T-516-74
International Factory Sales Service Limited
(Plaintiff)
v.
The Ship Alexandr Serafimovich and Far Eastern
Steamship Company (Defendants)
Trial Division, Smith D.J.—Vancouver, April 7
and 10, and May 30, 1975.
Maritime law—Loss of and damage to sewing machine
heads during unloading—Defendant admitting liability but
claiming $500 per package limit under Carriage of Goods by
Water Act—Each machine in separate carton, 50 shipped in or
on each of 3 pallets—Whether each carton a package—
Whether pallet containing 50 cartons a package—Machines
valued at $43.05 U.S. each—Carriage of Goods by Water Act,
R.S.C. 1970, c. C-15, Sch., Art. IV, Rule 5—Carriage of
Goods by Sea Act, U.S. Code 1970, 46-1300, s. 4(5).
Plaintiff claims damages for loss of and damage to sewing
machine heads valued at $43.05 (U.S.) each, each of which
were packed in separate cartons, and 50 of them were shipped
in or on each of 3 pallets. Defendants admit liability, but claim
the $500 per package limit under Rule 5, Article IV of the
Schedule to the Carriage of Goods by Water Act.
Held, awarding damages to the plaintiff, the $500 limit has
become unsatisfactory due to the depreciation of money since
1936, when thè limit was adopted, and the difference in type,
size and shape of packages resulting from technological
advance. Most of the jurisprudence dealing with the meaning of
the word "package" is American. It is clear that the decision
whether a large container, a pallet, or a smaller, wrapped
parcel in or on a container or pallet is a "package" within the
meaning of Rule 5 (Article 4(5) of the American Act) depends
on the facts of each case, especially the intention of the parties
as indicated by statements in the shipping documents, remarks
of the parties and the course of dealing between them. Descrip
tion of the goods in question (packing list and invoice, customs
invoice, bill of lading) indicates that each carton, rather than
the pallet, should be considered as the "package". The number
ing of the cartons, and their visibility from outside the pallet
strengthens the view that the description of the goods indicates
the governing factor in the parties' minds to have been 150
sewing machine heads, each packed in a separate protective
carton.
Johnston Company Limited v. The Ship "Tindefjell"
[1973] F.C. 1003, followed. Standard Electrica S.A. v.
Hamburg Sudamerikanische Dampfschiffahrts and
Columbus Lines Inc. [1967] A.M.C. 881; Leather's Best
Inc. v. The "Mormaclynx" [1971] 2 Ll. L.R. 476; Acush-
net Sales Co. v. S.S. "American Legacy" and United
States Lines Inc. (N.Y. District Court, unreported, May
21, 1974); and Primary Industries Ltd. v. Barber Lines
A/S Skibs and A/S Tropic [1974] A.M.C. 1444
discussed.
ACTION.
COUNSEL:
D. F. McEwen for plaintiff.
R. R. Walsh for defendant.
P. Gordon for third party.
SOLICITORS:
Ray, Wolfe, Connell, Lightbody & Reynolds,
Vancouver, for plaintiff.
Macrae, Montgomery, Spring & Cunning-
ham, Vancouver, for defendants.
Davis & Company, Vancouver, for third
party.
The following are the reasons for judgment
rendered in English by
SMITH D.J.: This is a claim for damages for loss
of and damage to sewing machine heads while they
were being unloaded at Vancouver, B.C. from the
ship Alexandr Serafimovich on the 28th of May
1973. The plaintiff, at the trial, rested its claim
solely on breach of contract by the defendants.
The defendants in turn have claimed, if they are
found liable, similar relief from a third party,
Empire Stevedoring Co. Ltd. whose servants and
employees were engaged in unloading the ship
when the loss occurred. Pleadings on the issue
between the defendants and the third party had
not been completed at the date of the trial, April 7,
1975 and the trial was concerned only with the
issue between the plaintiff and the defendants. The
issue between the defendants and the third party,
was, at the request of the parties, left for disposi
tion at a later date.
At the trial an agreed statement of admitted
facts was filed reading as follows:
1. Attached hereto and marked Exhibit "A" is a copy of the
Bill of Lading KVO-4 pursuant to which Bill of Lading the 3
Pallets containing a total of 150 Cartons of Sewing Machine
Heads were transported from Kobe, Japan to Vancouver, Brit-
ish Columbia by the Defendant Far Eastern Steamship Com
pany aboard the Defendant Ship "ALEXANDR SERAFIMOVICH".
