FRIENDLY, Chief Judge.
The facts of this case, which has already attracted considerable attention in maritime legal circles,
Plaintiff Leather's Best, Inc. ("the shipper") purchased some 11 tons of leather in 1967 from Carl Freudenberg, whose plant was at Weinheim, Germany. The seller's employees loaded the leather into 99 cartons, averaging 4' in length, 2' in width, and 1½' in height, and placed steel straps around them, thereby making them qualify as "bales" under the applicable tariff, which provided a fixed price per kilogram for leather in bales or rolls. At the request of the Freudenberg firm, a truckman engaged by the agent of Moore-McCormack (Mooremac) in Germany delivered to the plant a metal container owned by Mooremac which was 40' long, 8' high and 8' wide. With the truck driver watching, the seller's employees loaded the container and sealed it. The truck driver gave a receipt.
The driver delivered the container to the S.S. Mormaclynx at Antwerp, Belgium. Mooremac's agent at Rotterdam, Holland, issued a bill of lading which described the goods as follows:
Number and kind of packages; description Gross Measurement Marks & Nos. of goods Weight C F W 1 container s.t.c. NEW YORK 99 bales of leather 10864 kos. MADE IN GERMANY 2202/1-99 Container nr. UB 9622 209134 HOUSE-TO-HOUSE Seal Nr. 26844 SHIPPER'S LOAD AND COUNT IN TRANSIT
The lower left hand corner of the bill of lading stated, in legible capital letters:
The following clauses on the back of the bill of lading are also relevant:
The Mormaclynx arrived in Brooklyn on Saturday, April 25, 1967. The container, sealed and undamaged, was unloaded by stevedores and was placed in a large terminal area operated by Mooremac's wholly owned subsidiary, Tidewater Terminal, Inc. ("Tidewater") to await pick up by the shipper. The area was accessible through four gates. Two were open 24 hours a day, supposedly under the continuous supervision of watchmen. The other two were open only from 8:00 A.M. to 4:00 P.M. on weekdays and were similarly guarded at those times. At least one roving watchman was on duty to see that there were no unauthorized persons on the pier and that no one opened any container. Records were kept of all trucks entering and leaving the terminal area.
On Monday, April 27, the shipper's truckman arrived at 9:30 A.M. to pick up the container. It could not be located, although the delivery book at the pier had not been signed. The fence around the area bore no signs of tampering. Next day the police found the container empty, at Freeport, L.I., some 25 miles away. The goods have not been recovered, and the details of the theft have never been reconstructed.
In this suit in admiralty in the District Court for the Eastern District of New York, plaintiff sought damages in the amount of the alleged value of the leather from the ship, Mooremac, and Tidewater. In a thorough opinion, 313 F.Supp. 1373 (1970), Judge Judd held (1) that the defendants had been negligent in their custody of the container; (2) that the 99 bales rather than the single container constituted "packages" for the purposes of paragraph 13 of the bill of lading and § 4(5) of the Carriage of Goods by Sea Act (COGSA);
The district court was not asked, and evidently saw no need, to examine the jurisdictional underpinnings of this action. Neither has any question in this regard been raised by the parties on this appeal. Nevertheless, the nature of the claims here at issue necessitates such an examination. While this would be required in any event, here, as will be seen, our evaluation of the jurisdictional questions affects our resolution of the merits.
The shipper's complaint states this to be an action in admiralty for "contract and cargo damage." The action was brought in rem as to the Mormaclynx and in personam as to Mooremac and Tidewater. Without doubt, Mooremac was responsible—thus making the Mormaclynx liable in proceedings in rem —for the safe delivery of the container under the contract of carriage, i. e., the bill of lading. While the loss of the container occurred after the act of carriage had been completed and the container had been discharged from the Mormaclynx, that does not mean that the contract of carriage, obviously a maritime contract, was at an end; the contract continues to govern the relationship between a shipper and a carrier after discharge but before delivery.
