Daewoo International (America) Corp. v. Sea-Land Orient Ltd. ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
11-19-1999
Daewoo Intl Corp v Sea Land Orient Ltd
Precedential or Non-Precedential:
Docket 98-6171
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Recommended Citation
"Daewoo Intl Corp v Sea Land Orient Ltd" (1999). 1999 Decisions. Paper 306.
http://digitalcommons.law.villanova.edu/thirdcircuit_1999/306
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Filed November 19, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-6171
DAEWOO INTERNATIONAL (AMERICA) CORP.
v.
*SEA-LAND ORIENT LTD.; *SEA-LAND SERVICES, INC.;
WICE MARINE SERVICES, LTD.
(D.C. Civil No. 97-608)
DAEWOO INTERNATIONAL (AMERICA) CORP.
v.
ROUND-THE-WORD (U.S.A.) CORP.;
*EVERGREEN LINES, INC.; *EVERGREEN MARINE CORP.
*EVERGREEN MARINE CORP.,
Defendant/Third-Party Plaintiff
v.
*UNION PACIFIC RAILROAD COMPANY;
*SOUTHERN PACIFIC RAILROAD;
*CSX RAILROAD,
Third-Party Defendants
(D.C. Civil No. 97-624)
Daewoo International (America) Corp.,
Appellant
*Sea-Land Orient, Ltd., Sea-Land Services, Inc.,
Evergreen Lines, Inc., Evergreen Marine Corp.,
Union Pacific Railroad, Southern Pacific
Railroad, and CSX Railroad dismissed pursuant
to Court's order dated February 22, 1999
Appeal from the United States District Court
for the District of New Jersey
(D.C. Civil Action Nos. 97-cv-00608/624)
District Judge: Honorable John W. Bissell (97-608)
District Judge: Honorable Alfred J. Lechner, Jr. (97-624)
Argued April 27, 1999
Before: SCIRICA, ROTH and MCKAY,1 Circuit Judges
(Opinion filed November 19, 1999)
Martin B. Mulroy, Esquire (Argued)
478 State Route 28, Suite 444
Bridgewater, NJ 08807
Attorney for Appellant
Wayne D. Greenfeder, Esquire
Kraemer, Burns, Mytelka, Lovell
& Kulka
675 Morris Avenue, 3rd Floor
Springfield, NJ 07081
Nicholas Kalfa, Esquire (Argued)
Deborah R. Reid, Esquire
James J. Ruddy, Esquire
Badiak, Will & Maloof, LLP
120 Broadway, Suite 1040
New York, NY 10271
Attorneys for Appellee
Wice Marine Services, Ltd.
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1. Honorable Monroe G. McKay, Circuit Judge, United States Court of
Appeals for the Tenth Circuit, sitting by designation.
2
Peter D. Clark, Esquire
James R. Sanislow, Esquire
Gregory G. Barnett, Esquire (Argued)
Clark, Atcheson & Reisert
535 Fifth Avenue
New York, NY 10017
Attorneys for Appellee
Round-The-World (U.S.A.) Corp.
OPINION OF THE COURT
ROTH, Circuit Judge.
Daewoo International (America) Corporation purchased
over one million plastic videocassette tape holders from
Hang Fung Technology Manufacturing Company of Hong
Kong. When Daewoo received the shipment in the United
States and opened the containers, it found nothing but
cement blocks. The common carriers, Round-The-World
(USA) Corporation ("RTW") and Wice Marine Services
Limited, when they issued the bills of lading, had received
no notice of any problems. This case presents the question
whether, under the Carriage of Goods by Sea Act (COGSA),
46 App.U.S.C.A. S 1300 et seq., a common carrier, with no
notice that anything is awry, is obligated to inspect a sealed
shipment before issuing a bill of lading. We hold that no
such duty exists.
I. FACTS
Daewoo purchased the tape holders from Hang Fung in
Hong Kong. Hang Fung agreed to ship them to Daewoo in
the U.S. In return, Daewoo arranged for Korea Exchange
Bank to issue letters of credit in favor of Hang Fung. The
letters of credit described the tape holders, listed quantity
and price, and indicated that the shipment was to be "FOB:
Hong Kong." The letters of credit were irrevocable and did
not require confirmation from Daewoo for the bank to pay
Hang Fung. Moreover, under the terms of the deal, Hang
Fung could receive payment from the bank as soon as it
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presented the shipping documents, without waiting for the
shipment to reach Daewoo.