2. The 3 Pallets containing a total of 150 cartons of Sewing
Machine Heads were loaded at Kobe in apparent good order
and condition.
3. The Plaintiff is the owner of the 3 Pallets containing a total -
of 150 Cartons of Sewing Machine Heads.
4. During discharge at Vancouver, 1 Pallet containing 50
Cartons of the Sewing Machine Heads was dropped over the
side of the vessel.
5. Forty-nine of the cartons fell into Vancouver Harbour.
6. That 45 of those cartons were never recovered and 4 cartons
were recovered from Vancouver Harbour with the Sewing
Machine Heads enclosed therein heavily rusted.
7. That in addition to the 49 Cartons which fell into Vancouver
Harbour, 3 Cartons were delivered to the Consignee with the
bases and upper arms broken and distorted.
8. It is admitted that if the Defendants are not entitled to limit
their liability the Plaintiff's damages would be $2,886.75.
The defendants admit liability but claim the
right tô limit their liability in accordance with
Rule 5 of Article IV of the Schedule to the Car
riage of Goods by Water Act, R.S.C. 1970 c. C-15.
This Rule reads in part:
5. Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with
goods in an amount exceeding five hundred dollars per package
or unit, or the equivalent of that sum in other currency, unless
the nature and value of such goods have been declared by the
shipper before shipment and inserted in the bill of lading.
In this case the nature of the goods was dis
closed in the bill of lading, Exhibit P-4 and there
fore may be assumed to have been known to the
defendants, but the value of the goods was not
inserted in the bill of lading.
All the shipping documents indicate that each
sewing machine was packed in a separate carton
and that 50 of them were shipped in or on each of
three pallets. According to the evidence of A. H.
Moore, Secretary Treasurer of the plaintiff, which
I consider reliable, the cartons are made of heavy
cardboard, rectangular in shape and measuring 16
inches by 9 inches by 12 inches. In recent years, by
arrangement with the Japanese suppliers, they
have had a Styrofoam lining designed and formed
to fit around the packed sewing machine and have
been stacked on pallets. The pallets on which the
cartons are stacked are simply wooden platforms
measuring about four feet by three and a half feet
and fastened to two inch by four inch boards so
placed that the arms of a forklift truck can slide
easily under the platform. The stacked cartons are
fastened together and to the pallet by steel bands
running around them both lengthwise and tvidth-
wise. To protect the cartons from damage by
pressure from. the steel bands pieces of angle iron
or wood are placed along the exposed edges and
corners The cartons are not fully enclosed. They
are individually numbered. In this case the num
bers ran consecutively from 151 to 300. All of
them could be seen and counted by anyone moving
around the pallet.
The issue between the parties turns on the
answer to the question whether, in the circum
stances of this case, each carton is a package
within the meaning of that word in Rule 5 of
Article IV (supra), or whether the pallet contain
ing 50 cartons is to be considered as the package.
According to the invoice, Exhibit P-2, the price of
each sewing machine set to the plaintiff was
$43.05 in U.S. dollars. Thus if each carton, con
taining one sewing machine, is considered to be the
package, the limitation of the carrier's liability to
$500 per package can have no application in this
case. It does not limit the carrier's liability in any
way. On the other hand, if the pallet, containing
50 cartons and 50 sewing machines, is considered
to be the package, the price of the 50 machines on
the pallet would be over $2000 and the carrier's
liability would be limited to a maximum of $500
on each pallet.
Before seeking to ascertain what is meant by
"package" in the present case, I note that for two
reasons the $500 limit on each package has
become unsatisfactory. First, the rule originated as
part of an international convention at The Hague
in 1924, to become effective for each state which
adopted it. Britain accepted the Hague Rules in
1924, but Canada and the United States did not
enact legislation to bring themselves under them
until 1936. The rpose of the $500 limit was to
afford some protection to cargo owners by setting
an amount, at that time regarded as being fair and
reasonable, below which shipping companies would
not be permitted to limit their liability for loss of
or damage to cargo. There has been a tremendous
depreciation in the value of money since 1936. If
$500 was a fair and equitable figure in 1936 it is
far from fair in 1975. The second reason is that
while those who set the $500 per package rule no
doubt had in mind the types, sizes and shapes of
packages in common use at that time, technologi
cal changes have completely altered the situation.