The district court apparently considered the shipper's claim against Tidewater also to rest upon the contract of carriage. It took the position that there was no need to distinguish between Tidewater and Mooremac, since, in its view, the former was rendering services in connection with the contract of carriage at the time of the loss. But even accepting this view arguendo, we fail to perceive how this makes Tidewater a party to the
That is not to say, however, that the shipper failed to state any claim whatsoever against Tidewater. Pleadings in admiralty have traditionally been read with liberality. See DuPont de Nemours & Co. v. Vance, 60 U.S. (19 How.) 162, 171-172, 15 L.Ed. 584 (1856); Archawski v. Hanioti, 350 U.S. 532, 534, 76 S.Ct. 617, 100 L.Ed. 676 (1956). The 1966 merger of the admiralty and civil rules of procedure had no adverse impact upon this principle. See F.R.Civ.P. 9(h) & 8. The heart of the shipper's complaint is that the loss of the container was the result of the negligence of Tidewater. Viewing this allegation with the requisite liberality,
The question of pendent jurisdiction involves two discrete inquiries: whether the court has the "power" to hear the state claim; and whether, assuming the power, the court should, as a matter of "discretion," hear the state claim. As to the first issue, it is questionable whether this state claim could have been heard under the test of Hurn v. Oursler, 289 U.S. 238, 246, 53 S.Ct. 586, 589, 77 L.Ed. 1148 (1933), which restricted pendent jurisdictions to instances in which "two distinct grounds [one state, one federal] in support of a single cause of action [were] alleged." Joinder of the state claim against Tidewater would doubtless have been considered a second cause of action. But with the decision in United Mine Workers v. Gibbs, 383 U.S. 715, 86 S.Ct. 1130, 16 L.Ed.2d 218 (1966), the Court abandoned such an "unnecessarily grudging" approach to the question of power to hear the pendent claim, and turned instead to a mode of analysis which focuses upon the relationship between the facts underlying the state and federal claims:
Id. at 725, 86 S.Ct. at 1138 (footnote omitted).
To be sure, the Gibbs Court was not confronted with the question whether pendent jurisdiction extended to a state claim against a party not named in the federal claim. But as we have recently observed in Astor-Honor, Inc. v. Grosset & Dunlap, Inc., 441 F.2d 627, 629 (2 Cir. 1971), "Mr. Justice Brennan's language and the common sense considerations underlying it seem broad enough to cover that problem also. See Note, UMW v. Gibbs and Pendent Jurisdiction, 81 Harv. L.Rev. 657, 664 (1968)." In that decision, involving federal claims under the copyright laws and state claims of unfair trade practice and unfair competition, including a defendant not named in the copyright claims, we held that a federal court had power to hear a state claim against a party not named in the federal claim, provided the Gibbs test was met, noting that this conclusion was buttressed by our decisions concerning ancillary jurisdiction to entertain compulsory
It is true that in those cases, as well as in Astor-Honor, the federal claim had arisen in the ordinary civil jurisdiction, whereas the federal claim in this action had been brought under the admiralty jurisdiction. At an earlier date, this difference might have affected our decision here. But the rules of procedure in the admiralty and civil jurisdictions were merged in 1966, and we are of the opinion that at least since that merger, the constitutional rationale which underlies the doctrine of ancillary jurisdiction in the context of Rule 13 (a)
There remains, though, the further question whether this is an appropriate case for the court, in the exercise of its discretion, to hear the pendent claim. In this regard, the Supreme Court has indicated that the justification for the exercise of pendent jurisdiction "lies in the considerations of judicial economy, convenience and fairness to litigants." United Mine Workers v. Gibbs, supra, 383 U.S. at 726, 86 S.Ct. at 1139. In this case, the same facts are ultimately controlling with respect to both the state and federal claims; the desirability of having both claims tried in the same forum is self-evident. Moreover, while our conclusions in part II require us to remand the state claim for further proceedings, the evidentiary record compiled in the original proceeding will continue to be of substantial relevance, and we thus see no basis for declining jurisdiction over the state claim at this juncture.
