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GENERAL FOODS SALES CO. v. THE FELIPE CAMARAO

June 9, 1948

GENERAL FOODS SALES CO., Inc.
v.
THE FELIPE CAMARAO et al.



The opinion of the court was delivered by: KENNEDY

The libel in this cause alleges a claim in rem and in personam against respectively the S. S. Felipe Camarao and her owners, Lloyd Brasileiro Patrimonio Nacional (herein for brevity called Lloyd). The claim arises from a short delivery of a shipment of Brazil nuts which the libelant, General Foods Sales Company, Inc. (herein for brevity sometimes called General), had ordered from Companhia Industrial do Brasil (herein for brevity called the shipper).

On June 27, 1942, respondent Lloyd, a common carrier of goods by sea for hire, issued its on-board bill of lading No. 47 attesting to the fact that Camarao had received at Para, Brazil, from the shipper for delivery to the libelant 10,000 bags of Brazil nuts, freight prepaid. This merchandise was the total amount of an order placed by libelant with the shipper, the latter being bound to deliver the goods on board a steamer at Para no later than July 1, 1942.

 On July 15, 1942, Camarao sailed from Belem for New York, but on the way she was rerouted by naval authority to Pensacola, where she arrived on August 13, 1942. Meanwhile, and on July 21, 1942, Manufacturers Trust Company, a banking institution, had presented to Goldman Sachs & Co. a draft in the sum of $ 122,750. accompanied by the on-board bill of lading, together with other shipping documents. The amount of this draft, plus banker's commission, was paid by libelant through Goldman, Sachs & Co.

 As I have said, Camarao arrived at Pensacola on August 13, 1942; she completed the discharge of her cargo on August 19, 1942. Her manifest and her stowage plan both showed as being on board the total amount of libelant's merchandise (10,000 bags) covered by the bill of lading. But on the completion of discharge, it was discovered that there was an outturn of only 4,326 intact bags belonging to libelant (and unidentified sweepings totaling approximately 495 bags). I digress for the moment to say that it later developed that the amount of intact bags short-shipped (5,674) had been laden into respondent's ship S.S. Osorio on August 14, 1942.

 Upon the arrival of Camarao at Pensacola, General had engaged one Smith, an independent forwarder, warehouseman and ship operator doing business at Tampa, to supervise the discharge of the steamer. Respondent Lloyd was represented by one Zumsteg. There ensued a discussion between Smith and Zumteg concerning what was to be done about the short-shipment. Neither had any general authority of any kind to bind the corporation for which he acted.

 On August 21, 1942, two days after the shortage was discovered, the shipper appears to have advised libelant that the remainder of the merchandise was coming forward on another steamer which was thought to be the Maua, then due or en route to New York. In response to a cable addressed to it by the libelant, the shipper by letter dated August 27, 1942, informed libelant that the short-shipped merchandise was on board still another steamer belonging to respondent Lloyd, S.S. Osorio.

 I have already mentioned that the goods which respondent Lloyd failed to deliver ex Camarao had been laden into Osorio in Para on August 14, 1942. The steamer last mentioned sailed from Belem on September 27, 1942, and was on the following day sunk by enemy action. On October 9, 1942, libelant requested from respondent Lloyd a certification that the missing merchandise was on board Osorio when she went down; the request for certification identifies these goods, saying 'that the consignment we refer to was covered by bill of lading 47 issued in Para'. On February 6, 1943, Lloyd furnished libelant with the materials for a proof of loss. This was filed on March 15, 1943. It ultimately led to a payment by an insurance carrier to libelant in the amount of $ 147,923.77. On July 6, 1943, libelant began this suit.

 It may be a cause of wonder how a steamer could issue its bill of lading and make entries in its manifest and stowage plan covering goods which were not on board at all. Under such circumstances, respondent is impelled to admit that it is estopped to deny that it carried the goods and failed to deliver them, even if failure to lade and deliver the cargo was caused by an act of God. Olivier Straw Goods Corporation v. Osaka Shosen Kaisha, (The Alaska Maru) 2 Cir., 1928, 27 F.2d 129, certiorari denied 278 U.S. 618, 49 S. Ct. 22, 73 L. Ed. 540.

