Opinion ID: 266222
Heading Depth: 1
Heading Rank: 1

Heading: Crystal v. Cunard

Text: 8 Because Crystal's claim against Cunard was for breach of the contract of ocean carriage, we must look first to the bill of lading to determine the parties' rights and duties. The District Court was of the opinion that the bill of lading became inoperative once the cargo was discharged. We believe, however, that it is more precise to say that although the bill continued to govern the parties' relationships after discharge, its terms did not insulate Cunard from liability. It is true that the bill provided that Cunard's responsibility would cease when delivery was made from the ship's deck and that if the consignee did not immediately receive the goods, Cunard could simply abandon them on the wharf. But these clauses were clearly null and void under the Harter Act's restrictions against certain stipulations seeking to relieve carriers from liability. 46 U.S.C. § 190. 9 The bill of lading also provided that Cunard had the option to land or store the cargo at the sole expense and risk of Consignee in the Warehouses provided for that purpose. But it is clear that Cunard did not take advantage of that option, for it discharged the goods in the custody of its stevedore on a pier and did not deposit them in a warehouse. 10 Since the bill of lading did not specify Cunard's obligations when it discharged the shirts to Clark, the law steps in to fill the lacuna; this it does by properly characterizing Cunard's status as a bailee. Cf. The Italia, 187 F. 113 (2d Cir. 1911); Standard Brands, Inc. v. Nippon Yusen Kaisha, 42 F.Supp. 43 (D.Mass. 1941). And there is no sound reason to alter its bailee status simply because it landed the shirts on Clark's pier. Absent a valid contract to the contrary, a bailee remains liable for the safety of the goods in whatever hands he may place them; exceptions that may arise when a consignee fails to accept the goods have no relevance to this case. Cf. The Eddy, 5 Wall. 481, 72 U.S. 481, 495, 18 L.Ed. 486 (1867). 11 It is interesting that there is no direct precedent in the law of admiralty establishing the standard of responsibility of a bailee who misdelivers cargo. Because of this void and mindful that maritime law draws on many sources, the able District Court judge in order to shape the appropriate maritime law properly resorted to state decisional law, see 1 Harper & James, Torts 156 (1956), various uniform acts, including the Federal Bills of Lading Act, 49 U.S.C. §§ 81-124, as well as the Uniform Commercial Code, and finally fastened appropriately on the rule articulated in the Restatement, Torts § 234 (1934). 12 The Restatement rule suggests that a bailee is absolutely liable for misdelivering cargo, unless his mistake as to the person entitled to receive the goods was induced by the bailor. We agree with the District Court that considerations of uniformity and the need for certainty in commercial transactions justified application of this widely accepted rule to maritime transactions. It is not prudent to have a rule which varies a bailee's liability depending upon his proximity to the sea and susceptibility to admiralty's jurisdiction. At the same time, the rule of absolute liability represents a sound allocation of responsibility for the bailee is in a better position than the bailor to establish procedures to minimize the risk of misdeliveries and to insure against the few misdeliveries that will inevitably occur despite the most careful precautions. 13 Cunard was therefore absolutely liable for the misdelivery unless (a) certain bill of lading provisions not yet considered eliminated or reduced such liability or (b) the misdelivery was induced by Crystal or Penson, acting in its behalf. One of these provisions, the exception for acts of thieves, seems to us inapplicable because the loss of the cargo here is more appropriately characterized as due to misdelivery rather than theft. It is true that under New York law a taking by false pretenses is larceny, Penal Law, McKinney's Consol.Laws, c. 40, § 1290, but we do not believe that the broad definition of theft in the criminal law should be extended to a commercial contract. See Freedman v. George W. Bush & Sons Co., 284 Pa. 16, 130 A. 263 (1925). The law already recognizes this distinction for a warehouseman is absolutely liable for misdeliveries but is responsible in trespassory theft cases only where he has been negligent. See North American Smelting Co. v. Moller S.S. Co., 204 F.2d 384 (3d Cir. 1953). These differing standards are based on sound policy considerations since it is proper that a warehouseman should bear a greater responsibility for being duped by false pretenses than for thefts that cannot be avoided despite the exercise of ordinary care. 14 Cunard's attempt, elsewhere in the bill of lading, to limit its liability to £ 20 per package also must fail. This clause was clearly void while the goods were at sea, for the Carriage of Goods by Sea Act (COGSA), 46 U.S.C. § 1304(5), does not permit limitations under $500. It seems to us that once the law declared this clause void it should remain void forever. It would be unfair to permit the void clause to spring to life once the goods reached land, for by then Crystal had justifiably relied on the clause's inapplicability in making its decision on adequate cargo insurance. Moreover, the limitation provision in the bill of lading does not explicitly cover post-arrival damage. Furthermore, the £ 20 limitation, when contrasted with COGSA's $500 figure, is such an arbitrarily small sum that it should be void as contrary to public policy. Cf. Isbrandtsen Co. v. United States, 201 F.2d 281 (2d Cir. 1953). 15 We turn, finally, to what is for us the most troublesome question on this phase of the case: whether Crystal is estopped from recovering because the misdelivery was induced by Penson's alleged negligence. The law is clear that if Penson's negligence caused the misdelivery, Crystal would be barred from recovery. MacAndrews & Forbes Co. v. United States, 23 F.2d 667 (3d Cir. 1928). Indeed, the chain of estoppel is firmer and shorter here than in MacAndrews, where an owner of furs was estopped from recovering from a carrier by imputing to the owner the negligence of a trucking firm employed by his customs broker. We are not inclined to upset the District Court's holding that Penson could not be faulted for its office procedures or for hiring and retaining Segarra. The key issue on this question is whether Segarra was acting within the scope of his authority when he took the valid delivery order and the blank form from Perez' desk. 16 As we read the record, Segarra's authority to prepare and sign delivery orders and hand them to truckmen did not extend to the commercial shipment involved in this case. Segarra was allowed to take delivery orders from Perez' desk but only for temporary use in answering inquiries and not for delivery to truckmen. While it is true that by trusting Segarra to this limited extent Penson may have facilitated the plot, we are unwilling to stretch the tenuous line of causation and say that Penson proximately caused the misdelivery. See Saugerties Bank v. Delaware & Hudson Co., 236 N.Y. 425, 141 N.E. 904 (1923). Similarly, despite Segarra's authority to take the blank form, it seems clear that this authority did not extend to completing the form; a forgery by a mere custodian of documents is not binding on the principal. See, e. g., Ehrich v. Guaranty Trust Co., 194 App.Div. 658, 186 N.Y.S. 103 (1921), aff'd, 233 N.Y. 637, 135 N.E. 950 (1922); Manhattan Life Ins. Co. v. Forty-Second & Grand St. Ferry R. R. Co., 139 N.Y. 146, 34 N.E. 776 (1893). 17 A sound reason stands behind our holding that Segarra was not acting within the scope of his employment in the circumstances present here. If an employer were to be held liable every time an employee took advantage of a general authority to move freely about his offices, he would be placed in the role of an absolute insurer without the ability to protect himself. Instead, the law limits vicarious liability to situations where the wrongdoing can be traced to abuse of a more carefully defined authority. Here, it is clear that Segarra's actions were not sufficiently related to his delegated authority and for that reason Penson cannot be charged with responsibility for the misdelivery.