United States District Court, Southern District of New York
April 13, 1990
SEGUROS "ILLIMANI" S.A., EMPRESA NACIONAL DE FUNDICIONES, DERBY Y CIA, INC. AND S.W. SHATTUCK CHEMICAL CO., PLAINTIFFS,
M/V POPI P, HER ENGINES, BOILERS, ETC., NIMIPET CORP., LINEAS NAVIERAS BOLIVIANAS, COMPANIA SUD AMERICANA DE VAPORES AND CHILEAN LINE, INC., DEFENDANTS. COMPANIA SUD AMERICANA DE VAPORES AND LINEAS NAVIERAS BOLIVIANAS, DEFENDANTS AND THIRD PARTY PLAINTIFFS, V. UNIVERSAL MARITIME SERVICE CORP., THIRD PARTY DEFENDANT.
The opinion of the court was delivered by: Milton Pollack, Senior District Judge.
DECISION and OPINION
Having heard and seen the witnesses and considered all
documentary evidence and having evaluated all of the facts and
circumstances herein, I decide and find as follows:
The Carriage of Goods by Sea Act (COGSA) 46 U.S.C.App. §
1300, et seq., applies to the shipment and the loss of the tin
ingots involved therefrom.
The shipment could not be mistaken to be other than a
shipment of 600 packages or bundles into which 8,996 ingots
were packaged. The bundles or packages, each consisting of 15
ingots (except one package of 11), were each separately bound
by steel straps. The two containers herein involved 67 packages
or bundles containing 1,005 ingots, packaged as mentioned, and
were shipped that way. The bills of lading and their content
must be read and understood in the light of the clear intent
that 600 bundles in total were involved which is supported by
the collateral evidence that the quantity references in the
bills of lading were intended to embrace packages or bundles
wrapping 15 ingots per package or bundle, and individual ingots
were not intended to be individual, separate packages.
The ingots were aboard the rail cars referred to in the
evidence; were initially stored in Warehouse No. 5 at Arica,
Chile; were packaged into 600 bundles or packages; were
delivered to and stored in steel strapped packaged or bundled
groups and placed in 18 containers; all bundles or packages
were separately strapped with steel bands around each bundle;
were all loaded on the Popi at Arica, Chile; remained intact
during its voyage to New York; were off-loaded from the ship
intact and placed intact in the custody and control of the
stevedore, Universal Maritime Services Corp.; that 67 packages
of ingots shipped and so off-loaded involving a total of 1,005
ingots were found to be missing; the container had been opened
and invaded without breaking the seals; the packages of ingots
were removed and not delivered to the consignees in New York as
a result of the fault of the stevedore. From the evidence
presented and the legitimate inferences therefrom, I find that
the plaintiffs and third-party plaintiffs have sustained the
burden of proof that the removal of the ingots occurred while
the containers were in the custody and control of the
stevedores. The evidence of the third-party defendant did not
satisfactorily or credibly meet or overcome the prima facie
proof of the third-party plaintiffs that the loss occurred
while the containers were in the possession or under the
control of the stevedores. The issues of credibility involved
with respect to the loss are resolved in favor of the
plaintiffs and third-party plaintiffs against the third-party
The claims against the ship, carriers and charterers fall
within the scope of this Court's admiralty jurisdiction.
See 28 U.S.C. § 1333(1).*fn1 However, any claim against
Universal Maritime arose while the cargo was on land and is
grounded on state law and is not within federal admiralty
jurisdiction. See, Roco Carriers Ltd. v. M/V Nurnberg Express,
899 F.2d 1292, 1294 (2d Cir. 1990). The validity of
jurisdiction over a third-party defendant is grounded in the
concept of pendent party jurisdiction. The Second Circuit has
recently reaffirmed the availability of pendent party
jurisdiction in admiralty cases even in light of the Supreme
Court's holding in Finley v. United States, ___ U.S. ___, 109
S.Ct. 2003, 104 L.Ed.2d 593 (1989).
