The opinion of the court was delivered by: NEAHER
MEMORANDUM OF DECISION AND ORDER
This suit is brought pursuant to the Court's admiralty jurisdiction. See 28 U.S.C. § 1333; Fed. R. Civ. Pro. 9(h). Plaintiff is Knud I. Larsen ("Larsen"), a Danish corporation owning the M/V JETTE SIF. Defendant Associacion de Productores Rurales del Estado Aragua ("APRA") is a Venezuelan farmer organization, which buys supplies for its members. Defendants A.C. Carpenter, Inc. and A.A. Carpenter, Inc. (together "Carpenter") are New York corporations engaged in potato wholesale buying and selling.
This suit arose from an unsuccessful commercial undertaking. Briefly described, Carpenter purchased seed potatoes in Michigan, contracted for their sale to APRA and hired the JETTE SIF from Larsen for their transport to Venezuela. The ship arrived in Venezuela but was not unloaded; rather, the cargo was eventually dumped in a rotted condition at sea.
Regarding the resultant legal claims, Larsen seeks damages from defendants for demurrage, detention and related expenses stemming from the cargo's nondischarge. APRA, in turn, counterclaims against Larsen for the potatoes' spoilage and connected damages. Additionally, APRA crossclaims against Carpenter for similar losses and for not procuring appropriate insurance. For its part, Carpenter counterclaims against Larsen for a freight refund. Finally, aside from affirmative recovery, each party - if adjudged liable in any respect - seeks indemnification from another.
To resolve these multiple claims, the Court held a bench trial that concluded on March 3, 1983. Having reviewed the trial record (including numerous depositions), the parties' submissions and the law, the Court holds: 1) Larsen prevails on its claim against Carpenter but not on its claim against APRA; 2) APRA's counterclaim against Larsen is dismissed but its crossclaim against Carpenter merits relief; and 3) Carpenter's counterclaim and crossclaim are dismissed.
The findings of fact and conclusions of law underlying these holdings follow. See Fed. R. Civ. Pro. 52(a).
In August 1981, APRA was seeking seed potatoes to plant for the production of table potatoes. Learning of this, Robert Carpenter, a salesman for defendant Carpenter, contacted APRA president Simon Ortega and, thereafter, went to Venezuela for a meeting.
In Venezuela, Ortega took Robert Carpenter to visit potato farms. Robert Carpenter understood that the seed potatoes he might supply would not be consumed but would be planted to grow table crops.
Negotiating, Robert Carpenter offered good quality Michigan produce. For his part, Ortega asked that the purchase arrive not later than the "second week of November." T. 412. Ortega also communicated his desire to inspect before buying.
In accord with that desire, Ortega journeyed to the Gaylord, Michigan area where the potatoes were grown and stored. During that September 8-12, 1981 trip, Ortega was impressed by the produce, much or all of which was already warehoused.
More negotiations ensued. Robert Carpenter informed Ortega that he wanted to receive a letter of credit before shipment and that discharge was APRA's responsibility. Among his requests, Ortega preferred that for better circulation the potatoes be crated, not bagged. Robert Carpenter responded that crates would be difficult to timely obtain.
Concerning the potatoes' transport, Ortega left the ship's chartering to Robert Carpenter. Nothing was explicitly said requiring that the vessel be refrigerated.
The deal was struck at the Detroit airport. Robert Carpenter agreed to sell 30,000 bags of potatoes at $21 per 110 lb. (50 kg.) bag CIF Puerto Cabello, Venezuela, the discharge port.
The agreement's "primary terms" were contained in an October 9, 1981 letter of credit opened by APRA with Banco Provincial de Venezuela ("Banco Provincial"), the issuing bank. Joint Pretrial Order p. 4.
The letter of credit listed the documents (including a bill of lading) Carpenter had to submit with its sight draft to the Republic National Bank of Miami ("Republic National"), the confirming bank.
The harvested potatoes underwent by lot joint federal-state inspections while in Michigan. Of the 60 federal-state certificates issued (covering an average of 412 bags per lot), 47 indicate no soft rot.
But 13 note that such decay was present, although within the allowable .5% regulatory range.
Allowable then, the potatoes later died from just such soft rot determined to have been induced by erwinia bacteria. The soft rot death came despite the potatoes having a storage life up to "a couple of years." T. 301. In other words, these September 1981 harvested potatoes dying roughly, two months later succumbed well short of their life span.
That rapid soft rot demise necessitates a discussion of erwinia, the fatal agent.
In Michigan and worldwide soils, erwinia is harmless if remaining on a potato's skin. To cause damage, erwinia must enter the pulp via skin cuts, bruises of lenticells (pores). Once in, erwinia attacks cell wall pectin (a glue-like substance), thereby breaking down the potato's infrastructure. About eighty percent water, the potato is unable to retain its moisture and shrinks into a soft rot state.
To elaborate further, a potato is a living vegetable needing oxygen. With respect to erwinia's lenticell entry, when a water film overlays its skin, the breathing potato enlarges those pores facilitating air ingress and carbon dioxide emission. That dilation allows erwinia to swin [sic] into the pulp through the pores.
