M. Golodetz Export Corp. v. S/S Lake Anja

751 F.2d 1103
Court of Appeals for the Second Circuit·Decided January 2, 1985·No. No. 434, Dockets 84-7390, 84-7392·Published·Cited by 23 cases

Opinion

IRVING R. KAUFMAN, Circuit Judge:

M. Golodetz Export Corp., a seller and shipper of fats and oils, brought this action in the district court against the S/S Lake Anja in rem and her owners and charterers in personam, pursuant to the Carriage of Goods by Sea Act, 46 U.S.C. §§ 1300 et seq. (1982). Golodetz claimed its cargo was loaded aboard ship in good condition and offloaded in a damaged state. The ocean carrier responded that any damage was the direct result of a collision at sea for which the crew of the S/S Lake Anja was not responsible, and thus fell within the “q clause” exception to COGSA liability. See id. § 1304(2)(q).

The district judge, in an unreported decision, found that the carrier intentionally disregarded heating instructions delivered by the shipper and that the resulting overheating was a concurrent cause of the damage to the cargo. He found that the delay occasioned by the collision was also a concurrent cause of the damage, and that such cause fell within COGSA’s “q clause.” Because the delay approximately doubled the length of the voyage, the court below found the carrier liable for one-half of the total damages.

In quantifying damages, Judge Brieant held that Golodetz had failed to mitigate its losses, and therefore awarded it one half of the damages it would have sustained had it resold the cargo as soon as it learned of the rejection by a non-party consignee — a total of $183,128.

On appeal, Golodetz argues that the trial judge erroneously apportioned loss between excepted and unexcepted COGSA causes on the basis of fault and, in any event, that the collision delay was not a concurrent cause of the damage. It also urges that it should not be held to have failed to mitigate its damages. The ocean carrier cross-appeals, asserting that it was never bound by the heating instructions.

We affirm the district court’s rulings that the carrier was bound by the heating instructions, and that Golodetz failed to mitigate its losses. We reverse, however, the apportionment of damages between shipper and carrier, because such a division of losses is not supported by the relevant case law.

As always, our discussion of the pertinent legal points is meaningful only by reference to the facts of the case before us. Because this appeal arises from a rather byzantine factual setting, we find it necessary to set it forth in some detail.

I. Background

A. Tallow

Tallow is animal fat used in the manufacture of soap and candles, and is an ingredient in cattle feed. Generally, it is produced in meat-packing or rendering plants. The types and grades of tallow vary, and the characteristics of a given shipment greatly affect its value. Edible tallow, for example, is fat rendered from the edible parts of an animal, and is considerably more costly than the inedible commodity. Inedible tallow — the type shipped aboard the S/S Lake Anja — is also graded and priced according to certain uniform specifications.

Of particular interest in this case are two such specifications used in the grading of tallow — “FFA” and “R + B color.” Tallow is a compound of fatty acids and glycerine. FFA (Free Fatty Acid) provides a measure of how much of the fatty acids has broken free of the triglyceride molecule. In essence, FFA — described as a percentage— refers to the purity of the tallow. The higher the FFA, the less homogenous (and less valuable) the commodity.

R + B color (Refined and Bleached color) measures the bleachability of the tallow. To derive that figure, a sample is refined and bleached in a laboratory, and is then compared visually to a standardized color chart. The amount of red pigmentation in the sample (i.e. the tallow’s darkness) is expressed as a number, which increases as [1106] the color saturation becomes greater. Accordingly, a batch of tallow with an R & B color of 1.5 Red, for example, is more valuable than a batch measuring 2.5 Red.

Finally, it is worth noting that tallow has a relatively low melting point — somewhere between 125° and 130° Fahrenheit. When shipped, it is maintained in a liquid or semi-liquid state. When transferred — from railway tank cars to shore tanks, for example, or from shore tanks to a ship — it is heated to a liquid and pumped through pipes. This constant heating, cooling and reheating is critical to the proper loading, storage and discharge of a cargo of tallow. But, as shall be seen, a few too many degrees may, over the course of time, transform 4,500 tons of Bleachable Fancy Tallow into nine million pounds of animal fat.

B. Onloading

On January 14, 1980, the S/S Lake Anja took on 1,018 tons of Inedible Bleachable Fancy Tallow at Reserve, Louisiana, a port on the Mississippi River near New Orleans. The shipment had been purchased “FOB vessel” by the M. Golodetz Export Corp. (which will be referred to as “Golodetz” or simply the “shipper”), a New York firm that trades and exports animal fats and vegetable oils. In turn, Golodetz consigned the shipment to its customer, Ch. Daudruy Van Cauwenbershe et Fils (“Daudruy”) of Dunkirk, France, in fulfillment of an agreement previously entered into between the two parties. The Golodetz-Daudruy contract provided that the tallow was to be delivered at Dunkirk. Daudruy was to pay $605.00 per metric ton, with 90% of the purchase price payable upon presentation of the bill of lading and the balance due “after determination of delivered weight and quality.” It is to be noted that the Uniform Export Contract entered into by the parties set forth precise quality standards for the tallow. Specifically, it provided that Daudruy could reject the shipment if the FFA exceeded 5.00%1 or the R & B color was above 1.5.

Golodetz commissioned an independent laboratory to draw and scientifically analyze a sample of the tallow that had been pumped aboard the S/S Lake Anja at Reserve. The FFA was reported to be 4.00% and the R & B color 0.7 Red.

While the S/S Lake Anja was still at Reserve, Golodetz forwarded a one-page letter containing detailed heating instructions to the vessel. That document (reprinted in the margin)2 34provided that the [1107] cargo should not be heated above 118° Fahrenheit during the voyage, but could be raised to a temperature not to exceed 136° Fahrenheit in preparation for discharge. It also stated that the increase in temperature should never exceed 5° Fahrenheit in any twenty-four hour period and daily temperature readings should be taken and recorded. At the bottom of the instruction sheet, below the legend “please acknowledge receipt by signature below,” the first mate signed his name “for [the] master of the vessel.”

On January 19, the procedure described above was repeated at Avondale, Louisiana, a nearby port on the Mississippi River. 1,019.089 tons of tallow were loaded aboard the S/S Lake Anja. The cargo had been purchased “FOB vessel” by Golodetz and consigned to Daudruy pursuant to the same Uniform Export Contract. Samples were drawn and tested. The FFA was put at 3.47% and the R & B color at 1.0 Red. Heating instructions identical to those used at Reserve were transmitted to and acknowledged by the master of the ship.

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M. Golodetz Export Corp. v. S/S Lake Anja, 751 F.2d 1103 (2d Cir. 1985).

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