shows that the shipment's actual destruction was not a foregone conclusion. In a letter written to American some nine days after the shipment had been located, Aceto wrote only that the shipment "might" have lost its potency as a result of having been left unrefrigerated. (Letter from Aceto to American of 9/14/92, Ex. 3 to Def.'s 12(m) Statement.) More significantly, in the same letter Aceto advised American that upon receipt of the returned shipment, Omnichem would determine "whether [the vincristine sulfate] is usable as is, whether it has to be reworked, or whether it has to be disposed of." (Id.) In other words, unlike Dalton's greyhounds or Hughes-Gibb's swine, it was not apparent whether the vincristine sulfate had been merely damaged, and thus covered by Article 26, or completely destroyed, and thus outside of Article 26, or even left unharmed. Thus, where the destruction is not obvious or otherwise known to the carrier, Dalton's "no notice for destroyed goods" rule does not apply.
Other courts have reached the same conclusion. In Highlands Insurance Co. v. Trinidad and Tobago Airways Corp., 739 F.2d 536 (11th Cir. 1984), the court explained that the Dalton rule has been applied only to cases involving the shipment of live animals that died before delivery. Id. at 539 (collecting cases). Were the rule to apply beyond animal cases, the court stated, it should control only "where the destruction is both total and obvious," such as the shattering of the demijohn of brandy. Id. at 539 (citing example in Dalton). Such was not the situation presented by Highlands. There the plaintiff's subrogor, observing the defendant's employees throwing his fragile electronic components from a storage rack to the floor approximately 18 feet below, assumed that his goods had been harmed but did not confirm that the entire shipment had been severely damaged until three days afterwards. Id. at 538. Another thirteen days passed before the carrier received written notice of the loss. Id. The court found Dalton inapplicable and the plaintiff's claim timebarred by Article 26 because the items had been securely packed and the carrier did not have actual notice of the loss. Id. at 539. The court also concluded that a notation on the delivery receipt that the electronic parts were "lift inoperative" was not sufficient notice under Article 26 because it did not inform the carrier of the nature of the damages actually claimed. Id. at 540.
Highlands bears several similarities to the present case. Here, Aceto and Omnichem, like Highlands' subrogor, knew that the vincristine sulfate had probably been damaged or even destroyed but did not confirm the actual loss until some time after the shipment had been returned to Omnichem. While American, like the carrier in Highlands, was aware of the risks, American did not receive timely, written notice of actual harm; in fact, as noted earlier, Aceto's September 14, 1992 letter to American suggested that there was some possibility that the vincristine sulfate might still be usable or recoverable. Finally, the warnings about refrigeration that American received before and during the period the shipment was misplaced resemble the notation "lift inoperative" in Highlands in that the warnings, which were mostly oral, advised the carrier of certain risks but did not inform American of the actual damages claimed.
Amazon Coffee Co. v. Trans World Airlines, Inc., 111 A.D.2d 776, 490 N.Y.S.2d 523 (App. Div. 1985) is also instructive on the inapplicability of the Dalton rule to the non-obvious destruction of goods. In Amazon Coffee, the shipper sued the carrier for the destruction of a shipment of perishable cheese. Citing Highlands, the court found Dalton and Hughes-Gibb to be inapplicable because the destruction of the cheese "was not obvious" and the defendant had been unaware that it had perished, if indeed it had done so, before it was delivered. Id. at 777-78, 490 N.Y.S.2d at 524-25. In other words, the court distinguished between "latent destruction," which requires notice, and "patent destruction," which, under Dalton and Hughes-Gibb, does not. Id. For these and other reasons, the court affirmed dismissal of one count in the plaintiff's complaint due to the plaintiff's failure to give the carrier notice under Article 26.
Id. at 777-78, 490 N.Y.S.2d at 524-25.
In the same fashion, this court believes that Plaintiff's loss was a latent, not a patent, destruction of the vincristine sulfate, particularly in light of Aceto's letter affirmatively representing that there was a chance the shipment might still be usable or recoverable. Dalton's "no notice for destroyed goods" rule is thus inapplicable to this set of facts, and American was entitled to written notice of actual harm pursuant to Article 26.
II. Whether notice was required when Aceto did not receive the shipment
Plaintiff also argues that Article 26 is inapplicable because the shipment in question was never completed. Plaintiff points to the first paragraph of Article 26, which states:
Receipt by the person entitled to the delivery of baggage or goods without complaint shall be prima facie evidence that the same have been delivered in good condition and in accordance with the document of transportation.
Warsaw Convention Art. 26(1), 49 U.S.C. § 1502 note (emphasis added). In this case, "the person entitled to delivery," namely, Aceto (or its customs broker Danzas) never received the goods at all because Aceto refused to accept delivery and ordered the shipment returned to Omnichem. Consequently, Plaintiff argues, American cannot seek refuge in Article 26's notice requirements.
