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December 20, 1985


The opinion of the court was delivered by: POLLACK

POLLACK, Senior District Judge:


 This admiralty case arises from water damage to a shipment of fifty-four pallets (or crates) of SIR-20 (Standard Indonesian Rubber, grade no. 20) rubber from Padang, Indonesia to New Orleans, Louisiana, F.O.B. Padang. The issues were presented to the Court at a Bench trial.


 Who The Parties Are

 P.T. Kilang Lima Gunung (of Indonesia) ("seller") sold fifty-four pallets of rubber to Marubeni America Corporation ("Marubeni") ("buyer"), 200 Park Avenue, New York, N.Y.; the invoice was consigned to "Order of Bank Dagang Negara Padang" for the account of Marubeni. The rubber was shipped from Padang to New Orleans on the M/V L. Jalabert Botang, a vessel owned by defendant P.T. Trikora Lloyd ("carrier"), an Indonesian corporation with a place of business at Two World Trade Center, New York, N.Y. (c/o Kerr Steamship Company). After the arrival of the rubber in New Orleans, the buyer sent a letter to the carrier indicating that the rubber ordered was damaged and that it was holding the carrier liable for the damage. Plaintiff, The Tokio Marine & Fire Insurance Co., Ltd. ("Tokio Marine"), paid buyer $21,632.42 under an insurance policy for damage to the shipment. Plaintiff insurance company sues as a subrogee on the buyer's claim against defendant carrier.

 How Rubber Is Initially Processed Into Blocks

 Defendant's witness James Burley, a rubber processing specialist, and plaintiff's rebuttal witness Henry Schmeltzer, a chemist/laboratory specialist, testified as experts at length regarding the processing of rubber from the tree through to the finished product (e.g., a rubber tire). In short, the initial rubber processing is as follows:

 The natural latex solution ("dry rubber" -- i.e., latex -- content of approximately 30-40%) that oozes from the rubber tree is collected in cups and then emptied into larger five gallon milk cans. These cans are then emptied into a stainless steel truck to be taken to the processing area. At the processing plant, this substance is placed in stainless steel process tanks and a coagulant is added. Excess fluid is drained off. The remaining substance is approximately 65% dry rubber content. Excess water is squeezed out; the substance then is put through a hammer mill, is chopped and placed in pans that are approximately the size of a finished block (or bale) of rubber.

 The substance is then heated at approximately 200-225 degrees Fahrenheit (the boiling point of water is 212 degrees Fahrenheit) for four to six hours in a drying oven. Before entering the drying oven the substance is completely white like cheese and upon exiting the oven it is a shade of brown. Many of these blocks (approximately 75 pounds, or approximately 22 of them) are then compressed in a baler press under hydraulic pressure (approximately 20-25 tons of pressure per square inch) to make one block (i.e., the final product after initial processing). Samples of the rubber are then taken to determine its moisture content.

 These seventy-five pound finished blocks are stood upright and allowed to cool for eight to twelve hours. A polyethylene bag is then slipped over them; this bag is sealed at one end and partially open at the other; three spot thermal welds are placed on the open end. Any moisture present in the environment is sealed within the bag; Indonesia has a very humid climate.

 How Rubber Is Packed, Shipped and Processed Again

 Thirty of these seventy-five pound, individually wrapped, blocks are stacked in five tiers, six blocks to each tier. The rubber itself thus weighs approximately 2250 pounds.

 Between each tier of six blocks is placed a sheet of polyethylene (an "interleaf"). The long ends of these interleaf sheets are folded together loosely, not fastened, and another interleaf, colored blue, is laid over the top as a cap. These thirty blocks are then forced into a wooden pallet (or crate), held together by metal bands, and the top to the pallet is nailed down. Thus, there are three layers of polyethylene sheets, inside the pallet, covering the rubber.

 This pallet is then shipped abroad from Indonesia. Upon arrival, it is inspected, either accepted or rejected, and if accepted sold to a company that will, through further processing, turn the natural rubber into a finished product.

 The first stage of manufacturing the rubber into a finished product is to drop blocks from various lots of rubber into a Banbury mixer (i.e., blending). The Banbury runs for a specified time at approximately 350-400 degrees Fahrenheit. Any excess moisture, i.e., light spots, is driven off as steam. This rubber mixture is dropped on a mill, sheeted out, and allowed to cool. Samples are sent to the laboratory and if the tests are ...

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