In light of the broadly worded jurisdictional
grant over admiralty cases and the "strong
admiralty policy in favor of providing
efficient procedures for resolving maritime
disputes," In re Oil Spill, 699 F.2d  at 914
[(7th Cir. 1983)], we see no reason at this
juncture to depart from the established rule of
this Circuit that pendent party jurisdiction is
available in the unique area of admiralty.
Roco Carriers, at 1297.
The Carriage of Goods by Sea Act (COGSA), 46 U.S.C. App.
§§ 1300-1315, governs the rights of the parties while the cargo
is on the ship.
The plaintiffs argue that COGSA should not limit its recovery
in this case if the loss occurred before loading or after
Paragraph 2(a) of the bill of lading states:
If this Bill of Lading is issued exclusively for
the carriage of goods by sea the carrier shall be
responsible subject to the provisions of the
Carriage of Goods by Sea Act of the United States,
approved April 16, 1936 in case of a carriage of
goods from ports of the United States, or, in case
of a carriage from ports of Canada, subject to the
provisions of the Water Carriage of Goods Act of
Canada, approved August 1, 1936, and the said
provisions shall be deemed to be incorporated
herein. The provisions stated in the said Acts
shall also govern before the goods are loaded on
and after they are discharged from the ship,
however, restricted to the time when the goods are
in the actual custody of the carrier. The carrier
shall not be liable in any capacity whatsoever
while the goods are not in his actual custody.
Plaintiffs argue that the bill of lading only extends COGSA to
cover these periods in voyages from the United States.
When read in conjunction with COGSA, however, it is clear
that ¶ 2(a) extends coverage on all voyages. COGSA requires
bills of lading for voyages from the United States to contain a
statement expressly including COGSA's terms.*fn2 The first
sentence of ¶ 2(a) does exactly this. The second sentence then
states at what other times COGSA will apply. The plaintiffs'
argument that the first sentence modifies the second is not
persuasive. The second sentence states that COGSA "shall also
govern" before loading and after discharge. (Emphasis added).
It is an additional term, not one dependent on the sentence
The bills of lading also contain a so-called "Himalaya"
clause extending coverage to "servants, employees and agents of
the carrier as well as of such independent contractors
(including their servants, employees and agents) whose services
the carrier from time to time may engage in the operation of
the vessel or any other means of transportation including
loading, discharging and all services in connection herewith."
Stevedores are included in the term "independent contractor."
Whether a bill of lading extends limitations of
liability to stevedores depends on whether "the
clarity of the language used expresses such to be
the understanding of the contracting parties."
Robert C. Herd & Co. v. Krawill Machinery Corp.,
359 U.S.  at 305 [79 S.Ct. 766, 771, 3 L.Ed.2d
820 (1959)] . . . Two circuits have recently held
that a bill of lading mentioning independent
contractors clearly includes stevedores. Bernard
Screen Printing Corp. v. Meyer Line, 464 F.2d 934,
936 n. 1 (2d Cir. 1972), cert. denied, 410 U.S. 910
[93 S.Ct. 966, 35 L.Ed.2d 272] . . . (1973);
Seacrest Machine Corp. v. S.S. Tiber, 450 F.2d 285,
287 (5th Cir. 1971). The language of the district
court in Bernard Screen is instructive:
To exclude "stevedores," who are independent
contractors, from the scope of the more
inclusive term would, in effect, be holding that
parties by using
the more inclusive term had accomplished the
328 F. Supp.  at 290.
Tessler Bros. (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438,
446 (9th Cir. 1974).