Similarly, when water is present, erwinia can enter through harvest-handling incurred wounds. Access by whatever opening, pulp-penetrated erwinia gives off a strong ammonia-like stench. Lenticells and wounds are the gates but skin water is erwinia's vehicle into the potato. Water, in short, is the key to erwinia generated soft rot.
Possible water sources pertinent to these potatoes were harvest rain, the potatoes themselves, condensation and seawater. Rain at reaping time requires no detailed exposition and seawater is more appropriately dealt with later. See infra pp. 27-29. Regarding the potatoes themselves, if subject to heat, they exude their own water through the pores. As to condensation, in a storage setting with dew point higher than pulp temperature, the potatoes become coated with a water film from the cooled ambient air.
Which prevoyage water source(s) facilitated erwinia entry into these potatoes can only be deduced. Rain probably fell at harvest time.
But the Gaylord soils are sandy and would not likely retain water long enough (four to five days) for lenticell expansion. Moreover, those soils generally have antibodies competing against erwinia, lessening the infection possibility for an unearthed potato.
That does not preclude entry via lesions received during the postharvest-handling phase, since rain was likely present. In fact, Dr. Potter, a plant pathology professor, flatly stated that entry "occurred after harvest." If so, that ingress period would have coincided with erwinia's usual penetration pattern, Dr. Potter observing that "the greatest loss to the potato industry comes in the post-operative area." T. 318.
Necessarily a deduction, that "post-operative" stage (after harvest but before storage) was apparently the time when erwinia began its intrusion. Along with Dr. Potter's testimony, that deduction is substantiated by the federal-state certificates (upon which he relied) in essence attesting that prior to those Michigan inspections conducted in storage adequate water existed for erwinia's entry into a small percentage of pulps.
To transport the potatoes to Venezuela, the JETTE SIF was hired pursuant to a Gencon charter party executed on October 13, 1981 between Carpenter and Larsen.
The agreement was for the entire vessel and one voyage to Puerto Cabello. The initial freight rate was $60 "per 1000 kg fios." Ex. 1, pt. I, cl. 13. Laytime was "6 days of 24 running hours." Id., pt. I, cl. 16(c).
Built in 1975 for general cargo and fruit, the JETTE SIF has two cargo hatches - the no. 1 forward and the no. 2 aft. Without bulkheads separating those hatches, the cargo space runs fore and aft without interruption. Vertically divided, the under space is the lower hold and the upper is the 'tween deck. MacGregor pull covers overlay the hatches.
Four high volume electrical fans propel air through the cargo spaces with two each aft of the lower hold and 'tween deck. Ambient air is received from the main deck outlets constructed to prevent rain or seawater intrusion into the stow areas.
Although not mechanical extractors, four exhaust vents are correspondingly forward of the fans. Air is forced out through those vents by fan pressure and pulled out by suction through the main deck ducts when the ship is underway. Those main deck ducts are also built to resist rain or seawater entry.
The JETTE SIF has a one speed thirty (at least) air change per hour capacity. Through Novo Chartering, a ship broker, Robert Carpenter had requested that capacity, but the charter party only specified twenty-five. Regardless, being only electrically ventilated, the JETTE SIF could not substantially alter the holds' temperatures and humidities.
Robert Carpenter had considered a vessel with an automated chilling system, telling Novo Chartering that a "ventilated or refrigerated ship" was required. Ex. 125, pp. 16-17. But when available refrigerated ships were located, Robert Carpenter backed off because "they wanted too much money." Id., p. 17.
With a small percentage already erwinia invaded, the burlap sacked potatoes began arriving by truck on October 15, 1981 at Wilmington, Delaware, the load port, and were stored in a dockside warehouse to await the JETTE SIF. The unrefrigerated vessel reached Wilmington harbor on October 22, tendering its notice of readiness at 11:50. The same day, George Geiser, a National Cargo Bureau ("NCB") surveyor, inspected the ship and issued a certificate of readiness at 16:30 confirming that the holds were fit to receive the potatoes.
Due to unfavorable weather forecasts and intermittent rain, stowing did not begin until 08:00 on October 28. When it did commence, loading was not without problems. Hired by Carpenter, neither stevedore Jay Murphy nor his men had had previous potato experience. JETTE SIF Captain Sven Nissen did have an extensive background with that cargo. Robert Carpenter, too, had loaded potato shipments before.
Prior to loading, Captain Nissen met with Murphy. Learning that Murphy had never handled potatoes, the Master said that he would instruct the longshore gang. They also discussed the cargo amount relative to the ship's capacity, both foreseeing that space would be troublesome. Captain Nissen believed, however, that all could be taken.
When loading began, Captain Nissen directed that the 'tween deck be stowed twelve tiers high with dunnage every fourth. When Robert Carpenter arrived that same morning, he issued directions as well.
"Q. Were you making any suggestions to [Murphy] as to the method . . . the cargo should be stowed . . .?
