Opinion ID: 381814
Heading Depth: 1
Heading Rank: 5

Heading: Recovery Of Pre-Paid Freight And Associated Damages For

Text: 181 The Nedon: Validity Of The Lien, Reasoned Judgment 182 In Loading, And Asserted Computational Error 183 The District Judge awarded Stevenson its freight for the Nedon, plus detention damages and necessary expenses, totaling $310,067.25. 86 Damages associated with the detention of the Arizona and Southwall are not at issue here. Stevenson was found to have a valid lien on the Nedon cargo. Since the cargo was released to ADM under Supp. Rule E(5), F.R.Civ.P., payment of the judgment fell on ADM, the claimant. The freight component of that award was based on the pre-paid freight provision of the booking note and bill of lading, reduced, however, by the amount of the freight attributable to the third day of loading. The reason for the reduction was that Stevenson was found to have exercised a lack of reasoned judgment in continuing to load the Nedon after the second day of loading. ADM asserts four points of error 87 and Stevenson one in connection with the Nedon freight and detention award.
184 In the District Court ADM belatedly argued that the lien on the Nedon flour was invalid because Stevenson time-chartered the Nedon, making the owner of that ship the proper party to institute this in rem action. The District Judge considered and rejected that argument. 449 F.Supp. at 120. ADM does not reassert that argument on appeal. Rather, ADM's new argument attacking the validity of the lien is based on Goodpasture, Inc. v. M/V Pollux, 602 F.2d 84 (5th Cir.), reh. and reh. en banc denied, 606 F.2d 321 (1979), which was decided on September 10, 1979. In November 1979 ADM filed a letter in response to the Clerk's standard request for information about intervening decisions but did not mention this argument or cite Goodpasture. It was not in fact until the last few seconds of oral argument before this Court, in his rebuttal argument following those of Stevenson and Bolivia, that ADM's counsel first presented his Goodpasture argument. 185 Notwithstanding that the Goodpasture issue is not substantially related to the lien issue tried below (which was itself belatedly raised) and was raised at almost the last possible moment in this appeal, we choose to exercise our discretion and decide the issue. We do so because the issue is entirely a legal question and does not require the development of additional facts. Goodpasture was decided close to oral argument and apparently did not come to ADM's counsel's attention until late in the appeal. We decide in any event that the lien was valid and, under all the circumstances, we ought not to ignore the issue. See Evans v. Triple R Welding & Oil Field Maintenance Corp., 472 F.2d 713, 716 (5th Cir. 1973); Higginbotham v. Ford Motor Co., 540 F.2d 762, 768 n. 10 (5th Cir. 1976). 186 The facts in Goodpasture are strikingly similar in all but one crucial respect to those of this case. There, grain was sold by a seller to a buyer, with payment arranged by irrevocable letter of credit requiring presentation of various documents including a bill of lading. The buyer acted as shipper and contracted with a carrier for ocean carriage, agreeing that part of the freight would be paid in advance. The carrier presented a ship which was then loaded with the grain. The buyer did not make the agreed advance payment, however, and the carrier refused to issue a bill of lading to the seller. Subsequently, the carrier asserted a maritime lien for its freight against the cargo of grain. Reversing the District Court, we held in Goodpasture that the carrier had no lien against the cargo. The reasoning was that under the contract between the buyer and seller, it was understood that title to the grain was not to pass . . . until payment was made under the . . . letter of credit. 602 F.2d at 85 (emphasis added). The carrier having refused to issue the bill of lading, payment was never made, and title to the grain never passed. Id. at 86. The seller therefore retained title to the cargo. The carrier's claim was, however, based on a contract right between it and the buyershipper, not the seller. The carrier therefore had no contractual claim against the seller. Lacking a contractual claim against the titleholder of the cargo, we concluded that the carrier could not assert a lien against the cargo. 187 Stevenson's lien is entirely different from that in Goodpasture, however. The crucial difference is that ADM's contracts with Bolivia passed title to Bolivia upon delivery to Stevenson. Payment under the letter of credit was not required to pass title. The contract stated (d)elivery of goods by SELLER to the carrier at point of shipment shall constitute delivery to BUYER. . . . Section 2-401 of the UCC provides that (emphasis supplied): 188 Insofar as situations are not covered by the other provisions of this chapter and matters concerning title become material the following rules apply: . . . 189 (a) . . . . title to goods passes from the seller to the buyer in any manner and on any conditions explicitly agreed on by the parties. 190 (b) Unless otherwise explicitly agreed title passes to the buyer at the time and place at which the seller completes his performance with reference to the physical delivery of the goods, despite any reservation of a security interest and even though a document of title is to be delivered at a different time or place; and in particular and despite any reservation of a security interest by the bill of lading 191 (1) if the contract requires or authorizes the seller to send the goods to the buyer but does not require him to deliver them at destination, title passes to the buyer at the time and place of shipment; . . . 192 Thus, under the contracts in this case and the applicable UCC provisions, Bolivia took title to the flour when it was physically delivered to Stevenson-even though Bolivia had not yet accepted and though ADM retained the risk of loss. 88 Obviously, the flour was physically delivered to Stevenson at least by the time that it was loaded aboard the Nedon. 89 Thus Stevenson's contractual claim against Bolivia for freight is in perfect congruence with Bolivia's possession of title to the cargo, so that Stevenson's lien is distinguishable from that in Goodpasture. In fact, the negative implication of Goodpasture is that Stevenson's lien is therefore valid. We therefore find that ADM's belated reliance on Goodpasture is unavailing.