Plaintiffs also make the claim that even if COGSA was
extended by the bills of lading, the limitation is invalid
under state law. Although plaintiffs are correct that the
extension of COGSA is valid only as a contract term and not of
its own force as a statute, Colgate Palmolive Co. v. S/S Dart
Canada, 724 F.2d 313, 315-16 (2d Cir. 1983) ("Since state law
governs, provisions of COGSA incorporated by contract can be
valid only insofar as they do not conflict with applicable
state law."), cert. denied, sub nom., Global Terminal &
Container Svces., Inc. v. Colgate Palmolive Co., 466 U.S. 963,
104 S.Ct. 2181, 80 L.Ed.2d 562 (1984), plaintiffs are in error
when they state that Colgate Palmolive held such provisions
invalid in New York. In fact, Colgate Palmolive held such
provisions invalid under New Jersey law when conversion takes
place. The port facilities in this case are located in New York
and, in New York, the $500 limitation is valid for bailees in
negligence cases.*fn3 See, Leather's Best, Inc. v. Tidewater
Terminal, Inc., 346 F. Supp. 962, 967-68 (E.D.N.Y. 1972).
Section 4(5) of COGSA limits the liability of the carrier to
a maximum of:
$500 per package lawful money of the United
States, or in case of goods not shipped in
packages, per customary freight unit, or the
equivalent of that sum in other currency, unless
the nature and value of such goods have been
declared by the shipper before shipment and
inserted in the bill of lading.
46 U.S.C. App. § 1304(5).
There are three alternatives here for the definition of
"package:" 1) each container is a package; 2) each ingot is a
package; or 3) each bundle is a package. If no appropriate
package exists, then recovery will be based on the customary
freight unit. See, Mitsui & Co., Ltd. v. American Export Lines,
Inc., 636 F.2d 807, 822 (2d Cir. 1981) ("If the ingots were not
shipped in packages . . . the $500 limit would apply `per
customary freight unit'.").
It is clear that the container is not the appropriate
"package" in this case.
[S]ince the prevalent large metal shipping
container furnished by a carrier is "functionally
part of the ship," Leather's Best, Inc. v. S.S.
Mormaclynx, 451 F.2d 800, 815 (2d Cir. 1971), and
classification of it as a "package" would violate
the purpose of § 4(5) by permitting the carrier to
limit its liability unduly, we have refused to hold
a shipping container to be a COGSA package, absent
a clear agreement between the parties to that
effect, at least so long as "its contents and the
number of packages or units are disclosed." Mitsui
& Co., Ltd. v. American Export Lines, Inc. . .
. 636 F.2d at 821; accord, Smythgreyhound v. M/V
"Eurygenes," 666 F.2d 746, 753 (2d Cir. 1981).
Binladen BSB Landscaping v. M.V. "Nedlloyd Rotterdam",
759 F.2d 1006
, 1012-13 (2d Cir.) cert. denied, 474 U.S. 902
, 106 S.Ct.
229, 88 L.Ed.2d 229 (1985). Although the number is in dispute,
it is clear that the "contents and the number of packages or
units" was disclosed and the parties did not make a "clear
agreement" among themselves.
The number of "packages" is also not a difficult question.
The Binladen case sets out the analysis to be followed:
At the outset we are governed by some basic
principles that have been judicially developed for
resolution of issues of the type before us. The
first of these, rather obvious, is that the
touchstone of our analysis should be the
contractual agreement between the parties, as set
forth in the bill of lading. See Allied
International American Eagle Trading Corp.
v. S.S. "Yang Ming" . . . 672 F.2d  at 1061
[(2d Cir. 1982)] . . . Entries on the bill of
lading are thus important evidence of the intent of
the parties to the shipping contract, see Nichimen
Co. v. M. V. Farland, 462 F.2d 319, 335 (2d Cir.
1972); Standard Electrica, S.A. v. Hamburg
375 F.2d 943, 946 (2d Cir.), cert. denied,
389 U.S. 831 [88 S.Ct. 97, 19 L.Ed.2d 89] . . . (1967), and
the declaration on the bill may bind a shipper even
when the contents of the shipment diverge from the
description on the bill. . . . Secondly, no
controlling definition of the term "package" has
been judicially developed other than the
requirement that it be the result of some
"preparation [of the cargo item] for transportation
. . . which facilitates handling, but which does
not necessarily conceal or completely enclose the
goods." Aluminios Pozuelo Ltd. v. S.S. Navigator .