It appears that pallets, of the kind with which we
are concerned, were not in use at that time and
more particularly the large metal containers only
appeared on the scene in fairly recent years. These
containers vary greatly in size, being often 8 feet
wide and 8 feet high but having a length that may
be 40 feet or more. It further appears that other,
even larger receptacles for goods are being devel
oped. When we note that a container measuring 8
feet by 8 feet by 40 feet contains 2640 cubic feet
of shipping space, we readily see that if a fully
stuffed container is held to be a package under
Rule 5 of Article IV of the Schedule to the Car
riage of Goods by Water Act (supra) there will be
few, if any, cases in which the $500 rule affords
reasonable protection to the cargo owner. To
obtain protection a cargo owner will have to pay a
premium freight rate or provide himself with in
surance, probably at higher cost because of the
relatively small value of the insuring company's
subrogation rights against the shipping company.
There have been very few cases in Canadian
Courts where the question of the application of the
$500 rule to shipments by containers or on pallets
has arisen. There have been a few in the United
States, however, where judges have held that a
container was a single package. The same is true
respecting a pallet. The decisions have not been
uniform, but it seems clear that both the fall in the
value of money and in some instances the changes
in shipping methods have militated against the
cargo owner and in favour of the shipping
company.
Several judges have expressed the opinion that
shipping methods have changed and are changing
so greatly that the $500 rule should be thoroughly
reviewed and that a solution should be reached by
international agreement. Such a solution might
well come from a quite different approach to the
problem of providing a modicum of protection to
cargo owners. However, an international solution,
even if sought with good will and energy, is scarce
ly possible in less than a period of years. In the
meantime the courts must wrestle with the situa
tion as it continues to develop. They cannot change
the statutory figure of $500. This can only be done
by the legislature. It is always difficult to apply a
rule designed for an existing set of known circum
stances to very different circumstances that were
not even thought of at the time of its enactment
but have developed over the intervening years.
This is one of the functions of courts. In the
present instance this Court must seek to find and
apply, in the circumstances of this case, the true
meaning of the word "package" in Article IV,
Rule 5 (supra), in relation to the use of pallets,
always endeavouring to keep that meaning, so far
as possible, in accord with the legislative purpose
of the enactment.
To that end I turn to some court decisions,
mainly by United States courts because of the
paucity of Canadian cases. The American statu
tory provision is found in subsection (5) of section
4 of the U.S. Carriage of Goods by Sea Act U.S.
Code 1970, 46-1300. The opening paragraph of
this subsection reads:
(5) Neither the carrier nor the ship shall in any event be or
become liable for any loss or damage to or in connection with
the transportation of goods in an amount exceeding $500 per
package lawful money of the United States, or in case of goods
not shipped in packages, per customary freight unit, or the
equivalent of that sum in other currency, unless the nature and
value of such goods have been declared by the shipper before
shipment and inserted in the bill of lading.
It will be seen at once that the American subsec
tion is very similar to the Canadian, quoted earlier
in these reasons, but not identical therewith. The
most significant difference is found in the expres
sion "customary freight unit" in the American
statute. At the same spot the Canadian statute
uses simply the one word "unit", which means a
unit of goods, not a freight unit. As we are con
cerned in the instant case with goods shipped in
packages, the foregoing statutory difference will
affect us very little, if at all. The $500 limit per
package varies only with fluctuations in the
exchange value of U.S. and Canadian dollars, and
the legislative purpose is the same in both statutes.
Neither counsel had been able to find a case on
all fours with the instant case. Nor have I. How
ever, counsel for the plaintiff did cite several deci
sions of American courts, some of which I found
very helpful. I shall refer to three of them chrono
logically. The first is: Standard Electrica, S.A. v.
Hamburg Sudamerikanische Dampfschiffahrts
decided by the Second Circuit of the United States
Court of Appeals, April 19, 1967, and reported in
American Maritime Cases [ 1967] A.M.C. 881.
In this case 9 pallets each containing 6 card
board cartons of 40 television tuners were shipped.
The 6 cardboard cartons were strapped to the
pallet. Seven of the 9 pallets were lost. The pallets
were very similar in size to those in the instant
case.
