Opinion ID: 381814
Heading Depth: 2
Heading Rank: 2

Heading: Substantive Challenge: Issuance Of Clean Bills Of Lading

Text: 163 Bolivia argues that Stevenson was partly at fault for the detention and that damages should therefore be apportioned under Reliable Transfer 's 73 comparative fault principle. 74 Stevenson's fault allegedly stems from its issuance of clean bills of lading for the Arizona and Southwall flour, although Stevenson knew that the flour had, at least prior to fumigation, contained live infestation. 75 We conclude that Stevenson was not at fault by issuing clean bills of lading and therefore do not reach the question of whether Reliable Transfer 's principle extends to detention damages. 164 A brief explanation of the contractual relationships between the instant parties is helpful to an understanding of our discussion. In many transactions involving carriage by sea, the seller of the goods arranges transportation with an ocean carrier. The seller, not the buyer, is the shipper and enters into the booking note with the carrier. The carrier then delivers the goods to the consignee at the destination port specified by the shipper. In this case, however, the buyer, Bolivia, arranged for transportation and is both the shipper and the consignee. Stevenson, of course, is the carrier. The booking note and bill of lading (which is incorporated by reference) define the rights and obligations of Stevenson and Bolivia. Those documents expressly state that COGSA's provisions apply to the transportation of the flour. 165 Among COGSA's provisions is the requirement that 166 After receiving the goods into his charge the carrier, or the master or agent of the carrier, shall, on demand of the shipper, issue to the shipper a bill of lading showing among other things- 167 (c) The apparent order and condition of the goods: Provided, That no carrier, master, or agent of the carrier, shall be bound to state or show in the bill of lading any marks, number, quantity, or weight which he has reasonable ground for suspecting not accurately to represent the goods actually received, or which he has had no reasonable means of checking. 168 46 U.S.C.A. § 1303(3). This provision does not, however, indicate the consequences of issuing a false bill of lading. For contracts of public carriage, the Federal Bills of Lading (Pomerene) Act of 1916, 49 U.S.C.A. §§ 81-124, states: 169 Liability for nonreceipt or misdescription of goods 170 If a bill of lading has been issued by a carrier or on his behalf by an agent or employee the scope of whose actual or apparent authority includes the receiving of goods and issuing bills of lading therefor for transportation in commerce among the several States and with foreign nations, the carrier shall be liable to 171 (b) the holder of an order bill, who has given value in good faith, relying upon the description therein of the goods, or upon the shipment being made upon the date therein shown, for damages caused by the nonreceipt by the carrier of all or part of the goods upon or prior to the date therein shown, or their failure to correspond with the description thereof in the bill at the time of its issue. 172 Pomerene Act § 6, 49 U.S.C.A. § 102. But the contract in this case was one of private rather than public carriage. 76 The Pomerene Act therefore does not apply. Neither is Bolivia seeking recovery against Stevenson for pre-shipment defects in the cargo, as such. 77 Thus Bolivia does not seek the relief which § 6 of the Pomerene Act addresses. 173 Instead, Bolivia's argument is necessarily predicated on general maritime principles which underlie § 6 of the Pomerene Act. The admiralty has recognized for almost 200 years that false bills of lading work an injustice on unknowing holders, and potentially impede maritime commerce. A well-known decision by District Judge Woolsey discusses that history and observes: 174 A bill of lading is a document of dignity, and courts should do everything in their power to preserve its integrity in international trade for there, especially, confidence is of the essence. 78 175 Many decisions have condemned the carrier that issues a clean bill of lading knowing that the goods were not in good order and condition when received. 79 But the cases, like § 6 of the Pomerene Act, apply to a fact pattern different from that in the instant case. That usual fact pattern involves the delivery of goods by the shipper in apparent bad order and condition. Nonetheless, the carrier then issues a clean bill of lading, often because of pressure exerted by the shipper. 80 Often the carrier obtains a letter of indemnity from the shipper. 81 Relying on the description in the bill of lading, the consignee then takes a bill of lading and pays the shipper for the goods. The goods are, of course, then found to be damaged, and the holder of the bill of lading sues the carrier. Having relied on the bill of lading, the holder is then permitted to recover for preshipment damage against the carrier, even though the carrier did not cause that damage. 176 In the instant case the situation is somewhat different because Bolivia's claim does not relate to pre-shipment damage. Nonetheless, the carrier should be responsible for all consequences proximately resulting from the issuance of a misleading bill of lading. A bill of lading's integrity must be jealously guarded. Thus the general maritime law's proscription against issuing false bills of lading can apply where detention damages rather than pre-shipment cargo damage is involved. 177 Bolivia has failed, however, to establish one of the elements necessary to a finding of fault under the above principles: reliance on the allegedly false bill of lading. We do not doubt that in the usual situation in which the consignee has no knowledge of the condition of the goods that clean bills of lading for the flour would have been misleading. 82 But Bolivia, at least through its agent St. John, 83 was fully aware of the infestation and fumigation of the cargoes. Indeed, all of the parties' agents were in nearly continuous communication with one another concerning those cargoes. In spite of its full knowledge of the situation, Bolivia made no attempt to stop the ships from leaving Mobile. Bolivia therefore could not have relied upon the description of the flour contained in the bills of lading. 84 178 Without reliance, the holder of the bill of lading cannot have been harmed by any false description of the goods. The cases accordingly hold that the false bill of lading principle does not apply where the holder of the bill of lading did not rely on the description. 85 In Freedman v. The Concordia Star, 250 F.2d 867, 1958 A.M.C. 1308 (2d Cir. 1958), for example, a judgment against the carrier was reversed because the buyer examined the shipment of animal skins and discovered the damage prior to paying the consignee for the clean bill of lading. See also Portland Fish Co. v. States S.S. Co., supra, 510 F.2d at 633, 1975 A.M.C. at 400-01; Dal International Trading Co. v. The SS Milton J. Foreman, 171 F.Supp. 794 (E.D. N.Y. 1959). 179 Since Boliva cannot show any reliance on the description of the flour in the bills of lading, Stevenson's claim was not barred by the issuance of clean bills of lading. The District Judge was therefore correct in holding Bolivia solely responsible for the detention of the Arizona and Southwall in Arica. 180