"Q. Was [Murphy] consulting with you as to how the cargo should be placed . . .?
"A. I was pretty much consulting with him. I advised him that because of the size of the holds . . . I wanted six air channels made, three vertical and three horizontal, so that every bag of potatoes would get plenty of air."
After loading for about a day, Captain Nissen apparently became increasingly concerned about the capacity. He instructed that the 'tween deck and lower hold air aisles be narrowed from the 2-2 1/2 feet width to 1-1 1/2.
Near completion, Captain Nissen wanted bags added atop the stow in the lower hold and over the beams that were beneath the ceiling. Manifesting his ongoing supervisory participation, Robert Carpenter opposed, maintaining that ventilation would be impeded by plugging the space between the beams and the ceiling; and Captain Nissen acquiesced.
Concern about loading all the bags had another consequence - the charter party's renegotiation. By that modification, Carpenter agreed to a $96,000 flat rate instead of a per tonnage fee.
That change, in turn, led to a discussion about authority over the stow. Robert Carpenter recalled:
"[A]fter . . . we worked out the lump sum figure, . . . I said, Captain, now it's your responsibility; the stowage is yours . . . and all I want is clean on board bill of ladings. Because prior to making a call to the owners, he mentioned . . . that he was ready to protest the stowage . . . and I said, I don't want this, captain. I said, we'll straighten it out; it will be your responsibility."
Despite that unequivocal direction, Robert Carpenter did not cease making decisions.
"[W]e had completed the loading up to the top of the hatch coams [the covers' sides], and we were finishing hatch 1, and . . . had potatoes left over; and Mr. Murphy said . . . why not fill up hatch . . . 2, fill the hatch coaming, that we could get another 150 ton in there. I said, fine . . . and they reopened hatch 2, put in pallets around the hatch coam and filled the rest up with potatoes, so . . . hatch . . . 2 was filled up to the top of the covering."
Loading finished at 16:40 on October 30 with the ship filled and bags left on the pier. Captain Nissen then signed a clean of board bill of lading for 30,119 bags.
Before departure, the charterer gave written instructions to the Master. The holds were to be constantly ventilated at thirty air changes per hour, so long as the outside temperature stayed above 41 degrees F. and the humidity below 90%.
The ship sailed at 19:50 on October 30. Activated shortly after loading ceased, the ventilation system operated at thirty or better air changes per hour throughout the voyage.
Encountering heavy weather the first four days, the vessel rolled and took water over its hatches. As a result, Captain Nissen later filed a sea protest at Puerto Cabello.
Besides that rough weather, the ship was slowed by damage sustained on the previous voyage when it had grounded off Belize, bending the propellers. After that stranding, the vessel was inspected and cleared for the Venezuelan trip with directions that the engine speed "be controlled so as to eliminate vibration" due to the dented propellers. Ex. 9. So, though having a 12 knot capability, the JETTE SIF averaged 9.03 during the 1828 mile journey.
The passage was not only lengthened by adverse weather and reduced rpm's but also by a seven hour bunker trip to Curacao laying approximately 150 miles northwest of Puerto Cabello. Expected to take five days, the voyage took over eight.
Not surprisingly, on this journey into equatorial latitudes, warm and humid outside conditions were prevalent. The conditions in the cargo holds, through which the fans circulated ambient air, were likewise warm and humid, as indicated below:
Temp./Humidity 'Tween Deck Lower Hold
Octpber 30 65 degrees/72% 56.5 degrees/97% 55 degrees/96%
November 1 75 degrees/52% 63 degrees/88% 67 degrees/78%
November 2 77 degrees/58% 66.6 degrees/88% 70 degrees/84%
November 3 79 degrees/58% 70.5 degrees/87% 72 degrees/80%
November 4 81 degrees/75% 75 degrees/98% 77 degrees/98%
November 5 85 degrees/75% 81 degrees/86% 80.6 degrees/88%
November 6 86 degrees/75% 82.5 degrees/89% 83 degrees/83%
November 7 85 degrees/92% 84 degrees/82% 82 degrees/95%
November 8 85 degrees/83% 83.6 degrees/92% 84 degrees/91%
Carpenter's Proposed Findings of Fact p. 35, #72 (partially summarizing Ex. 11, which contains the vessel's temperatures and humidities recorded at noon each day).
Also not surprisingly, the simmering internal atmosphere was conducive to erwinia growth.
F. Puerto Cabello: Nondischarge
With its heating cargo, the JETTE SIF entered Puerto Cabello harbor on November 8. Captain Nissen cabled a notice of readiness that was received at 17:00 by Consignaciones Dasar ("Dasar"), the agent for both APRA and Larsen. For various reasons, the vessel did not dock until four days later.
The National Institute of Ports ("INP") is a government agency that oversees the Venezuelan waterfront, including the coming and going of ships and the hiring of longshoremen. INP insists that certain documentation (bills of lading, cargo manifests, etc.) be tendered twenty-four hours before arrival. If not done, INP will neither assign a berth nor classify a discharge. The JETTE SIF's papers were not timely produced.
