UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK
January 13, 1958
GULF ITALIA COMPANY, Libellant,
THE Steamship EXIRIA, her engines, etc., and American Export Lines, Inc., Respondent
The opinion of the court was delivered by: CASHIN
In this action for cargo damage, the parties have stipulated the following facts essential to a decision, which are therefore found as facts:
Libellant was the owner of a tractor which was shipped under a clean bill of lading upon the S.S. Exiria owned by respondent, American Export Lines, Inc., from the Port of New York to Palermo, Italy, on or about August 18, 1954. The tractor was re-delivered in a damaged condition. Respondent is responsible for the damage to the tractor. The tractor was prepared for shipment by putting waterproof papering about some of the more vital parts of the superstructure and by partially encasing the superstructure with wooden planking. The tread portion of the tractor was not prepared for shipment in any way, nor was the tractor attached to a skid. Exhibits 4, 5, 6 and 7, attached to the stipulated facts, demonstrate photographically the precise manner in which the tractor was prepared for shipment. Freight was charged on the basis of measurement tons, the tractor being 34.6 measurement tons.
Under the facts, as stipulated and found by the Court, only one basic issue is presented, namely, is the tractor which is the subject matter of this lawsuit, as prepared for shipment, to be deemed a 'package' under the Carriage of Goods by Sea Act.
The respondent admits liability but claims that its liability is limited to $ 500 under Section 4(5) of the Carriage of Goods by Sea Act (Title 46 U.S.C.A. § 1304(5)), the relevant terms of which are set down in the margin.
Libellant contends, on the other hand, that although the liability of the respondent is to be limited under Section 4(5) of the Carriage of Goods by Sea Act, the measure of the limitation of liability is $ 500 per customary freight unit
Respondent places great stress upon the fact that both parties, or those with power to bind them, are members of the 'North Atlantic Mediterranean Freight Conference' and bound by its terms. Libellant does not dispute the fact that the parties are members of the Conference but argues that the terms of the Conference do not act to limit the liability of the respondent herein.
Section 8 of North Atlantic Mediterranean Freight Tariff No. 3 is relied upon by respondent. The terms thereof are set out in the margin.
I do not deem it necessary to interpret the meaning of Section 8 of the North Atlantic Mediterranean Freight Tariff No. 3. Nor do I deem it necessary to attempt to draw inferences from other evidence submitted concerning the characterization by the parties of the tractor, as shipped, as a package. Suffice it to say that Section 3(8) of the Carriage of § Goods by Sea Act (Title 46 U.S.C.A. 1303(8)), printed in the margin
has the legal effect of outlawing any limitation of liability for negligence except as set forth in Section 4(3) of the Act.
While the Pan-Am Trade & Credit Corp. case, cited in footnote 5, considers a pro-rata limitation of liability included in the bill of lading, in addition to the statutory limitation,
the holding in that case is clear that any attempt to lessen the carrier's liability, other than by the terms of the Act, is invalid. To allow the parties themselves to define what a 'package' is would allow a lessening of liability other than by the terms of the Act since a carrier could always limit its liability to $ 500 by merely extracting a stipulation from the shipper that everything shipped, in no matter what form, would be deemed for the purposes of limitation of liability a 'package'. Since the conceded liability of respondent is predicated upon presumed negligence, the only issue before the Court is the one stated above, that is, whether the tractor in issue, as prepared for shipment, is to be considered a 'package', not as defined by the parties, but rather within the meaning of the Carriage of Goods by Sea Act
In determining this vital issue a comparative dearth of authority is encountered. While cases can be found where the goods obviously cannot be considered a 'package', such as goods shipped in bulk
or goods which have not been prepared for shipment in any way,
relatively few cases are reported where the damaged goods for which recovery is sought were to some extent prepared for shipment but were not fully enclosed so as to be considered a 'package' in the ordinary layman's sense of the term.
The only reported case which on its facts resembles the instant case is that of Middle East Agency v. The John B. Waterman, supra, footnote 5. In that case eleven tractors which were not prepared for shipment in any way were held not to be 'packages', while parts of a rock crusher, which were prepared for shipment only by being secured to skids, were held to be 'packages'. Limitation of liability for damage to the tractors was, therefore, measured by $ 500 per customary fright unit, while limitation of liability for damage to the parts of the rock crusher was measured by $ 500 per package, in that case each individual part of the rock crusher.
In the instant case, the preparation for shipment differed from the preparation utilized on the part of the rock crusher in the Middle East Agency case, in that here most of the superstructure of the tractor was enclosed, while the treads were completely uncreated and the tractor was not attached to a skid. The distinguishing feature between the Middle East Agency case and the instant case is that utilization of the skid facilitated the handling of the item shipped while the packaging of the tractor was only for protective purposes. However, I do not deem it necessary to rest my conclusion merely on this distinguishing factor since the differences in the items themselves and the differences in the methods of their preparation for shipment are great enough of themselves to warrant an independent determination of whether the tractor, as prepared for shipment, is a 'package'.
While it has been said that the purpose of the package limitation is to protect carriers from exorbitant claims on items whose value is not discoverable because their precise nature is hidden by the package,
it does not follow that merely because the value is discoverable the package limitation cannot apply. It can hardly be doubted that such limitation would be considered applicable to bales of cotton and the like and, in fact, in the Middle East Agency v. The John B. Waterman, supra, footnote 5, the limitation was applied to parts of a rock crusher which were completely exposed. However, in a close case, such as the instant one, such a purpose should be taken into consideration.
Here, the item damaged would not be considered a 'package' under any ordinary construction of the term. A large tractor, weighing 43,319 pounds, is not within the purview of the layman's view of a 'package'. The respondent herein certainly was well aware of the nature and value of the tractor. Under these circumstances I cannot believe that Congress intended the carrier to be able to limit its liability for its own negligence to a pittance of only $ 500.
At first blush the dictionary definitions of 'package' would seem to support respondent's contention. Thus, for example, Black's Law Dictionary defines 'package' as follows:
'Package. 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. A parcel is a small package; 'parcel' being the diminutive of 'Package'. Each of the words denotes a thing in form suitable for transportation or handling or sale from hand to hand. As ordinarily understood in the commercial world, it means a shipping package.'
However, I do not believe that the mere fact that an item is in some way prepared for shipment will thereby effect the result of making that item, as so prepared, a package within the meaning of the Carriage of Goods by Sea Act. To adopt such a construction it would have to be said that a shipper who attempts to minimize possible harm to his property by putting protective covering on sensitive parts, would be in a worse position than a shipper who cavalierly makes no effort to reduce the possibility of loss not only to himself but to the carrier. Such result would hardly foster good commercial practices.
While I am aware of the fact that there is a strong public policy to encourage American Merchant Marine activities by subsidies and by various forms of limitation of liability
a limitation of the kind urged by respondent appears too great a hardship on shippers and thus not intended by Congress. The liability of the carrier is, of course, limited to $ 500 per customary freight unit, that is the basis upon which the freight was charged.
Thus, the liability of the respondent is limited to $ 17,300. (34.6 M/T X $ 500)
An interlocutory decree should be entered referring the issue of computation of damages to a Master.