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October 7, 1980

CAEMINT FOOD, INC., Plaintiff,

The opinion of the court was delivered by: MOTLEY


This is an action brought by plaintiff Caemint Food, Inc., the consignee of a large shipment of canned corned beef from Brazil. Plaintiff brings this action against the defendant carrier, Lloyd Brasileiro Companhia De Navegacao, to recover for expenses and lost profits which plaintiff incurred as a result of mold and rust damage to a portion of the shipment. The total shipment, off-loaded in San Francisco, had been contained in 55,500 cartons. Each carton contained 24 or 48 cans. A total of 205,296 cans were found to contain mold on the labels and/or rust on the top and/or bottom rims. When placed in cartons the damaged cans amounted to 8,554 cartons.

The shipment had been loaded onto defendant's vessel, Lloyd Altamira, in Rio Grande, Brazil between August 15 and August 18, 1977. Nineteen bills of lading had been issued to plaintiff, each of which stated that the goods had been received "in apparent good order and condition." Two certificates furnished by the Brazilian authorities also attested to the good order and condition of the shipment when loaded on board the vessel.

 The shipment consigned to plaintiff had been loaded in the No. 3 and 4 holds of the vessel along with another shipment which was off-loaded prior to the shipment in question in Los Angeles. Between 5 and 7 percent of the cartons which had been off-loaded in Los Angeles were found to be damp to wet to the touch and to contain wet stains, although no claim for mold or rust damage was filed as to this shipment.

 When the cartons were off-loaded in San Francisco on September 24, 1977, inspection revealed that some cartons had wet stains and corrugation and mold appeared on the outside of some cartons, as a result of which the shipment was denied entry, except for 10,000 cartons which passed initial inspection. The bulk of the shipment had been denied admission by the United States Department of Agriculture. An inspection conducted on behalf of plaintiff was made by David Voss of the Bay Area Inspection Service. After the goods were denied entry, Voss initially segregated three (3) lots, or 12,000 cartons, as good for further inspection by the Department of Agriculture. These 12,000 cartons were again inspected and refused entry since individual cans were inspected and were shown to contain mold. Forty-five thousand (45,000) cartons were eventually opened at a warehouse in San Francisco and every tin examined. By this examination the 205,296 cans found to contain mold were segregated and placed into 8,554 cartons. The damaged cans came from cartons which showed evidence of having been wet as well as from cartons which appeared to be sound. Voss testified on the trial that in addition to mold on the labels he saw rust on the top and bottom rim of some cans. Thirty-six thousand nine hundred and forty-six (36,946) cartons were found to be good. These cartons, plus the 10,000 which originally passed inspection, were eventually shipped by plaintiff to Libby, the company for whom the goods had been purchased. The 8,554 bad cartons were sold as salvage.

 Plaintiff incurred expenses of $ 67,936.17 in connection with the inspection services of Bay Area Inspection Service, the surveyor employed by plaintiff, and the sale of the damaged goods. Plaintiff's lost profit, less the amount realized in the salvage sale, was $ 61,059.22. Total of the damages sought by plaintiff is $ 128,995.39.

 The cans of corned beef had been purchased by plaintiff from Swift Armour S.A. in Rio Grande, Brazil. They had been produced at two different plants owned by Swift Armour in Brazil on 31 different dates over a period of 68 days. They had been shipped to a warehouse in Rio Grande on 8 different dates-8 lots by truck, 11 lots by rail-and loaded aboard the vessel on 3 different dates.

 The goods thus shipped to the warehouse remained there from June 25 until loading aboard the vessel commenced on August 15, 1977. The warehouse was brick. There is no evidence that the cartons got wet in the warehouse or on route. However, the weather report from Rio Grande showed that there had been heavy rain and very high humidity during much of the time that these cartons were stored in the warehouse awaiting loading. The evidence also discloses that part of the shipment traveled in what was described as "unstable weather."

 The vessel left Rio Grande, on August 18. It stopped enroute to the United States in Recife, Brazil for additional loading in the No. 4 hold. While the vessel was in port in Recife the weather report indicates that there was some light rain. The vessel log states that on August 31, 1977 at Recife the stevedores did not work because of rain. This was about three weeks before arrival in Los Angeles.

 The photographs of the cartons off-loaded in San Francisco show the damaged condition of some of the cartons upon off-loading as testified to by Mr. Voss. These pictures show cartons with wet stain and corrugation. Significantly, the same pictures also reveal mold on the cartons. As noted above, inspection revealed that some of the cartons which were sound on the outside also contained from 2 to 6 moldy and rusted cans. Tests performed in San Francisco revealed that the water stains were the result of fresh water and not sea water. The 10,000 cartons which initially passed inspection were loaded on the very bottom of the No. 3 and No. 4 holds. The evidence shows that all the cartons were stowed in bulk and that a plastic covering and plywood had been placed at two tier intervals.

 Charts showing the temperature and humidity indexes in the holds during the voyage, as recorded by the ship's temperature and humidity control system, were destroyed by defendant more than a year after notice of the damage and four months after formal notice of the claim.

 The evidence established that the corn based paste which is used to secure the paper labels to each can of corned beef is susceptible to the development of mold which then appears on the labels. To avoid this problem a mold deterrent is used. The deterrent is manufactured by Dow Chemical Company and is known as Dowicide. The two Swift Armour Company plants in Brazil where the cans of corned beef involved here were produced, in mixing the paste for the labels, used twice the amount of Dowicide recommended by Dow in its literature. In addition, Dowicide was put on the varnish used on the cans.

 Expert testimony on the trial established that mold spores are everywhere, but at least three conditions are necessary for the growth and proliferation of mold-moisture, darkness and lack of ventilation. The court finds that the shipment here was subjected to these three conditions during two separate periods of time. The first time was during the six weeks that the cartons were stored in the warehouse in Brazil when there was heavy rain and very high humidity for many days. The second time was in the holds of the vessel on the voyage from Brazil to Los Angeles, after fresh water got on the cartons during loading either at Rio Grande or Recife or both.

 There is no direct proof that mold began to appear on the individual cans prior to loading. The court infers from the circumstantial evidence cited above that some mold developed during the time ...

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