Appeal from the District Court of the United States for the Southern District of New York.
Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.
AUGUSTUS N. HAND, Circuit Judge.
This is an appeal from a final decree in admiralty recovered by the libelant, an insurance company, which had insured 67 cases of cheese for transportation from Naples to New York on respondent's steamer Carso under a bill of lading dated September 29, 1926. The shipment was consigned to the order of Bowery & East River National Bank of New York or assigns, notify F. A. Lumis, who was the consignee and the person insured. When the shipment arrived at New York, it was found to be damaged by worms which had eaten or caused to run out a considerable portion of the butter fat. The bill of lading dated September 29, 1926, and issued by the respondent, described the merchandise as "in apparent good order and condition," whereas the mate's receipts given on loading and dated October 1, 1926, bore the notation "all cases stained by contents." The recital in the bill of lading that the goods were "in apparent good order and condition" was false, but the consignee accepted the accompanying drafts and paid for the cheese on that representation. Upon discovery that the shipment was damaged, he made demand upon the Insurance Company to pay his loss, and, on its refusal to pay, brought an action against it in the New York City Court on September 3, 1927, and recovered a judgment for $1,496.67 and interest. The Insurance Company defended the action on the ground that the policy did not cover the loss because the damage to the cheese did not occur on board the vessel but originated on shore long prior to shipment. After an unsuccessful appeal, final judgment was entered on April 6, 1932, and was satisfied May 23, 1932. On June 13, 1932, the Insurance Company in the exercise of its alleged right of subrogation to the claim of the consignee against the carrier filed this libel to recover damages under the bill of lading.
Section 17 of the bill of lading, which deals with the presentation and assertion of claims for damaged cargo, provides that "no suit * * * to recover for any such claims or demand shall be maintained against the carrier unless such action is commenced within twelve months after filing of * * * notice of claim." Section 22 incorporates the Rules of the British Carriage of Goods by Sea Act of 1924, one of which contains the following clause:
"In any event the carrier and the shipper shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered."
The parties agree that the merits of the present suit are in effect determined by the decision of this court in The Carso, 53 F.2d 374, 376. We there held that other consignees of cheese which had been shipped on The Carso under clean bills of lading were entitled to recover damages under the bills of lading where at the time of shipment the exterior of the cases showed that the cheese which had been described in those documents as in "apparent good order and condition" was infected with worms and was in a decaying condition.
The sole question left for consideration by the District Court and by us on appeal is whether the libelant is precluded from maintaining the present suit because of the one-year limitation for the assertion of such claims which is contained in the bill of lading.
The court below held that libelant was not precluded for the reason that the wrongful conduct of the respondent in issuing a clean bill of lading when it had notice that the cheese was infested with worms estopped it from invoking any clause of that instrument inuring to its benefit. In reaching this conclusion the trial judge relied on our decision in The Carso, 53 F.2d 374. In our opinion, The Carso is not an authority that supports the libelant's position, and we believe that the same thing is true of the other authorities on which its counsel so earnestly relies.
In The Carso we held that the owner of the vessel, which was the respondent in the present case, was estopped to invoke exceptions in bills of lading relieving it from claims for damage from putrefaction of the cheese, where it had been described as shipped in "apparent good order and condition," but where, at the time of shipment, the cases showed on their exterior that it was infested with worms and had begun to decay. We also held that the carrier could not invoke a 48-hour notice clause because the consignee had been lulled into security by the issuance of clean bills of lading and had not become aware before the expiration of 48 hours that the cheese was decaying when laden on the vessel.
In Silver v. Ocean Steamship Co.,  1 K.B. 416, the Court of Appeal held that the carrier could not avail itself of an exception relieving it from damages due to "insufficiency of packing" where the bill of lading was in the hands of a bona fide purchaser for value and recited that the goods were "shipped in apparent good order and condition" but the insufficiency of packing was manifest at the time the cargo was taken on board.
In Higgins v. Anglo-Algerian S.S. Co. (C.C.A.) 248 F. 386, 389, the carrier fraudulently issued the bill of lading which recited that a shipment was in apparent good order and condition when such was not the case. It was held as in The Carso that the carrier was precluded from showing that the merchandise was not in the condition described and that, when sued for damages, it could not avail itself of an exception providing for notice of claim by the owner of the cargo before removal of the goods from the carriers' possession, because "to give the carrier the benefit of this exception would be to enable it to protect itself against the consequences of its own fraud."
In Olivier Straw Goods Corporation v. Osaka Shosen Kaisha (C.C.A.) 47 F.2d 878, 74 A.L.R. 1378, the bill of lading recited that merchandise which had never been put on board was shipped in apparent good order and condition. It was in fact in the warehouse at Yokohama at the time of the Japanese earthquake in 1923 and was stolen therefrom by looters in the ensuing confusion. We applied the doctrine of estoppel and allowed the consignee to recover for the loss of the goods, holding that the carrier could not receive the benefit of valuation clauses in the bill of lading which purported to limit its liability. We said that the breach of the contract of carriage was of so fundamental a character as to be the equivalent of a deviation which rendered all the exceptions in the bill of lading a nullity. See The Sarnia (C.C.A.) 278 F. 459, 461, to the same effect.
In Brandt v. Liverpool, Brazil and River Plate Steam Navigation Co. (1924) 1 K.B. 575, a carrier which had described goods in a bill of lading as shipped in apparent good order and condition when they had not been so shipped but had been previously wet by rain was held estopped to show that the goods were in damaged condition at the time of shipment and precluded from taking advantage of an exception in the bill of lading exempting the carrier from liability for delay caused by prolongation of the voyage. A delay due to reconditioning and reshipment of the goods by another steamer was found necessary because of their damaged condition when received by the carrier. This delay and reshipment were held to be in effect a new voyage which amounted to a deviation and nullified the clause in the bill of lading exempting the carrier from claims for damages due to delay or prolongation of the voyage. The decision turned on the substitution of a different voyage from the one contracted for, ...