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TOSHIBA INTL. CORP. v. M/V "SEA-LAND EXPRESS

January 10, 1994

Toshiba International Corp., Plaintiff,
v.
M/V "SEA-LAND EXPRESS," her engines, boilers, etc., Sea-Land Service, Reynolds Leasing Corp., and Burlington Northern Railroad Company, Defendants.


Leval


The opinion of the court was delivered by: PIERRE N. LEVAL

Findings of Fact and Conclusions of Law

 PIERRE N. LEVAL, U.S.C.J.*

 Toshiba International Corp. brings action against Sea-Land Service, an ocean carrier, and Burlington Northern Railroad Company, a rail carrier, for damage in the amount of approximately $ 272,000 sustained by cargo in transit. Trial has been submitted on a written record on the question whether the $ 500 per package damage limitation provided in the bill of lading effectively limits the exposure of the defendants.

 Background

 In late 1990, Toshiba shipped two cartons containing a turbine generator and related equipment (collectively "the turbine") from Yokohama, Japan, to New York. On November 24, 1990, Sea-Land issued a bill of lading to Toshiba which listed the destination of the cargo as New York. The cargo was received by Sea-Land in Yokohama in good condition, and the goods were carried aboard the SEA-LAND EXPRESS from Yokohama to Tacoma, Washington. On December 5, 1990 in Tacoma, the cargo was transferred to Burlington Northern (BN) for transportation by rail to Chicago, where it was to be transferred by truck to Conrail for rail transportation to New York and delivery to the consignee.

 A trucking company was employed to transport the cargo across Chicago from BN's terminal to Conrail's terminal. During this cross-town transportation, on December 9, 1990, the container was apparently "low-bridged," resulting in substantial damage to the turbine. *fn1" Conrail refused to accept the container because it was visibly damaged, and it was redelivered by the trucker to the BN hub. The cargo was then recoopered, recrated, and redelivered to Conrail, which accepted it for shipment to New York. The trucker that hit the bridge is not a party to the action. *fn2"

 Discussion

 The provisions of the Carriage of Goods by Sea Act, (COGSA) 46 U.S.C.App. § 1300 et seq., govern the shipment of goods from foreign ports to the United States and expressly provide for a $ 500 per package liability limitation. COGSA covers "the period from the time the goods are loaded on to the time they are discharged from the ship." 46 U.S.C.App. § 1301(e). However, the provisions of COGSA may contractually be extended past the time of discharge of the cargo from the ship. Colgate Palmolive Co. v. S/S Dart Canada, 724 F.2d 313, 314 (2d Cir. 1983). It is also well-settled that the protections of COGSA and other provisions of the bill of lading may contractually be extended to third party agents of the carrier, such as inland carriers. See, e.g., Lucky-Goldstar v. S.S. California Mercury, 750 F. Supp. 141 (S.D.N.Y. 1990) and cases cited therein. See also Seguros Illimani S.A. v. M/V Popi P, 929 F.2d 89, 93 (2d Cir. 1991) (extension of bill of lading protections to stevedores upheld); *fn3" Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.2d 518, 520 (2d. Cir. 1975) ("It is axiomatic that parties to a bill of lading may extend the $ 500 limitation of liability to third parties.") The clause in a bill of lading that extends the carrier's protection to such other entities is referred to in the admiralty bar as the "Himalaya clause." *fn4"

 A. Sea-Land's Liability

 Paragraph 17 of the bill of lading, under the caption "Valuation," provides:

 
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, or in case of goods not shipped in packages, per shipping unit, the value of the goods shall be deemed to be $ 500 per package or unit, unless the nature and higher value of the goods have been declared by the shipper and higher charges paid as provided in Carrier's tariff . . . When the U.S. Carriage of Goods by Sea Act does not apply of its own force to goods not shipped in packages, the $ 500 limitation shall apply to each shipping or customary freight unit or piece, provided always that any compulsorily applicable limitation shall apply in place of the $ 500 limitation.

 The front of the bill of lading makes clear that Toshiba chose not to declare a higher value for its cargo. No value was entered in the space provided to enter a declared value." Additionally, a printed provision in the declared value space provided that "If shipper enters a value carrier's 'package' limitation of liability does not apply and the ad valorem will be charged." Toshiba chose not to declare a higher value and not to pay a higher ad valorem rate. The terms of the contract between Sea-Land and Toshiba thus provide that Sea-Land is protected by the $ 500 per package limitation. *fn5"

 The bill of lading furthermore effectively dissipates any contention that the limitation ceased to protect Sea-Land when the goods passed out of its custody into the hands of the rail carrier. The initial clause on the back of ...


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