Lumbard Ch. J., in the course of his judgment,
stated at page 884:
Libellant's principal contention is that a pallet is merely a
mechanical device that is to be used in conjunction with a
forklift and other machinery in order to facilitate loading.
At the bottom of the same page he proceeded:
Libellant's contention overlooks a number of factors. First, it
does not take into account the characterizations of the parties
themselves. The dock receipt, the bill of lading, and libellant's
claim letter all indicated that the parties regarded each pallet
as a package. On the dock receipt the "Marks and Numbers"
were given as "1/9 #" and the "No. of Pkgs." as "9 pallets."
The invoice from the shipper to the libellant described the
goods as follows:
"Numbers on the packages: 1 /9
Quantity: 9
After the loss was discovered libellant sent a letter to appellee's
agent complaining that "only 2 packages were discharged" out
of "a shipment of 9 packages"..
On page 885 he added:
Secondly it was the shipper and not the carrier who chose to
make up the cartons into a pallet, apparently for the reasons of
greater convenience and safety in handling.
And at the bottom of the page:
Thirdly, it does not take into account the fact that sec. 4(5)
specifically provides that the shipper, at his option, can obtain
full coverage simply by declaring the nature and value of the
goods in the bill of lading, and, if necessary, paying a higher
tariff, and thereby avoid the "outdated" limitation.
Lastly, since the word "package" fairly includes the pallets as
made up for shipment in this case, we do not deem it important
that the drafters might not have foreseen this precise applica
tion at the time that this provision was enacted thirty years ago.
It is clear that the learned Judge was influenced
greatly by the fact that all the documents in the
case referred to pallets as packages.
One of the judges dissented—Judge Feinberg.
His reasons for judgment begin at page 886.
Appellant consignee never received 1,680 T.V. tuners worth
$16,800, and appellee concedes it is liable for the loss. How
ever, appellee limits its liability to $3,500. Therefore, appellant
has been denied $13,300, which it has lost through no fault of
its own. For insufficient reasons the majority opinion approves
this inequitable result and disregards the strong policy behind
section 4(5) of COGSA.
The purpose of section 4(5) when enacted in 1936 was to
protect cargo interests like appellant. Prior to that time, seago
ing carriers had been able to limit their liability for loss of
cargo to insignificant amounts.
At the bottom of page 887 he then said:
I would normally expect a package at least to completely
enclose the goods in question. Here the tuners were completely
enclosed in cartons—each carton was obviously a package.
Strapping six cartons together on a platform with a board on
top "to prevent other cargo and the [four metal] straps from
cutting into the top two cartons" did not make a package out of
six cartons, since the pallet was not also enclosed on the sides.
On pages 888 and 889 he said:
None of the reasons the majority has given is adequate to
support the unfair result here. ... whether the, parties did
consider the pallets to be the statutory packages is ambiguous
at best; e.g. the appellee's own agent referred to "the loss of 42
cartons."
Second, the majority opinion points out that the shipper,
apparently for reasons of convenience and safety, and not the
carrier chose to make up the cartons into a pallet. This would
seem irrelevant. The opinion concedes that carriers also benefit
from the use of pallets; indeed, in footnote 4, it refers to other
"exciting possibilities" of large shipping units, presumably
desirable to carriers as well as to shippers. Attaching no
significance to which party loaded the cargo on board the
vessel, the majority considers crucial the number of units
received from the shipper, which it equates with the number of
packages, arguing that "the number of inner cartons is not apt
to be mentioned in * * * the shipping documents * * * ." This,
of course, assumes the conclusions that a carton is not a unit
and—by calling these plainly visible cartons "inner cartons"—
that the cartons were not packages.
Third, the majority implies that this shipper could have
obtained full coverage by declaring the nature and value of
goods and, if necessary, paying , a higher tariff. But if each
carton was a package, there would be no occasion for a special
declaration at a higher charge, since each carton was worth less
than $500. Thus, finding significance in failure to declare
merely begs the question of how to construe the word
"package."
Fourth, the majority concedes that the $500 package limita
tion may have become inadequate and its application inequit
able, but asserts that revision must come from Congress, not
the courts. Inadequate it has become; technological advance
ment and decline in the purchasing value of the dollar have
combined to reduce the meaning of the $500 minimum liability
limitation Congress gave to cargo interests. But I do not
understand why we should add to the inequity. The call for
congressional revision may be sound, but in the meantime we
should construe the existing statutory term as applied to the
facts before us in consonance with its legislative purpose. That
judicial function we ought not abdicate.