. . 407 F.2d  at 155 [(2d Cir. 1968)].
759 F.2d at 1012.
All the parties in this dispute have put forward
arguments on what effect the number "600" in the
column titled "number of pkgs." on the bills of
lading should have and what effect the number of
"bundles" typed on the bottom of the bills should
have. The plaintiffs argue that the 600 refers to
the individual ingots. They refer to three of the
bills of lading which through happenstance use the
figure "600" in referring to the ingots and say that
"600" covers only the number of ingots thereon. In
fact, 600 happens also to be the total number of
bundles involved in the 16 bills of lading. The
defendants and third party defendants argue that the
faces of the bills of lading covering the entire
shipment show that the individual ingots were
bundled and strapped in bands covering 15 ingots to
However, while on their faces the three selected
bills of lading out of the entire group of 16 of
them might be ambiguous, when considered in
conjunction with all shipping documents taken
together it becomes abundantly clear that the total
number of ingots shipped were packaged in 600
bundles and were not considered individual packages.
The appropriate limitation of liability is thus
$500 per package X the 67 bundles which were lost.
3. Entity Liable for the Loss
Plaintiffs have made out a prima facie case under
COGSA by providing the Court with the bills of
lading for the lost ingots. See, e.g., Lekas & Drivas, Inc. v.
Goulandris, 306 F.2d 426, 429 (2d Cir. 1962):
Under the Carriage of Goods by Sea Act, 46 U.S.C. § 1301[sic]
et. seq., here applicable, a shipper
makes out a prima facie case by proving that his
goods were delivered to the carrier in good
condition and were outturned damaged or not at all;
the burden then falls upon the carrier to bring
itself within an excepted clause or to prove it
exercised due diligence to avoid and prevent the
and 46 U.S.C. App. § 1303(4), COGSA § 3(4):
. . a bill of lading shall be prima facie
evidence of the receipt of the cargo by the
carrier of the goods as therein described . . .
None of the exceptions of 46 U.S.C. App. § 1304(2) are
applicable in this case nor have the defendants presented any
evidence tending to rebut plaintiffs' prima facie case.
The fact that the goods were loaded onto the ship in Arica
was amply documented by both live witnesses at trial and by
numerous documents signed by the stevedores in Arica.*fn4
Cf. Morton v. Berman Enterprises, Inc., 669 F.2d 89 (2d Cir.
1982) (Court distinguishes Stein Hall & Co. v. S.S. Concordia
Viking, 494 F.2d 287 (2d Cir. 1974) on grounds that proof of
loading was lacking.)
The shipment was turned over by the ship to its stevedores.
Universal Maritime, as stevedore, "gave an implied warranty of
workmanlike service competently to perform the carrier's
statutory and contractual
obligations for the discharge of cargo." Stein Hall & Co. v.
S.S. Concordia Viking, 494 F.2d 287, 290 (2d Cir. 1974). This
warranty was breached when the contents of the containers were
negligently lost during the stevedores' control and handling of
the containers. See, e.g., Eutectic Corporation v. M/V
Gudmundra, 367 F. Supp. 681, 686 (S.D.N.Y. 1973) ("Failure to
account for the missing [items] is a breach of such warranty of
workmanlike service. David Crystal Inc. v. Cunard S.S. Co. . .
. 339 F.2d  at 299 [(2d Cir. 1964)] . . . Liability must
be based on the ordinary tort standard of negligence.").
Universal Maritime did not give any credible explanation of
what occurred to the cargo in its control. Universal Maritime's
failure to give an explanation gives rise to a presumption that
it was negligent. See, Stein Hall, 494 F.2d at 290.
As bailee of an unexplained lost cargo, Universal Maritime is
liable for damages. See Id. at 293:
In David Crystal, supra [339 F.2d 295 (2d Cir.
