The opinion of the court was delivered by: Newman, Senior Judge of the United States Court of International Trade, sitting as a United States District Court Judge by designation:
OPINION, FINDINGS OF FACT AND CONCLUSIONS OF LAW
Blommer Chocolate Company ("Blommer"), the purchaser and
consignee of a double-bagged sugar cargo transported on board the
M/V NOSIRA SHARON from Antwerp, Belgium to Toledo, Ohio in April
and early May of 1987, and the Insurance Company of North America
("INA"), Blommer's insurer, bring this action for damages
under the Carriage of Goods by Sea Act ("COGSA"), 46 U.S.C.App. §
1300 (1936), et seq. Plaintiffs allege improper care and
custody of cargo, negligence and vessel unseaworthiness against
Nosira Sharon Ltd., the vessel owner ("Nosira"), and Fednav Ltd.,
the voyage-charterer ("Fednav"), in personam, and the M/V
NOSIRA SHARON, in rem.
Judgment is demanded in the amount of $50,000.00, plus interest
and costs flowing out of three distinct categories of damages:
(1) short-delivery of approximately 119,992 lbs. upon discharge
in Toledo; (2) spillage of approximately 15,460 lbs. from
punctured bags which leaked sugar during the unloading process;
and (3) contamination of 165 bags or approximately 353,430 lbs.
inasmuch as during offloading grain and other foreign matter was
found between the sleeve separating the inner and outer bags.
Responding, defendants proffer objections concerning the
existence of in personam jurisdiction over Fednav, and
regarding the issue of privity of contract between Nosira and
Blommer. Defendants make no objections to the existence of a
maritime claim against the vessel, in rem.
Notwithstanding, defendants deny COGSA liability and seek
dismissal of the instant complaint. In support of their request
for dismissal of plaintiffs' claims, defendants initially focus
upon plaintiffs' purported failure to sustain their burden of
proving a shortage upon discharge. Next, defendants point to
Blommer's improper method of stowage which allegedly became its
responsibility by virtue of language in the charter party (see
46 U.S.C.App. § 1304(2)(i)). Last, defendants raise the theory
that damages occured as a consequence of Blommers' insufficiency
of packing (see 46 U.S.C.App. § 1304(2)(n)), coupled with
failure to mitigate damages.
The following constitutes the Findings of Fact and Conclusions
of Law of this court in accordance with Rule 52(a) Fed.R.Civ.P.:
Prior to addressing the merits of the action sub judice the
court rules on the admissibility of a large portion of disputed
exhibits offered at trial by plaintiffs regarding which decision
was reserved pending review.
At the trial of this matter on April 16 and 17, 1991*fn1
plaintiffs offered 75 exhibits, of which 46 were objected to by
defendants. The determination respecting the admissibility of
plaintiffs' submissions, however, required the court's extensive
review of several lengthy deposition transcripts in conjunction
with the disputed exhibits. Consequently decision was reserved,
without objections, to provide the opportunity for a thorough
digest of the relevant deposition transcripts.
The following evidentiary rulings constitute the court's
determination as to the 46 disputed exhibits offered by
plaintiffs during the two day trial of this matter regarding
which the court reserved decision pending further evaluation:
Admitted — Exhibits 2, 4, 10-13(a), 14(b), 17(b), 18(a) & (b),
21, 22(a) & (b), 23, 26-28, 32, 34-48, 50, 52-54, 60-64;
Rejected — Exhibits 22(c) & (d), 24, 56.
Defendants seek dismissal of the complaint against Fednav,
arguing that plaintiffs' failure to directly serve that defendant
with a copy of the summons and complaint results in the court's
lack of in personam jurisdiction over Fednav. Plaintiffs reply
that Lamorte Burns & Co. Inc. ("Lamorte Burns") was acting as the
"authorized agent of charterer, Fednav Ltd., and vessel and
vessel owner in this matter, . . . [and by] serving the Summons
and Complaint, which included Fednav Ltd. in the caption, on
Lamorte Burns & Company as agents of Nosira Sharon, Ltd., Fednav,
Ltd. was given the notice as due process requires" (pltfs'
post-trial brief at 28).
Defendants' argument has merit. Under Rule 4(d)(3),
Fed.R.Civ.P., service of process upon a domestic or foreign
corporation shall be made as follows:
[B]y delivering a copy of the summons and of the
complaint to an officer, a managing or general agent,
or to any other agent authorized by appointment or by
law to receive service of process, and, if the agent
is one authorized by statute to receive service and
the statute so requires, by also mailing a copy to
Here, according to Rule 4(d)(3), Fednav, a foreign corporation
organized and existing under the laws of Canada, was never
properly served with a copy of the summons and complaint.
