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ATLANTIC MUTUAL INSURANCE CO. v. POSEIDON SCHIFFAHRT

April 15, 1962

ATLANTIC MUTUAL INSURANCE COMPANY, LIBELLANT,
v.
POSEIDON SCHIFFAHRT, RESPONDENT.



The opinion of the court was delivered by: Parsons, District Judge.

This libel action involves the $500 Limitation of Liability provision of the Carriage of Goods by Sea Act, 46 U.S.C.A. § 1304(5). The Libellant, Atlantic Mutual Insurance Company, was assurer of the consignee, Societe Belge Reineveld, of Antwerp, Belgium. The Respondent is the carrier. The goods consisted of certain ironing machine pads in one package, stowed on Respondent's vessel for delivery upon arrival at Antwerp on a day certain. The goods did not arrive as scheduled. Instead, they were located eight months later in Hamburg, Germany.

In the meantime, Libellant assurer had paid the consignees $1,070 pursuant to the insurance contract between them. Approximately eighteen months after the contemplated date of delivery, Respondent delivered the goods to the Libellant. The Libellant, then in turn, offered the goods to the consignee, Societe Belge Reineveld, on condition that the latter would refund the $1,070 that had been paid it, but to this the consignee refused to agree. Later the consignee agreed with its assurer to buy from it the goods for $204.66, the alleged value of the goods to Reineveld at the time it finally received them, and the loss to Libellant, that is, the approximate difference between the amount it paid the consignee for the loss and the amount it received for the goods in mitigation thereof, $725, became the amount sued on in this action.

After having stipulated to certain facts, the parties present the Court here with two questions:

    "(1) Is the assurer-libellant entitled to
  recover as damages from the carrier-respondent
  the loss it experienced, that is, the difference
  between the amount it paid the shipper under the
  policy of assurance and the amount it received
  from the mitigation of loss sale; and
    "(2) If Libellant is entitled to recover from
  the Respondent, may it recover the full $725 sued
  for, or is its recovery limited to the $500 set
  out in the Limitation of Liability provision of
  the Carriage of Goods by Sea Act, Supra?"

The pertinent provisions of Title 46 U.S.C.A. § 1304, are these:

    "(4) Any deviation in saving or attempting to
  save life or property at sea, or any reasonable
  deviation shall not be deemed to be an
  infringement or breach of this Chapter or of the
  contract of carriage, and the carrier shall not
  be liable for any loss or damage resulting
  therefrom: Provided, however, That if the deviation
  is for the purpose of loading or unloading cargo or
  passengers it shall, prima facie, be regarded as
  unreasonable"; and

Sub-section (5), which reads:

Prior to the passage of this Act in 1936, there was little doubt that overcarriage beyond and to a different port than the contracted destination was a material "deviation". Niles-BementPond Co. v. D/S A/S Balto, 282 F. 235; General Electric Co. v. Argonaut Steamship Line, Inc., D.C., 7 F. Supp. 710. And in at least one case decided subsequent to the Act, it has been recognized that overcarriage is a material deviation. Shackman v. Cunard White Star, D.C., 31 F. Supp. 948 (1940).

A delay of one and one-half years in delivery is in itself a material deviation, regardless of the fact of overcarriage. The Citta Di Messina, 2 Cir., 169 F.472 (1909); The Hermosa, 9 Cir., 57 F.2d 20 (1932). All of these cases indicate that such material "deviations" constitute fundamental breaches of the contract of shipment.

There should be no doubt in the instant case that the overcarriage here, coupled with the one and one-half year delay in delivery, constitutes indeed an "unreasonable deviation" justifying rescission of the contract of shipment, under the law, either before or after the enactment of the Carriage of Goods by Sea Act. What happened to the goods was, under the least strict application of the law, an entirely different venture from that contemplated by the parties.

Respondent here cites Hellyer v. Nippon Yesen Kaisya, D.C., 130 F. Supp. 209, in support of its contention that mere non-delivery is not an "unreasonable deviation," and should not be the basis for contract rescission; but the issue here was not actually presented in that case. Although Hellyer may be quoted as stating that "mere non-delivery" is not an "unreasonable deviation," the issue there was the effect of "reasonable or unreasonable deviation" upon the determination of the time of delivery for the purpose of applying the limitation of action provision of the Carriage of Goods by Sea Act.

Section 1303(6), Title 46 U.S.C.A. § 1303(6) provides that any action in respect of loss or damages must be brought within one year from the contemplated date of delivery or from the date of delivery. The question raised by this provision is not present in the instant case, for if we assume delivery to the insurer after payment by the insurer to the shipper of the loss, to constitute delivery to the consignee under the Act, this action was brought within one year after delivery. At any rate, the parties admit that there was no physical loss or damage to the goods. Hence, 46 U.S.C.A. § 1303(6), does not apply to the case at bar. United Merchants & Manufacturers, Inc. v. United States Lines Co., 204 Misc. 989, 126 N.Y.S.2d 560 (1953). In the case before us, we have not only an eighteen months and an unreasonable delay in delivery, if there was at law delivery, but also a material overcarriage from ...


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