1964) ], this court said, "the bailee is in a
better position than the bailor to establish
procedures to minimize the risk of misdeliveries
and to insure against the few misdeliveries that
will inevitably occur despite the most careful
precautions." 339 F.2d at 298. This applies equally
well to mysterious disappearances of cargo in the
custody of the stevedore/terminal operator.
4. Rule 14
Plaintiff asserted an admiralty or maritime claim within the
meaning of Rule 9(h) and the defendants, as third party
plaintiffs, brought in Universal Maritime as a third party
defendant under Rule 14(c), Fed.R.Civ.P.
The action then proceeded under the Rule as if the plaintiffs
had commenced it against the third-party defendant as well as
the third-party plaintiffs.
Accordingly, judgment will be entered against the third-party
defendant in favor of the plaintiffs and judgment of dismissal
will be granted in favor of the defendants on the claim of
plaintiffs against defendants.
Additional Findings of Fact
1. In November 1985, Empresa Nacional de Fundiciones (ENAF)
shipped 8,996 tin ingots by rail from La Paz, Bolivia to Arica,
2. At Arica, Empresa Portuarias de Chile (EMPORCHI), the port
authority for warehouses, equipment and labor at Arica,
discharged the 8,996 tin ingots from the rail cars, tallied
them, and stored them in EMPORCHI Warehouse No. 5 at Arica,
3. At the request of the CSAV and LINABOL's agents,
Sudamericana Agencias Aereo y Maritimo (SAAM), and under the
direction, supervision and control of EMPORCHI, the 8,996 tin
ingots, in 600 bundles or packages, were stuffed into 18
containers on November 27, 1985 under the surveillance of the
Bolivian Customs Authority, Administracion Autonoma de
Almacenes Aduaneros de Bolivia (AADAA). With the exception of
one bundle containing 11 ingots, all the bundles contained 15
ingots. Each bundle of tin ingots was strapped with steel
4. The 18 containers were loaded onto the POPI P at Arica,
Chile, with 12 containers stowed below deck in the Lower Hold
and Tween Deck of Hatch No. 2, another four containers stowed
in the Tween Deck, forward of Hatch No. 3, and two containers
stowed on the deck of Hatch No. 2, starboard and carried to New
5. 16 bills of lading, dated November 28, 1985, numbered 1
through 16, were issued for the 8,996 tin ingots.
6. Plaintiff, Derby Y Cia, Inc., 1221 Avenue of the Americas,
New York, N Y 10020, was the consignee and notify party in the
bills of lading numbered 1 through 8, all dated November 28,
1985, for carriage from Arica, Chile to New York in the M/V
7. Plaintiff, S.W. Shattuck Chemical Company, P.O. Box 2526,
Grand Central Station, New York, NY, was the notify party in
the bills of lading numbered 9
through 16, all dated November 28, 1985, for carriage from
Arica, Chile to New York in the M/V POPI P.
8. Plaintiff, Seguros "Illimani" S.A. (SEGUROS), Calle
Loayza, Casilla 133, Edif. Mcal. de Ayacucho, Piso 10, La Paz,
Bolivia, insured the 8,996 tin ingots described in the relevant
16 bills of lading.
9. Defendant, Nimipet Corp., c/o Petzetakis, Menelaos, S.A.,
Kifissou 103, Athens, Greece, was and is (1) a foreign
corporation organized and existing under and by virtue of the
laws of Greece, and (2) the owner and operator of the M/V POPI
P which was under charter to CSAV in November/December 1985.
10. Defendant, Lineas Navieras Bolivianas (LINABOL), Edificio
Esperanza, Avenida Mariscal Santa Cruz, 6 Piso, La Paz,
Bolivia, was and is (1) a foreign corporation organized and
existing under and by virtue of the laws of Bolivia engaged in
the transportation of goods, inter alia, from ports on the west
coast of South America to ports on the east coast of the United
States, (2) was the subcharterer, the space charterer, of the
M/V POPI P at the relevant time, and (3) issued the 16 bills of
lading for 8,996 ingots of tin.
