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English Electric Valve Co. v. Mallard

decided: March 12, 1987.

ENGLISH ELECTRIC VALVE CO., LTD., PLAINTIFF-APPELLANT,
v.
M/V HOEGH MALLARD, HER ENGINES, TACKLE AND BOILERS, ETC., WESTWOOD SHIPPING LINES; ALLIANCE SKIBS A/S; AND LIEF HOEGH & CO., A/S, DEFENDANTS; WESTWOOD SHIPPING LINES, DEFENDANT-APPELLEE



In an action to recover for damage to electronic cargo, plaintiff consignee appeals from a judgment entered in the United States District Court for the Southern District of New York (Lasker, J.) in favor of defendant carrier, the district court having found that the consignee failed to establish a prima facie case that cargo was damaged while in carrier's custody.

Feinberg, Chief Judge, Newman and Miner, Circuit Judges.

Author: Miner

MINER, Circuit Judge:

Plaintiff-appellant English Electric Valve Co., Ltd. ("EEV") appeals from a judgment of the United States District Court for the Southern District of New York (Lasker, J.), after a non-jury trial, in favor of defendant-appellee Westwood Shipping Lines ("Westwood"). Judge Lasker ruled that EEV failed to establish a prima facie case under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. §§ 1300-1315 (1982 & Supp. 1983), because it failed to establish that the cargo was damaged while in defendant carrier's custody. Furthermore, Judge Lasker ruled that had EEV stated a COGSA claim, COGSA's $500.00 per package liability limitation, 46 U.S.C. § 1304(5), would apply.*fn1 Because it is now apparent that Westwood retained custody of the cargo from the time of its discharge from the ship throughout its storage on the quay, and because the water damage necessarily occurred during the ocean voyage or the storage period, we reverse the judgment of the district court and remand for judgment in the amount of $2,500.00 to be entered for appellant.

BACKGROUND

This suit arises out of the shipment of electronic cargo from Oakland, California to Tilbury, England. The cargo arrived at its destination with sufficient water damage to render it unsalvageable. At issue in the district court was (1) whether the damage occurred while the cargo was in custody of Westwood, the shipping company, and (2) whether Westwood could avail itself of COGSA's $500.00 per package limitation on liability. After a three-day non-jury trial, the district court made detailed findings of fact reported at 637 F. Supp. 1448 (S.D.N.Y. 1986).

Appellant EEV was the consignee of the shipment, which included a modulator purchased for $236,880.00 from the shipper, Aydin Energy Division ("Aydin"). Aydin's freight forwarder booked the shipment with appellee Westwood's agent, Norton Lilly Co. ("Norton"), and indicated that the cargo was "electronic equipment," to be handled as a house-to-house shipment, but requested neither special handling nor stowage below deck. In a house-to-house shipment the shipper packs the cargo into a container provided by the carrier and delivers it to the carrier. Norton booked the shipment for loading at Oakland, California, and discharge at Tilbury, England, aboard Westwood's ship, the M/V Hoegh Mallard.

Aydin packed the modulator components in five wooden crates, which were then placed in an open top container provided by Westwood. The modulator cabinet was enclosed in an aluminum envelope, cushioned and surrounded by paper packing material and bags of a drying agent. It was then packed in the largest wooden crate, which extended about fourteen inches above the open top container. The top of the container was covered with a tarpaulin. Normally an open top container is designed to be stowed on deck; once covered with a tarpaulin, it should withstand spray and rain conditions. When a container holds over-height cargo, as was the case here, the tarpaulin is distorted and no other containers can be stacked on top of it.

On December 1, 1981, the open top container was delivered, at the Oakland pier, to Westwood's stevedore, which noted that the container was a "rag top" and "oversize." The cargo was loaded aboard ship and the bill of lading was issued by Westwood. The bill of lading provided, in Clause 20, that goods in containers

may be carried on deck at carrier's option without notice to the shipper, consignee or owner of the goods, and, if carried on deck, the carrier shall not be required to specially note, mark or stamp any statement of on deck carriage on this bill of lading, any custom to the contrary notwithstanding.

Joint App. at 283. Westwood had a tariff on file with the Federal Maritime Commission, which provided in Rule 110B that:

Rates named in this tariff will apply on shipments tendered for transportation, provided that all freight received for transportation in or on containers . . . is received "To be held and Transported on Deck." Shippers may not request deviation from this provision.

Joint App. at 408. On previous occasions, Aydin's freight forwarder had booked with Westwood similar over-height electronic equipment stored in open top containers for carriage in the Pacific Coast-Northern Europe trade, and had been informed that such cargo would be stowed on deck. Westwood's eastbound service generally permitted stowage of containers only on deck, because below deck was usually filled with lumber, pulp and plywood loaded in the Pacific Northwest. Prior to loading at Oakland, the ship had loaded cargo at other northwest ports. Consequently, the over-height open top container could be stored below deck only by removing twenty containers on top of hatch 2, and by replacing one container below hatch 2 with the over-height container of electronic equipment. Evidently, the over-height container would have had very little clearance below deck, which would increase the risk of crushing. The container was stowed on deck, therefore, atop hatch 4, in the third and top tier.

Off the coast of Mexico, the ship encountered the worst weather of the voyage, with winds of force 6-7 on the Beaufort scale and waves of four to six meters. On January 9, 1982, between Antwerp, Belgium and Tilbury, the ship again encountered force 7 winds and sea spray on deck. No indication of any damage to the open top container or its tarpaulin was recorded by the crew. Upon discharge at Tilbury on January 11, however, the tarpaulin was found to be torn. After discharge, the container was stored in an open container park to await ...


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