Nevertheless, plaintiffs maintain that Lamorte Burns "was acting
as the agents for Fednav Ltd. and other defendant [sic] in all
matters concerning this claim. Authorization is clear from the
deposition of Michael Minogue . . . and plaintiffs' exhibits 35
through 45" (pltfs' post-trial brief at 29). But contrary to
plaintiffs' assertions, neither the exhibits nor Minogue's
testimony establish that Lamorte Burns qualifies as a "managing
or general agent," or that it was "authorized by appointment or
by law [on behalf of Fednav] to receive service of process."
True, Minogue's testimony demonstrated that he was a claims
adjuster (Minogue depos. at 95); that, inter alios, Fednav
authorized Lamorte Burns' representation (Id. at 21); and, that
Lamorte Burns arranged for the making of surveys regarding
certain portions of the cargo (Id. at 17). Other evidence also
indicates that Lamorte Burns was only retained to adjust the
sugar claim directly with cargo interests, with authorization to
grant extensions of suit time (pltfs' exh. 35-41, 45).
Equally true, however, under these facts Fednav's retention of
Lamorte Burns to represent Fednav along with other vessel
interests in adjusting this claim falls far short of qualifying
Lamorte Burns as a "managing or general agent." Usually, the
managing or general agent for purposes of service of process is
that person or entity undertaking those kinds of activities
within the forum state which would justify the exercise of
personal jurisdiction over the principal. Grammenos v. Lemos,
457 F.2d 1067, 1072 (2d Cir. 1972); Bomze v. Nardis Sportswear,
Inc., 165 F.2d 33, 37 (2d Cir. 1948).
More specifically, the activities must amount to a "regular and
continuous course of substantial business . . . [calling] for the
exercise of discretion by [the agent] . . . in carrying out its
duties [on Charterer's behalf] . . . suggest[ing] a certain
identity and closeness between the two entities." Koupetoris v.
Konkar Intrepid Corp., 535 F.2d 1392, 1395-96 (2d Cir. 1976).
Under these criteria, it would be completely improper to depict
Lamorte Burns' activities on Fednav's behalf as indicative of the
types of qualities characterizing a "managing or general" agent.
Furthermore, the record is silent concerning any specific
appointment by Fednav which authorized Lamorte Burns to accept
service of process or, more importantly, any such acceptance of
service by Lamorte Burns on Fednav's behalf. To reiterate,
plaintiffs contend that the presence of Fednav's name and address
within the caption of the summons combined with the fact that
proof of service upon Lamorte Burns (Fednav's purported agent)
was established, provided Fednav with proper notice and satisfied
the requirements of due process.
Accordingly after further evaluation, the court reverses its
trial ruling denying defendants' motion and now dismisses the
complaint as to Fednav.
Much less persuasive is defendants' next assertion that privity
of contract between Nosira and Blommer does not exist. Defendants
premise their argument on the belief that the record lacks
evidence showing Nosira to be a party subject to the bill of
lading (defts' post-trial brief at 8).
The pertinent rule of law establishes that a vessel owner
becomes a party to the bill of lading when the vessel owner,
through the master, grants authority to the charterer or to
charterer's agent to sign on the vessel owner's behalf. This
characterizes the shipowner as a "carrier," subject to in
personam liability within the scope of COGSA. See Demsey &
Assoc., Inc. v. S.S. Sea Star, 461 F.2d 1009, 1015 (2d Cir.
1972); Gans S.S. Line v. Wilhelmsen, 275 Fed. 254, 262 (2d Cir.
1921) ("The Themis"). If, on the other hand, the bill of lading
is signed by the master, but without the shipowner's
authorization, the vessel owner may not be personally bound by
COGSA. Demsey & Assoc., Inc., 461 F.2d at 1015.
Defendants obtain no support from the above stated rule.
Nosira's authority over the master of the M/V NOSIRA SHARON was
never compromised because Nosira never divested itself of all
control and command of the vessel under a "bareboat" or "demise"
charter, and only a true demise charter releases a vessel owner
of legal liability. See Guzman v. Pichirilo, 369 U.S. 698,
699-700, 82 S.Ct. 1095, 1096-97, 8 L.Ed.2d 205 (1962); Avin
Int'l Bunkers Supply, S.A. v. Wellrun Management, 607 F. Supp. 738
(S.D.N.Y. 1985). Indeed, Nosira stipulated at trial that the
alleged "demisee," Caribbean Trailer Ships, is a wholly owned
subsidiary of Nosira (Tr. 132); there is thus little, if any,
doubt that Nosira retained significant control, command and
possession of the vessel.