11. Defendant, Compania Sud Americana De Vapores (CSAV),
Calle Blanco 895, Casilla 49-V, Valparaiso, Chile, was and is
(1) a foreign corporation organized and existing under and by
virtue of the laws of Chile engaged in the transportation of
cargo, between, inter alia, p orts on the west coast of South
America and ports on the east coast of the United States, and
(2) was the time charterer of the M/V POPI P at the relevant
12. At the times mentioned in the complaint, CSAV was the
charterer of the POPI P and as disponent owner of the POPI P,
it space chartered the ship to LINABOL.
13. Defendant, Chilean Line, Inc., a Delaware Corporation,
One World Trade Center, Suite 3861, New York, N Y 10048, was and
is the agent of LINABOL and CSAV as disclosed principals.
14. Third-party defendant Universal Maritime Service Corp.,
One Broadway, New York, N Y 10004, was and is a New York
corporation that provided terminal stevedoring services for
defendants relating to the tin ingots at New York.
15. U.M.S. operates a marine terminal known as Red Hook
Marine Terminal, Brooklyn, NY.
16. The POPI P sailed from Arica on or about November 28,
1985, arriving at the Port of New York at Red Hook Terminal on
or about December 13, 1985.
17. The 8,996 tin ingots described in the 16 bills of lading
were manifested in the United States Customs Cargo Declaration
for the POPI P entered at the Customs House in New York in
18. On discharge at Red Hook Terminal, all 18 containers
moving under Arica/New York Bills of Lading 1-16 were delivered
into the possession and control of the terminal operator and
third-party defendant, U.M.S.
19. On December 16, 1985, the containers with the original
seals intact were taken to the stripping area at the north end
of Pier 11 in the Red Hook Terminal for stripping.
20. In the presence of security guards, checkers, surveyors
and representatives of the third-party plaintiff and U.M.S.,
the original intact seals on containers CTIU 289674-5 and CTIU
196134-2 were cut, the container doors were opened and the
containers were found to be empty.
21. 720 tin ingots under bills of lading numbers 1 and 3, and
285 tin ingots under bill of lading number 13 were not
delivered to the consignees at New York.
22. The amount that Seguros Illimani paid for the 1,005 tin
ingots that were not delivered to the consignees at New York on
December 13, 1985, was $462,104.10.
23. Derby & Co., Inc. was the holder of bills of lading
numbers 1 through 8. S.W. Shattuck Chemical Company was the
holder of bills of lading numbers 9 through 16. Shattuck paid
Chilean Line Inc. freight of $23,290.18. Derby paid Chilean
Line freight of $23,465.36. R. Markey & Sons,
Inc. received as fees for weighing at Red Hook Terminal (a)
3,911 ingots at 307,116 pounds net, $1,807.00 from Shattuck,
and (b) 3,780 ingots at 277,642 pounds net, $1,638.00 from
Derby. Shattuck paid ENAF a balance of $142,545.06 (i.e.,
$1,148,613.84, less ocean freight of $23,290.18, less weighing
costs of $1,807, less provisional payment of $974,999.73, and
less interest on provisional payment of $5,971.87). Derby paid
ENAF a balance of $24,894.90 (i.e., $1,038,381.08 less ocean
freight of $23,465.36, less weighing costs of $1,638, less
provisional payment of $982,365.83, less interest on
provisional payment of $6,016.99).
Plaintiffs are entitled to recover from the third-party
defendant the amount of $33,500. ($500 per package X 67 bundles
lost), with interest from December 16, 1985 and costs to be
taxed by the Clerk; and defendants are entitled to dismissal of
the complaint, with costs to be paid by the third-party
defendant, to be taxed by the Clerk.
The foregoing shall constitute the findings of fact and
conclusions of law as required by Rule 52(a) of the Federal
Rules of Civil Procedure.