Plaintiff, however, cites no case law to support the argument that the Warsaw Convention does not apply where delivery is not completed. In fact, Article 26(1) does not state that notice is required only when the goods are received by the intended recipient, as Plaintiff suggests. Rather, Article 26(1) states only that receipt is prima facie evidence that the goods have been delivered in good condition. Thus, if delivery had been made, and the condition of the delivered goods were disputed, then American could rely on the intended recipient's silence as prima facie evidence in its favor. Here, it is undisputed that the chemical shipment was not delivered to Aceto. This failure does not render the notice requirements of the Warsaw Convention inapplicable.
The court sympathizes with Plaintiff's implicit contention that the circumstances here suggest that American had at least constructive notice of Plaintiff's damage claim. American was told repeatedly that exposure to heat could damage or destroy the vincristine sulphate, and knew that Aceto had refused to accept delivery. Case law reveals, however, that even actual or constructive notice does not meet the Warsaw Convention's requirement. In Onyeanusi v. Pan American World Airways, Inc., 952 F.2d 788, 789 (3d Cir. 1992), the plaintiff sued the carrier for mishandling his mother's corpse, which had been exposed to the weather and decomposed when its airtray broke open en route to Nigeria. Although Onyeanusi involved damage rather destruction of goods, the case is instructive in that the court considered whether the carrier's "actual or constructive notice" that the corpse had been damaged constituted sufficient notice under Article 26. Id. at 794. The court concluded it did not, because Article 26 "clearly requires written notice" from the injured party that the goods have been damaged, even when the carner is already aware of or suspects there is a problem.
Id. Here, similarly, while American may have had "actual or constructive notice" that the vincristine sulfate had been ruined, such notice did not satisfy Article 26.
In brief, the fact that Aceto refused to accept delivery of the vincristine sulfate and ordered its return to Omnichem does not imply that American was not entitled to written notice of the damage, particularly when the evidence of the loss was not obvious or known to the parties. Having found that Article 26 is applicable, the court does not believe that American's actual or constructive knowledge, based on Aceto's actions and representations, satisfied the Article's notice requirements.
III. Whether notice was required when there was no air waybill
Finally, Plaintiff argues that the Warsaw Convention does not apply to this set of facts because there was no air waybill or other documentation for American's shipment of the vincristine sulfate back to Omnichem in Belgium. This is significant because, according to Plaintiff, American is holding Omnichem responsible as the consignee of the shipment and, thus, the party responsible for giving notice to American. Where there is no air waybill, there is no contract of carriage, and the Warsaw Convention does not apply, argues Plaintiff. (Plaintiff's Response at 6-7.)
Plaintiff's assumption that there is no contract where there is no air waybill is incorrect, however. Article 5(2) makes clear that the absence of an air waybill does not affect the existence or validity of a contract of transportation, nor does it affect the applicability of the Warsaw Convention, subject to the provisions of Article 9.
See Warsaw Convention Art. 5(2), 49 U.S.C. § 1502 note. Two questions arise, then: first, whether there was a contract for transportation for the shipment's return flight; and second, whether the Convention is applicable to such contract.
With regard to the first question, the court believes the facts of this case are such that the return flight cannot be viewed in isolation but must be taken together with the original (unsuccessful) shipment to Aceto. Rather than two separate shipments, then, this case more closely resembles a single transportation operation performed by successive carriers, as described in Article 1(3) of the Warsaw Convention.
Under Article 30(1), the carriers (in this case, both American Airlines) are subject to the rules of Warsaw Convention and deemed to be contracting parties, while Article 30(3) states that either the consignor or consignee (i.e., either Aceto or Omnichem) may take action against the carrier (American) that was transporting the goods when the destruction, loss, damage or delay took place.
See Warsaw Convention Art. 30(1), (3), 49 U.S.C. § 1502 note. Consequently, the court concludes there was a contract for carriage for the return flight to Omnichem, even if the parties completed an air waybill only for the initial delivery to Aceto.
As for the question whether this contract is governed by the Warsaw Convention, Article 5 directs the court's attention to Article 9, which states that if a carrier accepts the goods without an air waybill, "the carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability."
Id. Art. 9. Notably, Article 9 does not state that the Warsaw Convention does not apply at all, as Plaintiff seems to suggest; it states only that the carrier may not take advantage of certain limits on liability.
Case law strongly suggests that the provisions that "exclude or limit" liability mentioned in Article 9 do not include Article 26, particularly its fourth paragraph that allows a carrier to escape liability where it has not received timely, written notice of damage to goods. See Onyeanusi, 952 F.2d at 794; Highlands, 739 F.2d at 539-40; Butler's Shoe Corp. v. Pan American World Airways, Inc., 514 F.2d 1283, 1285 (5th Cir. 1975). Although these cases actually involved interpretation of Article 25 rather than Article 9, they are nonetheless relevant to this discussion because of similarities between these two articles. Article 25 states that in cases of wilful misconduct, "the carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability."