 Although the explanation that follows does not help respondent Lloyd, it seems clear that as of July 1, 1942, an embargo (by the United States) against the shipment of Brazil nuts was to go into effect. Consequently, buyers like the libelant took care to make their contracts of purchase provide or delivery prior to the deadline date. And the wildest confusion undoubtedly existed at Brazilian ports, such as Para. It is likely that cargo of this sort was simply laden huggermugger into any bottom that was available, and that the sanctity of documents like bills of lading and manifests, cf. United States v. Rappy, 2 Cir., 1947, 157 F.2d 964 was forgotten. As I say, this explanation does not help respondent Lloyd: it has no choice except to concede, as it does, that on August 19, 1942, it was guilty of a thorough-going breach of its contract of carriage.

 But respondent Lloyd asserts, as its sole defense, that this breach of its contract was waived. There is at stake, of course, the question of liability for loss of the cargo on S.S. Osorio. If libelant is still entitled to assert its claim of short delivery, then respondent Lloyd's bill of lading does not excuse it. On the other hand, if the breach was waived by a course of conduct on the part of libelant, then respondent Lloyd is exonerated, because loss of cargo by enemy action is excepted under that same bill of lading.

 I have used the term 'waiver' to characterize the defense asserted by Lloyd. If terminology makes any difference it probably comes closer to a claim of novation. In support of this defense, Lloyd does not and could not assert that it is excused merely because libelant protected itself by insurance and collected on its policy. In fact, in its brief, Lloyd plainly says that this fact, standing by itself, is of no very great significance. This is a wise concession: 'The equities existing between libelant and the underwriters are no concern of the respondent.' Federal Forwarding Co. v. Lanasa, 4 Cir., 1929, 32 F.2d 154, 157.

 But Lloyd urges that libelant's conduct in asserting its insurance claim is but one step in a course of conduct, which constitutes forgiveness of the short delivery on the Camarao, willingness on the part of libelant to abandon all of the rights of General that sprang from that breach, and acceptance by libelant, in lieu of those rights, of a promise merely to ship the undelivered merchandise -- a promise which came to nothing in a practical sense because the action of the enemy intervened.

 If one analyzes the course of conduct upon which respondent relies, it is certain that no one step taken by General could be called definitive, or even anything more than equivocal. As I have said, between August 19, 1942, the date the shortage was discovered, and probably August 28, 1942, no one concerned in the affair really knew what had become of the lost cargo. *fn1" The conversations and discussions between the respective representatives of libelant and respondent Lloyd are of the vaguest sort, to say nothing of the fact that each was an agent of very limited scope of authority. Respondent's representative indeed admitted at the trial that when he told Smith (acting for libelant) that respondent had a ship at or due New York with the short-shipped goods, he was thinking of S.S. Maua, and that he soon discovered that the lost merchandise was not in that ship. In fact, it appears to have been the libelant who first advised the respondent that the missing goods were on S.S. Osorio. There was not any commitment by either side, so far as I can see, of any kind during this period, nor for that matter after it. Libelant, through its representative Smith, actually told respondent on August 24, 1942, that 'we are holding the matter of filing claim in abeyance for the present'. And at the trial respondent's agent (Zumsteg) at first plainly described the understanding between himself and libelant's agent as one under which 'if the nuts were not to arrive or were not shipped, the, of course, he (Smith) would file his claim'. I asked Zumsteg whether it was his understanding that Smith was withholding the filing of a claim if the goods should 'arrive' or whether he (Smith) meant that the claim was in abeyance if the goods were 'shipped', and the witness replied 'if they did not arrive or they were not shipped'. I mention this point only to indicate the lack of any basis for a claim that the talks between the two agents in themselves rose to to the dignity of a waiver or a novation, even if Zumsteg's first and spontaneous version of the matter be accepted. *fn2"

 Until after S.S. Osorio was notified sunk, no significant dealings between the parties took place. When this fact became known, libelant then asserted its claim against its insurance carrier, based upon the very same bill of lading which is the keystone of its claim here. But it seems to be a current practice to forward short-shipped cargo under the original bill of lading, and indeed to make entries at the Custom House under that same document. So that again, standing by itself, the assertion by libelant of a claim against the carrier based on that bill of lading ...


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