The $96,000 freight having been paid, Anthony Carpenter, Robert's brother and president of both Carpenter corporations, received the bill of lading on October 31. On November 2, he submitted to Republic National the bill and other papers necessary for the letter of credit sight draft (and eventually necessary for INP). Republic National reviewed the documents and paid the $630,000 sight draft for the potatoes' purchase. The next day, not having been instructed by Anthony Carpenter to engage a special courier, Republic National forwarded the documents by registered air mail to Banco Provincial.
On November 10, with the ship already at Puerto Cabello anchorage for two days, Robert Carpenter and Ortega went to Banco Provincial to inquire about the unreceived documents. The papers arrived about noon and were reviewed. The next day the requisite documents were given to the Venezuelan authorities. An occupied berth being assigned, the ship did not dock until 14:00 on November 12. Discharge did not begin then either due to an INP equipment shortage. Nor did it commence on November 13 because the longshoremen went on strike at 08:00.
Exercising its charter party general strike clause rights, Carpenter informed Larsen that it would hold the JETTE SIF in Puerto Cabello during the stoppage. The strike ended at 12:00 on November 16.
Unloading still did not go forward. The INP longshoremen refused to discharge because the potatoes were putrefying with a noticeable ammonia stench. Special stevedores (distinct from the INP longshoremen) would only perform the onerous task for more money.
On Saturday, November 14, Ortega for the first time viewed and all but rejected the cargo. He seems to have withheld a final decision until the following Monday when the hatches would be opened.
The November 16 inspection apparently confirmed his earlier tentative appraisal, since Ortega (then or shortly thereafter) informed John-Thomas Duesing, Carpenter's Caracas agent, that he did not want the cargo. Despite the disavowal, Ortega still would have unloaded the vessel believing that APRA by law had to discharge, truck and burn the cargo, which would have cost about $25,000.
Planting plans by then foresaken, even that resigned effort was unsuccessful, as Dasar's Marichal related:
"Q. At anytime after November 16, 1981, did you attempt to negotiate with the local stevedores for the discharge of the cargo from the JETTE SIF?
"A. We tried with Simon Ortega. [W]e would start to discharge the vessel, but there was no help from the sellers. [C]ommunication was lacking."
The lack of communication may have been attributable to Robert Carpenter's leaving Puerto Cabello on November 11. When back in New York, he received a telephone call on or about November 19 from Duesing. Robert Carpenter was informed that "Ortega was refusing the cargo because of the condition." Ex. 122, p. 69.
He returned to Venezuela, meeting with Duesing on November 26.
Adding to the previous troubles, another general strike began at 13:00 on November 19. That stoppage lasted through November 24.
Ostensibly, an alternative existed. Ten hours by sea, La Guaira was a nearby port.
Proceeding there, however, was unrealistic because the Venezuelan government would have required other permits taking 48-72 hours to procure. Also, nothing guaranteed that the La Guaira longshoremen would have responded any differently than their Puerto Cabello counterparts to the smelling, rotting potatoes.
On November 25, INP at last ordered the ship from the dock and it departed to anchorage at 19:40. By then, the potatoes were unquestionably a total loss.
G. Puerto Cabello: Other Liability Relevant Matters
Before proceeding beyond Puerto Cabello, additional factual issues pertinent to the subsequent legal analysis are best addressed at this point.
When INP ordered the ship to anchorage, the potatoes were incontestably beyond use. When prior to November 25 they had become unfit for planting (or other use) is disputed. The focus is on their November 8 arrival condition.
The credited evidence is that the cargo had considerable soft rot when the vessel entered Puerto Cabello harbor. For instance, Robert Carpenter told of his November 11 observations upon boarding.
"Q. Was there anything unusual about the cargo?
"Q. [C]ould you pinpoint where it was coming from?
"A. No, just a general smell.
"Q. What was the smell of?
"A. Of decaying potatoes."
On November 13, the log noted that bags with advanced decaying were seen:
"INSPECTED . . . CARGO AND FOUND . . . SOME . . . SACKS . . . ROTTEN AND FILLED WITH FLIES."
Ortega visited the next day.
"Q. When you went aboard the vessel on November 14th, did you smell anything?
"A. Yes, it was a smell of something rotten . . . like ammonia. There were fleas also. And underneath the end it was a kind of a dark liquid."
Dr. Ramon Lastra, a plant pathologist with the Venezuelan Institute of Scientific Research, surveyed the cargo on November 23. Based on that inspection and his review of the log's recorded temperature and humidity levels, Dr. Lastra offered an opinion as to when the potatoes began rotting:
"A. [B]y the extent of the damage . . . I can put it maybe 3rd, 4th or 5th or 6th of November.
"Q. That is your best estimate?
"A. Yes, but that is very difficult to estimate."
