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AUSTRACAN INC. v. NEPTUNE ORIENT LINES

April 23, 1985

AUSTRACAN (U.S.A.) INC., Plaintiff,
v.
NEPTUNE ORIENT LINES, LTD., Defendant and Third-Party Plaintiff, v. CONSOLIDATED RAIL CORP., Third-Party Defendant



The opinion of the court was delivered by: HAIGHT

HAIGHT, District Judge:

In this admiralty action alleging partial loss of a shipment of canned tuna, plaintiff consignee moves for summary judgment pursuant to Rule 56, F.R.Civ.P., against defendant and third-party plaintiff ocean carrier.

 Many of the relevant facts are not disputed. Plaintiff Austracan (U.S.A.) Inc. (hereinafter "Austracan"), whose office is in New York City, is an importer of canned goods. In October 1980, Austracan contracted to purchase a shipment of 1,350 cartons of tuna from Judric Seafoods Company of Hong Kong. At the same time, Austracan contracted to sell these 1,350 cartons to Quality Foods Corporation of the Virgin Islands, at a price of $46.00 per carton, F.O.B. New York.

 The shipment moved by sea from Manila, the Philippines (where it was shipped by Judric Canning Corporation) to Oakland, California, and thence by rail from Oakland to Port Elizabeth, New Jersey. The ocean carrier was defendant and third-party plaintiff Neptune Orient Lines, Ltd. ("Neptune"), whose vessel NEPTUNE TOPAZ performed the voyage. The rail transportation from Oakland to Port Elizabeth was performed by third-party defendant Consolidated Rail Corp. ("Conrail"). Neptune tendered defense of the action to Conrail, which has thereafter carried the laboring oar of the defense, including briefing and arguing the case on behalf of Neptune. Neptune's agent at Manila was Overseas Agency Services ("OAS"). Under date of October 25, 1980, and on Neptune's behalf, OAS issued a Combined Transport Bill of Lading which, under the printed caption "Description of Packages and Goods," contained this typed material: PIER-TO-HOUSE "SHIPPER'S WEIGHT" 1 CONTAINER (20 FAR) SAID TO CONTAIN 18,000 KLS 25.65 CBM 1,350 CARTONS PACKED 6/66.5 OZ. TINS PER CARTON OF CHUNK LIGHT TUNA IN BRINE PRODUCT OF THE PHILIPPINES QUALITY BRAND LABEL LOADED ON BOARD NEPTUNE TOPAZ V-24S OCTOBER 25, 1980 SHIPPER'S LOAD COUNT AND SEAL

 Under its contract with Judric, Austracan set up a letter of credit in Judric's favor, with payment to be made by the bank upon presentation of specified documents, including an on board negotiable bill of lading. Following loading of the cargo on the NEPTUNE TOPAZ, these documents were in fact presented, and payment made under the letter of credit. The shipping documents were then forwarded to Austracan. No one at Austracan had an opportunity to examine the bill of lading before payment under the letter of credit was made.

 Austracan contends that the phrase "pier-to-house" appearing on the bill of lading is generally understood in the field of ocean carriage to mean that the ocean carrier receives the goods in the form of cartons, or pallets, or some other "breakbulk" form. The ocean carrier then loads or "stuffs" the packages thus received into a container for ocean carriage. At the port of destination, the ocean carrier delivers the container without unloading or "stripping" it, and it is delivered to the consignee's "house," that is, the consignee unloads or "strips" the container at its premises. Affidavit of William McCuen, in support of plaintiff's motion, at P4. In the case at bar, the designated place of delivery was "New York," at the end of the combined sea/rail transportation. Neptune, as ocean carrier, remained responsible under the bill of lading contract for the rail portion of the combined transport. Austracan was the consignee under the bill of lading.

 Conrail contends for a different meaning of the notation of "pier-to-house" carriage. According to Conrail, the notation means that the carrier's customer (shipper or consignee) arranges for delivery of the container to the ocean carrier's facility at the port of loading, and the ocean carrier's facility at the port of loading, and the carrier transports the container to the customer's warehouse or facility at the port of discharge. Under Conrail's construction of the phrase, the shipper stuffs and seals the container, and then delivers it to the ocean carrier's facility for carriage to the consignee's "house." Affidavit of Daniel S. Gonzales, in opposition to plaintiff's motion, at P6.