193 The concept of reasoned judgment as it relates to a carrier's loading of cargo is one of first impression for this Court. The District Judge relied on a recent adaptation of the concept by our brothers (and now sisters) of the Court of Appeals for the District of Columbia. In Orient Mid-East Lines, Inc. v. Cooperative for American Relief Everywhere, Inc., 410 F.2d 1006, 1969 A.M.C. 1658 (D.C. Cir. 1969), that Court considered a situation factually different from the instant case. There, the carrier continued to load its ships in the face of information that the St. Lawrence seaway would soon close because of ice. The ships were in fact trapped in the Great Lakes when the ice closure occurred. The carrier then sued the shippers for overwinter storage charges and for second freights compensation for delivering the cargo after the Seaway reopened. 194 The Orient Court affirmed the judgment of the District Court that the carrier failed to use reasonable judgment in not sending its ships out through the Seaway before the ice closure. The Court construed the bill of lading's storage fee and second freight provisions impliedly to contain a condition that the carrier exercise reasonable judgment. The Court held that the carrier lost its contractual right to storage fees and second freights because it had unreasonably ignored repeated warnings that the Seaway was about to close. The reasoned judgment rule formulated by Orient was the following: 195 there is a common standard of conduct prescribed if a carrier is to be afforded the protection of the exculpatory provisions. The Court finds that standard to be that to afford itself the protection of the exculpatory clauses of the bills of lading the carrier must exercise reasonable judgment under the circumstances existing and reasonably foreseeable at the time the judgment is made. In other words the exculpatory clauses do not confer a license to disregard the likely or the obvious. 196 410 F.2d at 1008, 1969 A.M.C. at 1661 (quoting the District Court opinion, 284 F.Supp. at 43). 197 The Orient formulation does not spring from fallow ground. Without tracing the full extent of its roots, the reasoned judgment rule dates to at least The Styria v. Morgan, 186 U.S. 1, 22 S.Ct. 731, 46 L.Ed. 1027 (1902). There, the carrier discharged a cargo of sulphur bound for America, which had just been loaded in Sicily, when it learned of the outbreak of war between America and Spain and that sulphur was on the Spanish enemy's contraband list. The carrier was held to have exercised reasoned judgment in discharging the cargo, even though soon afterwards Spain exempted sulphur from the contraband list. 90 198 These cases, whatever their differences, at least agree that it is necessary to determine the amount of knowledge which the carrier had or should have had as of the time of loading. Of course this is a factual determination well-protected under F.R.Civ.P. 52(a) unless induced by a misunderstanding of the applicable law. 199 Stevenson argues that the reasoned judgment rule has been used only in cases where the ship's ability to make its voyage was in doubt. It argues that matters relating to the voyage-for example, navigation and scheduling-are peculiarly within the knowledge of the carrier. By comparison, it urges the carrier has no duty to look inside packaged goods, nor the knowledge of whether the goods comply with the contract. In this case, concern centered around the goods, not the dangers of the voyage. Based on that distinction, Stevenson asserts that the reasoned judgment rule should not be extended to this case. 200 The District Judge was correct in applying the reasoned judgment rule to Stevenson's loading of the Nedon. 91 201 ADM and Stevenson also challenge the District Judge's application of the reasoned judgment rule to the facts. Stevenson argues that it exercised reasoned judgment even on the third and last day of loading. ADM argues that Stevenson did not exercise reasoned judgment even on the first and second days, as well as the third day, of loading. The District Judge considered all of the factual arguments now pressed by the parties and decided that information obtained and decisions made by Stevenson on the evening of the second loading day, October 16, 1974, marked a significant change in circumstances. Because of the events of that evening, the District Judge found that Stevenson continued loading the Nedon in spite of the likely cancellation of the voyage. 449 F.Supp. at 107-08. Stevenson was therefore awarded only that portion of the prepaid freight and other damages attributable to the first and second days, not the third day, of loading. 202 The District Judge's largely factual finding is supported by substantial evidence. The results of tests of the Nedon -bound flour were communicated to Stevenson on the evening of October 16. Those results were the first definite indication that something was amiss with the Nedon flour. In addition, Stevenson decided that evening that the ship would not sail immediately. 92 Nor has Stevenson satisfactorily explained why it did not at least telephone Bolivian officials or agents of Bolivia, apprise them of the available facts, and ask whether loading should be discontinued until there was further investigation. In all, the District Court could conclude that Stevenson's conduct following the events of the evening of October 16 is more consistent with a desire to obtain prepaid freight, by completely loading the Nedon, than with a reasoned judgment that the voyage was likely to be completed. The balance struck by the District Judge was therefore not clearly erroneous. 93
203 ADM concedes that the method for calculating damages due to the detention of the Nedon in Mobile was correct, but asserts that the District Judge failed to deduct enough days when computing its award. 94 204 The formula 95 used by the District Judge nowhere challenged by either ADM or, more significantly, Stevenson is of questionable correctness. Unopposed as it was, what it amounted to was the District Judge's effort to figure the profit lost by Stevenson during the 67 days (plus) delay. As the Judge's method of calculation assumed a voyage which never occurred, since the cargo was discharged, and was necessarily a reasoned estimate, we do not think that, at this stage, we should intercede to make a specific money adjustment. We do not find the Judge's conclusion clearly erroneous. 205