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INSURANCE CO. v. S/S "GLOBE NOVA

May 19, 1986

INSURANCE COMPANY OF NORTH AMERICA, Plaintiff,
v.
S/S "GLOBE NOVA," her engines, tackle, boiler, etc., THE GLOBE TANKERS, GLOBE TRANSPORT AND TRADING COMPANY LTD., WILLOW GROVE SHIPPING COMPANY LTD., GAMMA SHIPPING CO., INC., GLOBE TANKER SERVICES, INC., Defendants



The opinion of the court was delivered by: MOTLEY

MOTLEY, Ch. J.

 This is an action under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C. Section 1300 et seq., for an alleged shortfall in a shipment of molasses from India to the United Kingdom. After a bench trial and consideration of the controlling law as well as of the evidence submitted by the parties, the court finds and concludes that plaintiff has made out a prima facie case for relief under COGSA, unrebutted by defendant and that, accordingly, plaintiff is entitled to damages. The court's findings of facts and conclusions of law are as follows:

 FACTS

 Plaintiff, Insurance Company of North America, is the insurer of the shipment of molasses at issue in this case and brings this suit as subrogee of the insured parties. The insurance coverage was arranged through Namolco, Inc., a Delaware Corporation. The policy included coverage of Namolco, A.G., a Swiss Corporation, and International Molasses, Ltd., an English business entity, both subsidiaries of Namolco, Inc. Namolco A.G. was the FOB purchaser of the cargo and International Molasses, Ltd. was the receiver of the cargo.

 Defendants are related companies engaged in ocean transport of cargo. During the period at issue in this action, defendant Gamma Shipping Company, Inc. was the owner of the S/S Globe Nova. Defendant Globe Transport & Trading Company, Ltd. was the vessel's chartered owner. Defendant Globe Tanker Services, Inc., also known as Globe Tankers, was the operating manager of the S/S Globe Nova at all relevant times. Defendant Willow Grove Shipping Company, Ltd., the charterer of the Globe Nova for the voyage in question, has never been served as a defendant in this action.

 On March 29, 1983, The State Trading Corporation of India, a seller of molasses, made a delivery of molasses to defendants and the Globe Nova at the port of Bombay, India. This was done pursuant to a letter of credit arrangement with Namolco, A.G. and various banks. The cargo was weighed on board the Globe Nova by a draft survey technique, a method which compares the depth of the vessel in the water before and after loading. This Bombay draft survey indicated that the ship had received 15,522.778 metric tons of molasses, the same amount that the Indian seller had represented to defendants would be delivered. Defendant carrier at this time issued a negotiable on board bill of lading dated March 29, 1983 for 15,522.778 metric tons of Indian cane molasses of sound and merchantable quality.

 From Bombay the Globe Nova sailed to Kandla, India. On April 3, 1983 the same seller, pursuant to the same letter of credit arrangement, delivered a quantity of molasses to the vessel at Kandla. This additional molasses was again weighed on board by a draft survey method. The draft survey here indicated that 3,429.478 metric tons of molasses had been loaded on board. As in Bombay, this was the identical amount as the seller had represented would be delivered to the ship at Kandla. Defendant carrier at this time issued a second negotiable on board bill of lading dated April 3, 1983 for 3,429,478 metric tons of Indian cane molasses of sound and merchantable quality. *fn1"

 The cargo was shipped from India to the United Kingdom pursuant to a charter party dated February 3, 1983 between defendant Globe Transport and Trading Company Ltd. as chartered owner of the Globe Nova, and Willow Grove Shipping Company Ltd. Clause Seven of this charter party reads in pertinent part:

 
The cargo shall be pumped into the vessel at the expense, risk and peril of the Charterer, and shall be pumped out of Vessel at the expense of the Vessel, but at the risk and peril of the Vessel only so far as the vessels permanent hose connections, where delivery of the cargo shall be taken by the Charterer or its Consignee.