Finally, the majority's result is justified as giving "package"
a more predictable meaning. I am not sure what the "certain"
definition of package is that the majority relies upon, but I
suggest that, in any event, certainty at the expense of legislative
policy and equity is undesirable and often turns out to be
ephemeral.
I would reverse.
In my opinion the reasoning in the dissenting
judgment is more persuasive than that in the
majority decision.
The second case is Leather's Best Inc. v. The
"Mormaclynx" [1971] 2 Ll. L.R. 476. In this case
99 bales of leather valued at $155,192.47 were
shipped in one container, the property of the
defendant carrier. Apparently the container and
contents were stolen after unloading at the port of
destination. Chief Judge Friendly stated at page
485:
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". However,
several factors distinguish Standard Electrica from this case.
The pallets were nothing like the size of the container here;
they had been made up by the shipper; and the
... dock receipt, the bill of lading, and libellant's claim letter
all indicated that the parties regarded each pallet as a
package. [375 F.2d at 946.]
We recognize that this distinction is not altogether satisfacto
ry; 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. There is a good deal in Judge
Hays' point in his dissent in the Encyclopaedia Britannica case,
see fn. 16, "that considering the container as the package
promotes uniformity and predictability," at least where it con
tains goods of a single shipper. It is true also that the standard
arguments about the economic power of the carrier and the
weak bargaining position of the consignor may be simply a
recitation of an ancient shibboleth, at least as applied to
shipments of containers fully packed by the shipper. The ship
per insures for any value in excess of the limitation (or perhaps
for the whole value) and, for all we know, a ruling that each
bale constituted a "package" may simply be conferring a
windfall on the cargo insurer, admittedly the true plaintiff here,
if it based its premium on the assumption that Mooremac's
liability was limited to $500. Still, we cannot escape the belief
that the purpose of sect. 4(5) of COGSA was to set a reason
able figure below which the carrier should not be permitted to
limit his liability and that "package" is thus more sensibly
related to the unit in which the shipper packed the goods and
described them than to a large metal object, functionally a part
of the ship, in which the carrier caused them to be "contained."
The Court confirmed the finding of the Court
below that the shipment of 99 bales in one contain
er should, on the facts, be treated as a shipment of
99 packages, not of 1 package.
This case is in many respects similar to the
instant case but it is concerned with a large con
tainer whereas our case is concerned with much
smaller pallets.
The third case is Acushnet Sales Co. v. S.S.
"American Legacy". This case was decided by the
District Judge in New York on May 21, 1974.
Neither counsel for the plaintiff nor I have been
able to discover that it has been published in any
law reports.
This case involved a shipment of 134 cartons of
golf balls strapped to 9 disposable pallets valued at
$24,071.79.
The learned Judge mentioned the Standard
Electrica and Mormaclynx cases inter alia and
then proceeded to say:
Essentially, what I think we can draw from these cases is this—
that whether you have a package or not is not only a matter
that stems from the physical description of the manner in which
the goods are presented for shipment, but more precisely it
depends upon how the parties have been dealing with each
other, what their shipping documents and what their contractu
al relationships signify.
At page 4 he stated as follows:
Judge Friendly stressed the fact that the parties in the Morma-
clynx case were dealing with a situation where it was perfectly
clear that the parties were dealing with a specific number of
cartons. He says at page 815:
Indeed, there seems to have been nothing in the shipping
documents in that case [Standard Electrica] that gave the
carrier any notice of the number of cartons.
He went on to point out that in the case before him (Morma-
clynx), there was such a notice to the parties and the parties
were dealing with a number of cartons.
On page 5 he said:
Now, in this case, I have no difficulty whatever in reaching the
conclusion on the facts before me, which are largely undisputed
that the parties here were dealing with a shipment consisting of
134 cartons and that the carrier acknowledged that this was a
shipment of 134 cartons.
And further on pages 5 and '6:
While the cartons were in its custody in Honolulu there was an
apparent pilferage and 50 cartons disappeared.
