before Feinberg, Chief Judge, and Friendly and Oakes, Circuit Judges.

Author: Friendly

These appeals and a cross-appeal from a judgment of the District Court for the Southern District of New York awarding damages for cargo loss and damage again confront us with the application to containers furnished by the carrier of § 4(5) of the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. § 1304(5). This provides in pertinent part:

Neither the carrier nor the ship shall in any event be or become liable for any loss or damage to or in connection with the transportation of goods in an amount exceeding $500 per package lawful money of the United States, or in case of goods not shipped in packages, per customary freight unit, ... unless the nature and value of such goods have been declared by the shipper before shipment and inserted in the bill of lading....

By agreement between the carrier, master, or agent of the carrier, and the shipper another maximum amount than that mentioned in this paragraph may be fixed: Provided, That such maximum shall not be less than the figure above named. In no event shall the carrier be liable for more than the amount of damage actually sustained.*fn1

The Facts and the Proceedings in the District Court

The shipments here at issue consisted of 1834 tin ingots shipped to plaintiffs Mitsui & Co., Ltd. and Ataka & Co., Ltd. (hereinafter collectively referred to as Mitsui)*fn2 in Japan and 1705 rolls of floor covering shipped by plaintiffs Armstrong Cork Canada, Ltd. and Armstrong Cork Company to ABC Trading Co., Ltd., also in Japan (hereinafter collectively referred to as Armstrong).*fn3 The shipments were carried by a vessel, the S.S. Red Jacket, owned and operated by defendant American Export Lines, Inc. (AEL). The Red Jacket sailed from New York to Japan on December 26, 1973. The loss occurred on January 10, 1974, when a stow of 50 containers on the weather deck of the Red Jacket collapsed during a storm in the North Pacific, sending 43 containers overboard and damaging the remainder. In Houlden & Co., Ltd. v. S.S. Red Jacket, 1977 A.M.C. 1382 (S.D.N.Y.), aff'd by order, 582 F.2d 1271 (2 Cir. 1978), cert. denied, 439 U.S. 1128, 99 S. Ct. 1045, 59 L. Ed. 2d 88 (1979), rehearing denied, 440 U.S. 968, 99 S. Ct. 1521, 59 L. Ed. 2d 785 (1979), AEL was found liable for the loss. All damage claims were then settled save for the two here at issue.

Trials with respect to the amount of damages recoverable by Mitsui and Armstrong were held before the district court. Mitsui claimed that the ingots were not shipped in packages and that AEL's maximum liability was therefore $500 per ingot under a clause in the bills of lading fixing liability at "$500 per package or per shipping unit", thereby permitting recovery of the full value of the ingots since this was less than the $917,000 produced by multiplying the number of ingots by $500. AEL contended that its liability for the ingots was limited to $2500 on the ground that the shipment consisted of 5 packages, namely, the containers in which the ingots, piled into 124 stacks, had been shipped. Armstrong claimed damages of $357,946.19, the C.I.F. value of the goods, on the basis that each of the 1705 rolls of floor covering was a package and that the package limitation thus did not reduce its recovery; AEL sought to limit liability to $6,500 on the ground that the packages within the meaning of § 4(5) of COGSA were the 13 containers in which the rolls had been placed.

The S.S. Red Jacket was a container ship. The containers in both cases were large metal boxes, those in the Mitsui case being 8' high, 8' wide, and 20' or 40' long, which were packed and sealed by the shippers at their own premises and were intended to be forwarded, unopened, to the consignees at their places of business in Japan.

With respect to the ingots, Judge Motley made the following findings of fact, which are not questioned:

Upon the trial of the issue of damages with respect to the packaging of the ingots, the parties relied upon the testimony developed at the liability trial and the court's findings with respect to such packaging. Each ingot was found to be approximately 4 inches wide, 5 inches in depth and 18 inches long. Each ingot weighed 75 pounds. Each ingot had a 2-inch lip extending out from each end of the top side of the ingot so that the ingot could be lifted by forklift or other device. In November 1973 the shipper, through its agents, requested AEL to provide it with 9 containers to be used for the shipment of 200 long tons of tin ingots. The ingots were loaded into the containers at the United States Navy Construction Battalion Center at Davisville, Rhode Island on a loose, "as is", basis by the employees of the General Services Administration, from which agency the ingots had been purchased by the shipper. The evidence disclosed that the ingots were, in fact, loaded into the containers in stacks consisting of 15 ingots three across and five high. When placed in these stacks of fifteen, they were referred to as "bundles". These bundles of 15 were the way in which the ingots had been stacked on the grounds of the federal installation. When the bundles were loaded onto the floors of the containers, they were arranged three across, a space between each, starting at the front end of the container. This pattern was then repeated. Next the bundles were placed four across, a space between each. This pattern continued to the rear of the container. The bundles were placed in the container in such a way as to have them abut each other at the after end of each bundle, from the front of the container to the rear. These bundles were not banded or strapped together as the use of the word bundle might suggest. They were not secured in any way. There was no chocking, dunnage, or other securing devices employed to keep the bundles from moving or coming apart. The shipper was of the view that on placing the bundles in the containers, it was not necessary to band or strap the bundles since the weight of the ingot (sic) and the manner in which they were stacked made them self securing. The evidence disclosed, however, that during the course of transit, which included a severe storm in the North Pacific, the bundles crumbled and the ingots fell to the floor of the containers in disarray. One of the containers was off-loaded in New York from a feeder vessel which had carried it to the S.S. RED JACKET from Boston to New York, since that container had sustained damage described in the court's opinion on liability. When the ingots in that particular container were reloaded by AEL agents in New York into another container, the evidence disclosed that they were loaded on an entire floor of the container, two high, and a wooden platform placed over the ingots and braced to secure them on the floor of the container.

Other evidence on the damage trial and the liability trial disclosed that with respect to break bulk shipments prior to containerization, ingots were always bundled and strapped or banded together with metal bands and placed in the hold of the vessel. (footnote omitted)

The bills of lading were furnished by the carrier but filled out by the shipper.

A typical one for the shipments here at issue listed the contents as follows:

PARTICULARS

CARRIER'S RECEIPT FURNISHED BY SHIPPER

Marks and No. of Cont. Description Gross

Measurement

Numbers or other Pkgs. of Goods Weight

TWO (twenty foot CONTAINERS HOUSE

s.t.c. as follows: TO HOUSE

OMLU 122590 30 bundles of 438 pcs.) GRADE "A" ...


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