With the jurisdictional problem thus resolved, we turn to the liability of Mooremac and Tidewater for the loss of the container. Although the contract of carriage continued in effect after the cargo had been discharged, it failed to specify the precise responsibilities of the carrier with respect to the container during that period. Thus, we are presented with a situation essentially analogous to that in David Crystal, Inc. v. Cunard S.S. Co., supra, 339 F.2d at 298. We see no basis for departing from
Since this is a suit within the admiralty jurisdiction, the standard for judging Mooremac's liability is a matter of federal law. It is common ground that Mooremac, as bailee responsible for the container under the contract of carriage, is liable for the loss of the container as a result of negligence and that a bailor makes out a prima facie case of negligence merely by showing delivery of the goods to the bailee and failure to return at the required time. R. Brown, Personal Property § 87, at 363 (1955). Under federal law, though, this does not mean that the burden of persuasion shifts from bailor to bailee. See Southern Ry. v. Prescott, 240 U.S. 632, 640, 36 S.Ct. 469, 60 L.Ed. 836 (1916); Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U.S. 104, 110-111, 62 S.Ct. 156, 86 L.Ed. 89 (1941); Kohlsaat v. Parkersburg & Marietta Sand Co., 266 F. 283, 284-285 (4th Cir. 1920). It is only the burden of production that shifts once the bailor has made the requisite prima facie showing. Just what this means was developed in Commercial Molasses Corp. v. New York Tank Barge Corp., 314 U.S. at 110-111, 62 S.Ct. at 161, where the Court said (citations omitted):
Another useful statement is that for the bailee to rebut the bailor's prima facie case
In reviewing the district court's determination of negligence, the established rule in this circuit is that a judge's conclusion with respect to negligence is not a "finding of fact" protected by the "unless clearly erroneous" provision of F.R.Civ.P. 52(a), but that "it will ordinarily stand unless the lower court manifests an incorrect conception of the applicable law." Cleary v. United States Lines Co., 411 F.2d 1009, 1010 (2 Cir. 1969). While Judge Hough's opinion in Evans v. New York & P.S.S. Co., Ltd., 163 F. 405 (S.D.N.Y. 1906), from which the district judge quoted, may have been based on state rather than federal bailment law, we find nothing in that opinion inconsistent with the present federal rule that, on the one hand, the burden of persuasion remains throughout with the bailor, but that, on the other, the burden of production is on the bailee to show his freedom from negligence in connection with the loss of the bailed property by whatever cause in order to meet the bailor's prima facie case. In short, nothing in the district judge's opinion in this case indicates that he applied a legal standard erroneous under federal law in determining the carrier's liability.
As to the evidence in the record, while we would scarcely have disturbed a conclusion that Mooremac was not liable for negligent loss of the cargo, we likewise see no sufficient basis for upsetting the conclusion that it was. The mere facts that the evidence points strongly to theft and that defendant's agent had taken considerable precautions do not preclude a conclusion of negligence on the part of the agent under federal law. None of Tidewater's gatemen was called to testify; no evidence was offered to rebut what seems to be, in light of all the facts, the very substantial possibility that a gateman was derelict in the performance of his duties—either by abandoning or sleeping at his post for a time. In sum, Mooremac showed neither that the possible theft was "in no way attributable to [Tidewater's] negligence" nor that Tidewater had exercised such a degree of care in guarding the container that the loss could not have been due to its negligence regardless of how the container was removed from the storage area.
