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M. W. Zack Metal Co. v. S.S. Birmingham City

December 12, 1962


Author: Medina

Before MEDINA, SMITH and KAUFMAN, Circuit Judges.

MEDINA, Circuit Judge.

M. W. Zack Metal Company appeals from a final decree in admiralty dismissing its libel to recover for cargo damage against the S.S. Birmingham City and her owner, Bristol City Line of Steamships, Ltd. The stevedore Jarka Corporation was impleaded, but we will give no separate consideration to the cross-claim against Jarka as we have decided to affirm the decree.

There have been two trials. We reversed the first decree against Zack because the findings were too fragmentary and inadequate to cover all points of substance raised by the evidence. M. W. Zack Metal Company v. The S.S. Birmingham City, 2 Cir., 1961, 291 F.2d 451. We also reversed the rulings favorable to the vessel and her owner that the cargo owner's proof of ownership of the goods was not satisfactory and that the claim was time barred for failure of Zack to give the notice required by 46 U.S.C. § 1303(6). On the new trial Zack produced further proof and, after due consideration, new and detailed findings were made and the libel was again dismissed on the merits. The findings and conclusions of Judge Clancy are reported at 1962 Am.Mar.Cas. 925.

Zack's claim is for damage to 77 bundles of steel shipped on the Birmingham City at the port of Avonmouth, England. The vessel docked at Hoboken, New Jersey, where the steel was unloaded, lightered to Weehawken and there loaded into railroad gondolas and transported to Detroit, Michigan, where some of the steel was found to be rusted and otherwise damaged. The specific 77 bundles with respect to which damage is claimed were ultimately rejected by a purchaser.

After the style of the great epic poems of the ancient Greeks and Romans, the briefs on both sides plunge immediately in medias res, and then proliferate in all directions, without even the semblance of an attempt to treat the sequence of events, and the proofs relating to them in a chronological or any other rational manner. It seems to be assumed that we know all about the case, and counsel have belabored one another with charges and countercharges that serve only as far-from-diverting digressions and result in a general mass of confusion. Zack in effect tells us the critical findings are clearly erroneous, and that the trial judge not only misapplied the law applicable to this rather common type of case, but that he also failed to make the very findings directed to be made by the prior opinion of reversal.

Under these circumstances we have felt the ends of justice required a careful scrutiny of the entire trial transcript and the exhibits. As a result of this we are convinced the trial judge did precisely what it was contemplated he should do and, with one exception that does not affect the outcome, to be discussed in due course, we hold the findings are decisive of the issues and are supported by substantial evidence. We affirm the decree dismissing the libel.

Zack's claim is for damage to 77 bundles of steel sheets marked "MIE/D". These 77 bundles were: shipped from a plant at Ebbw Vale, England, on April 16, 1953; loaded aboard the Birmingham City by the employees of the shipowner at Avonmouth, England, on April 21-4; transported to Hoboken, New Jersey, where they arrived on May 5; unloaded by Jarka's longshoremen on May 5 and 6; loaded on May 8 and 11 aboard a lighter of the Erie R.R. Co. by employees of the railroad; taken to Weehawken, New Jersey, where, on May 12 and 13, they were placed in three Erie freight gondolas and conveyed by rail to Detroit, Michigan, where they arrived at some time between May 18 and May 25, 1953.

