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Allied Chemical International Corp. v. Brasileiro

October 15, 1985

ALLIED CHEMICAL INTERNATIONAL CORP., PLAINTIFF-APPELLEE,
v.
COMPANHIA DE NAVEGACAO LLOYD BRASILEIRO, DEFENDANT-APPELLANT



Appeal from a judgment of the United States District Court for the Southern District of New York, Owen, J., finding Companhia de Navegacao Lloyd Brasileiro, an ocean carrier, liable to Allied Chemical International Corporation, a shipper, for misdelivery. Concluding that the Carriage of Goods by Sea Act package limitation, 46 U.S.C. app. § 1304(5) (Supp. I 1983), incorporated into the bill of lading, did not reduce the carrier's liability, the court held that the shipper was entitled to recover the full value of the cargo. Affirmed.

Author: Meskill

Before: MESKILL, KEARSE and WINTER, Circuit Judges.

MESKILL, Circuit Judge:

Companhia de Navegacao Lloyd Brasileiro (Lloyd), an ocean carrier, appeals from a judgment of the United States District Court for the Southern District of New York, Owen, J., finding Lloyd liable to Allied Chemical International Corporation (Allied), a shipper, for the misdelivery of goods to the consignee, Banylsa Tecelagem do Brasil S.A. (Banylsa). The carrier caused the goods to be delivered without requiring Banylsa to produce the original order bill of lading. Lloyd also challenges the district court's refusal to interpret the Carriage of Goods by Sea Act (COGSA) package limitation, 46 U.S.C. app. § 1304(5) (Supp. I 1983), which was incorporated into the bill of lading, to reduce Allied's recovery. The court awarded damages equal to the value of the cargo in United States dollars minus an amount that Allied had already recovered from Banylsa plus interest.

We affirm the judgment of the district court.

BACKGROUND

This case was decided without a trial. The parties submitted to the district court two stipulations of fact; the deposition of Pedro Calmon Filho, an expert on Brazilian law; memoranda, one of which included an appendix; and separate proposed findings of fact and conclusions of law. Allied alleged federal jurisdiction on the basis of admiralty or, alternatively, diversity of citizenship. The pertinent, undisputed facts follow.

In September 1980, Allied, an exporter of chemical products, received from Banylsa an order for a quantity of caprolactam, a crystalline cyclic amide used in the manufacture of nylon. The sale was to be in two lots of 6,000 bags on terms of sight drafts against documents through Banco Bamerindus do Brasil S.A. of Sao Paulo, Brazil (Brazilian bank). The sight drafts were in the amount of the per lot invoice price, $266,756.92 C&F Salvador, Brazil.

In October 1980, Allied delivered to Lloyd at the Port of Norfolk, Virginia two lots of 150 double faced pallets, each lot said to contain 6,000 bags of caprolactam to be shipped to the Port of Salvador, Brazil. The cargo was loaded onto Lloyd's vessel ITAPURA. Lloyd issued clean order bills of lading that described the cargo, listed Allied as the shipper and showed that the goods were consigned to the order of Banylsa. Banylsa was also listed as the notify party. Allied, through its bank, forwarded the shipping documents - including the sight drafts, the original bills of lading and the original commercial invoices - to the Brazilian bank for handling and collection. Allied specifically instructed the Brazilian bank to deliver the documents only against payment of the sight drafts.

On or about November 12, 1980, Lloyd's vessel arrived at the Port of Salvador. In accordance with local custom and usage, the carrier unloaded the caprolactam at a warehouse under the control of the Administration of the Port of Salvador (the port authority), an agency of the Brazilian government. The caprolactam was undamaged.

Banylsa made payment on only one of the two sight drafts and therefore received from the Brazilian bank only one bill of lading. It is the bill of lading not received and the lot to which it related that are the subject of this dispute. Hereinafter, when we refer to the cargo or to the bill of lading, we refer solely to the misdelivered goods and the bill of lading that covered them.

On November 17, 1980, Banylsa through its agent delivered to Lloyd's agent in Salvador a letter explaining simply that the original bill of lading had not been received and requesting Lloyd to issue in accordance with Brazilian import regulations a "carta declaratoria," a letter declaring that the freight had been paid at the port of origin and that the Merchant Marine Renewal Tax had been paid in Salvador.*fn1 That same day, Lloyd's agent issued the requested document.*fn2 The parties do not dispute that to obtain the release of goods from the port authority, a party would have to produce either the original bill of lading or a carta declaratoria from the carrier. Thus, by virtue of the carta declaratoria, Banylsa was able to obtain possession of the caprolactam although it had not paid for the goods and it was not in possession of the bill of lading.

Allied first became aware that the sight draft had not been paid in January 1981. It was not until several weeks later, however, when Banylsa complained about the quality of the caprolactam, that Allied discovered that Banylsa had, notwithstanding nonpayment, obtained possession of the caprolactam. After an investigation that included an on-site inspection of the goods at Banylsa's facility, Allied rejected Banylsa's quality complaint.

In early April 1981, Banylsa filed a voluntary receivership proceeding in the Civil Court of the District of Salvador, Brazil. On May 8, 1981, Allied made a demand on Lloyd for losses incurred as a result of the carrier's failure to request proper documentation before authorizing the release of the caprolactam. J. App. at 160. The demand letter stated that Allied had been advised by Lloyd that the good were released on Banylsa's promise to deliver the original bill of lading within ...


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