John Maguregui, the manager of the Caracas Lloyd's Agency, which performs cargo examinations, had hired Dr. Lastra and had accompanied him on the November 23 survey. Extrapolating from a survey observation, Maguregui gave a more specific reason partially supporting his and Dr. Lastra's appraisal of an early deterioration onset date - the 9-10 day fly life cycle.
"A. [F]rom Dr. Lastra's verbal report to me, the flies would only deposit eggs on decomposing organic material; in this case, soft rotting potatoes.
"Q. Were you given any indication by Dr. Lastra how soon before November 13th . . . of 1981 the damage must have commenced?
"A. Yes. That it probably commenced, and in this we agreed, . . . sometime after the vessel approached tropical waters. . . . That is high temperatures and humidities."
Plainly, attempting to isolate the particular voyage day of the infection's spread involves conjecture. Nevertheless, with respect to the cargo's November 8 arrival condition, Dr. Potter responding to a hypothetical was emphatic that the potatoes were unfit for planting:
"Q. Based on the facts that I have given you - I'll add . . . that after a number of potatoes were examined by the authorities in Venezuela, it was noted that they were affected with Erwinia rot, and that . . . given off in the ship's hold was an ammonia-type odor. Can you tell us whether . . . those seed potatoes were suitable [on November 8] for . . . being sown . . .?
"A. . . . I'd say no, they would not be.
"A. Because it is obvious that there must be a great deal of rot in that pile of potatoes . . . . And that doesn't necessarily mean that the potato was completely disintegrated but if you have any amount of soft rot in a potato, it should not be used for seeding. Absolutely not.
T. 293-94. See generally Ex. 118, p. 18 (Antonio Landaeta, chief of the Puerto Cabello plant protection division of the Venezuelan Ministry of Agriculture, commented: "[W]hen an importation is for seeding, the plant protection division has to be exceedingly careful so that this seed can be used for agricultural purposes, and a seed which is not in the optimum conditions cannot be used for seeding."); Ex. 89 (Venezuelan Legislation 1980, No. 46 allowing a maximum of .5% wet (soft) rot for imported seed potatoes).
Directly or inferentially, others were not in accord with Dr. Potter. Carlos Araque, a surveyor with Supervisiones e Inspecciones Venezuela, C.A. ("Sivenca") was aboard on November 13 and smelled a "[f]ermented odor." Ex. 115, p. 29. Certain bags had broken open and "some potatoes [were seen] in a decomposition process." Ex. 84. Araque estimated that "a maximum of 20% of the bags" were spotted. Id. Returning on November 16, Araque opened ten of the 'tween deck's worst looking bags and estimated "that no more than 10[%] of those potatoes were looking in bad condition." Ex. 115, pp. 21.
Yet, during a next day survey, Araque's perception was strikingly different.
"Q. Can you tell us what was your estimate of the extent of damage aboard the JETTE SIF which was observed on November 17th? . . . .
"A. At that time I couldn't realize the amount of damage.
"A. Because it was so big."
Indeed, Araque graphically recalled the red flags of extensive erwinia rotting.
"A. [J]uice from the potatoes stowed in the 'tween deck were falling down wetting the cargo into lower hold.
"Q. Was the water coming down from the 'tween deck rapidly or slowly?
"A. Rapidly. It was like rain. "Q. What type of an odor was [there]?
"A. Decomposition. I mean ammonia. . . .
"Q. Was it . . . strong . . .?
Even accounting for erwinia's acceleration rate, the November 17 palpable putrefaction renders suspect Araque's 10% decay assessment just the day before. That and his previous conservative estimate appear more likely the result of cursory perusals.
Dr. Jose Barreiro, a food science professor, related the results of an investigation performed by Biotec, his food industry consulting firm. Those findings are contained in the Biotec Report, which utilized a mathematical model to gauge the cargo's daily deterioration levels. As explained by Dr. Barreiro, the model is a standard decay measure that will identify some straightline rate since decomposition velocity is a constant. That ascertained straightline rate, however, "could be any degree." T. 611.
Here, the appraised decay percentages of the November 13, 16, 18 and 19 surveys were put into the model. Digesting that data, the methodology projected deterioration from the voyage's commencement until November 20. As summarized in the Biotec Report, the degradation was purportedly zero until November 12 climbing to 83% on November 20. The Biotec Report concluded that:
"[T]he deterioration . . . started between November 12 and 13 . . . . In this way, the cargo arrived . . . in sound condition. . . ."
In light of the other testimony (scientific and lay), the Biotec Report's projections cannot be accepted. The apparent misstep leading to those comparatively low assessments has been intimated - the systemic use of data from inspections that underestimated the deterioration levels.
Two such examinations (on November 13 with 1% and November 16 with 10%) were performed by Sivenica's Araque. The likely superficialities of those surveys already noted render unreliable their small percentages. The November 18 inspection was by Biotec's Emilio Saiz, who had never checked potatoes before and took no samples for laboratory analysis. His opinion that only 20% had spoiled by that late date also has to be questioned.
On November 20, Saiz did take samples that were analyzed by an agronomist, who assigned an 83% degradation. Those samples were taken from various 'tween deck stow areas extending from the top tier to the third down.
