The opinion of the court was delivered by: SAND
This action is brought by a cargo interest, Joo Seng Hong Kong Co., Ltd. ("Joo Seng"), a company organized under the laws of Hong Kong, to recover damages of some $ 85,000 for the short shipment or non-delivery of approximately 371.28 metric tons of soybean. The defendants are the S.S. "Unibulkfir", the ship which carried the soybean, Grand Wisdom Transports, Inc. ("Grand Wisdom"), a Liberian corporation which owns the Unibulkfir, Transamerican Steamship Corp. ("Transamerican"), a Delaware corporation and the disponent owner or time charterer of the Unibulkfir, and Cook Industries, Inc. ("Cook"), a corporation of "one of the states of the United States", which acted in a variety of capacities during the events connected with this litigation. Cook sold the soybean to Joo Seng and was both the "shipper" to whom the bills of lading described herein were issued, and the voyage charterer of the Unibulkfir during the shipping and transportation period.
Cook now seeks an order pursuant to F.R.Civ.P. 81(a)(3) and 9 U.S.C. §§ 3 and 6 staying trial of plaintiff's claim against Cook pending arbitration.
Cook urges that Joo Seng's claim against it arises out of the contract entered into by the two parties on December 19, 1975, for the sale of 14,000 metric tons of soybean, and that that contract incorporates a provision calling for arbitration of the parties' disputes.
Plaintiff opposes the motion on the ground that this dispute arises not out of the contract of sale, but out of the bills of lading, and that Cook, as a charterer, is a "carrier" who is liable on those bills. Accordingly, plaintiff claims that this suit is subject to the terms of the Carriage of Goods by Sea Act, 46 U.S.C. § 1300 Et seq. ("COGSA"), which entitles plaintiff to a judicial resolution of its claims in a federal forum.
For the reasons stated herein, defendant's motion for a stay is denied, and the parties are directed to proceed with this law suit unless there is consent by plaintiff to a local arbitration.
I. The Factual Background
The December 19, 1975 contract between Cook and Joo Seng called for the shipment from a "U. S. Gulf port" to Jakarta/Surbaya, Indonesia of 14,000 metric tons "Number Two Yellow Soybeans, 10 percent more or less at Seller's (Cook's) option", at $ 196.00 per metric ton. On the same day, Cook entered into a Voyage Charter Party with Transamerican for the soybean shipment described in the Cook-Joo Seng contract. Under the Charter, which was a standard 1913 "Baltimore Form C Berth Grain Charter Party", Cook was to pay a set freight rate per ton and its employees or agents were to load and unload ship's cargo. The Captain, apparently an employee of the owner Grand Wisdom,
was directed by the agreement to "sign Bills of Lading, as presented, without prejudice to" the Charter Party.
On January 15, 1976, three bills of lading covering the soybean shipment were issued to Cook and signed "For The Master" of the Unibulkfir. The parties have made no allegations as to who actually signed the bills, although Cook stated at oral argument that the bills were issued "by the master". The three bills are identical except as to the quantity of soybeans covered. Cook appears as both shipper and consignee, and each of the three documents was subsequently indorsed by Cook to Joo Seng. No date appears on the endorsement.
The soybeans were loaded aboard the Unibulkfir on January 15, 1976. On arrival in Indonesia, the cargo was found to be 371.28 metric tons short. There are no specific allegations as to the cause of the shortage.
II. Liability Under a COGSA Bill of Lading
Plaintiff's opposition to Cook's motion for a stay is based on the claim that Cook, as charterer, is a "carrier" under COGSA, and is therefore liable under the bills of lading. Cook responds that since it did not "issue" the bills, it cannot be liable under them. The issue, then, is whether Cook is a "carrier" for COGSA purposes and whether in order for Cook to be so considered, it must have issued the bills of lading.
Every bill of lading which evidences a contract for the carriage of goods by sea to or from ports of the United States, in foreign trade, including bills of lading issued under or pursuant to a charter party, is subject to COGSA. 46 U.S.C. §§ 1300 and 1301(b). COGSA imposes In personam Liability upon "carriers" of goods by sea. 46 U.S.C. § 1302. See Yeramex International v. S.S. Tendo, 595 F.2d 943, 945 (4th Cir. 1979). Although the statute provides no precise definition for the term "carrier", it clearly suggests that the term is not limited to a party who signs the bill of lading. Under the definitional section of COGSA, the "term "carrier' Includes the owner or the charterer who enters into a contract of carriage with the shipper." 46 U.S.C. § 1301(a). (Emphasis added.) Under the statute's general liability section, the carrier upon whom liability is imposed is described as "the carrier in relation to the loading, handling, stowage, carriage, custody, care and discharge" of the goods. 46 U.S.C. § 1302. While the statute thus leaves much to judicial interpretation, the question whether Cook is liable to the plaintiff "under" the bills of lading as a carrier is not one which turns on whether Cook "issued" the bills in a strict, commercial law sense.
The case law interpreting COGSA provides surprisingly little guidance on the question of who is properly characterized as a carrier for COGSA purposes or on the factors to be considered in making such a determination. Typically faced with a cargo interest plaintiff and several defendants, including at least one charterer, courts in most COGSA cases approach liability questions from the perspective of an inquiry as to who issued the bill of lading, and tend not to explicitly address the question of who qualifies as a COGSA carrier.
The result is a focus on a variety of factors designed to throw light on the question of "issuance". The factors looked to include: who signed the bill of lading, on whose form the bill was issued, and whether authority was given by one party to sign for another.
Despite the difficulty of distilling consistent principles from the existing case law, two things can be said with some certainty. The first is that more than one party is frequently held liable to a cargo interest under a COGSA bill of lading. See, e.g., Gans S. S. Line v. Wilhelmsen, 275 F. 254 (2d Cir.), Cert. denied, Barber & Co. v. Wilhelmsen, 257 U.S. 655, 42 S. Ct. 97, 66 L. Ed. 419 (1921) (owner, time charterer and voyage charterer); Aljassim v. S. S. South Star, 323 F. Supp. 918 (S.D.N.Y.1971) (owner and time charterer). Obviously then, there can be more than one COGSA carrier of a given shipment. Second, the courts have not hesitated to impose liability on charterers or owners who are non-signatories to a bill of lading and who cannot in any real sense of the word be said to have issued the bill. In doing so, the courts typically look for some evidence tying the party to the bill involved.
Thus, in Gans S. S. Line v. Wilhelmsen, supra, a suit for breach of a time charter party, it was necessary for the court to determine who was liable on bills of lading actually signed by a voyage charterer with authority from the master. The court found that the ship's owner, time charterer and voyage charterer were all liable to the cargo interests. In language still frequently quoted by courts in this and other circuits, the court stated:
"When . . . the master of a ship chartered but not demised . . . issues bills of lading, we hold that the contract evidenced thereby is not only the ship's contract, and that of the time or other charterer who caused their issue, but that of the owner, whose master (i. e., authorized agent) issued the same. Therefore in this instance the shippers had, beyond the obligation of the ship, the right to look to all three ...