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J. Howard Smith Inc. v. Maranon

decided: July 25, 1974.

J. HOWARD SMITH, INC., J. H. BAKER & BRO. INC., WILBUR ELLIS COMPANY, INTERNATIONAL PROTEINS CORP., CARGILL, INC., AND GLOUCESTER BYPRODUCTS, INC., PLAINTIFFS-APPELLANTS,
v.
S.S. MARANON, HER ENGINES, BOILERS, ETC., AND CORPORACION PERUANA DE VAPORES, DEFENDANT-APPELLEE



Appeal from orders entered in the United States District Court for the Southern District of New York, Lee P. Gagliardi, Judge, dismissing libel and complaint by cargo owners against carrier for damage to cargo and granting carrier judgment in counterclaim for contribution in general average. Affirmed.

Lumbard and Hays, Circuit Judges, and Jameson, District Judge.*fn*

Author: Hays

HAYS, Circuit Judge:

A group of cargo owners brought this action to recover from the carrier losses incurred when their cargoes of fish meal caught fire aboard the vessel. The carrier counterclaimed seeking contribution in general average. The district court found the carrier free from fault and therefore dismissed the complaint and granted the carrier judgment on the counterclaim.

We affirm.

In April and May, 1965, the S.S. Maranon picked up some 132,000 bags of anchovy fish meal at Matarani, Callao, Huacho, and Chancay, Peru, and headed for Baltimore, Maryland. A few days after leaving Chancay the crew discovered overheating in some of the sacks of fish meal that had been loaded at Matarani. The master of the ship ordered certain sacks placed on deck and others jettisoned in an attempt to isolate and alleviate the problem.

The master contacted the owner, and when the vessel reached Cristobal, Panama Canal Zone surveyors were brought aboard. After the surveyors examined the cargo and reported their findings it was decided that the ship would proceed.

Shortly after leaving Cristobal overheating recurred and fire broke out in the Matarani cargo. The master continued the voyage but then decided to dock in Savannah, Georgia, where the voyage was terminated and general average declared.

To impose liability on the shipowner for the loss suffered to the cargo, the cargo owner must show "design or neglect" or "actual fault or privity" by the carrier. Negligence of the master or the crew will not suffice. 46 U.S.C. § 182 (1970); Carriage of Goods by Sea Act § 4(2) (b), 46 U.S.C. § 1304(2) (b) (1970). Appellants' case does not meet this statutory standard.

If improperly prepared for shipment fish meal may ignite through spontaneous combustion. The carrier is not liable for damage arising from such inherent defects. Carriage of Goods by Sea Act § 4(2) (m), 46 U.S.C. § 1304(2) (m) (1970). Where cargo has such a propensity for damage due to latent defects the shipper bears the burden of proving delivery to the carrier in good condition. Elia Salzman Tobacco Co. v. S.S. Mormacwind, 371 F.2d 537, 539 (2d Cir. 1967); Commodity Service Corp. v. Hamburg-American Line, 354 F.2d 234 (2d Cir. 1965). In an attempt to discharge this burden appellants introduced a Fishmeal Certificate of Inspection for the Matarani cargo prepared by a firm of cargo surveyors in Peru. The district court properly found this inadequate in two respects.

First, appellants failed to establish a foundation adequate to bring the certificate within the scope of the "business records" exception to the hearsay rule, 28 U.S.C. § 1732 (1970). In United States v. Rosenstein, 474 F.2d 705 (2d Cir. 1973), this court held that the foundation must be laid by "someone who is sufficiently familiar with the business practice." Id. at 710. We declared that, while the foundation need not be established by one who personally makes or keeps the records, it was insufficient to rely on one who had no direct knowledge of the business practice of the company which kept the records.*fn1

Appellants sought to establish the foundation through the testimony of an employee of one of the appellants who was not associated with the Peruvian firm. He had no personal knowledge of how the firm created or kept the records. Thus there was no testimony by "someone who is sufficiently familiar with the business practice" of the record-keeping company, and no adequate foundation was established.

The district court also properly rejected the certificates on the ground that they contained conclusions about the temperature, fat content, and moisture content of the cargo without indicating how such measurements were taken or whether the inspection extended to possible defects not apparent from an internal examination. Had they been admitted there would have been no way for appellees to determine by cross-examination how reliable the records were. Cf. Aunt Mid, Inc. v. Fjell-Oranje Lines, 458 F.2d 712, 719 (7th Cir.), cert. denied, 409 U.S. 877, 34 L. Ed. 2d 131, 93 S. Ct. 130 (1972). The certificates were not admissible. See The Niel Maersk, 91 F.2d 932, 933 (2d Cir.), cert. denied, 302 U.S. 753, 82 L. Ed. 582, 58 S. Ct. 281 (1937).

As to the non-Matarani cargo there was not even an attempt to prove delivery in good condition. Thus appellants did not sustain their ...


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