While the issue of control and command of the vessel is
substantially reinforced by defendants' stipulation, the
determination of whether or not Nosira successfully insulated
itself from liability by means of its agreement with Caribbean
Trailer Ships is a question of fact, ultimately resolved by
looking to the language of the charter party itself.
At first glance, the charter party between Nosira and Caribbean
Trailer Ships Limited ("Caribbean Trailer Ships") appears to be a
demise charter (defts' exh. O). For example, there is the
prominent pre-printed heading stating in relevant part "Standard
Bareboat Charter," and the presence of the following language
"[t]he vessel shall during the charter period be in the full
possession and at the absolute disposal for all purposes of the
Charterers and under their complete control in every respect."
Despite the seeming force of such language, however, the
agreement as a whole, offered by Nosira as proof of a demise
charter between Nosira and Caribbean Trailer Ships, fails to
sustain Nosira's required burden of demonstrating its complete
divestiture of control or possession. See Guzman, 369 U.S. at
700, 82 S.Ct. at 1096; Avin Int'l Bunkers Supply, 607 F. Supp.
at 741. To begin with, other highly important terms in the
charter, viz, "time for delivery" and "charter hire" were left
"to be agreed," and the term "charter period" was, at the very
least, unclear since it was terminable at any time, without
cause, by either party with merely one month's notice. Next, a
significant proportion of other clauses were completely redacted
or otherwise altered, thereby rendering extremely suspect the
purported "standard bareboat" nature of this charter.
Both factors, the vague or incomplete clauses, and the numerous
redactions or alterations of other language, contribute to the
court's finding that the agreement between Nosira and Caribbean
Trailer Ships was not a "true" demise charter, and hence, Nosira
could be subject to in personam liability assuming the master
authorized the signing of the bill of lading.
It is clear that the remaining link was accordingly
established. An express grant of authority from the master to
Cobelfret N.V., Fednav's European general agents ("Cobelfret"),
to act as agent for the master and sign the bill of lading on the
master's behalf was plainly admitted as part of defendants'
response to question 1(a) of plaintiffs' October 1989 request for
admissions (pltfs' exh. 71). Defendants are now conclusively
bound by that admission. See Rule 36(b) Fed.R.Civ.P.
More, language appearing on the face of the bill of lading
itself supports this admission. Imprinted above Cobelfret's
signature is the following statement:
Compagnia Belge d'Affrettementa n.v.
Signed as per authority of the Master
In sum: Since the record contains sufficient evidence that
Nosira, through the master, expressly authorized Cobelfret,
Fednav's agent, to sign the bill of lading, plaintiffs' claim
against Nosira remains alive.
The court turns to the controversy surrounding the damage to
the subject cargo of bagged sugar. On April 16, 1986 Blommer
contracted with E.D. & F. Man (Sugar) Ltd. ("E.D. & F. Man") for
the purchase of 8,000 metric tons of sugar (pltfs' exh. 1). In
furtherance of the sugar contract during March, 1987, a shipment
was readied approximating 4,000 metric tons of sugar packed
within 4,120 double-lined bags, one inner and one outer, with a
tied loop at the top into which a hook could be inserted to
facilitate manipulation of the stow. The cargo was purchased for
$921,000 under a letter of credit issued from Continental
Illinois National Bank and Trust Company of Chicago ("Continental
Bank"), and drawn upon by Blommer on April 16, 1987 (pltfs' exh.
Blommer arranged for transport of the bagged sugar to Toledo by
entering into a voyage-charter with Fedcom ("Fedcom/Blommer
charter party"), a division of Fednav, whereby Blommer obtained
space onboard the M/V NOSIRA SHARON. Fednav had previously
time-chartered the M/V NOSIRA SHARON from Forestships
International Ltd. ("Forestships"), which was itself a
time-charterer pursuant to a charter with Caribbean Trailer
Ships, the wholly owned subsidiary of Nosira, the vessel owner.
Between March 30 and April 3 stevedores retained by Blommer,
but under the master's supervision, loaded holds 2 and 6 of the
M/V NOSIRA SHARON with the 4,120 bags of sugar (pltfs' exh.
19(d), defts' exh. A). Contemporaneously, on March 31, Fednav
issued a bill of lading marked "CLEAN ON BOARD" and signed by
Cobelfret as agents for the master (pltfs' exh. 25), with the
following description of the sugar cargo, particularized by E.D.
& F. Man:
4.000 METRIC TONS WHITE REFINED SUGAR OF EEC NO. 2
QUALITY WITH MINIMUM POLARIZATION 99.8 DEGREES AND
MAXIMUM MOISTURE 0.06 PERCENT AT TIME OF SHIPMENT AND
MAXIMUM COLOR 65 ICUMSA UNITS IN BAGS ABOUT ONE
METRIC TON EACH.