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ALFRED C. TOEPFER, INC. v. FEDERAL BARGE LINES

October 6, 1978

ALFRED C. TOEPFER, INC. and Cook Industries, Inc., Plaintiffs,
v.
FEDERAL BARGE LINES, INC. and Anderson Clayton & Co., Defendants



The opinion of the court was delivered by: PIERCE

OPINION AND ORDER

This is an action for damages caused to a shipment of 1,303 short tons of soybean meal. Plaintiffs Alfred C. Toepfer, Inc. and Cook Industries, Inc. are two corporations which buy and sell grain, including soybean meal. Defendant Federal Barge Lines owned the barge which carried the meal in question. Defendant Anderson Clayton & Co. ("ACCo") manufactured and sold the meal and loaded it onto the barge. Defendants have also crossclaimed against each other for indemnity. This action was tried to the Court from June 5 to June 12, 1978. The following shall constitute the Court's findings of fact and conclusions of law.

 Facts

 On or about October 17, 1972, Cook purchased from ACCo three barge loads of soybean meal of approximately 1,000 short tons each. ACCo chartered one of the barges, T-2078B, from Federal Barge Lines. The other two barges were chartered elsewhere and their cargo was delivered and accepted in apparently good condition. After T-2078B was loaded, the barge was sealed and placed in a tow consisting of numerous barges and towed by a tow boat belonging to Federal to New Orleans, La., where it arrived on or about December 23, 1972. Upon arrival, the barge was placed in a fleet containing numerous barges and maintained by Federal at New Orleans. Cook was notified of the barge's arrival on that date. It is undisputed that the cargo on the barge was not inspected by either plaintiff at any time prior to February 8, 1973.

 On or about January 29, 1973, Cook reconsigned the cargo to Toepfer. On or about February 4, 1973, Toepfer directed that the barge be shifted to the Dockside Commodity Terminal at Belle Chasse, La. On February 8, 1973, preparations were made to discharge the cargo of the barge onto an oceangoing vessel. Toepfer's agents broke the seals of the cargo compartments, rolled back the barge covers and discovered that the soybean meal appeared "smoldering" and severely damaged. (Exhs. C, YY, XX, ZZ, AAA, BBB, ZZZ). Subsequently all parties involved denied liability and hence the within lawsuit was commenced.

 Discussion

 Despite the voluminous exhibits and depositions in this case, the contentions of the parties can be distilled to three basic issues: whether the claims against ACCo are time-barred; whether ACCo breached any obligation to provide insurance; and what caused the soybean meal damage.

 Defendant ACCo contends that plaintiffs are barred from recovering from ACCo because they failed to file a claim in writing with ACCo within 30 days of the arrival of the barge at New Orleans. It is undisputed that the Trading Rules of the National Soybean Processors Association governing the Purchase and Sale of Soybean Meals ("Meal Trading Rules") apply to this action.

 Rule 2, Section 5(E) of the Meal Trading Rules states: "Claims shall be waived unless submitted in writing by the Buyer within thirty (30) days after date of arrival of the car." (Exh. 3).

 Plaintiffs claim that this section does not bar their claim since they question the Condition of the meal sold to them while this section refers to the Quality of the meal. Rule 2 of the Meal Trading Rules is entitled "Quality" and Section 5 is denoted "Adjustments for Quality." Subdivisions A through D of Section 5 discuss "Moisture." "Fiber (44% Protein)," "Fiber (49% Protein)," and "Protein."

 In 1975, the Meal Trading Rules were changed to provide:

 
"12(a) the original shipper shall be responsible for the condition of the meal up to five (5) business days subsequent to: the arrival of the barge at destination (Milepost seventy (70) North on the Mississippi River); unloading of the barge; or inspection of the barge, whichever occurs first.
 
"12(b) If the barge is sold after reaching its destination (Milepost seventy (70) North on the Mississippi River), the Seller will be responsible for the condition of the meal for five (5) business days subsequent to: the arrival of the barge at destination; unloading of the barge; or inspection of the barge, whichever occurs first." (Exh. DDDD).

 Plaintiffs argue that since the former rules did not deal with condition this new rule represents an addition. However, the Court finds that the mere fact of a new rule could also support the inference that the former rules did deal with condition and the time period was shortened. Further, there is substantial evidence indicating that the parties and the trade assumed that the 30-day rule did apply to claims regarding condition. (Exhs. G, HH). For example, in an arbitration opinion dated February 6, 1978, the same argument was made differentiating quality from condition and was rejected by the arbitrators. In re Cargill, Inc., Case 71-10, 00087-75 (American Arbitration Ass'n Feb. 6, 1978). ("The specifications set forth in Section 3 of the Rule are clearly those referred to in Section 1 and they are the same ones treated in Section 5. All sections of the Rule are inter-related parts of the whole. Any contrary interpretation would make both the basis and the time limit for rejection wholly dependent on the whims of the buyer." Id. at p.3) *fn1" The Court also finds the testimony of Walter Lurry III, a grain export agent for 17 years who represented both Cook and ACCo at that time to be highly credible. In essence, Lurry testified that the 30-day rule was the practice of the trade and that since the percentage of such damage was low and the cost of inspection high, a consignee frequently did not inspect and in that event chose to bear the risk of loss. (Tr. 24). James ...


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