The liability of Tidewater for its allegedly tortious conduct is a different matter. Under applicable state law, Tidewater, while an agent engaged in fulfilling Mooremac's obligations following discharge of the container, apparently occupied as well the status of a bailee with respect to the shipper. See Berger v. 34th Street Garage, Inc., 274 App.Div. 414, 418-420, 84 N.Y.S.2d 348, 351-353 (1948); Leland Wine & Liquor Store, Inc. v. Midtown Warehouse, Inc., 181 Misc. 106, 42 N.Y.S.2d 9 (1943); cf. Howard v. Finnegans Warehouse Corp., 33 A.D.2d 1090, 307 N.Y.S.2d 1022 (1970). As under federal law, the shipper made a prima facie case of negligence by showing a failure to deliver the container upon demand. See, e. g., Jay Howard, Inc. v. Rothschild, 16 A.D.2d 628, 226 N.Y.S.2d 769 (1962); Textile Overseas Corp. v. Riveredge Warehouse Corp., 275 App.Div. 236, 88 N.Y.S.2d 429 (1949). Under New York law, too, it is only the burden of production that shifts from the bailor to the bailee; the burden of persuasion remains always on the
In light of this, the district court's determination of negligence with respect to Tidewater's personal liability cannot stand. See Cleary v. United States Lines Co., supra, 411 F.2d at 1010. The only evidence introduced by the shipper on the question of Tidewater's negligence went to the initial question of the failure to deliver the container. The bailee responded with substantial evidence pointing strongly to theft and detailing its procedure for guarding cargo. While the showing made by the defendants was not necessarily sufficient to absolve the carrier of liability for negligence under the strict federal rule, it seems clear that the shipper did not meet its burden of proof as to Tidewater under the state rule. Substantial evidence suggesting theft having been presented, the shipper failed to come forward with evidence concerning possible negligence of Tidewater in connection with the theft. On the record before us, we find it impossible to sustain the finding of negligence with respect to the claim against Tidewater.
At the same time, we cannot conclusively say that Tidewater was not negligent under state law. The failure of the bailor to offer detailed proof of negligence is explainable by the evident misimpression in the district court that the same law applied to each defendant. Had the parties been aware of the nature of their respective burdens of proof on the various claims, the bailor might well have come forward with further evidence. Consequently, we conclude that fairness to both parties requires us to reverse the finding of negligence with respect to Tidewater but to remand this claim for further proceedings in light of what has been said here.
We thus reach the issue of the extent of Mooremac's liability—more specifically, of the validity of the limitation to $500 per container.
This is by no means the first case in which this court has been confronted with the question what constitutes a "package" within § 4(5) of COGSA, 46 U.S.C. § 1304(5), and it will hardly be the last. The purpose of the provision, as stated by Chief Judge Lumbard in Standard Electrica, S.A. v. Hamburg Sudamerikanische Damperchifffahrts-Gesellschaft, 375 F.2d 943, 945 (2 Cir.), cert. denied, 389 U.S. 831, 88 S.Ct. 97, 19 L.Ed.2d 89 (1967) (footnote omitted), was doubtless to describe "a unit that would be fairly uniform and predictable in size, and one that would provide a common sense standard so that the parties could easily ascertain at the time of contract when additional coverage was needed, place the risk of additional loss upon one or the other, and thus avoid the pain of litigation." The difficulty presented in this case, as in that one, is that "[f]ew, if any, in 1936 could have foreseen the change in the optimum size of shipping units that has arisen as the result of technological advances in the transportation industry." Id. The problem demands a solution better than the courts can afford, preferably on an international scale, and diplomatic discussions have been initiated to that end. See Schmeltzer & Peavy, Prospects and Problems of the Container Revolution, 1 J.
Defendants place great reliance on the decision of a divided court in Standard Electrica, from which we have quoted, holding that where a shipper had made up nine pallets each containing six cardboard cartons of television timers, the pallet rather than the cartons constituted the "package."
We recognize that this distinction is not altogether satisfactory; it leaves open, for example, what the result would be if Freudenberg had packed the bales in a container already on its premises and the bill of lading had given no information with respect to the number of bales.
