Appeal from judgment in admiralty entered in the Southern District of New York, Wyatt, Judge, holding the stevedore/terminal operator, rather than the ship, liable for missing cargo. Affirmed.
Moore, Friendly and Anderson, Circuit Judges.
On September 23 and 24, 1967, the S.S. Concordia Viking took on board at Port Sudan thousands of bags of gum arabic, including 1455 bags consigned to the Port of New York under the four clean bills of lading contested in this case. The ship's agent, dockside at Port Sudan, tallied each consignment before it was loaded. The mate of the Concordia Viking did not check the cargo as it came on board but testified that in any event he would have relied on the agent's tally in issuing the mate's receipts certifying that the four shipments were complete. The ship's manifest stated that the ship was carrying the bags of gum which it had contracted to transport under the bills of lading.
The Concordia Viking sailed directly to the Port of New York where it was assigned a Newark terminal operated by the Pittston Stevedoring Corporation, which unloaded the ship between October 24 and 27 in accordance with a discharge plan based on New York shipments, including the gum, described in the manifest. No one counted the cargo during or after unloading, and no one noticed any shortages. After discharge, the mate inspected the hatches to make sure that all New York cargo had been unloaded.
The stevedores arranged the bags on the pier according to consignments and they were left there awaiting the consignees, who called for the goods during the following weeks. They were, however, unable to locate their complete orders and complained to the ship's New York agent who in turn asked Pittston to report what cargo it had on hand. On January 2, 1968, Pittston notified the Concordia Viking that 178 bags of gum under these bills of lading were missing. Some shipments were particularly short; one bill of lading called for 100 bags, but 54 of these were missing. Despite the shortages, Pittston had charged consignees demurrage based on the complete consignments described in the bills of lading.
The ship sent tracer sheets to the ports subsequently visited by the Concordia Viking, but none of the missing bags was reported. The terminal operator admits misdelivery of other consignments of gum from the same unloading operation, but no one knows what caused the loss in this case.
Shippers Stein Hall & Co., Inc., and Swift & Company brought this libel against the ship and its owner, Skibs A/S Samuel Bakke, for the shortages. The defendant carrier impleaded Pittston; and they then settled with the plaintiffs for $10,000 and asked the court below to allocate damages.
The court found that Pittston had taken control of the cargo and that it was liable for the loss on either of two grounds. First, under the stevedoring contract, Pittston gave an implied warranty of workmanlike service competently to perform the carrier's statutory and contractual obligations for the discharge of the cargo. Ryan Stevedoring Co., Inc. v. Pan-Atlantic Steamship Co., 350 U.S. 124, 76 S. Ct. 232, 100 L. Ed. 133 (1956); David Crystal, Inc. v. Cunard Steam-Ship Co. Ltd., 339 F.2d 295 (2 Cir. 1964), cert. den., 380 U.S. 976, 85 S. Ct. 1339, 14 L. Ed. 2d 271 (1965); The Harter Act, § 1, 46 U.S.C. § 190. Failure on the part of the stevedore to explain what occurred to the cargo in its control gives rise to a presumption that the stevedore breached this implied warranty.*fn1 Second, once Pittston as the terminal operator took possession of the cargo, it became a bailee for the mutual benefit of the carrier and consignees. Doak, Liabilities of Stevedores, Terminal Operators and Other Handlers in Relation to Cargo, 45 Tul. L. Rev. 752 (1971). "The absolute obligation of the bailee is frequently phrased by the modern authorities as a duty to restore the property, or to account for it," 8 Am. Jur. 2d Bailments § 176, and the failure to account in this case constitutes negligence as a matter of law. Pittston contends, however, that there is no proof that it ever had custody of the cargo.
The court below based its conclusion that all New York cargo from Port Sudan was discharged in Newark on the facts that the ship made no stops between Port Sudan and Newark; that the mate inspected the hatches after unloading and found no New York cargo; that the stevedore presented no evidence that the cargo remained on board; that at no time did Pittston make any claim or put the ship on any notice that there was any shortage; and that the cargo tracer sheets failed to locate any of the missing bags. The judge was surely not clearly erroneous in so finding. Middle East Export Co. v. Concordia Line, 64 Misc. 2d 270, 314 N.Y.S. 2d 390 (Cir. Crt Cty of N.Y., 1970), aff'd 71 Misc. 2d 365, 336 N.Y.S. 2d 217 (Sprm Crt App. Term 1st Dpt 1972).
Proof that the disputed goods were actually loaded was almost entirely documentary. The carrier introduced, over the stevedore's objections, the four bills of lading, the manifest, and the mate's receipts. All of these were issued in Port Sudan, and as evidence against Pittston, they were hearsay. Intermondale Trading Co. v. North River Ins. Co. of N.Y., 100 F. Supp. 128 (S.D.N.Y. 1951); M.W. Zack Metal Co. v. Federal Ins. Co., 1961 A.M.C. 1547 (Sprm Crt N.Y. Cty 1961), aff'd 17 A.D. 2d 141, 232 N.Y.S. 2d 940 (Sprm Crt App. Div. 1st Dpt 1962), aff'd 13 N.Y. 2d 952, 244 N.Y.S. 2d 319, 194 N.E.2d 134 (Crt of App. 1963).
The district court held the bills of lading admissible under the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. § 1303(4), which provides, "a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described." The court ruled that this clause bound the stevedore as the carrier's agent and that the failure of the bills to describe any shortages gave rise to a presumption that the shipments were complete. A.C. Israel Commodity Co., Inc. v. American-West African Line, Inc. v. Lavino Shipping Co., 1968 A.M.C. 139 (E.D. Penn. 1967), aff'd 397 F.2d 170, 1968 A.M.C. 1517 (3 Cir.), cert. den. 393 U.S. 978, 21 L. Ed. 2d 439, 89 S. Ct. 446 (1968).*fn2 But the Supreme Court has held that COGSA's purpose was "to establish uniform ocean bills of lading to govern the rights and liabilities of carriers and shippers inter se in international trade" and that the Act does "not advert to stevedores or agents of a carrier." Robert C. Herd & Co., Inc. v. Krawill Machinery Corp., 359 U.S. 297, 301, 3 L. Ed. 2d 820, 79 S. Ct. 766 (1959). Just as the damage limitation provided carriers under the Act does not protect stevedores, Herd, the liabilities of carriers under the Act likewise cannot be extended to stevedores.
The bills are also not admissible against the stevedore as an admission by contract. The stevedore is not a party to the bills of lading and is not bound by their terms unless it contracts to be so. While the carrier and the shipper can extend certain contractual protections, such as the limitation on damages, to stevedores as third-party beneficiaries, Bernard Screen Printing Corp. v. Meyer Line, 464 F.2d 934 (2 Cir. 1972), cert. den., 410 U.S. 910, 93 S. Ct. 966, 35 L. Ed. 2d 272 (1973), they cannot contract to bind an unconsenting third party.
The court, however, did not err in admitting the bills because they are business records and, therefore, exceptions to the hearsay rule. 28 U.S.C. § 1732(a). The mate testified that it was a part of the ship's business to make and keep such records; and that these ...