I think the conclusion is unavoidable that the carrier was
responsible for this loss, that it dealt with the shipper on the
basis of a shipment of cartons, and that the doctrine of package
limitation should not apply just because those cartons were
strapped on disposable pallets apparently for trucking conveni
ence and for convenience in handling.
In this case each carton was individually steel-strapped, and the
entire shipment, although strapped onto nine pallets, was
strapped only for trucking convenience. It is easier for truck-
men and dockmen to handle cartons of the size that we have
here on such pallets rather than handle them carton by carton.
It was cheaper, easier and quicker to do it that way.
Each carton weighed 82 or 83 pounds. It was 19 inches wide,
32 inches long and 8 1 / 4 inches deep.
It make a great deal more sense simply, as a matter of
handling, to handle them in this way. This pallet which is in
evidence, a prototype of which was used by the manufacturer to
strap the cartons on, is a disposable pallet made of cheap wood
and never intended for reuse. It was not a stevedore's type of
pallet.
Mr. Moore's evidence in our case is to the same
effect as to the pallets being made of cheap wood
and not intended for reuse.
He continues on page 7:
These cartons were separately numbered, separately strapped.
They were not covered or protected except in a very limited
way. Each carton was steel-strapped and consecutively num
bered by machine. The cartons were placed upon the wooden
pallets two to a tier and seven tiers high. Only the two cartons
on the sixth tier were tied together to facilitate fork lift
handling. There were straps holding the cartons to the pallet.
It is clear that the individually visible cartons were self-con
tained shipping units irrespective of the pallets.
It is equally clear that the packaging of each carton, the
numbering of each carton and the shipping documents them
selves all uniformly manifested an intention of the parties to
deal with the cartons as functional shipping units.
All these facts are remarkably like those in our
case.
After counsel for the parties had closed their
case, counsel for the defendants, with the consent
of counsel for the plaintiff, was permitted to refer
to another American case, and argument for both
sides was heard thereon. That case is Primary
Industries Ltd. v. Barber Lines AIS Skibs [1974]
2 A.M.C. 1444. It is a decision of the Civil Court
of New York which is an inferior court of limited
jurisdiction.
It involved a shipment of a number of tin ingots
strapped in numbers of 22 on pallets. The court
decided that each pallet was a package, not each
tin ingot.
The facts are very similar to those in the instant
case with one exception which I think is decisive.
The ingots were simply blocks of tin which were
not packaged at all except that they were strapped
on the pallets. There was therefore only one article
to which the term "package" could apply, namely
the pallet. I do not find that this case assists the
defendants materially.
One Canadian case was referred to at length by
counsel. It is Johnston Company Limited v. The
Ship "Tindefjell". It is reported in [1973] F.C.
1003. In this case 316 cartons of shoes packed in
two large metal containers were shipped. The bill
of lading described the shipment as 2 containers
containing 143 cartons and 173 cartons respective
ly. Mr. Justice Collier referred at length to the
Mormaclynx case. He stated at page 1009:
The defendants say a container per se, under the Canadian
statute, is a package; it is immaterial how many packages the
container contains; the plaintiff here rented the two containers
from a third person, filled the containers with its goods, and
delivered for carriage two containers or packages. In my view
the propositions advocated are too general. To a large extent
the facts of each particular case must govern, and equally
important, the intention of the parties in respect of the contract
of carriage must be ascertained. I think it proper in a case such
as this to determine if the cargo owner and the carrier intended
the container should constitute a package for purposes of
limitation, or whether the number of packages in the container
was to be the criterion.
At page 1011 he quoted from the Mormaclynx
case the following paragraph which I have quoted
(supra):
We recognize that this distinction is not altogether satisfactory;
it leaves open, for example, what the result would be if Freu-
denberg had packed the bales in a container already on its
premises and the bill of lading had given no information with
respect to the name of bales. There is a good deal in Judge
Hays' point in his dissent in the Encyclopaedia Britannica case,
see fn.16 "that considering the container as the package pro
motes uniformity and predictability," at least where it contains
goods of a single shipper. It is true also that the standard
arguments about the economic power of the carrier and the
weak bargaining position of the consignor may be simply a
recitation of an ancient shibboleth, at least as applied to
shipments of containers fully packed by the shipper. The ship
per insures for any value in excess of the limitation (or perhaps
for the whole value) and for all we know, a ruling that each
bale constituted a "package" may simply be conferring a
windfall on the cargo insurer, admittedly the true plaintiff here,
if it based its premium on the assumption that Mooremac's
liability was limited to $500. Still we cannot escape the belief
that the purpose of sect.4(5) of COGSA was to set a reasonable
figure below which the carrier should not be permitted to limit
his liability and that "package" is thus more sensibly related to
the unit in which the shipper packed the goods and described
them, than to a large metal object, functionally a part of the
ship in which the carrier caused them to be "contained". We
therefore hold that, under the circumstances of this case, the
legend in the lower-left hand corner of the bill of lading was an
invalid limitation of liability under COGSA.