That inspection was not as cursory. Still, no tween deck potatoes were selected from the stern nor, most notably, from beneath the third tier. Below that tier were nine more layers and, as Dr. Potter remarked in general, stow temperatures are higher midload to the extent that a "melting in the pile" can occur. T. 344. Thus, the 'tween deck samples were not taken from where the infection was probably the worst.
Additionally, 10-15% of the unsampled lower hold bags, being visibly dry, were evidently assumed in good condition. That may have been unwarranted. Hence, while the November 20 survey's 83% spoilage rate was not as dubiously derived, that figure as well could be deflated.
In short, the Court rejects the Biotec Report's deterioration levels. When supplied with accurate data, the model may be a valid scientific tool. For the most part, dependable information seems to have been lacking here.
That view notwithstanding, Dr. Barreiro's regression check determined that the survey data correlated "very well" with the model. T. 612. Assuming the methodology's structural correctness, conceivably the correlation means that the inspections' estimates were all erroneously low, albeit in a mathematically consistent manner.
But there is further persuasive scientific testimony that calls for distrust of the Biotec model's findings. Drawing upon other information in the Biotec Report (including the ship's temperature, humidity and dew point records), Dr. Cargill calculated significantly higher degradation amounts. In doing so, Dr. Cargill, with many years of potato storage experience, offered a nonerwinia theory for their death, i.e., due to nearly continuous hold condensation and resultant increased pulp respiratory heat (BTU's), the potatoes suffocated.
Noting first that plants lose their viability at "5 to 6 BTU['s]," Dr. Cargill gave his opinion on the potatoes' arrival condition.
"Q. [W]hen do the potatoes begin to lose their viability . . .?
"A. Based on this Biotec report, they started to lose their viability on . . . approximately the 4th of November . . . .
"Q. That's when it went above 6 BTUs?
"Q. What occurred when you had a BTU of 11 on [the] November 8th [arrival]? . . .
"A. That tells me that the potatoes were in a degenerated condition.
"A. [T]he only way potatoes can have an 11 BTU . . . is degenerating . . . I'd like to say, rotting potatoes."
Dr. Cargill's dying-on-arrival assessment not only contradicts the model's zero estimate (and other asserted levels) but coincides with the credited evidence, even though his calculations were from a suffocation analysis. When asked about accounts that the potatoes had died from erwinia infection, Dr. Cargill acknowledged being aware of the information but suggested that a plant pathologist be asked about it.
While those erwinia reports undercut Dr. Cargill's position that suffocation was the primary decay factor, they are consistent with his contentions that the cargo holds had continuous condensation during the voyage and the potatoes characteristically responded with heightened respiration.
Such moist and heated holds would have been an erwinia favorable environment. So, besides their deleterious oxygen depriving effect, those conditions would have supplied erwinia with ideal ambient surroundings to perform its lethal operation.
Thus, Dr. Cargill's coordinate theory substantiates that evidence conflicting with the model's results. Concomitantly, Dr. Cargill's circumscribed but cogent analysis - itself - is a distinct reason for rejecting the methodology's conservative calculations.
From the preceding, then, it follows that whatever the exact percentage of decay upon the JETTE SIF's November 8 entry into Puerto Cabello harbor, the potatoes were unfit for planting.
Much evidence has been received concerning whether seawater penetrated the cargo holds. Ramon Soler, a chemical engineer and manager of SGS, S.A. ("SGS"), analyzed liquid samples taken about November 17 from the JETTE SIF. The method employed was a silver nitrate test that determines chloride presence but not quantity. Since chloride is an ocean mineral component, a positive response might indicate seawater entering the stow areas.
Soler's test results were positive. But potatoes also contain chlorides, and Techni Alimentos, a laboratory, was requested to ascertain a sample's composition. Based on that sample's chloride amount and calcium-magnesium ratio, Techni Alimentos concluded that seawater was in the liquid.
That examination was conducted by Dr. Carin Soulavy. Dr. Barreiro sharply challenged her findings and the basis therefore. To illustrate, Dr. Soulavy testified that chlorides in potatoes were about 300-400 parts per million ("ppm's"). Dr. Barreiro, on the other hand, maintained that the figure was much higher, i.e., about 1,610 ppm's. Dr. Barreiro took particular issue with the determination that the identified 2,500 ppm's of chlorides pointed to seawater, which has 34-37,000 ppm's. The 2,500 ppm's figure, according to him, was much "closer to the natural contents of . . . potatoes." T. 635. Similarly, he asserted that the reported calcium-magnesium ratio was well within the range of potatoes.
Concerning this dispute, the Court accepts Dr. Barreiro's testimony, being corroborated by additional facts suggesting that ingress of seawater did not occur and that the liquid on the decks was from the shrinking potatoes. To be specific, potatoes are approximately 80% water, as previously mentioned. The Techni Alimentos sample was obtained about November 17. Araque saw liquid coming down "like rain" from the sacks that day. Ex. 115, p. 46. Thus, whether or not the sole origin, the decomposing cargo was a source of the deck liquid. See generally Ex. 119, p. 13 (Regarding the draining observed on the November 24 survey, Dr. Lastra stated that "[I]t was a steady stream, like an open faucet.").
