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MINEMET, INC. v. M. V. MORMACDRACO

April 19, 1982

MINEMET, INC., Plaintiff,
v.
M. V. MORMACDRACO, her engines, boilers, etc., Moore-McCormack Lines, Incorporated and International Terminal Operating Corp., Defendants



The opinion of the court was delivered by: WEINFELD

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This action centers about the theft from a pier in Brooklyn, New York of 70 bundles of tin ingots weighing 35,000 kilograms that were in two "pier-to-pier" shipping containers.

Plaintiff, Minemet Inc. ("Minemet"), was the purchaser and the consignee of the tin ingots which had been transported from Santos, Brazil aboard the M.V. Mormacdraco owned by the Moore-McCormack Lines ("Mormac") and discharged at the 23rd Street Terminal in Brooklyn, New York. The Terminal encompassed a number of adjacent piers, one at 25th Street and another at 23rd Street. Mormac operated and controlled the piers at the Terminal and provided all security for the piers and the cargo stored there, including gatemen and security guards.

 International Terminal Operating Corp. ("ITO"), pursuant to a contract with Mormac, provided stevedoring services customarily performed by a terminal operator which included discharging cargo from the vessels, storing and stripping containers and delivery of cargo. ITO discharged and placed cargo onto the piers in consultation with Mormac.

 Minemet seeks recovery for nondelivery of the stolen shipment valued at $ 581,653.27 plus the freight of $ 7,028 from the vessel and Mormac as the carrier (collectively Mormac) and from ITO for their alleged negligence while the containers were in their custody. Minemet and Mormac agree that if Mormac is liable to plaintiff, its liability is limited to $ 35,000 based upon the $ 500 per package limitation (70 bundles at $ 500 each) contained in the Carriage of Goods by Sea Act, *fn1" the Harter Act, *fn2" and the bill of lading issued by Mormac. Minemet contends that ITO is not entitled to the $ 500 per package limitation since it was not a party to the bill of lading. Thus plaintiff seeks the major portion of its claimed loss from ITO.

 Mormac denies any negligent conduct with respect to the shipment while in its custody and in addition to affirmative defenses asserts, in the event it is held liable to Minemet, a cross-claim against ITO for indemnity upon the ground the loss was due solely to ITO's (1) negligence and (2) breach of its warranty of workmanlike performance under the terms of their agreement.

 ITO, with respect to Minemet's claims against it, denies it was a bailee of the shipment; also, it denies any negligence on its part. As to Mormac's cross-claim it pleads contributory negligence by Mormac as a defense; in addition, it alleges a cross-claim against Mormac on the ground that the loss of the cargo was due to Mormac's failure to provide adequate security at the pier and that if it, ITO, be found negligent, it was passive. Finally, ITO contends that if it is found liable to plaintiff, it also is entitled to the $ 500 per package limitation under the Carriage of Goods by Sea Act and the bill of lading; *fn3" or, alternatively, the $ 500 per package limitation contained in the Port of New York Marine Terminal tariff.

 Before discussing the operative facts which are common to the various claims and cross-claims, it is desirable to state the applicable law. Plaintiff's claim against Mormac, the carrier, is within the admiralty and maritime jurisdiction of the Court. The standard for determining its liability is under federal law. Thus, following the discharge of the containers from the vessel, Mormac continued as bailee under the contract of carriage and as such remained liable for the safe delivery of the ingots to the consignee regardless of the fact that it had engaged ITO to render stevedoring services at the pier with respect to the shipment. Plaintiff, as bailor, makes out a prima facie case of negligence upon proof of delivery of goods to Mormac and its failure to redeliver at the required time. The burden of production then shifts to Mormac to come forward to show that the loss in no way was attributable to its negligence or that it exercised the requisite degree of care with respect to the bailed shipment. *fn4" Thus in this case, Mormac may meet its burden of production by showing that the loss was due to theft and that the theft was not the result of its negligence. *fn5"

 Plaintiff's case against ITO is governed by different standards. The claims against ITO are based upon common law liability for tortious conduct under the law of New York and jurisdiction is pendent. *fn6" It also seeks to hold ITO liable as a bailee even though it was not a party to the bill of lading. As noted, ITO provided its terminal and stevedoring services to Mormac at the pier upon the discharge of the containers from the vessel. In this capacity, ITO was an agent "engaged in fulfilling (Mormac's) obligations following discharge of the containers, apparently occupied as well the status of a bailee with respect to the shipper (citing New York State cases)." *fn7" However, state law differs from federal law as to the burden of production upon ITO as bailee once the bailor makes out a prima facie case by proof of nondelivery. New York holds that the "bailee is not required to go on to show that the theft was not the result of its negligence; rather it is for the bailor to demonstrate negligence on the part of the bailee in the context of loss by theft (citing New York cases)." *fn8"

 Upon the trial, Minemet made out its prima facie case by showing delivery of the goods to Mormac and the failure to return at the required time; it also established as part of its direct case the theft of the shipment and other attendant circumstances related thereto. Thus the principal testimony upon the trial centered about the issue of negligence on the part of Mormac, the carrier, and ITO, the stevedore.

 It is desirable to describe the general procedure that was in effect at the time in question with respect to pier-to-pier containers that had valuable or special cargo and the activities of each defendant with respect thereto. Prior to a vessel's arrival at the port, Mormac notified ITO of special cargoes that were to be placed in a security position upon their outturn pending their removal by the consignee. Upon unloading onto the pier, they were stacked in twos-that is, one container placed on top of the other and close to adjacent containers so that their doors could not be opened. The purpose was to prevent theft or pilferage from the containers but this would not prevent theft of an entire container with its contents. The containers were kept in this stacked condition until they were ready to be stripped or "unstuffed." *fn9"

 Usually stripping is effected within two days after complete discharge of the unloading vessel's cargo. However, this may be delayed depending upon the number of vessels being loaded or unloaded, pier congestion, available stevedores, and other factors. When ready for stripping, the containers are placed on a chassis and removed by tractor to a headhouse at the 23rd Street pier where the contents of the containers are unloaded and placed in cribs (secured areas) until called for by the consignee or its trucker. To move containers from their resting place following their discharge to the pier, or from one place to another on the pier, specialized equipment is required such as a top loader, or a stacker (a heavy forklift), which lifts the container and places it on a chassis which is connected to a tractor. The specialized and heavy equipment and other machinery for stacking and moving containers were under the control of and used by ITO personnel.

 The entire terminal was enclosed by a cyclone-wire fence 8-10 feet high topped with barbed wire, and a Mormac guard was stationed at each gate entrance to a pier. Only authorized ITO and Mormac employees were admitted to the piers to carry out their assigned tasks and other persons had to identify themselves as having legitimate business to be admitted to the pier areas. Against that background, the Court turns to the events touching upon the two containers in question.

 Mormac, prior to the vessel's arrival at the 23rd Street Terminal, had notified ITO of the containers and their ingot contents. They were discharged from the vessel on Wednesday, January 16, 1980 onto the open 25th Street pier and were stacked one over the other and blocked by other containers so that the doors could not be opened. The containers rested flat on the pier and could not be moved unless first ...


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