and then proceeded to say:
The result in The Mormaclynx was in accord with two
European decisions both of which were referred to by Judd J.,
the trial judge in The Mormaclynx, whose conclusion was
affirmed by the Circuit Court of Appeals. The rationale of
these decisions, it seems to me, is found in the intention of the
parties. Where the shipper knows his goods are to be shipped by
container and specifies in the contract (usually by means of the
bill of lading) the type of goods and the number of cartons
carried in the container, and where the carrier accepts that
description and that count, then in my opinion, the parties
intended that the number of packages for purposes of limitation
of liability should be the number of cartons specified. I hasten
to add that the intention must be ascertained from consider
ation of all the facts and not merely the words used in the bill
of lading: the type of container, who supplied it, who sealed it if
it was sealed on delivery to the carrier, the opportunity for
count by the carrier, previous course of dealings—all these
matters, and many others which I have not enumerated, may be
relevant in arriving at what the parties, by the particular
contract, intended.
In the present case, the plaintiff had no reason to declare a
higher value in the bill of lading than the $500 per package
valuation set out in the Hague Rules. Each carton of shoes did
not exceed $500 in value. It seems logical to me that the
plaintiff intended to have the benefit of the minimum monetary
responsibility laid down in the Rules by putting the carrier on
notice as to the number of packages being carried, though for
convenience and other reasons, they were grouped together in
one large receptacle. The carrier could have refused to issue the
bill with such a description, could have insisted on a count, and
in any event, adjusted its charges to meet the situation.
As I see it, other American decisions dealing with containers,
where it was held the container was a package, are distinguish
able. In Royal Typewriter Co. v. MIV Kulmerland [1972]
A.M.C. 1995 the bill of lading provided "1 container said to
contain machinery." There was no indication to the carrier of
the number of cartons or of the intention of the shipper to
contract on that basis. In Rosenbruch v. American Isbrandtsen
' Lines Inc. (1973) 357 F. Supp. 982 the bill of lading contained
a similar vague description, with no enumeration.
I therefore hold, on the facts of this special case, the contain
ers were not "packages" for the purpose of calculating the
monetary limitation.
The defendants further submit that if the containers were not
"packages" they were "units" and the limitation is still $1000.
Reliance is placed on a recent decision of the Supreme Court of
Canada: Falconbridge Nickel Mines Ltd. v. Chimo Shipping
Limited ... [(1973) 37 D.L.R. (3d) 545]. There a tractor and
generator were carried on board a vessel from Montreal to
Deception Bay, P.Q.
Again on p. 1014 he stated:
In my view the Falconbridge case does not meet the point
here. The difficulty in that case was that the large pieces of
machinery were not "packaged" in the usual sense. Here the
shipment of shoes was placed in cartons or packages in the
usual and well-accepted sense. If the cartons had not then been
collected and placed in one large receptacle, I have no doubt all
parties would have agreed the carrier had accepted statutory
liability for 316 packages. Where cargo cannot be "packaged"
as in the Falconbridge case, then "unit" seems to me to be an
appropriate term to characterize one complete, integrated piece
of equipment or machinery.
At p. 1015 his final conclusion was:
In my view, the containers here, having in mind the descrip
tion given of the goods in the bill of lading, were not "a unit of
goods" or an "item of cargo" as the Supreme Court character
ized the machinery in the Falconbridge decision. They were
merely a modern method of carrying the packages.
From all the cases referred to supra it is clear
that the decision whether a large container, a
pallet, or a smaller, wrapped parcel in or on a
container or pallet, is a "package" within the
meaning of Rule 5 of Article IV depends on the
facts and circumstances of each case. 'In particular
it depends upon the intention of the parties as
indicated by what is stated in the shipping docu
ments, things said by the parties and the course of
dealing between them.