However, this does not inevitably lead to the conclusion that the limitation was invalid as applied to a loss after the cargo had been landed.
The framers of COGSA were at considerable pains to make clear that it applies only to "the carriage of goods by sea to or from ports of the United States, in foreign trade." 46 U.S.C. § 1300 (enacting clause). Section 1(e) defines "carriage of goods" as covering "the period from the time when the goods are loaded on to the time when they are discharged from the ship." 46 U.S.C. § 1301 (e). Section 12 leaves the issue of liability for the period prior to loading or after discharge to the Harter Act, 46 U.S.C. § 1311, see fn. 4, or any other relevant legislation.
If Mooremac had said simply that liability before loading or after discharge would be limited to $500 per container unless a higher valuation were declared and a higher rate paid, such a stipulation would have effectively limited its liability for the loss that here occurred. The Ansaldo San Giorgio I v. Rheinstrom Bros. Co., 294 U.S. 494, 496-497, 55 S.Ct. 483, 79 L.Ed. 1016 (1935). However, plaintiff claims, and the district court held, that a different result was compelled here because the limitation was void as applied to the carriage covered by COGSA and, as we said in David Crystal, supra, 339 F.2d at 299, "[i]t would be unfair to permit the void clause to spring to life once the goods reached land, for by then Crystal had justifiably relied on the clause's inapplicability in making its decision on adequate cargo insurance."
Defendants suggest various bases for distinguishing David Crystal. They say that, in contrast to the bill of lading there at issue, clause 1 of the instant bill of lading apprised the shipper that where COGSA did not apply by its own force, the carrier was covered by all limitations stated elsewhere therein, and thus the $500 limitation clause for the entire container should be given effect after discharge. They point out that the limitation sought to be effected by the bill of lading in David Crystal was £20 per package, which was inadmissible under any possible reading of COGSA and, indeed, as the court said, "such an arbitrarily small sum that it should be void as contrary to public policy," 339 F.2d at 299. But all this shows is that David Crystal was a stronger case for holding the limitation invalid after landing than this one.
This brings us to the shipper's cross-appeal. The district court applied the $500 per bale limitation to Tidewater on the ground that "Tidewater was only an instrumentality for performing the carrier's duty and therefore was `rendering services in connection with the performance of this contract'" under clause 2 of the bill of lading. Plaintiff attacks this conclusion on a number of grounds, notably this court's decision in Cabot Corp. v. S.S. Mormacscan, 441 F.2d 476 (2 Cir.), cert. denied, 404 U.S. 855, 92 S.Ct. 104, 30 L.Ed.2d 96 (1971). While we find it unnecessary now to decide these questions in light of our remand of the shipper's claim against Tidewater, we do note with interest the apparent New York rule, applicable in the context of bailments, that an agent acting within the scope of its authority is entitled to the benefit of any contractual limits upon the liability of its principal. See e. g., Berger v. 34th Street Garage, Inc., 3 N.Y.2d 701, 171 N.Y.S.2d 824, 148 N.E.2d 883 (1958); Howard v. Finnegans Warehouse Corp., 33 A.D.2d 1090, 307 N.Y.S.2d 1022 (1970). We express no views at this juncture as to the precise effect of that rule in the context of this case.
On the defendants' appeals, the judgment is affirmed with respect to Mooremac and the Mormaclynx, and reversed and remanded with respect to Tidewater; we do not reach the questions raised on the plaintiff's cross-appeal. Plaintiff may recover half its costs against Mooremac and the Mormaclynx. Costs with respect to Tidewater shall abide the event.
