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DAL INTL. TRADING CO. v. THE SS MILTON J. FOREMAN

March 13, 1959

DAL INTERNATIONAL TRADING COMPANY, Libelant,
v.
THE SS MILTON J. FOREMAN, her engines, etc., and United States of America, Respondents



The opinion of the court was delivered by: MOORE

Dal International Trading Company (referred to as 'Dal') brought this libel pursuant to the Suits in Admiralty Act (46 U.S.C.A. § 742) against SS Milton J. Foreman (referred to as 'Foreman') and its owner United States of America both in rem and in personam for damages sustained because of shortage in, and damage to, a bulk cargo of copra in the foreman from five Philippine ports to Gdynia, Poland. Jurisdiction is conceded.

Dal was a Polish corporation with its principal office in Warsaw, Poland. In 1947, desirous of purchasing a large quantity of copra (dried coconut) for the purpose of obtaining edible oils, Dal arranged with Louis Dreyfus & Co., (Overseas) Ltd. to purchase 7,500 tons (5% more or less at seller's option) from Dreyfus Overseas in Manila. The agreement described the 'Buyers' as 'Messrs. Dal International Trading Company, Warsaw' and the 'Sellers' as 'Messrs. Louis Dreyfus & Co. (Overseas) Ltd., Manila, trough Messrs. Louis Dreyfus & Co., Ltd., London'. The purchase contract was dated September 13, 1947 and was signed by Produce & Oilcakes, Limited as agents. The buyer, Dal, was to supply the tonnage and the vessel was to make stops at up to seven Philippine ports at the seller's option. The contract further provided as to quantity and condition 'All final at loading port for quality, condition, weight and analysis as per Official Certificate.' Payment was to be made against shipping documents in New York and an irrevocable credit 'for the maximum value of this purchase' was to be opened with a New York bank in favor of 'Messrs. Louis Dreyfus & Co. (Overseas) Ltd.'

Dreyfus London, acting under authority of Produce & Oilcakes, Limited on behalf of Dal, then entered into a bare boat charter party dated October 11, 1947 for the Foreman, the charter being between Sword Line, Inc. as owners and Dal as charterers. Attached to the charter were additional typewritten clauses including a USA clause paramount which incorporated the Carriage Of Goods by Sea Act (referred to as 'COGSA') of the United States as approved April 16, 1936 and provided amongst other things that if any term of the bill of lading be repugnant to the Act to any extent such term should be void to that extent, but not further. Paragraph 28 of the charter stated that the master of the Foreman was to make application to 'Sesostris Manila' for orders as to the first loading port, subsequent orders to be given at successive ports. Sesostris Manila was the cable code name for Dreyfus Overseas Manila. Under the charter the 'Steamer' was to load 'a full and complete cargo of Copra in bulk and/or bags; which the said Merchants (Dal) bind themselves to ship, * * *.' Clause 21 provided that 'Steamer an Owners to be held answerable for the number of packages signed for in Bills of Lading.' Freight was to be prepaid in New York fifteen days after telegraphic advice of signing final bill of lading.

 The Foreman, having received instructions, proceeded to the port of Cebu in the Philippines and commenced to load the copra. It then loaded additional copra at the ports of Calapan, Gasan, Siain and Legaspi. Except for Cebu the loading facilities were quite primitive, the ports being more or less jungle towns. In some cases the Foreman had to anchor off shore while the loading was done by lighters. At Legaspi planks from a bamboo dock to the stern of the Foreman provided the means of access. There was no proof as to any weighing on the docks or on the ship.

 The loading took place between approximately November 2, 1947 and December 2, 1947. While at Legaspi it was noticed that there was a substantial amount of additional cargo space yet unfilled. At the request of Dreyfus Overseas, a surveyor, Lawrence Fox, together with the master, measured the available space which Fox computed to be about 50,000 cubic feet. Fox was unable to account for the unusually low stowage factor unless the amount supposedly loaded had not actually been loaded. However, no additional copra was put aboard by the shipper and the Foreman sailed for its ultimate destination, Gdynia, Poland.

 When the cargo was loaded at the various ports, receipts, which the first mate described as mate's receipts, and which bore a typewritten figure already inserted indicating the weight, were submitted by the supplier loading the copra. These receipts were not produced on the trial apparently having been lost with the passage of years. The charter provided (clause 17) 'The Master to sign Bills of Lading as presented without prejudice to the Charter Party,'. Eight bills of lading were produced signed (with the exception of the first, which bears another signature) by 'L. Alday'? for Everett Steamship Corporation, agents for owners. They state the port of loading, the name of the consignee, Dal, and the shipper. Except for the first bill of lading which reads 'Aboitiz & Company, Inc. -- Account Louis Dreyfus & Co. (Overseas) Ltd., New York', the shipper was either the National Coconut Corporation or an individual or company having a Chinese name. All bills of lading (with the exception of the first) in the column referring to quantity contained the words 'Said To Be' stamped in a prominent place over the tonnage figure. A similar stamp reading 'Shipper's Weight' was placed in the column headed 'Shippers Gross Weight'. The bills of lading, with the exception of the first, in which the words were similar in substance, bore the typewritten inscription 'Freight And All Other Terms, Conditions And Exceptions As Per Charter Party Signed In London Dated October 11, 1947'. The bills themselves in bold type contained the clause 'If The Goods Are Shipped Under Charter Party, All The Terms, Provisions, Exceptions And Clauses Contained In Charter Party Dated London, October 11, 1947 pursuant to which this shipment has been made are to be deemed incorporated herein, without prejudice, however, to the right of the carrier to avail itself of all exemptions from, or limitations upon, liability, or other rights and immunities provided for in this bill of lading.' The bills, again with the exception of the first, all bore a stamp reading 'Shipment Covered By This Bill Of Lading Has Been Loaded On The Above Named Vessel.' This inscription was also apparently signed by the same L. Alday.