Looking at the several documents in the instant
case we find the following:
Exhibit P-1 is a packing list prepared by agents
of the seller and is not binding on the carrier. It is
of some interest because it names the ship, names
the plaintiff as consignee and contains the follow
ing description of the goods:
Domestic full automatic sewing machine heads built in motor
with standard accessories.
No brand
Koyo model #615B
(IFSS model #567) 150 sets
3 Pallets (each pallet cont'g. 50 cartons
total 150 cartons)
To the left of the description are two short lines of
letters and figures:
P/No. 4-6
(C/No. 151-300)
The evidence given to the Court was that the
second line indicated that the cartons were num-
bered consecutively from 151 to 300. Probably the
first line indicated that the pallets were numbered
4, 5 and 6.
Exhibit P-2 is an invoice prepared by the same
agents containing precisely the same description of
the goods.
Exhibit P-3 is an invoice approved by Canadian
Customs. It begins:
Invoice of Three (3) Pallets of Domestic Sewing Machine
Heads....
The description of the goods is precisely the
same as on Exhibits P-1 and P-2. This invoice also
states the market value of each set and the value of
the whole 150 sets, together with 5 items of export
charges. Attached to the invoice is a copy of a bill
of lading (described to the Court as an advance
bill of lading) issued by the defendant. Far Eastern
Steamship Company. In a column headed "Pack-
ages" are the words and figures:
3 Pallets
(150 cartons)
In the next column, headed "Description" are the
words:
Domestic Automatic Sewing Machine Heads (each pallet
cont'g. 50 cartons).
Below the words in these 2 columns are the follow
ing words:
Say:—Three (3) Pallets only.
The document also contains the same numbering
notations as on Exhibits P-1 and P-2. It also
indicates that a palletizing discount of $3 per 40
cubic feet of space was allowed, amounting to
$13.88 in all. Rather, the freight cost figure of
$187.31 is only consistent with this allowance
having been granted.
Exhibit P-4 is the bill of lading constituting the
binding shipping contract. It is, for all relevant
purposes, in the same terms as the advance bill of
lading.
Exhibit P-5 is the advice notice from Empire
Stevedoring Company to the plaintiff, advising it
of the arrival of the goods. The description of the
goods in columns headed "PKGS" and "Descrip-
tion" is the same as on Exhibits P-3 and P-4, as is
the numbering notation.
While the wording on the final bill of lading,
Exhibit P-4, is open to either interpretation and
the margin of choice is narrow, in my view the
description of the goods on these exhibits, includ
ing Exhibit P-4, indicates that each carton, rather
than the pallet to which 50 of them were strapped,
should be considered to be the "package". While
the words "3 Pallets" appear on all of them, so
also do the words "150 cartons". There is no doubt
that if, as it appears was the practice in the earlier
years of the plaintiff's sewing machine importing
business, the cartons had been stowed individually
on the ship, each one would have been a "pack-
age". Each sewing machine was packed in a pro
tective carton designed with care and was fully
enclosed therein. Mr. Moore's evidence was that
the palletizing of 50 cartons together was simply a
matter of shipping convenience. It may also have
reduced the risk of damage to the cartons. Palletiz-
ing apparently results in a small reduction in
freight costs, and it should mean more rapid load
ing and unloading of cargo, thereby some saving in
stevedoring costs and some reduction in turn
around time for the ship. It should thus be of
benefit to both cargo owner and carrier.
I accept Mr. Moore's evidence. The numbering
of the cartons and their visibility from outside the
pallet add strength to the view I have formed that
the description of the goods indicates the govern
ing factor in the minds of the parties to have been
150 sewing machine heads, each packed in a sepa
rate protective carton, rather than the wooden
pallet on which 50 of them were stacked and to
which they were strapped. The conclusion I have
reached accords much more closely with the essen
tial purpose of the legislation than would the alter
native. If I had not already reached the conclusion
stated above, this fact would have tended to
remove any lingering doubt.
There will be judgment for the plaintiff for the
admitted amount of loss, $2,886.75, together with
interest and costs as claimed.
You are being directed to the most recent version of the statute which may not be the version considered at the time of the judgment.