 Whether these conflicting affidavits create a "genuine issue" as to a "material fact," Rule 56(c), F.R.Civ.P., I consider infra. but it appears to be common ground that, in fact, the shipment in question was stuffed into a container and sealed at the premise of the shipper, Judric Canning Corporation, and delivered to Neptune's Manila pier in that condition.

 Defendants offer evidence, not contradicted on this motion, that the dock facility at Manila where OAS received the container had no scales or other equipment for weighing containers. Gonzales affidavit at P8.

 There is evidence that on December 1, 1980, the container holding the cartons of tuna had arrived at Conrail's facility in Port Elizabeth, and was examined by a United States Customs Service inspector on that date. Affidavit of Benjamin C. Jefferson, Director of the Newark, N.J. area of United States Customs, in opposition to motion, and attached letter report of January 29, 1982. On December 2, Emanuel Cheatham, a truck driver employed by E.R.A. Trucking Company Inc., was directed to go to Port Elizabeth with a tractor and pick up the container for transportation to a warehouse at Pier 40, North River, for delivery of its contents into the warehouse. When Cheatham found the container, he saw that it had no seal upon it. Cheatham brought this to the attention of the Customs Inspector and Conrail representatives at the terminal. The Customs Inspector "looked inside the container," Cheatham affidavit at P6, and a new seal, Conrail No. T24446, was affixed to the container. Cheatham then drove the container directly to the Gordon Warehouse on Pier 40. The area of Pier 40 where the Gordon Warehouse and E.R.A. Trucking's offices are located is surrounded by a security fence, manned at all times by security guards. Cheatham left the container, still sealed, in that secured enclosure, to be unloaded by Gordon Warehouse personnel subsequently.

 Gordon's warehouse is a bonded customs warehouse. Accordingly the Customs Service maintains a Customs Inspector on the premises during business hours. On December 4, warehouse personnel unloaded the container, under the supervision of Customs Inspector Paul Fliegel. Fliegel's duty was to note the condition of the seal on the container before unloading, and to verify the quantity of cargo imported into the warehouse. Fliegel's reports, attached as exhibits to the affidavit of Michael Cilenza, the warehouse manager, reflect that the Conrail seal was intact on December 4, and that upon unloading it was discovered that the container was 258 cartons short of the bill of lading quantity of 1,350 cartons.

 In these circumstances, plaintiff claims for the loss of 258 cartons at the resale value of $46 per carton.

 DISCUSSION

 This shipment is governed by the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. §§ 1300-1315 (1976). Under the statute, a consignee such a s Austracan establishes a prima facie case for recovery from the carrier by proving (1) delivery of the goods to the carrier in good condition and (2) outturn by the carrier in damaged condition. When the consignee proves its prima facie case, the burden shifts to the carrier to show that the loss or damage falls within one of the COGSA exceptions to liability set forth 46 U.S.C. § 1304(2) (1976). Westway Coffee Corp. v. M.V. NETUNO, 675 F.2d 30, 32 (2d Cir. 1982), and cases cited.

 Here we deal with a case not of damage but of partial loss. Austracan's prima facie case would consist of proof of delivery of a specified number of cartons to the carrier, followed by an outturn of less than that number.

 The first question is therefore whether a genuine issue requiring trial exists as to that unquestionably material fact, the number of cartons that were placed in this container.

 Austracan contends that the numbers of cartons stated in the bill of lading constitute "prima facie evidence of the receipt by the carrier of the goods as therein described," 46 U.S.C. § 1303(4); that it was entitled to rely on the numbers of cartons stated in the bill of lading, which was negotiated to it in consideration of payment under the letter of credit; and that the carrier is estopped from claiming that the missing cartons of tuna were not in the container when Neptune took possession of them.

 Neptune contends that plaintiff has failed to prove delivery of the full number of cartons to the carrier, and thereby has failed to establish a prima facie case. Neptune further contends that the estoppel theory does not apply to a case involving sealed containers.

 COGSA provides at §§ 1303(3) and (4), in pertinent part:

 "(3) After receiving the goods into his charge the carrier, or the master or agent of the carrier, shall, on demand of the shipper, issue to the shipper a bill of ...


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