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PACOL LTD. v. M/V MINERVA

January 16, 1981

PACOL (CANADA) LIMITED, Plaintiff,
v.
M/V MINERVA, et al., Defendants



The opinion of the court was delivered by: MOTLEY

MEMORANDUM OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW

Plaintiff, Pacol (Canada) Limited, seeks recovery for damage to a shipment of 2,175 bags of cocoa beans carried from Ilheus, Brazil, to Philadelphia aboard the M.V. Minerva. Plaintiff claimed that a total of 1,494 bags constituting 197,514.122 pounds of cocoa beans were damaged en route by direct contact with seawater which entered the hold through defective McGregor hatch covers and by defendants' commingling of heavily wetted bags with sound bags on the pier after outturn. The court, after trial, found for plaintiff as to its claims and the court's findings in this respect were set forth orally on the record.

 It was undisputed that some portion of the shipment of beans was damaged at outturn in Philadelphia. However, defendants contend that only 1,175 bags were damaged at the time of delivery and that any additional damage was due to the commingling of sound and damaged bags by plaintiff's trucker after the bags were delivered to the trucker. Plaintiff's trucker noted damage only on the delivery receipt for Bill of Lading No. 1 which covered 1,175 bags and did not note damage on the delivery receipt for Bill of Lading No. 3 which covered the remaining 1,000 bags. Defendants argue that the trucker's failure to note damage on the delivery receipt for 1,000 bags creates the presumption that these bags were delivered in good condition.

 Under the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. § 1303, plaintiff had the initial burden of proving receipt of the goods by the carrier in good condition and delivery at destination in bad condition. Once a prima facie case has thereby been established, the burden shifts to the carrier to prove that the loss was attributable to one of the COGSA exceptions. 46 U.S.C. § 1304(2); Nissho-Iwai Co., Ltd. v. M/T Stolt Lion, 617 F.2d 907, 911-912 (2d Cir. 1980); Demsey and Associates v. S.S. Sea Star, 461 F.2d 1009, 1114-1115 (2d Cir. 1972). Once the carrier has established an exception, as the carrier did in this case by showing a peril of the sea exception, § 1304(2)(c), the burden shifted to plaintiff to show that there were concurrent causes of loss in the fault and neglect of the carrier. Vana Trading Co. Inc. v. S.S. "Mette Skou", 556 F.2d 100 (2d Cir.), cert. denied, 434 U.S. 892, 98 S. Ct. 267, 54 L. Ed. 2d 177 (1977). This the plaintiff did by showing that the rubber gaskets around the hatch covers were defective as set forth orally on the record after the liability trial. Once the plaintiff has sustained this burden of showing some concurrent fault, the burden shifts to the carrier to show what portion of the loss is attributable to the § 1304(2) exception and which is attributable to its demonstrated fault. Vana Trading Co., Inc. supra. Here the carrier has failed to make this required apportionment.

 Moreover, plaintiff showed that the damage to all 1,494 bags of cocoa beans resulted from wetting. Plaintiff's surveyor's report indicated that some of the bags were wetted by coming into contact after outturn with other bags which were heavily wetted by seawater during the voyage. Plaintiff showed that defendants negligently commingled damaged bags with sound bags on the pier. Plaintiff's surveyor testified that it was more likely that the additional wetting after outturn resulted from the commingling of bags on the pier by defendants rather than from commingling in plaintiff's trucks. Thus, plaintiff established a prima facie case that the total damage was due to defendant's negligence and rebutted any presumption created by plaintiff's trucker's failure to note damage on the delivery receipt for 1,000 bags. Defendants have not met their burden of proving that some portion of the damage was due to negligence on the part of plaintiff.

 The court next considers the measure of the value of the damaged beans. With respect to the measure of damages, the long-established and ordinary rule is that

 
"damages for injury to cargo while in the possession of a carrier are to be computed at the difference between the fair market value of the cargo at destination in the condition in which it would have arrived but for the carrier's fault and its market value in the condition in which by reason of such fault it did arrive."

 Interstate Steel Corp. v. S.S. "Crystal Gem," 317 F. Supp. 112, 121 (S.D.N.Y.1970); St. Johns NF Shipping Corp. v. S.A. Companhia Geral, 263 U.S. 119, 125, 44 S. Ct. 30, 68 L. Ed. 201 (1923); Encyclopaedia Britannica, Inc. v. S.S. Hong Kong Producer, 422 F.2d 7, 18 (2d Cir. 1969), cert. denied, 397 U.S. 964, 90 S. Ct. 998, 25 L. Ed. 2d 255 (1970); Pioneer Import Corp. v. The Lafcomo, 159 F.2d 654, 655 (2d Cir.), cert. denied, 331 U.S. 821, 67 S. Ct. 1310, 91 L. Ed. 1838 (1947); Weirton Steel Co. v. Isbrandtsen-Moller Co., 126 F.2d 593, 594 (2d Cir. 1942). The Court of Appeals for the Second Circuit has recognized that this rule is "obviously the right measure where the (cargo owner) buys the goods for resale." Weirton Steel Co., supra, 125 F.2d at 594. The rule is not altered by the provision of § 1304(5) of COGSA that "(in) no event shall the carrier be liable for more than the amount of damage actually sustained."

 The primary purpose of these standards is to indemnify the plaintiff for its loss due to the carrier's fault, or to make the plaintiff whole.

 
"If the (cargo had been delivered in good condition, its worth to the buyer would have been determined by the market price at the port of destination.... To have held otherwise would have required the carrier to pay a price for the damaged goods which was more than the worth of the goods in their undamaged state. The carrier is not and should not be the guarantor of the ups and downs of commodity prices."

 A. L. Holden v. S. S. Kendall Fish, 395 F.2d 910, 912-913 (5th Cir. 1968).

 The fair market value rule, however, is not the sole method of ascertaining the cargo owner's loss. It has been discarded in exceptional cases, such as where there exists no market value at destination or where there is available a more accurate means of computing the loss. Dixie Plywood Co. v. S.S. Federal Lakes, 404 F. Supp. 461 (S.D.Ga.1975), aff'd, 525 F.2d 691, cert. denied, 425 U.S. 974, 96 S. Ct. 2174, 48 L. Ed. 2d 798 (1976); Santiago v. Sea-Land Service, Inc., 366 F. Supp. 1309 (D.P.R.1973).

 
"The assessment of damages in particular situations has called for the development of lesser rules, the use of common sense and the creation of exceptions, all to the end that the shipper ...

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