For the shipment, Hang Fung loaded and sealed fourteen
ocean containers. It then delivered the containers to the
appellees, RTW and Wice, which are non-vessel owning
common carriers. In return, RTW and Wice issued bills of
lading, which were provided to Hang Fung (the shipper) and
Daewoo (the consignee and cargo owner). The bills of lading
listed the weights and contents of the containers as
declared by Hang Fung. Hang Fung represented that each
container held pallets of "V/O Housing" and weighed
17,500 kilograms. The container references on the bills of
lading were qualified with the terms, "Shipper's Load and
Count" and "S.T.C.," which means "said to contain." The
carriers did not weigh the containers or break the seals to
inspect the contents.
The ocean voyage was uneventful, and the containers
were delivered safely to Daewoo with seals intact. When the
containers were opened, it was discovered that they
contained cement blocks instead of tape holders and that
the weights listed on the bills of lading were incorrect.2 In
the meantime, Hang Fung had received payment from the
bank and disappeared.
Daewoo sued RTW and Wice to recover its payment for
the goods, plus shipping expenses.3 After discovery, Daewoo
moved, and RTW and Wice cross-moved, for summary
judgment under COGSA and principles of estoppel.
The District Court denied Daewoo's motion, granted
RTW's and Wice's cross-motions, and dismissed the
complaint. It determined that Daewoo had failed to
establish a prima facie case under COGSA because it did
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2. Daewoo's agents did not immediately break the seals and inspect
every container upon delivery. Although most or all of the containers
were delivered in February 1996, some were not opened and inspected
until March 22, 1996.
3. Daewoo also sued in a separate action ocean carriers Sea-Land Orient
Limited, Sea-Land Services Incorporated, Evergreen Lines Incorporated,
and Evergreen Marine Corporation. Although the two suits were
consolidated, this appeal concerns only defendants RTW and Wice.
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not prove that the goods were delivered to the carriers in
good condition. Daewoo's only evidence was the bills of
lading. In the court's opinion, this did not prove the
contents of the sealed containers, which were not
ascertainable from the outside.
The court acknowledged that Daewoo was correct in
arguing that the weight notations on the bills of lading were
prima facie proof of receipt of that weight, despite such
qualifiers as "Shipper's Load and Count." However, the
court distinguished this case from those cited by Daewoo in
which carriers were held liable based on weight listings that
were higher than actual weight. Those cases dealt with
shortages of cargo, which in the court's opinion was
different than a situation involving a substitution of cargo.
There is no indication that the substitution could have been
ascertained from the listed weights. Moreover, the fact that
the seals from Hang Fung had remained intact and that
Hang Fung had disappeared further indicated to the court
that the carriers were not at fault and that, even if the
burden of proof were to shift to the carriers, the carriers
would not have been found liable.
Daewoo appealed. The District Court had jurisdiction
under 28 U.S.C. S 1333. We have jurisdiction pursuant to
28 U.S.C. S 1291.5 Our standard of review is plenary. See
Sun Oil Company of Pennsylvania v. M/T Carisle, 771 F.2d
805, 812 (3d Cir. 1985). We must determine, viewing the
evidence in the light most favorable to the nonmoving party,
whether there are any genuine issues of material fact and
whether the moving party is entitled to judgment as a
matter of law. See FED. R. C IV. P. 56(c).
II. DISCUSSION
COGSA regulates the carriage of goods by sea between
U.S. and foreign ports. See 46 App.U.S.C.A.SS 1300, 1312.
A carrier of goods has the duty to "properly and carefully
load, handle, stow, carry, keep, care for, and discharge the
goods carried." Id. S 1303(2). A carrier has the further duty
of issuing a bill of lading which contains a description of
the goods. Id. S 1303(3).4 That bill of lading serves as prima
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4. The statute provides in pertinent part:
After receiving the goods into his charge the carrier . . . shall,
on
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facie evidence that the carrier received the goods as
described. Id. S 1303(4). When the carrier delivers the
goods, the bill of lading constitutes prima facie evidence of
the goods' delivery, unless the receiver gives notice at that
time, or within three days if the loss or damage is not
apparent. Id. S 1303(6).5
Under SS 1303 and 1304, a cargo owner has to establish
a prima facie case when it has demonstrated that the cargo
was delivered to the carrier in good condition but was
delivered by the carrier to the cargo owner in a short or
damaged condition. See Sun Oil Company of Pennsylvania,
771 F.2d at 810. Once the cargo owner has established a
prima facie case, the burden shifts to the carrier. Id. One
way for the carrier to meet its burden is to show that the
loss or damage falls within one of the exceptions to liability
in S 1304(2)(a)-(p). Id.
To establish that the cargo here was delivered to the
carrier in good condition, Daewoo points to the bills of
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demand of the shipper, issue to the shipper a bill of lading
showing
among other things . . .
(b) Either the number of packages or pieces, or the quantity or
weight, as the case may be, as furnished in writing by the shipper.