MULLIGAN, Circuit Judge (dissenting in part):
I respectfully dissent only from Part IV of this scholarly opinion. I agree that the $500 limitation on the face of the bill of lading is invalid while the cargo is on board and COGSA is applicable. However, I cannot agree that its invalidity persists after the cargo has been unloaded from the ship. There is no dispute that COGSA is applicable only from the time the goods are loaded to the time when they are discharged, 46 U.S.C. § 1301(e). It is also agreed and COGSA provides (46 U.S.C. § 1311) that after the cargo is discharged the duties, responsibilities and liabilities of the ship or carrier are to be governed by the Harter Act (46 U.S.C. §§ 190-196). It is further undisputed that the Harter Act permits a contractual limitation of liability such as that on the face of this bill which gives the shipper the option to declare a higher valuation and to pay higher freight. If all of this is agreed and understood, by what legal legerdemain is the limitation on this bill which is valid under the applicable statute, found to be invalid?
The majority opinion relies on the decision of this court in David Crystal, Inc. v. Cunard Steamship Co., Inc., 339 F.2d 295
We think J. Aron v. The Askvin, 267 F.2d 276 (2d Cir. 1959) should control here. There the bill of lading, as in this case, incorporated COGSA and also contained a specific statute of limitations that was more restrictive than the COGSA provision. The issue was which limitation provision would apply to a shipper's claim for a loss of cargo which occurred after discharge and before delivery. This court found that the specific language of the bill controlled the general language of COGSA and that the limitation was valid under the applicable Harter Act. In that case the shipper had no alternative but to adhere to the specific language of the limitation. In the present case the shipper at least had the option of declaring a higher valuation and paying more freight. This he deliberately failed to do and I am not conscious of any unfairness in limiting his recovery. In J. Aron this court totally barred the recovery.
The fact J. Aron was not cited to the court in David Crystal is interesting but not significant. If this court were limited in its decision to cases and authorities cited to us, the landmark opinion of Chief Judge Friendly in this case would never have been written.
This must be read in conjunction with § 3(8), 46 U.S.C. § 1303(8), which states:
In the same vein, while a carrier could not simply disclaim all responsibility for cargo upon discharge from the ship's deck, see § 1 of the Harter Act, 46 U.S.C. § 190, we see no impediment to a carrier and shipper agreeing in the bill of lading that the carrier may fulfill its responsibilities as carrier following discharge by taking such a step as putting the cargo in a public warehouse at the risk and expense of the shipper. Compare David Crystal, Inc. v. Cunard S.S. Co., 339 F.2d 295, 297-298 (2 Cir. 1964), cert. denied, 380 U.S. 976, 85 S.Ct. 1339, 14 L.Ed.2d 271 (1965). The bill of lading here essentially provided for this, but Mooremac did not act upon this provision.
On the other hand, the absence from the shipper's complaint of any allegation concerning pendent jurisdiction does not bar consideration of the issue by this court. Pendent jurisdiction is not matter which must be pleaded since the court already has jurisdiction over the case. See F.R. Civ.P. 8(a) (1); 5 Wright & Miller, Federal Practice and Procedure § 1207, at 82 (1969).
To the extent that any possible constitutional considerations influenced judicial limitation of admiralty impleader, a major factor appears to have been concern with the denial of the jury trial right guaranteed by the Seventh Amendment. See The Goyaz, 281 F. 259, 261 (S.D. N.Y. 1922). This was, of course, a serious problem prior to the merger of the admiralty and civil jurisdictions. Nor has the problem been clearly resolved by the mere fact of merger. See F.R.Civ.P. 38 (e). Compare McCann v. Falgout Boat Co., 44 F.R.D. 34, 44 (S.D. Tex. 1968), with 6 Wright & Miller, Federal Practice and Procedure § 1465, at 350-52. However, insofar as third-party practice has relevance to the question of pendent jurisdiction in this case, we are not faced with any problem of denial of the right to jury trial since Tidewater made no such demand below. See F.R.Civ.P. 38(d).
In sum, then, we find the constitutional judgments reflected in the doctrine of ancillary jurisdiction in civil impleader to be of substantial relevance to the issue of pendent jurisdiction in this case.