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BLOMMER CHOCOLATE CO. v. NOSIRA SHARON LTD.

October 4, 1991

THE BLOMMER CHOCOLATE COMPANY AND INSURANCE COMPANY OF NORTH AMERICA, PLAINTIFFS,
v.
NOSIRA SHARON LTD., FEDNAV LTD., IN PERSONAM, AND M/V NOSIRA SHARON, HER ENGINES, BOILERS, TACKLE, ETC., IN REM, DEFENDANTS.



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

INTRODUCTION

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.:

EVIDENTIARY ISSUE

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.

Procedural History

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.

Rulings on Exhibits

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.

JURISDICTION

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
  the defendant.

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.

Plaintiffs' theory is rejected for the reason that it presupposes, without proof, that Lamorte Burns was authorized to receive service of process on Fednav's behalf. Although there is no doubt that the summons refers to Nosira Shipping Ltd.*fn2 and Fednav in the caption, and there is evidence establishing proof of service upon Lamorte Burns respecting Nosira Shipping Ltd., the missing link which uncouples plaintiffs' conclusory argument is the lack of any evidence confirming the agency relationship between Fednav and Lamorte Burns with regard to service of process. Without proof of such an agency relationship, the court finds in favor of defendants on this issue.

Accordingly after further evaluation, the court reverses its trial ruling denying defendants' motion and now dismisses the complaint as to Fednav.

PRIVITY OF CONTRACT

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:

COBELFRET

Compagnia Belge d'Affrettementa n.v.

as agents

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.

DISCUSSION

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. 27).

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.

4.000.000 KG NETT

4.120 BAGS (BIG BAGS)

In accordance with the Fedcom/Blommer charter party, the freight due for cargo transport was "$42.00 per metric ton freein/liner terms, all inclusive, discharge" (defts' exh. A). Thus, the total freight payable was $168,000. Payment of ninety percent (90%) less two and one-half percent (2.5%) commission on the net ocean freight was due within seven days after Fednav's release of the signed "clean" bill of lading to Blommer. The remaining ten percent (10%) was due upon "right and true delivery of the cargo." A signed "clean" bill of lading was, in fact, released on April 4 (pltfs' exh. 15) following which ...


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