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February 21, 1990


The opinion of the court was delivered by: Sand, District Judge.


One might have thought, considering the volume of litigation concerning the subject, that all issues had been resolved relating to the question whether the $500 package limitation on liability arising under bills of lading and the Carriage of Goods by Sea Act ("COGSA") applies to a single container or to the units of goods shipped in that container. As Judge Haight observed in I.N.A. v. Texas, 1985 AMC 1358, 1361 (84 Civ. 1700 (CSH)), 1984 WL 1300 (not otherwise reported):

    Modern technology has triggered much litigation
  about the meaning of "package" under COGSA and
  ocean bills of lading. The statute, enacted in
  1936, limits the carrier's liability to $500 per
  "package" but does not define "package". Admiralty
  judges, lawyers and bill of lading draftsmen have
  found employment in filling the gap, or trying to.
  Containers, undreamt of in the thirties, "added a
  new dimension to the problem," Mitsui & Co., Ltd.
  v. American Export Lines, 1981 AMC 331, 343,
  636 F.2d 807, 816 (2nd Cir. 1981), by creating "another
  area of contention" Allied International American
  Eagle Trading Corp. v. S.S. Yang Ming, 1982 AMC
  820, 824, 672 F.2d 1055, 1058 (2nd Cir. 1982).
  Comprehensive reviews of the authorities are found
  in Yang Ming, supra, and Solar Turbines, Inc. v.
  M.V. Alva Maersk, 1984 AMC 2007, 584 F. Supp. 32
  (S.D.N.Y. 1983).

But as Judge Haight further noted, one question, not raised by the facts of the case before him, remained unanswered. Thus, he wrote (1985 AMC 1364, 1365):

    I am also entitled to consider Clause 10 of the
  bill of lading, quoted supra. In that provision of
  the contract, the parties undertake to provide
  when the container will be regarded as the COGSA
  "package." The first sentence of the clause
  provides, in substance, that when the container is
  stuffed by or on behalf of the shipper, the
  carrier's liability is limited to $500 with
  respect to the contents of the container: in other
  words, for limitation of liability purposes the
  container is the package. The clause secures to
  the shipper the option to declare a higher value
  on the face of the bill of lading, and to pay
  additional freight in consequence. Plaintiff does
  not suggest that this particular provision offends
  COGSA; nor do I see upon what basis such an
  argument could be made. Of course, I confine this
  part of the decision to the facts presently before
  me. The effect, if any, upon Clause 10 of a
  specific description on the face of the bill of
  lading of how many separate packages or units were
  stuffed in the container may wait for another day.
  (Emphasis added).

With this case, that other "day" has arrived.

The Bill of Lading

Defendant ocean carriers have moved for partial summary judgment declaring their liability under the bill of lading described below to be $500.

The face of the bill of lading is appended hereto as Appendix A and the reverse is appended as Appendix B.*fn*

Clause 11 of the Bill of Lading printed on the back of the bill (Appendix B) in miniscule type face reads:

  Clause 11: Package Limitation. Neither the carrier
  or the vessel shall in any event be or become
  liable for any loss or damage to or in connection
  with the transportation of goods in an amount
  exceeding U.S. § 500 per package, or in the case of
  goods not shipped in packages, per customary
  freight unit, unless the nature and value of such
  goods have been declared by the Shipper before
  shipment and inserted in this Bill of Lading (Box
  26) and the Shipper has paid the additional charges
  on such declared value (Box 23). Where container(s)
  is stuffed by shipper or on his behalf, and the
  container is sealed, the Carrier's liability will
  be limited to U.S. § 500 with respect to the
  contents of each container, except when the Shipper
  declares value on the face hereof (Box 23). The
  freight charged on sealed containers when no higher
  valuation is declared by the shipper is based on
  the value of U.S. § 500 per container. This clause
  shall also apply to the Carrier's servants and
  contractors (see Clause 6).

The container was packed by the shipper and padlocked for a house to house shipment. It is not disputed that the bill of lading was prepared by the defendants' agent. Plaintiff alleges that the 76 bales sustained water damage. The freight paid of $1,885 was based on a "lumpsum."

At oral argument, counsel for the shipper alleged that the freight damages would have been the same, i.e., the negotiated lumpsum amount, regardless of whether the bill of lading had indicated that there were 76 packages (bales) contained in a single container or one package (i.e., the container) containing 76 bales. However, an affidavit in support of the motion furnished by the shipping manager for Liner Agencies Ltd., which prepared the bill of lading, asserts that the carrier "would have charged a greater freight rate had the shipper declared its intentions to treat each of the bales in the container as a package, . . ." Affidavit of Joseph Osseiyaw, ¶ 13.

Plaintiff-shipper invokes the conclusive presumption that "the container is not the package where the bill of lading discloses the container's contents" unless clear and unambiguous language indicates agreement on the definition of "package." ...

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