(c) The apparent order and condition of the goods: Provided, That
no
carrier . . . shall be bound to state or show in the bill of lading
any
marks, number, quantity, or weight which he has reasonable
ground for suspecting not accurately to represent the goods
actually
received, or which he has had no reasonable means of checking.
46 App.U.S.C.A. S 1303(3).
5. The statute provides in pertinent part:
Unless notice of loss or damage and the general nature of such loss
or damage be given in writing to the carrier . . . at the port of
discharge . . . at the time of the removal of the goods into the
custody of the person entitled to delivery thereof under the
contract
of carriage, such removal shall be prima facie evidence of the
delivery by the carrier of the goods as described in the bill of
lading.
If the loss or damage is not apparent, the notice must be given
within three days of the delivery.
46 App.U.S.C. S 1303(6).
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lading. It contends that the carriers should have inspected
the cargo to verify that the information provided by Hang
Fung was correct before they listed that information on
their bills of lading. Daewoo argues that once the carriers
listed the information on the bills of lading, they were
responsible for any inaccuracies.
Although a bill of lading, attesting to the apparent good
order and condition of the goods, normally constitutes
prima facie evidence of the goods as described, see
S 1303(4)(c), a bill of lading is not prima facie evidence of
the contents of a sealed container because the contents are
not discoverable from an external examination. Bally, Inc. v.
M.V. Zim America, 22 F.3d 65, 69 (2d Cir. 1994); Westway
Coffee Corp. v. M.V. Netuno, 675 F.2d 30, 32-33 (2d Cir.
1982); Caemint Food, Inc. v. Brasileiro, 647 F.2d 347, 352
(2d Cir. 1981); see Plastique Tags, Inc. v. Asia Trans Line,
Inc., 83 F.3d 1367, 1370 (11th Cir. 1996).
Daewoo also contends that RTW and Wice are bound by
the weight listed on the bills of lading. Daewoo claims that
the carriers should have verified the information by
weighing the containers on public scales in Hong Kong. If
they had, Daewoo argues, they would have discovered that
the weight information provided by Hang Fung was
incorrect. Daewoo contends that the weight differential
would have put the carriers on notice that the shipment
was not as described; the carriers would then have been
obligated to break the seals to inspect the contents of the
containers. Daewoo argues that if the carriers had done so,
they would have discovered the substituted cement blocks.6
Unlike the contents of a sealed container, the weight of a
container is usually "readily verifiable." See S 1303(c). A bill
of lading, then, is prima facie proof that the carrier received
that weight from the shipper. Bally, 22 F.3d at 69. This
holds true regardless of limiting language, such as "said to
weigh" and "shipper's load and count." Id. For this reason,
carriers have been held liable in cases involving a shortage
of cargo where the actual weight of cargo at outturn was
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6. Daewoo concedes that the containers held cement blocks even before
they were delivered to RTW and Wice.
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less than the weight listed on the bill of lading. See
Westway Coffee Corp., 675 F.2d at 31-32, 33.
Although the weight of a container can be a signal that
there is a shortage of cargo, weight is not logically related
to whether cargo is in "good condition" when there has
been a substitution. Had RTW and Wice weighed the cargo
upon receipt, the weight differential would not have
revealed the condition of the goods inside. Nor has Daewoo
presented any evidence of the weight of the correct quantity
of tape holders. Indeed, had Hang Fung weighed the
containers and provided the actual weight of the cement
blocks, there would have been no weight differential at all.
The only way that the carriers could have discovered the
substitution was if they had broken the seals on the
containers. We conclude, however, that, absent notice that
something was amiss, the carriers did not have an
independent duty to break the seals. Instead, Daewoo, the
owner and consignee, was better positioned to prevent the
loss. For instance, it could have instructed the carriers to
break the seals for inspection at loading, or it could have
designated a representative to be present when the
containers were loaded. Daewoo could also have required
the bank to withhold payment for thirty days after delivery
or until the containers had been inspected. Consequently,
Daewoo has failed to establish its prima facie case.
We note, moreover, that, even if the common carriers
should have been held responsible for the contents of the
containers on receipt, Daewoo did not inspect the
containers when they were delivered to determine if cargo
was missing or damaged. Some containers were not opened
until weeks after delivery. Nor did Daewoo give timely notice
of the missing cargo to the carriers as required by
S 1303(6).
Because Daewoo presented no evidence that the cargo
was lost while in the carriers' possession, it cannot recover
from RTW and Wice for its loss.7
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7. We decline to reach Daewoo's estoppel argument.
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III. CONCLUSION
For the reasons stated above, we will affirm the decision
of the District Court.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
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