Warsaw Convention Art. 29(1), 49 U.S.C. § 1502 note. Courts have held that Article 26 is not
among those "provisions . . . which exclude or limit [the carrier's] liability"; thus, carriers are entitled to written notification under Article 26 even if they may have engaged in wilful misconduct under Article 25. See Onyeanusi, 952 F.2d at 794 (Article 25 excuses only limitations on monetary liability, not requirements of notice); Highlands, 739 F.2d at 539-40 (Article 25 does not deprive carrier of Article 26 notice requirements); Butler's Shoe, 514 F.2d at 1285. The same reference in Article 25 to provisions that "exclude or limit [the carrier's] liability" is also found in Article 9. Thus, it is a simple extension of these cases to conclude that the absence of an air waybill does not mean that American cannot avail itself of Article 26's notice requirements.
In sum, the court finds that regardless of the absence of an air waybill for the vincristine sulfate's return flight to Omnichem, the parties did have a contract of carriage for this flight; that such contract was subject to the Warsaw Convention; and that the Convention does not prevent American from taking refuge in the notice requirements of Article 26. Consequently, Plaintiff's claim is barred as untimely under Article 26.
IV. Whether Aceto's September 14 letter was sufficient notice under Article 26
Given the seemingly harsh and technical requirements of Article 26, it is worth exploring sua sponte whether Aceto's September 14, 1992 letter to American was adequate written notice of damage or destruction of the vincristine sulfate. In this letter, which was prepared some nine days after American located the missing shipment, Aceto advised American that vincristine sulfate loses its potency if not refrigerated; directed American to return the shipment to Omnichem for analysis; and sought assurances that American would pay for any expenses involving in reworking or disposing of the product. (See Letter from Aceto to American of 9/14/92, Ex. 3 to Def.'s 12(m) Statement.) Assuming the letter was timely,
one could argue that it did give American sufficient notice under Article 26.
The court, however, believes that the letter expressed only the possibility that the shipment had been damaged, not that it actually had been destroyed. This is borne out by Aceto's own statements in the letter that the shipment "might" have been damaged or destroyed, and that Omnichem would determine whether the product was usable, recoverable, or ruined. (Id.) The court believes that where a party affirmatively represents that a shipment may in fact be undamaged, notice of only potential harm. or notice given before the damage or destruction has actually been ascertained, is not sufficient to satisfy Article 26. Cf. Onyeanusi, 952 F.2d at 794 (carrier's actual or constructive knowledge of damage did not satisfy Article's 26's clear requirements for written notice).
The court recognizes that other cases may appear to have come out differently. See Maschinenfabrik Kern, A.G. v. Northwest Airlines, Inc., 562 F. Supp. 232, 235, 237 (N.D. Ill. 1983) (carrier's own observation of "at least actual possible damage" to shipment of copying machines was sufficient to satisfy Article 26, even though carrier did not know conclusively that the machines were damaged); B.R.I. Coverage Corp. v. Air Canada, 725 F. Supp. 133, 137-38 (E.D. N.Y. 1989) (letter informing carrier that shipment of furs had not arrived and that the carrier would be held responsible for the missing goods satisfied Article 26's notice requirement for damaged goods, even though the parties did not know at that time that the furs had been ruined by water damage); Pesquera Navimar, S.A. v. Ecuatoriana de Aviacion, 680 F. Supp. 1526, 1527-28 (S.D. Fla. 1988) (notation on air waybill that boxes of frozen shrimp had arrived soft, wet, and overly warm was sufficient notice, even though the parties did not know whether the goods inside had in fact been damaged). Neither Plaintiff nor Defendant has discussed these cases, which the court believes are distinguishable from the present case; in none of these cases did the shipper or intended recipient affirmatively represent to the carrier that the goods may still be usable or recoverable, as was the case here. Also, to the extent that these district court decisions differ from the Third Circuit's decision in Onyeanusi, the latter case is controlling.
Having belabored a point that the parties themselves have not raised, the court concludes that Aceto's September 14 letter did not satisfy Article 26's notice requirements.
For all the reasons given above, the court finds none of Plaintiff's objections to the application of the Warsaw Convention or the notice requirements of Article 26 to be persuasive. Furthermore, the court finds that while American may have had notice of potential harm to the vincristine sulfate shipment, such notice was not sufficient to satisfy the requirements of timely notice of actual harm under Article 26. Consequently, the court finds that Plaintiff's action is barred as untimely under Article 26 of the Warsaw Convention. Defendant's motion is granted.
Dated: December 27, 1995
REBECCA R. PALLMEYER
United States Magistrate Judge