These 77 bundles were part of a lot of 127 bundles of similar "MIE/D" steel sheets and 137 other bundles of steel sheets marked "MPD/D". Each of the "MIE/D" bundles weighed about two tons and consisted of oiled steel sheets enclosed in protective waterproof paper, and given added protection by being enveloped in metal waster sheets, consisting of trumpeting around the edges and a top and bottom waster sheet. Each such package was then secured by three metal cross straps and the package thus strapped was placed on two wooden skids to which it was attached by lengthwise metal straps running completely around both the package and the skids. Thus the combination of skids and package with the two sets of metal straps, one crosswise around the package of doubly protected oiled steel strips, and another lengthwise and around both the package and the skids, became what is called in this record a "bundle" of "MIE/D" steel. The marking "MIE/D" was superimposed in white paint against a black background on the top waster sheets, and was plainly visible. The "MPD/D" bundles in the same shipment were made up in a similar manner but with one most significant difference. The "MPD/D" bundles had no separate metal cross-strapping around the package. From the above it may be deduced, and the facts are clearly established in the record, that rust could only be formed on the oiled steel strips if both the waster sheets and the waterproof coverings were torn or broken, so that humidity in the atmosphere, rain, sea water, ship or cargo sweat, or other moisture could reach the inner strips of steel. It is also apparent that once moisture had penetrated apertures both in the torn waterproof envelopes and broken waster sheets, any subsequent recovering and rebanding alone could scarcely be expected to stop the progress of the rust. Implicit also in this basic factual background, including a whole series of loading and unloading operations, is the likelihood that witnesses were confused by the similarity of the "MPD/D" bundles, in which we are not interested except tangentially, and the "MIE/D" bundles, damage to which presents the sole issue to be decided. Also, it should not surprise us to find some of the entries or statements, in the multiplicity of documents in evidence, inconsistent, confusing and unreliable. Most of the testimony was by deposition, but several of the principal witnesses gave their versions of what they saw at various times and places in plain view of the trial judge in open court.

Accordingly, unless we find some misapplication of the rules of law governing cargo damage cases, our inquiry is likely to be focused upon the trial judge's findings. As these seem on their face to be dispositive of the issues, and as we shall find that so they are, we can readily understand why it is that counsel for Zack has tried so hard to persuade us that this Court, on the prior appeal, gave positive instructions that there be detailed findings with respect to particular factual matters not necessarily required by the rules of law applicable to these cargo damage cases. Here again, but only after a prolonged winnowing process, we find that no such directions were or could have been intended, and that the findings were adequate for all purposes relevant to the decision of the case, bearing in mind that issues of credibility, and those arising out of contradictory testimony, other inconsistencies and the general welter of exaggeration, hesitancy and half-truths, even in cases where the testimony is partly or even wholly by deposition, are primarily to be disposed of by the trial judge in a non-jury case, and not by an appellate court.

We turn to the applicable law. Under the Carriage of Goods by Sea Act, 46 U.S.C. §§ 1303, 1304, the cargo owner bears the burden of proving delivery of the goods in good condition and outturn by the vessel, or by the stevedore for whose conduct the vessel was responsible, in damaged condition. The burden then shifts to the vessel to prove the damage occurred through a cause excepted under the Act or the exercise of due diligence to prevent the harm. Miami Structural Iron Corp. v. Cie Nationale Belge De T.M., 5 Cir., 1955, 224 F.2d 566, 568; United States Smelting, Refining & Mining Co. v. Waterman S.S. Corp., E.D.La., 1945, 62 F.Supp. 511, 518, affirmed, 5 Cir., 1946, 155 F.2d 687, cert. denied, 1946, 329 U.S. 761, 67 S. Ct. 115, 91 L. Ed. 656; F. Badrena E. Hijo, Inc. v. The Rio Iguazu, E.D.La., 1960, 182 F.Supp. 885, 891-892; Schroeder Bros., Inc. v. The Saturnia, S.D.N.Y.,1954, 123 F.Supp 282, 284, affirmed, 2 Cir., 1955, 226 F.2d 147. As stated in our prior opinion in this case, "damaged outturn" could be established not only by proof that upon discharge of the cargo on the pier at Hoboken the inner sheets were already rusted or otherwise damaged, but might also be established by proof that the rust or other damage that may have developed after such discharge was caused by the vessel or by those for whose conduct the vessel was responsible. 291 F.2d at page 454. See also Armco International Corp. v. Rederi Aì Disa, 2 Cir., 1945, 151 F.2d 5, 8. Moreover, if the cargo owner proved good delivery and bad outturn as to any portion of the specific 77 bundles for damage to which recovery is sought, the shipowner would then have to establish by proof what portion of the balance of the shipment was either delivered in bad condition or was outturned in good condition. Armco International Corp. v. Rederi Aì Disa, supra; Empresa Central Mercantil De Representacoes, LTDA. v. Republic of U.S. of Brazil, S.D.N.Y., 1957, 147 F.Supp. 778, 781, affirmed, 2 Cir., 1958, 257 F.2d 747.

