The opinion of the court was delivered by: Robert P. Patterson, Jr., District Judge.
This case raises the recurring question of what is a
"package" for purposes of § 4(5) of the Carriage of Goods by
Sea Act ("COGSA"), 46 U.S.C.A.App. § 1304(5), which limits the
liability of a carrier to $500 per package unless the shipper
declares on the bill of lading the value of the goods and
pays additional freight.*fn1 The issue presented is whether
the container in which the shipper's goods are shipped is the
COGSA package, such that the carrier's liability is limited to
$500 total, or whether each of 150 items packed in the
container are COGSA packages for the purpose of the $500
limitation. The parties have submitted to the Court informal
memoranda of law on the issue.
A brief review of the general legal principles in this area
is necessary before turning to the specific facts of this case.
The meaning of the word "package", which has remained undefined
by Congress since COGSA was enacted in 1936, has troubled the
courts for many years, especially as new methods of shipping
goods have been developed. Binladen BSB Landscaping v. M. V.
Nedlloyd Rotterdam, 759 F.2d 1006, 1011-12 (2d Cir.), cert.
denied, 474 U.S. 902, 106 S.Ct. 229, 88 L.Ed.2d 229 (1985). One
of these new methods is the practice of placing cargo in large
metal shipping containers, which the Second Circuit has
described as "functionally part of the ship." Leather's Best,
Inc. v. S.S. Mormaclynx, 451 F.2d 800, 815 (2d Cir. 1971).
The Second Circuit has made clear that "when a bill of lading
discloses not only the number of containers but the number of
cartons within them, the cartons, not the containers, will be
treated as COGSA packages." Binladen, 759 F.2d at 1013, citing
Mitsui & Co. v. American Export Lines, Inc., 636 F.2d 807, 821
(2d Cir. 1981). See also Leather's Best, 451 F.2d at 815-16;
Allied International American Eagle Trading Corp. v. S.S. Yang
Ming, 672 F.2d 1055 (2d Cir. 1982). On the other hand, "if the
bill of lading lists the container as a package and fails to
describe objects that can reasonably be understood from the
description as being packages, the container must be deemed a
COGSA package." Binladen, 759 F.2d at 1013. Thus, under the
current interpretation of the statute, a shipper who wishes to
protect itself may do so "by stating in plain terms on the bill
of lading the number of COGSA packages being shipped."
Binladen, 759 F.2d at 1016.
With that background, we may turn to the facts of the present
case. This action is brought by St. Paul Fire & Marine
Insurance Company as subrogee of Concept Cargo, Inc. ("Concept"
or "plaintiff") for damages arising out of a shipment by vessel
from Florida to the Dominican Republic. Concept is a non-vessel
operating common carrier (NVOCC). As is customary for NVOCCs,
Concept issued ocean bills of lading for various customers and
then consolidated the cargo in one container belonging to the
carrier, in this case Sea-Land Service, Inc. ("Sea-Land").
After the cargo had been consolidated, Concept delivered the
container to Sea-Land, which in turn issued its own bill of
lading, dated December 21, 1986, for the entire shipment.
The particulars of the cargo, as provided by Concept, are
described on the face of the Sea-Land bill of lading as
MKS & NOS/ NO OF PKGS DESCRIPTION OF PACKAGES
CONTAINER NOS AND GOODS
CONTAINER NO: 1 40 FT CONT. NO: SEAU 465911-3,
SEAU-465911-3 SEAL NO: 0000613, S.T.C. 150 PKGS:
S.T.C. commonly means "said to contain" and F.A.K. commonly
means "Freight All Kinds."
The container was duly shipped from Port Everglades, Florida
to Santo Domingo, Dominican Republic on the vessel Vermillion
Bay. Upon delivery by Sea-Land at the port, the container seal
was missing and, when the customs agent opened the container,
it was observed that certain cargo had been stolen. Concept's
insurer paid the claims of Concept's consignees and
subsequently brought this action as subrogee of Concept against
Sea-Land to recover those amounts it had paid on Concept's
On these facts, there would be little doubt that Sea-Land's
liability would be $500 for each of the 150 packages, rather
than $500 total for the container. Concept took the step the
courts have required in order to be protected from the severe
limitation of recovery that would result if the container were
considered the COGSA package: it stated in plain terms on the
face of the bill of lading the number of packages in the
container, thereby notifying Sea-Land of its potential
liability. See, e.g., Mitsui, 636 F.2d at 821.
The fact that "1" appears in the column designated "Number of
Pkgs" does not alter this conclusion as defendant argues. While
this designation is important, see Standard Electrica, S.A. v.
Hamburg Sudamerikanische Dampfschifffahrts-Gesellschaft,
375 F.2d 943 (2d Cir.), cert. denied, 389 U.S. 831, 88 S.Ct. 97, 19
L.Ed.2d 89 (1967); Nichimen Co. v. M.V. Farland, 462 F.2d 319
(2d Cir. 1972), in this case it carries little weight since
from the face of the document it is clear that the column lists
the number of containers, the contents of which are described
in the next column as "150 pkgs F.A.K." To rule otherwise would
place undue emphasis on a technical aspect of the document at
the expense of the clear import of the document as a whole.
Furthermore, courts that have considered similar bills of
lading have not regarded the "No. of Pkgs" column to be
dispositive where, as here, the adjacent column describes the
contents of the container. In Binladen, for example, the number
of packages was listed as "1", which in actuality indicated the
number of containers, but the court did not rely on that
designation in its ruling that the container was the COGSA
package. The court held that the container was a COGSA package
because it "list[ed] the container as a package and fail[ed] to
describe objects that can reasonably be understood from the
description as being packages." 759 F.2d at 1015 (emphasis
added). Accordingly, the designation of the container as a
package alone is insufficient.
Sea-Land has made the resolution of this case more difficult,
however, by including in the boilerplate language on the
reverse side of its bill of lading a purported definition of
the word "package." The reverse side of the bill of lading
contains 22 numbered paragraphs setting forth various terms of
the contract between the parties, including the following:
17. VALUATION. In the event of loss, damage or
delay to or in connection with goods exceeding in
actual value the equivalent of $500 lawful money of
the United States, per package . . . the value of
the goods shall be deemed to be $500 per package or
unit, unless the nature and higher value of goods
have been declared by the shipper herein and extra
charges paid as provided in Carrier's tariff. . . .
The word "package" shall include a container used
to ship household goods or Freight All Kinds
shipped under lump sum tariff. . . . (emphasis
Defendant contends that this definition is binding on Concept
and limits its liability in this case to $500 for the
container. Plaintiff argues that the provision is invalid
because it contravenes the provisions of COGSA. The issue to be
decided, then, is whether a NVOCC who has complied with the
requirement of describing the contents of the container such
that under the Second Circuit's interpretation of COGSA ...