Elgie & Co. v. S. S. "S. A. NEDERBURG"

599 F.2d 1177
CourtCourt of Appeals for the Second Circuit
DecidedJune 11, 1979
DocketNos. 379, 643, Dockets 76-7510, 76-7562
StatusPublished
Cited by15 cases

This text of 599 F.2d 1177 (Elgie & Co. v. S. S. "S. A. NEDERBURG") is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Elgie & Co. v. S. S. "S. A. NEDERBURG", 599 F.2d 1177 (2d Cir. 1979).

Opinion

VAN GRAAFEILAND, Circuit Judge:

On March 24, 1974, the S. A. Nederburg, owned and operated by South African Marine Corporation, Ltd., sailed from New York City bound for South Africa. Several days later, South African issued an on-board order bill of lading indicating that the Nederburg was carrying eleven cartons and one crate of optical machinery and accessories for discharge at Durban, South Africa. The equipment had been sold by the consignor, Shuron Continental, an American manufacturer, to plaintiff, Elgie, a Durban company, and payment was to be made pursuant to a draft against an irrevocable letter of credit established in Shuron’s favor by Barclays Bank D.C.O. for Elgie’s account. The letter of credit required that the draft be accompanied by a full set of clean on-board bills of lading marked “freight prepaid”. On April 16, 1974, Shu-ron presented its draft, together with South African’s bill of lading and other pertinent documents, to' Barclays and received payment.

It is now conceded by all parties that the crate, which contained a lens-grinding machine, was never aboard the Nederburg. In fact, the crate has simply disappeared. El-gie instituted suit against South African in the Southern District of New York and established that its total damages resulting from the non-delivery were $10,559.47. However, South African’s bill of lading1 contained the $500 per package limitation of liability clause permitted by section 4(5) of COGSA (46 U.S.C. § 1304(5)), and the judgment appealed from limited plaintiff’s recovery to that amount. The judgment also denied recovery over by South African against International Terminal Operating Co., Inc. (ITO), the terminal company that received the shipment and undertook to load it. Plaintiff appeals from that portion of the judgment limiting its recovery to $500. Defendant appeals from the judg[1179]*1179ment in plaintiff’s favor and the dismissal of its third-party complaint against ITO.

The appeal has been argued twice. After the first argument, this Court sua sponte raised the question whether section 22 of the Pomerene Bills of Lading Act (49 U.S.C. § 102) applied to the circumstances of this case and, if so, whether the plaintiff should recover the full amount of its damages, rather than $500.2 We remanded to the district court for further factual findings and a determination of the legal issues thus raised. On remand, none of the parties offered any additional testimony, although given the opportunity to do so. The district judge found, nonetheless, that the missing crate had been loaded on the S. S. Morgen-ster, another of defendant’s ships, which had sailed for Durban from New York on March 16, 1974.3 He also concluded once again that plaintiff’s recovery must be limited to $500. This determination was not based upon the aforementioned factual finding, however, but upon the district judge’s interpretation of section 22.

The district judge interpreted the term “description”, as used in section 22, to cover only the character or nature of the goods referred to in the bill of lading, not their quantity. He concluded, therefore, that the bill of lading’s reference to eleven cartons and one crate was not a misdescription of the goods. He held further that, if section 22 were construed to cover misstatements as to quantity, the $500 limitation would nonetheless be applicable, because section 22 of the Pomerene Act was intended only to curb deliberate fraud. Our examination of that section in its historical context convinces us that the able district judge misconstrued it.

In 1916, when Pomerene was enacted, there was already a substantial body of law holding carriers liable to consignees and good faith assignees for value for misrepresentations in their bills of lading. See The Carso, 43 F.2d 736 (S.D.N.Y.1930), aff’d in part and rev’d in part, 53 F.2d 374 (2d Cir. 1931). However, federal courts limited the application of this rule by holding that a carrier’s agent issuing a bill of lading had no implied authority to represent that goods had been received when actually they had not. See Friedlander v. Texas & P. Ry., 130 U.S. 416, 9 S.Ct. 570, 32 L.Ed. 991 (1889). New York law was to the contrary, see, e. g., Bank of Batavia v. New York L.E. and W.R.R., 106 N.Y. 195, 12 N.E. 433 (1887), and section 22 was enacted for the purpose of adopting a rule like that of New York. Gleason v. Seaboard Air Line Ry., 278 U.S. 349, 354-55, 49 S.Ct. 161, 73 L.Ed. 415 (1929); Josephy v. Panhandle and S. F. Ry., 235 N.Y. 306, 310, 139 N.E. 277 (1923). With this purpose in mind, Congress could not have intended the term “description” in section 22 to apply only to the nature of the goods being shipped. Indeed, Congress’ expressed intent was to plug the “loophole” represented by the Friedlander line of authorities by providing that a “carrier shall be liable for goods receipted for by its representatives even though they may not actually have been received.” See S.Rep. 742, 74th Cong. 1st Sess. (1935).

An examination of section 22 as it was originally enaeted makes it quite clear that this was the congressional intent. The original statute made no reference to the date of shipment. It provided that the carrier would be liable to “the holder of an order bill, who has given value in good faith, relying upon the description therein of the [1180]*1180goods, for damages caused by the nonre-ceipt by the carrier of all or part of the goods or their failure to correspond with the description thereof in the bill at the time of its issue.” See 39 Stat. 542 (1916). The only reasonable construction that can be placed upon this language is that “description” of goods includes the quantity involved.4

On shipments originating outside the United States and thus not covered by the Pomerene Act, a carrier is bound by its representations concerning on-board quantities. General Foods Corp. v. The Felipe Camarao, 172 F.2d 131, 133 (2d Cir.), cert. denied, 337 U.S. 908, 69 S.Ct. 1047, 93 L.Ed. 1720 (1949); A. L. Holden v. S. S. Kendall Fish, 212 F.Supp. . 106, 110 (E.D.La.1962); Insurance Company of North America v. The S. S. Exminster, 127 F.Supp. 541, 542 (S.D.N.Y.1954).5 Congress could not have intended to impose a lesser standard of care by the enactment of section 22. See Portland Fish Co. v. States Steamship Co., 510 F.2d 628, 631-32 (9th Cir. 1974); Pacific Micronesian Line, Inc. v. New Zealand Insurance Co., 397 F.2d 236, 237 (9th Cir. 1968). It follows that defendant did not accurately describe the shipment of eleven cartons by calling it eleven cartons and a crate and that it misrepresented the shipment in so doing. Plata American Trading, Inc. v. Lancashire,

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Bluebook (online)
599 F.2d 1177, Counsel Stack Legal Research, https://law.counselstack.com/opinion/elgie-co-v-s-s-s-a-nederburg-ca2-1979.