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AMERICAN INDUS. CORP. v. M.V. MARGARITE

January 4, 1983

AMERICAN INDUSTRIES CORP., Plaintiff,
v.
M.V. MARGARITE, her engines, boilers, etc., v. SOUTHERN CROSS STEAMSHIP CO., INC., and ATLANTIC SHIPPING COMPANY, S.C., Defendants



The opinion of the court was delivered by: LOWE

MEMORANDUM OPINION AND ORDER

 In this cargo damage action, this Court after a trial on liability found:

 
1. Plaintiff had proven its fraud claim and was awarded a verdict against the defendant M.V. Margarite and Southern Cross Steamship Co., Inc., in rem and in personam for 43 coils.
 
2. Plaintiff was awarded a verdict for 2 coils defendants conceded were short at Outturn.
 
3. Defendants were found not liable for damage to 237 coils. 556 F. Supp. 206.

 The matter was set down for a trial on damages. At the damage hearing counsel for defendants informed the court that the admission of liability for the two coils, short at Outturn, was made in the pre-trial order by the Charterer not the vessel and owner. *fn1" The Court finds this to be a correct statement of the record.

 Owner interests argue that they are not liable for the shortage under 46 U.S.C. 1301(e) in that under COGSA a vessel's liability under a contract of carriage covers the period from the time when the goods are loaded on to the time when they are discharged from the ship. Counsel further claims that since the master testified that none of the coils were left aboard, and the Custom House broker and plaintiff's truckmen confirmed that the coils were on the pier, the carrier discharged its liability.

 Neither of these arguments has merit. Although 46 U.S.C. ยง 1301(e) defines the term "Carriage of Goods" it does not purport to limit a carrier's responsibility for cargo. The burden of proof is upon the carrier to show that it delivered the coils to the Philadelphia pier in the manner specified in the bill of lading. Leather's Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800, 807 (2d Cir. 1971), David Crystal Inc. v. Cunard Steam Ship Co., 339 F.2d 295 (2d Cir. 1964), cert. denied, 380 U.S. 976, 14 L. Ed. 2d 271, 85 S. Ct. 1339 (1975); Philipp Brothers Metal Corporation v. S.S. Rio Iquazu, 658 F.2d 30 (2d Cir. 1981). The bill of lading herein provided that the cargo was: "to be delivered at the aforesaid Port into consignees or their assigns".

 The defendants offered no evidence that the two missing coils were off-loaded. The Charterer, now in default, stated at page 11 of the Pre-Trial Order that there is no explanation for the loss. The defendants' reliance upon the truckmen's letter stating that there were two coils still left on the pier does not raise an inference that the coils were off-loaded when one reads the balance of the letter which states: "The Pier will be in touch with us when they are found." Thus read in context, this letter is evidence of nondelivery. Since the carrier is a bailee of cargo until delivered in accordance with the provisions of the bill of lading, Gilmore and Black, The Law of Admiralty, (2d Ed. 1975) pp. 183-185, and defendants have offered no evidence of such delivery, they are chargeable with the loss of the two coils. Nissho-Iwai Co., Ltd. v. M/T Stolt Lion, 617 F.2d 907 (2d Cir. 1980).

 There is no evidence that the two missing coils were among the 43 subject to this Court's estoppel finding. The defendants' liability is therefore fixed by the COGSA limitation of $500.00 per package. *fn2" Judgment is therefore entered in favor of the plaintiff on this claim in the sum of $1,000.00 plus interest from the date of discharge at Philadelphia.

 The 43 Coils

 After the liability trial, this Court found that defendant M.V. Margarite is liable in rem and defendant Southern Cross Steamship Co. Inc., is liable in personam for 43 coils they are estopped to deny were delivered to them as represented in the bill of lading.

 Defendants argue that Iligan Steel Mills, Inc. v. S.S. John Weyerhaeuser, 507 F.2d 68 (2d Cir. 1974) holds that the COGSA package limit applies in all situations except where cargo is improperly stowed on deck. Plaintiff contends, in reliance on pre-COGSA cases, *fn3" that a fraudulent representation as to the condition of the cargo is a fundamental breach of the contract of carriage such as to constitute a deviation which has the effect of voiding COGSA limitations of liability.

 This Court finds that both parties have urged overly broad interpretations of the cited cases. The Carso, Oliver Straw Goods and Switzerland General stand for the proposition that when a carrier issues a clean bill of lading, with knowledge that such clausing is a misdescription of the apparent condition of the cargo, the carrier is estopped to deny apparent good order and condition (The Carso) and the carrier cannot invoke valuation clauses in the contract limiting its liability, (Oliver Straw Goods) however the carrier may take advantage of all exceptions "the enforcement of which would not be inequitable in view of the misrepresentations" (Switzerland General). The theory of the cited cases is that wilful misrepresentation of condition of cargo, made in a bill of lading gives rise to the equitable remedies of estoppel and recision of the valuation clauses or the contract remedy -- breach of warranty which prevents the shipowner, after such breach, from invoking the provisions of the contract which would defeat recovery. Judge Weinfeld of this Court, in Jones v. Flying Clipper, 116 F. Supp. 386, 389 (S.D.N.Y. 1953) *fn4" explained that the doctrine renders unenforceable COGSA's $500.00 limitation of liability. ...


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