The same cannot be said about seawater. Succinctly put, the means of entry - untainted by speculation - has not been exhibited. The ballast tank's minor hole had been repaired. Further, with that tank beneath, the lower hold's deck was not the ship's skin. The lower hold's deck and the ship's bottom, rather, were double barriers through which seawater would have had to pass before reaching the potatoes. Even if the pencil-sized puncture had remained unpatched, the ocean could not have invaded the lower hold unless its deck was not watertight. Of that, nothing has been shown.
Speculation has been advanced about leaking via the MacGregor hatch covers. Yet, in Wilmington, NCB's Geiser inspected those tops appraising them in good condition, and found their gaskets (for a tight seal) satisfactory. At Puerto Cabello, the November 23 Lloyd's inspection designated the covers and gaskets "[i]n apparent sound order and condition." Ex. 120, p. 55.
Against that evidentiary background, seawater leakage is unproven. To the contrary, the scale tips the other way.
The fans, as noted, were promptly turned on after loading and remained on during the voyage. Without much likely effect, the fans were also on at Puerto Cabello. Robert Carpenter's account is somewhat counter. Boarding in Puerto Cabello harbor on November 11, he heard a "slight hum" but "didn't feel much air coming up." Ex. 125, p. 51. His recollection must be put in context.
If intact to Puerto Cabello, the vertical aisles collapsed after arrival. Supporting that inference, Araque saw the aisles clogged with fallen bags during a November 13 survey, probably traceable to unsecured stowing and rough seas. In subsequent days, the channels gave way, presumably from the potatoes' dehydration. On November 18, Dr. Jose Gonzalez, an agrononmist, discerned no passages. Biotec's Saiz perceived only "vestiges of channels" on November 18 and 20. Ex. 114, pp. 58-59. And when he was aboard on that latter date, Dr. Lastra saw no aisles.
So, when Robert Carpenter made his ventilation observations, the channels were no doubt disappearing. Rather than a separated stow through which ventilated air could move, the potatoes in each hold were compacting into a unitary mass. That consolidation would have prevented circulation, muffled the hum of the fans and accounted for Robert Carpenter's possible impression that the ventilation system was not fully functioning.
Focusing on the stow itself, to get more bags aboard at Wilmington, the aisles had been narrowed. The lower hold had been filled to the beams and the 'tween deck to the coamings. Upon leaving Wilmington, the ship was packed.
As attested by the Lloyd's Report compiled after a November 20 survey, that loading was an improper stow.
"BAGS WERE STOWED DEEP AND TIGHT, 12 OR MORE TIERS HIGH WITHIN TWEENDECKS, 10 OR MORE TIERS HIGH WITHIN LOWER-HOLDS, WITH LIMITED DUNNAGE AND MINIMAL VENTILATION CHANNELS (STOWAGE OF SUBJECT . . . CARGO CALLS FOR TIERS NOT TO EXCEED 8 IN HEIGHT AND FOR AMPLE DUNNAGE AND VENTILATION CHANNELS)."
Maguregui, who had participated in that survey, observed that the stuffing would have impeded ventilation on a south bound journey with expectedly high temperatures and humidities. Apart from hindered circulation, he noted the more direct role of overloading in the erwinia infection's spread.
"A. [T]he more tiers you stow, you will exert greater pressure on the lower tiers. . . .
"Q. [T]he pressure put on the bottom sacks would cause water to ooze out of the potatoes?
"A. Water was oozing, and on its vertical descent . . . would contact potatoes below and create further soft rot."
All too plainly, the Wilmington stow facilitated the destruction of the potatoes.
Concerning this final problem before moving from Puerto Cabello to Dakar, the experts - for once - were united in their views that refrigeration would have slowed erwinia. While granting that soft rot works in cool conditions, too, Dr. Potter stressed the benefits of refrigeration.
"Q. If these potatoes had been carried in a refrigerated vessel and assuming that some of them had a half of 1 percent rot, would that have retarded the progression of the rotting . . .?
"A. That would have helped a great deal. . . .
"Q. [continuing] Definitely. [I]f somebody asked . . . how you should ship potatoes, I would say, in a refrigerated shipment, frankly, if I was the shipper, that's exactly what I'd be doing. I've been at sea myself and I would do that."
The verity of Dr. Potter's opinion was affirmed by William Loggie, a salesman-manager with Canadian Packers, Inc., which exports 300-400 million lbs. of potatoes each year to Venezuela and elsewhere.
"Q. Why do you use refrigerated vessels, rather than electrically-ventilated vessels?
"A. Because we are responsible for delivery . . . of potatoes . . . suitable for the purpose . . . intended, and we found through experience, that potatoes will arrive in much better condition on refrigerated vessels, than they will on an electrically-ventilated vessel."
