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Nissho-Iwai Co. v. Lion

decided: October 3, 1983.


Appeal by Parcel Tankers, Inc., from a judgment of the Southern District of New York, Gerard L. Goettel, Judge, dismissing its claim as shipper's assignee against a carrier, Anglomar Supertankers, Limited, for cargo damage (discoloration of styrene monomer).

Mansfield, Pratt, Circuit Judges, and Tenney, Senior District Judge.*fn*

Author: Mansfield

MANSFIELD, Circuit Judge:

Parcel Tankers, Inc. (Parcel), a shipper's assignee seeking damages from a carrier, Anglomar Supertankers, Limited (Anglomar), for alleged discoloration of a cargo of styrene monomer shipped by its assignor, Nissho-Iwai Co., Ltd., aboard Anglomar's vessel M/T Stolt Lion, appeals from a judgment of the Southern District of New York. The judgment was entered after a non-jury trial before Judge Gerard L. Goettel, who dismissed Parcel's complaint on the ground that Parcel had failed to make out a prima facie case. We reversed an earlier judgment in favor of Anglomar because the district judge had imposed an excessive burden of proof on Parcel. Nissho-Iwai Co., Ltd. v. M/T Stolt Lion, et al., 617 F.2d 907 (2d Cir. 1980). We also reverse the present judgment for the reason that as a matter of law the evidence satisfies Parcel's burden and Anglomar as carrier has failed to show that it was free from negligence with respect to the cargo.

Since certain material undisputed facts are set forth in our prior decision, we need not dwell upon them at length here. The cargo (1,500 tons of styrene monomer) was delivered in good condition by the shipper, Nissho-Iwai Co., Ltd., to the No. 8 tank of the carrier's ship, M/T Stolt Lion, at Texas City, Texas, for carriage to Yokohama, Japan. The relations between the parties were governed by the U.S. Carriage of Goods by Sea Act, 46 U.S.C. ยงยง 1300, et seq. (COGSA). The ship, owned and manned by Anglomar, had been time-chartered by it to Parcel, which later succeeded by assignment to the shipper's cargo damage claim.*fn1

The cargo damage claim is based on evidence that, although the styrene was delivered to the carrier in good condition, it was found to be discolored shortly after discharge on November 16, 1973, from the Stolt Lion into the shipper's coastal tanker Kyokuho Maru near Yokohama. The case was originally bench-tried upon a record consisting (except for one live expert witness who testified briefly) of deposition transcripts and documents. Nissho-Iwai Co., Ltd. v. M/T Stolt Lion, et al., No. 77 Civ. 716 (S.D.N.Y. April 30, 1979). The district judge, laboring under the understandable but erroneous assumption that Parcel had the "burden of proving fault on the part of the owner [Anglomar]," id. at 6, focused his attention mainly upon evidence received "as to the cause of the contamination." Id. at 2. It was undisputed that when discharge began on November 16 the styrene was clear. However, from 4:45 P.M. to 5:55 P.M. pumping was suspended because the pump on the Stolt Lion was unable to continue pumping the styrene into the Kyokuho Maru due to a leaking "suet blank" that was sucking air into the pipeline. A suet blank is a pipe coupling, bolted into a gap in the pipeline, that can be opened or closed to regulate the flow of liquid. If its bolts become loose, leakage can develop and the pump can suck into the pipeline whatever foreign substance is located outside the blank (e.g., air, bilge, a different liquid) and mix it with the liquid being discharged. If sufficient air is sucked into the line the pump may be prevented from discharging the liquid cargo.

In his deposition Tetsuya Hirayama, the shipper's surveyor who was present throughout the entire discharge, testified that he had found upon inspection before any discharge that the tanks of the receiving coastal steamer Kyokuho Maru -- which had transported styrene on its previous trip -- were clean. However, at approximately 5:00 P.M., early in the 70-minute interruption required to repair the suet blank on the Stolt Lion, he noted upon further inspection that the styrene already pumped into the No. 4 tank of the Kyokuho Maru was slightly discolored. He testified that he called this to the attention of the Stolt Lion's Chief Officer, that he, Hirayama, then had the discolored styrene transferred from the receiving coastal steamer's No. 4 to its No. 2 tank, and that when pumping resumed after the suet blank was repaired the newly discharged styrene appeared to be clear.

Hirayama further testified that prior to the interruption of the discharge the Stolt Lion had developed a "big list," which was corrected by the time discharge was resumed. An expert witness, Arthur Steier, was of the view that the pump and suet blank had, because of the list, become immersed in black bilge which had then been sucked into the line through the leaking blank to mix with and discolor the styrene being discharged.

Hirayama's deposition testimony was disputed in part by that of Herbert Graham and David B. Sutherland, who had respectively been Master and Chief Officer of the Stolt Lion and supervised the discharge on November 16, 1973. As Anglomar's principal witnesses they denied having received during discharge any notice of discoloration of any of the discharged styrene. They both confirmed that during the discharge the Stolt Lion listed, the list ranging from 3-4 degrees (Sutherland) to not more than 6 degrees (Graham). Sutherland, who had been in immediate charge of the repair of the suet blank, confirmed that it had leaked styrene into the bilge but testified that the bilge level was below the blank at the time of repairs. At any rate, the evidence was uncontroverted that when the Kyokuho Maru arrived three days later at Yokkaichi samples were taken from its tanks and found to be discolored. Moreover, there was no evidence that anything had occurred in the three-day period to cause discoloration.

Judge Goettel concluded that, although it was "not impossible" that the discoloration was caused by listing of the Stolt Lion during discharge, which might have caused the leaking suet blank to suck dirty bilge water into the line and mix with the styrene being discharged, Parcel had failed to sustain its burden, which he defined as follows: "Parcel must prove fault in the discharge of the cargo, and not merely that the goods were found to be in a damaged condition at some subsequent time, no matter how soon." Id. at 7. We reversed this decision on the ground that Parcel was not required to prove fault on the carrier's part; as the shipper's assignee Parcel was entitled to make out a prima facie case by showing that the styrene was delivered in good condition to the carrier and discharged in discolored condition. 617 F.2d at 912.

However, we remanded the case for further fact findings because the district judge had taken a somewhat ambivalent position on the crucial question of whether the cargo was discolored on discharge. For example, in his first decision Judge Goettel had found as follows:

"During pumping into [the Kyokuho Maru] . . . problems developed which required the pumping to be stopped. While repairs were being conducted on the pumps it was discovered that some of the styrene monomer already unloaded and aboard the second coastal tanker had discolored.

"The owner . . . believes that the most likely possibility was that the contamination occurred after the styrene was in the tanks of the coastal vessel. All of the evidence in this regard, however, was that the vessel's ...

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