TUTTLE, Circuit Judge:
This is a suit for damages for breach of contract by the insurer, Emmco Insurance Company, who has been subrogated to the rights of the consignee, Quality Sales Corporation (Quality), against the carrier, Wallenius Caribbean Line (WCL).
The district court held under the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1300 et seq., that the plaintiff had failed to carry its burden of proof (1) on liability, by failing to demonstrate that the partial thawing of the cargo resulted in spoilage and unmarketability, and (2) if liability was proven, of establishing the amount of damages by showing the difference between the fair market value of the cargo at destination had there been no spoilage and the market value as damaged. In other words, the consignee caused the cargo to be destroyed because of its deteriorated condition. The insurer reimbursed Quality $15,902.95 for the cargo pursuant to its insurance policy. In the subsequent suit by the insurer against the carrier, the district court found that there had been no proven damage. Plaintiff-appellant asserts that the district court's decision was "clearly erroneous."
The cargo, 2,475 cartons of frozen french fried potatoes, was stowed in two refrigerated trailers which were placed aboard a freighter operated by WCL in August, 1971 at Port Everglades, Florida. On August 15, 1971, the trailers containing the cargo were unboarded in St. Thomas, Virgin Islands. One trailer was delivered to Quality on August 16, while the other remained in the trailer holding area. Because of the thawed condition of the cargo, discovered by Quality's employees while unloading cartons on August 16, a marine surveyor, Mr. Robert Crytser, was engaged by Quality to ascertain the fitness for consumption of these potatoes. On August 17, Mr. Gonzalez Sibila, a marine surveyor from San Juan, Puerto Rico, was brought in by WCL to inspect the cargo. Also, on that date Mr. Edward Buzzell, an inspector from the Department of Health, Bureau of Environmental Sanitation, inspected and determined that the cargo should be condemned. A telephone offer to purchase the shipment sight unseen by a salvage broker in San Juan, Puerto Rico, for 40% of the invoice value of the cargo was allegedly made but not acted upon by Quality.
Appellant maintains that if the hearsay statements, improperly admitted, are subtracted from the evidence at trial, the district court's decision is "clearly erroneous." Fed.R.Civ.P. 52(a). An examination of the properly admissible evidence reveals that the court's findings "are without adequate evidentiary support in the record" and leaves us with a "definite and firm conviction" that the district court was mistaken. Chaney v. City of Galveston, 368 F.2d 774, 776 (5th Cir. 1966).
Appellant excepts to two conversations, both testified to by Sibila, WCL's marine surveyor, as inadmissible hearsay. Fed.R.Civ.P. 43(a). Each statement was accepted by the trial court, over appellant's objections, for the truth of the information in the conversation.
The first conversation was an alleged offer, which Sibila stated a San Juan salvage broker conveyed to him, to salvage the cargo for 40% of its invoice value. The trial court inferred from this statement:
Hearsay is commonly defined as an out of court statement accepted for the truth of what the statement asserts. McCormick § 226; 5 Wigmore § 1361. This statement was made by an out of court declarant. One of the inferences that arises from its assertion is that the french fried potatoes have value as a food product, i. e. are edible.
The second conversation is contended to constitute hearsay within hearsay. The witness Sibila stated:
The district court accepted this as true: "Credible evidence was introduced, however, that the purported order of condemnation was issued at the request of Quality Sales Corporation." Appellant argues that not only the statement by Sibila of what Buzzell said is hearsay, but that what Buzzell said that the consignee said totals double hearsay.
The district court clearly erred in admitting this twice handed-down statement. General Tire of Miami Beach v. NLRB, 332 F.2d 58, 61 (5th Cir. 1964). Not only was there no opportunity to cross-examine, but the alleged declarant, an employee of Quality, is not even identified. Appellant had no way of attempting to locate the declarant for trial.
The appellee does not offer, and we cannot discover, a rebuttal, in the form of an exception to the hearsay rule or other rationale, to appellant's hearsay objections. Appellee submits, rather, that the court had correctly concluded that appellant had failed in his burden
In reviewing a trial court's determination, an appellate court is bound by the standard of Fed.R.Civ.P. 52(a):
However, the presumptions under this rule normally accorded the trial court's findings are lessened where the evidence consists of documentary evidence, depositions, and "situations where credibility is not seriously involved or, if it is, where the reviewing court is in just as good a position as the trial court to judge credibility."