T. 364-65. In accord with that responsibility and experience, Canadian Packers whenever possible has procured refrigerated vessels, "[s]ince they became readily available on the market . . . approximately eight to ten years ago." T. 365. See also Ex. 117, p. 28 (Relative to Puerto Cabello, Port Inspector Enrique Gomez indicated that refrigerated vessels were becoming the norm, although acknowledging that prior to November 1981 "some" ventilated vessels arrived.).
Clearly, a refrigerated vessel would have impeded the erwinia process, enabling more potatoes to survive the voyage. Moreover, utilizing such a ship would have been consonant with commercial responsibility and developing industry custom.
After being ordered from its berth by INP on November 25, 1981, the JETTE SIF left Puerto Cabello harbor about six days later. From there, the vessel obviously unable to re-enter the charter market, sought to rid itself of the rotted cargo. That mission was not fully accomplished until December 25. During the interim, the ship sought an equipped and willing discharge port. After ten other ports had been contacted, Dakar, Senegal, having laborers and gear, consented.
Captain Tyge Halse, a Larsen shoreside superintendent, met the JETTE SIF there on December 17. He described what he encountered.
"I discovered a strong rotten smell all over, and I told the captain I should like to . . . inspect hatches . . . and I open up the lip . . . and there was a swamp of half an inch large green shining flies, millions of them coming up, so I just slapped it again and got hold of a team who could fumigate the whole area."
A survey determined that less than half the original tonnage remained. Some potatoes had been dumped in the Puerto Cabello harbor area. The remainder had simply evaporated or had liquefied and been pumped out.
With hired workers and equipment, the vessel went to sea for four days to perform the clean out. Upon returning to Dakar, the JETTE SIF after more cleansing was at last fit at 12:00 on December 25 for the charter market.
With the voyage coming to that unfortunate end, this litigation was already underway, having been commenced on December 21, 1981. With additional facts being related where essential, we turn to the legal issues.
Analyzing the parties' claims will be simplified by resolving at this juncture numerous issues, some preliminary and others fundamental in nature.
The commercial transaction underlying this litigation was international and interstate, suggesting a choice of law inquiry. See Cardinal Shipping Corp. v. M/V SEISHO MARU, 1983 AMC 2573, 2576 (S.D. Tex.) (The Supreme Court in Romero v. International Terminal Operating Co., 358 U.S. 354, 382-83, 3 L. Ed. 2d 368, 79 S. Ct. 468 (1959) "expanded the application of the broad principles governing choice of law problems to all maritime cases, noting that there must be due regard for the particular interests advanced by different aspects of maritime law and for the interacting interests of the United States and foreign countries."). See also Restatement (Second) of Conflict of Laws § 188 comment d, at 579 (1971) ("Each issue is to receive separate consideration if it is one which would be resolved differently under the local law . . . of the potentially interested states.").
The parties have not raised this matter. That silence coupled with their general citation to this forum's law (federal and state) suggests a tacit agreement. See Walter E. Heller & Co. v. Video Innovations, Inc., 730 F.2d 50, 52 (2d. Cir. 1984) ("[I]n the absence of a strong countervailing public policy, the parties to litigation may consent by their conduct to the law to be applied."). See, e.g., El Hoss Eng'g & Transp. Co. v. American Indep. Oil Co., 183 F. Supp. 394, 399, (S.D.N.Y. 1960), rev'd on other grounds, 289 F.2d 346 (2d. Cir.), cert. denied, 368 U.S. 837, 82 S. Ct. 51, 7 L. Ed. 2d 38 (1961) ("[N]either party has made any contention that the law of Kuwait governs . . . the agreement. Nor has either made any reference . . . to what the law of Kuwait . . . is . . . . Both have treated the case throughout on the basis that the law of the forum applies . . . . [T]his has the effect of a stipulation between them that the case should be governed by the law of the forum . . . .") (cited by Heller).
More to the point, the parties refer to the law of neither foreign (Venezuela or Denmark) nor out-of-state (Michigan or Florida) jurisdictions arguably touched by the ranging business activities. They have relied on this jurisdiction's statutes and decisions. See generally Lopez v. Bulova Watch Co., 582 F. Supp. 755, 757 (D.R.I. 1984) ("The parties have . . . briefed . . . in terms of Rhode Island law, so the court may accept the implicit premise that such law governs [the state] claims.").
By their conduct, the parties have impliedly consented to an adjudication under this forum's jurisprudence. See Petroleo Brasileiro, S.A., Petro. v. Ameropan Oil Corp., 372 F. Supp. 503, 508 n.23 (E.D.N.Y. 1974) ("The second cause of action . . . would appear . . . to raise a question of [Brazilian] law . . . . But . . . it also appears that despite the international character of the sale, the parties are content to have their contract rights determined under [the] New York [Uniform Commercial Code].") (footnote omitted).
Accordingly, United States maritime (principally, Second Circuit) and New York State law are controlling. Where appropriate, their statutory and decisional ...