 After the vessel had departed from Legaspi, a cable reported a cargo weight of 5,836 tons against cargo loaded by receipts of 6,561 tons. (Actually the eight bills disclose a total of 6,600 tons.) This information was sent to Dreyfus Overseas which forwarded it to Sword Line. Although the Foreman made several stops for fuel and repairs, the cargo was not disturbed. When the vessel arrived at Gdynia draft measurements were also taken which indicated a cargo weight there of 5,663 tons. Libelant's weighers found that 5,725 tons had been unloaded at Gdynia. The parties concede that a shipment of copra during such a voyage would lose approximately 2% or 3% in weight which would be normal shrinkage. Giving allowance to this factor the cargo discharged at Gdynia was some 700 tons less than that 'Said To Be' put aboard in the bills of lading and the actual weight upon arrival was approximately 700 tons less than the represented shipper's weight at the time of loading.

 In the meantime, although Dreyfus Overseas had notice of the short shipment, on December 19, 1947 a bill entitled 'Full Cargo Copra Philippine Islands to Gdynia, as per Charter Party dated in London October 11th, 1947' stated to be 6,600 tons at $ 27.50 per ton less 2 1/2% was paid in the total amount of $ 176,962.50 and receipt acknowledged by Dreyfus Overseas. The purchase contract called for payment against shipping documents and the quality, condition and analysis was to be shown 'as per Official Certificate'. Libelant introduced into evidence documents entitled 'Certificate of Weight and Quality of Copra Loaded Aboard SS 'Milton J. Foreman' on (various dates and ports)' and also certificates of laboratory analysis of samples of copra. The certificates are on printed forms of 'General Superintendence Company Ltd.' and are signed in the name of Luzon Brokerage Company, Inc., agents for Philippines. These certificates were signed by Arthur H. Barrett, vice-president. Because of his death the manner of preparing the certificates was described by Pedro R. Francisco, an employee of Luzon. The certificates dated and sworn to in Manila subsequent to the dates of loading in the five ports give the same figures as to quantity as appear in the eight bills of lading. From the Francisco deposition it is disclosed that 'These certificates are issued to the firm which gave us the Superintendence order * * *' and he states that 'They were based on the reports submitted by our surveyors who have been assigned to these shipments.' These certificates were not issued or obtained by respondents and do not constitute any admission of receipt of cargo by them. The figures presented by the shippers which were incorporated into the bills of lading were the identical figures which found their way into the General Superintendence Company's certificates of weight and analysis. The certificates themselves bear a limiting 'hedge' clause, reading:

 'This Is To Certify that the above inspection, weighing, sampling and loading have been carried out to the best of our knowledge and ability but without any responsibility to the General Superintendence Co., Ltd. or ourselves as their Agents.'

 These were not certificates of the respondents or respondents' agents. The issuing company was selected pursuant to, and the certificates were obtained to satisfy the terms of, the purchase contract. Any payment made in reliance on these certificates cannot be attributed to any false representations by respondents.

 At the close of the trial libelant's claim for cargo damage was withdrawn and it was agreed that all the cargo less normal shrinkage received on board in the Philippines was delivered in Gdynia. The case thus resolves itself into the proper application of principles of law to the material facts. There is no question but that libelant received some 700 tons of copra less than the quantity for which it paid. Whether this damage resulted from fraud or mistake is irrelevant. The fact remains that libelant lost a substantial amount of money as a result of the shortage. The main question is, who in law and equity should be responsible? It is quite apparent that approximately 700 tons of copra less than represented was put on board by the sellers. Dal made the purchase from Dreyfus Overseas. Dal also authorized Dreyfus Overseas to act for it with respect to the loading. If Dreyfus Overseas failed to act properly as agent possibly it or the various shippers who furnished the copra should be responsible for the shortage. Such conjecture, however, is academic because libelant has chosen to sue only the Foreman and its owner. Inquiry, therefore, is limited to searching the record for evidence of responsibility assumed in fact by, or imposed by law upon, respondents.

 The lines of argument of the opposing parties are clearly drawn. Libelant asserts that the bills of lading incorporate COGSA and that the bills must be deemed to have been issued thereunder. Section 3 of the Act provides (Apr. 16, 1936, ch. 229, § 3, 49 Stat. 1208; 46 U.S.C.A. § 1303):

 'Responsibilities and liabilities of carrier ...


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