 The bills of lading issued by the Globe Nova at Bombay and Kandla both incorporate the terms of the February 3, 1983 charter party between Globe Transport and Trading Company Ltd. and Willow Grove Shipping Co. Ltd. Besides setting forth the weight of the cargo as loaded on board, among other things the bills of lading state that the cargo is consigned "to order," that the "Freight [is] payable per Charter Party," and that "the contract of carriage evidenced by this bill of lading is between the shipper, consignee and/or owner of the cargo and the owner or demise charterer of the vessel . . . ." As per the charter party clause number eight, the freight was due and payable "ninety percent prepaid on telegraphic advice of signing Bills of Lading on the intake quality . . . ."

 The voyage of the Globe Nova from Kandla, India to its first discharge port at Felixstowe, England lasted approximately three weeks. Defendants offered no evidence regarding the nature or eventfulness of the Globe Nova's ocean transit. There was also little evidence as to the condition of the vessel other than that it had been built in 1964.

 On April 25, 1983 the Globe Nova arrived at Felixstowe, England where the receiver of the cargo, International Molasses, Ltd. ("Intermol"), operated a shore facility. Upon the ship's arrival at Felixstowe, an Intermol employee conducted a draft survey of its cargo. Roughly half of the molasses on board was then discharged through offshore pipelines into Intermol's Felixstowe shoretanks located approximately 1250 feet from where the vessel was docked. This discharge lasted about three days. After it was complete another draft survey was taken of the amount of molasses remaining on board.

 The vessel proceeded to a second Intermol facility at Hull, England where it arrived on April 27, 1983. Here the remaining molasses cargo on board was measured by draft survey, again by an Intermol employee. This molasses was then discharged into the Intermol shoretanks at Hull located about 1250 feet from the ship's docking point. The Hull discharge activities lasted about six days. Upon completion of this discharge a second draft survey of the ship's contents was made. The combined draft survey results at Felixstowe and Hull indicate with only a small amount of loss approximately the same figures arrived at by the combined draft surveys in Bombay and Kandla, India -- the surveys taken after the cargo had been loaded on board and that had formed the basis for the numbers stated in the two bills of lading. However, the general inaccuracy of the draft survey method per se is suggested by the 70 metric ton discrepancy between the draft survey estimate made after completion of discharge at Felixstowe on April 27, 1983, and that made by a somewhat different draft survey method prior to the commencement of discharge at Hull the same day.

 The discharge activities themselves at both Felixstowe and Hull were uneventful in that there was no leakage or spillage from the lines that led from the vessel to the Intermol receiving tanks on shore. Upon termination of discharge at the second port, Hull, an Intermol employee inspected the vessel's tanks and issued a dry tank certificate representing that the tanks were empty and well drained for discharge purposes. Accordingly, the court finds that all of the cargo which passed the vessel's permanent hose connection was received in the shore tanks.

 The Intermol shore tanks at both Felixstowe and Hull were equipped with precision molasses measuring devices called pneumercators. Pneumercators are used extensively in the molasses trade and had been used by Intermol since 1968. They operate by means of a delicately adjusted air chamber which communicates with a mercury gauge calibrated for the particular tank whose contents it is measuring. The pressure of the weight of molasses inside of the storage tank forces the mercury up the glass gauge tube. The mercury level is then read off on a Vernier Scale. Pneumercators, which may be used with shipboard tanks as well as on shore tanks, provide a more reliable and accurate method of measuring molasses than draft surveys can furnish. Draft surveys, though commonly used in cargo measurement, are comparatively crude in their technique and correspondingly give less accurate measures than pneumercators.

 The Intermol shore tank pneumercator readings at both Felixstowe and Hull, each taken immediately upon receipt of the molasses discharged from the Globe Nova, indicated a 253 metric ton shortfall in the amount of molasses received as compared to the 18,952 metric ton amount to which Intermol was entitled under the bills of lading issued at Bombay and Kandla. The pneumercator readings showed that 9,074 metric tons of molasses were delivered at Felixstowe and 9,625 metric tons at Hull, for a total delivery of only 18,699 metric tons. Intermol reports setting forth a total delivery to the shore tanks of only 18,699 metric tons ...


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