The evidence at trial consisted almost totally of depositions and documents. The components of the evidence on the issue with which we are concerned, except for the minor testimony of Mr. Pedrito Francois, the Director of the Bureau of Environmental Health for the Virgin Islands, are depositions and documents.
From a reading of the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1300 et seq., and the cases dealing with this Act, it is clear that appellant could establish a prima facie case merely by proof of receipt of the cargo by the carrier in good condition and delivery at destination damaged. Compagnie De Navigation v. Mondial United Corp., 316 F.2d 163 (5th Cir. 1963); M. W. Zack Metal Co. v. S.S. Birmingham City, supra, 311 F.2d at 337; Daido Line v. Thomas P. Gonzalez Corp., 299 F.2d 669, 671 (9th Cir. 1962); Interstate Steel Corp. v. S.S. "Crystal Gem," 317 F.Supp. 112,
On this issue, the district court held:
To summarize more specifically, the evidence of unmarketability consisted of an exhibit of the Health Department's report by their inspector Buzzell declaring the french fries inedible, and the deposition of Quality's marine surveyor, Crytser, supporting this conclusion. On the side of marketability, the evidence was comprised of the testimony of WCL's marine surveyor, Sibila, stating that the potatoes were uncontaminated and if refrozen, would be edible, and the hearsay salvage offer.
Having found the salvage offer to be hearsay, the district court's decision cannot be underpinned by its support. Concerning the testimony of both marine surveyors, there appears to be a question of whether they were qualified as experts on the issue of the fitness for human consumption of the french fired potatoes.
The auxiliary issue is whether appellant established the amount of damages. This amount, as the district court correctly concluded, is the difference between the fair market value of the cargo in sound condition at its destination and the fair market value in its damaged state. Holden v. S. S. Kendall Fish, 395 F.2d 910 (5th Cir. 1968); Weirton Steel Co. v. Isbrandtsenmoller Co., 126 F.2d 593, 594 (2d Cir. 1942). Cf. Zajicek v. United Fruit Co., 459 F.2d 395, 402-403 (5th Cir. 1972). While the condemnation of the french fried potatoes is proof that the cargo was a complete loss in the Virgin Islands, the appellant still had to show the fair market value of the cargo in sound condition. The district court found that some evidence, in the form of the invoice of the cargo which reflected the price paid by the consignee, was introduced on the issue of the fair market value, but concluded that this was not sufficient.
While the duty to mitigate damages lay with Quality, the burden to show failure to mitigate is upon the appellee. 5 Corbin On Contracts §§ 1039, 1041 (1964). The testimony of Francois, the Director of the Bureau of Environmental Health, revealed that Quality was free to transport the cargo out of the Virgin Islands. The hearsay statement by Sibila concerning the alleged offer from a salvage broker in Puerto Rico was inadmissible to prove this failure. The appellee made no effort to depose
The district court erred by admitting damaging hearsay, by taking an erroneous legal view of the Health Department's document admitted under the business records exception to the hearsay rule, and by giving insufficient weight to the invoice value. Since we are unable to determine what the court's judgment would have been but for these errors, we remand for its further consideration.
The judgment of the trial court is reversed and the case is remanded for further proceedings not inconsistent with this opinion.
The main justification for excluding hearsay is lack of opportunity for the adversary to cross-examine the out of court declarant. McCormick § 224; 5 Wigmore § 1362. In other words, cross-examination in this case could have brought out exactly on what factual basis the salvage broker made the alleged offer, e. g. merely salvage speculation, actual first hand knowledge of the edible quality of the potatoes, the opinion of Sibila. The court could have then better judged the weight to which the statement was entitled.
See United States v. United States Gypsum Co., 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746 (1968).
Quality received delivery of one trailer on August 15th at which time it called in a marine surveyor. WCL sent over a marine surveyor on August 17th, which was also the date of the inspection by the Health Department. There was testimony by the defendant's marine surveyor that if the potatoes had been maintained at the correct refrigerated temperature during transit, forty-eight hours, if not longer, was the minimum thawing time before damage. From this evidence, we assume that the time lapse or the responsibility for refrigerating the potatoes during this time as bearing on liability, had been settled.