To avoid any possible misunderstanding a few additional preliminary observations seem desirable and proper. Zack seems to have the impression that we held on the prior appeal that it had on the first trial made out a prima facie case and thus shifted the burden. We did no such thing. We merely held that detailed findings should be made "as to all points of substance raised by the evidence." 291 F.2d at page 455. Another misconception that goes to the heart of Zack's argument on this appeal, is that the purport of our decision on the prior appeal is to require the trial judge to make an affirmative finding with respect to the actual cause of the damage. No such inference may fairly be drawn from the text of the opinion; and such a requirement would fly in the face of the well settled principles of law we have just briefly set forth. If the cargo owner fails to sustain its burden, its libel must be dismissed, even if the cause of the damage found at the point of ultimate destination may still remain in nubibus. Zack also complains because the findings and conclusions do not correspond exactly with those sketched by way of illustration in the earlier opinion. It is a sufficient answer, we think, to say that the findings and conclusions now before us are adequate to dispose of all relevant issues and that there is substantial evidence to support them.

Moreover, the scope of our powers of review are not unlimited. While this is a case in admiralty, the "clearly erroneous" principle embodied in Federal Rule of Civil Procedure 52(a) is applicable. McAllister v. United States, 1954, 348 U.S. 19, 20, 75 S. Ct. 6, 99 L. Ed. 20. A fair statement of the rule is that we may not set aside a finding of fact unless we are left with the "definite and firm conviction that a mistake has been committed," United States v. United States Gypsum Co., 1948, 333 U.S. 364, 395, 68 S. Ct. 525, 542. 92 L. Ed. 746, and that we will reverse "most reluctantly and only when well persuaded." United States v. Aluminum Co. of America, 2 Cir., 1945, 148 F.2d 416, 433. We must respect the evaluation of credibility made by the trial judge of the witnesses present before him. Broadcast Music, Inc. v. Havana Madrid Restaurant Corp., 2 Cir., 1949, 175 F.2d 77, 80. As we have already held on the previous appeal in this case, we cannot disturb Judge Clancy's refusal to believe Zack's principal witness Krasnov. 291 F.2d at page 454. When we have thus given due weight to what may be deemed the effect of the demeanor of a witness upon the trial judge we are probably not at much of a disadvantage vis-a-vis the trial judge insofar as concerns documentary proof and testimony read from depositions. Iravani Mottaghi v. Barkey Importing Co., 2 Cir., 1957, 244 F.2d 238, 248, cert. denied, 354 U.S. 939, 77 S. Ct. 1402, 1 L. Ed. 2d 1538; 5 Moore, Federal Practice, Section 52.03[1], pp. 2615-16 (2d ed. 1951). What this comes down to in substance is that we must take a good, hard look at the record as a whole, and when all is said and done, given the unavoidable division of function between a trial and an appellate court, we should only reverse when fairly well persuaded. See Austin v. Commissioner, 2 Cir., 1962, 298 F.2d 583, 584-585; 2B Barron & Holtzoff, Federal Practice & Procedure, Section 1132, pp. 523-4 (2d ed. 1961).

We shall now examine the proofs and the findings in sufficient detail to determine whether or not each of them should stand or be set aside as clearly erroneous, and whether or not they are decisive of the case in ...

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