Opinion ID: 457710
Heading Depth: 1
Heading Rank: 1

Heading: issues

Text: 1 This appeal represents another skirmish in the long battle between shippers, who send their goods by sea, and carriers, whose vessels transport the goods. The issue, briefly stated, concerns the existence and validity of a trade custom relieving the carrier of the responsibility for delivering 0.5% of crude oil delivered to it for transport. It is one of first impression for an appellate court. 2 The parties have stipulated that the Sun Oil Company of Pennsylvania and Sun International, Ltd. (jointly Sun) chartered the M/T Carisle to transport Zarzatine crude oil from La Skhirrah, Tunisia to Marcus Hook, Pennsylvania. The ship loaded the oil on October 13, 1980, and measurements showed 540,401 barrels on board. When it arrived at Marcus Hook on October 31, measurements showed 537,566 barrels on board. Sun then filed a complaint in admiralty against the ship in rem and against Ore Sea Transport, S.A. of Panama, the time charter owner, 1 in personam, later amended to include Tradax Gestion, S.A., the owner, in personam, seeking damages for the missing 2835 barrels of oil. 3 The present case is one of four similar cases filed by Sun in 1980 and 1981 in the same district court. In each case, one of the defendants raised the affirmative defense that by custom and practice the carrier has a 0.5% trade allowance, which was an implied term in the charter party contract. Pursuant thereto, unexplained losses of less than 0.5% do not give rise to any claim against the carrier, and unexplained losses of more than 0.5% give rise to claims only for the amount by which the loss exceeds that figure. Thus, the carrier would be obligated to deliver only 99.5% of the oil loaded unless the loss was due to some specific, known cause, such as a collision, in which case the allowance would not apply. 4 Pursuant to a stipulation of counsel for all parties, approved by the three district court judges to whom these cases were assigned, the four cases were consolidated for an evidentiary hearing before a panel consisting of those three judges. App. at 268-71. After hearing the testimony and receiving the documentary evidence submitted on the alleged trade custom, the judges ruled that a custom as alleged was proven and was an implied term in the contracts at issue. Sun Oil Co. of Pennsylvania v. M/T Mercedes Maria, 1983 A.M.C. 718 (E.D.Pa.1982) (as amended January 24, 1983). 2 The cases were then severed, and returned to the individual judges for disposition. 3 5 Cross motions for summary judgment were filed in this case. The district court, finding the oil shipping industry's customary 0.5% trade allowance [to be] controlling, App. at 127, gave summary judgment for the defendants. Sun was awarded recovery only for 133 barrels of oil, the amount by which its loss of 2835 barrels of oil exceeded 0.5% of the cargo. 6 In its appeal, Sun argues first that the Carriage of Goods by Sea Act, 46 U.S.C. Secs. 1300 et seq. (1982) (COGSA), precludes the implication of the alleged custom into the contract; second, that certain factual determinations of the district judges were clearly erroneous; and third, that the judges erred in the legal standards they applied to the facts in determining that the custom alleged was an implied term in the contract. We first summarize the holding of the district court and then turn to Sun's COGSA argument, which we find dispositive.