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B.s. Livingston & Co. v. Bethlehem Steel Export

DECEMBER 5, 1974.




APPEAL from the Circuit Court of Cook County; the Hon. JAMES D. CROSSON, Judge, presiding.


Rehearing denied January 30, 1975.

B.S. Livingston & Company, an exporter of steel, purchased 2,900 tons of secondary cold rolled steel from Bethlehem Steel Export Corporation for resale to a customer in Italy. Pursuant to agreement, Bethlehem wrapped the steel in waterproof paper and shipped it by the New York Central Railroad to a marine terminal owned and operated by the International Great Lakes Shipping Company at Calumet Harbor, Chicago. International had agreed to unload and store the steel, without cost to Livingston, at its open-air facilities until it could be shipped abroad on a freighter of the Yugoslav Line, for which International was the agent.

The purchase, shipping and storage agreements were made in July 1967, and in August of that year, at Bethlehem's plant in Burns Harbor, Indiana, 775 packages of the steel were loaded on 38 open gondola cars. The cars were in transit 3 to 10 days and were delivered by New York Central to International at seven different times. The first two cars left Bethlehem on August 2 and arrived on August 8; the last three arrived on August 27. It had rained on August 8, 10, 18, 19, 26 and 27. Steel is subject to rust from rain and moist air and that bought by Livingston — secondary cold rolled — had more flaws than primary steel and was more susceptible to oxidation from exposure to water and humid atmosphere. International noticed that packages were wet, the wrappings were torn and that rust was forming on the sides and corners of the steel. On August 16 it reported its observations to Livingston. By August 22, 29 carloads had been delivered and on that date Livingston inspected the steel and confirmed the damage. Despite the damage, Livingston disagreed with International's opinion that the material was not suitable for export to Europe. The contents of the nine cars delivered subsequent to August 22 were in essentially the same condition as that examined by Livingston on the 22nd.

International unloaded the steel from the gondola cars and stored it outdoors on wooden chocks and covered it with plastic and with canvas tarpaulins which were secured by large pieces of wood. Livingston encountered difficulty in consummating the contemplated sale to its Italian customer and the material remained on International's lake-side dock until sometime in October 1967. In the meantime the customer reduced its order to 1,000 tons and Livingston negotiated the sale of most of the balance to a client in Germany. Considerable deterioration had occurred during storage and representatives of the two prospective purchasers examined the steel toward the end of September and rejected it as unsatisfactory. An effort was made to renovate the steel, but it was decided that this would be too expensive. Finally, the entire lot was sold to a warehousing firm at a considerable loss to Livingston.

Livingston filed a complaint for damages against Bethlehem, New York Central and International. The complaint alleged that each of the defendants committed one or more negligent acts: failure to adequately cover the steel from the elements during shipment; failure to properly load and unload the steel from the freight cars; careless and negligent handling of the material; shipment and storage in open rather than enclosed accommodations, and failure to prevent further damages after knowledge that the steel was being damaged. The second count of the complaint alleged that the defendants had exclusive possession and control of the steel and that no damage would have occurred to it if the defendants had exercised due care.

At the close of the evidence, the trial court dismissed the second count. The jury found in favor of Bethlehem, but returned a verdict against New York Central and International and assessed damages of $25,000. Post-trial motions were filed by New York Central, International and Livingston. The court granted a new trial to New York Central as to damages and entered a judgment notwithstanding the verdict for International on all issues. Livingston's post-trial motions were denied.

Livingston appeals from the n.o.v. judgment granted International and from the denial of its motion for a new trial against Bethlehem and International on Count II. It does not appeal the new trial New York Central received on the issues of damages.

The case was tried on Livingston's erroneous theory that the negligence of one defendant was the negligence of all. It is apparent that the intent behind this theory was the desire to hold the two financially solvent defendants — Bethlehem and International — liable for any damage caused by New York Central (now the Penn Central) which is presently in financial difficulty. In keeping with this intent, it is to be noted that Livingston does not protest the partial new trial for damages allowed the railroad.

• 1, 2 The evidence fully justified the jury's verdict that Bethlehem was not guilty of negligence, but that New York Central and International were. In our view, however, New York Central and International were successive, not joint, tort-feasors.

The steel left Bethlehem's plant in good condition. Each package was bound with steel straps running lengthwise and crosswise around it, wrapped in oil paper selected by Livingston, loaded in enclosed facilities and in accordance with the rules of the American Association of Railroads, and shipped in cars to which Livingston had no objection. To prevent the packages from slipping in the freight cars, they were placed on skids and separated by lengthwise wooden runners. 2" x 4" and 4" x 4" uprights were attached to the skids. No logical inference that there was negligence on Bethlehem's part can be drawn from the condition of the steel at the time it reached International's terminal. Three railroads participated in transporting the material, the freight cars went through five switching yards and took as long as 10 days to reach their destination, during which time they had been exposed to rain.

On the other hand, the evidence presented at the trial supported the jury's conclusion that New York Central's handling of the shipment and International's handling and storage of the steel contributed to its damage. There was testimony that 102 of the 775 packages were damaged when they arrived at the terminal. Some were torn, some had broken bands, some were wet, some had started to rust and others were bent from being jammed against the ends of the cars. Water dripped from several of them as they were lifted from the cars.

The railroad left the cars about 150 to 200 feet away from the unloading area. International's employees moved the cars by pushing a tractor against the last car in the line. The impact from that car set the next car in motion until the whole line of cars moved. A 2-foot downward slope over a distance of 300 to 400 feet caused the cars to roll to the unloading area. After the first car stopped, each following car bumped the preceding car and stopped. International's superintendent testified that the procedure used to move the freight cars was not forceful enough to constitute a "humping" — a railroad term meaning heavy impact between cars. Still, he noted in his records that he observed humping when he checked the packages. He also testified that the freight cars were not covered or protected between their arrival at the terminal and their unloading. In one instance, three cars that arrived on August 23 were unloaded on the 28th; it rained on the 28th and had rained on August 26 and 27.

In removing the packages from the cars, International used a crawler type crane and attached four clamps to each package before lifting it. The packages were lowered on to a dunnage (6' x 8' lengths of 4" to 4" lumber) and a forklift truck then carried four of them at a time approximately 150 feet to the storage area where they were placed on dunnages and piled 6 feet high. The piles were covered with plastic that ...

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