Court Opinion

ID: 8918468
Source: CourtListenerOpinion
Date Created: 2022-11-27 06:00:32.489061+00
Date Added: 2024-06-11T17:09:12.390201
License: Public Domain

VAN GRAAFEILAND, Circuit Judge,
dissenting:
The issue on this appeal, as I view it, is not whether appellant’s action against Global Terminal & Container Services, Inc. is within the federal maritime jurisdiction of the district court, but whether state or federal law controls when construing and applying the provisions of a bill of lading which was issued in interstate commerce. I believe that Congress has asserted its constitutionally accorded preeminence in this area and that federal law controls. See North Am. Phillips Corp. v. Emery Air Freight Corp., 579 F.2d 229, 233-34 (2d Cir.1978); Guinasso v. Pacific First Fed. Sav. & Loan Ass’n, 656 F.2d 1364, 1367 n. 7 (9th Cir.1981), cert. denied, 455 U.S. 1020, 102 S.Ct. 1716, 72 L.Ed.2d 138 (1982); National Garment Co. v. New York, C. & St. L.R. Co., 173 F.2d 32, 35 (8th Cir.1949); 49 U.S.C. § 81.1 Accordingly, I respectfully dissent.
In the exercise of its constitutional power to regulate interstate commerce, Congress enacted the Shipping Act of 1916, 46 U.S.C. §§ 801-842. The Shipping Act closely parallels the Interstate Commerce Act in its general scope and purpose as well as in its terms, and “Congress intended that the two acts, each in its own field, should have like interpretation, application and effect.” United States Navigation Co. v. Cunard Steamship Co., 284 U.S. 474, 480-81, 52 *318S.Ct. 247, 248-49, 76 L.Ed. 408 (1932). The passage of the Shipping Act was prompted in large measure by the report of the Alexander Committee,2 which stated, among other things, that most of the shippers who testified before the Committee favored “a comprehensive system of government supervision ... [and] the approval of contracts, agreements, and arrangements, and the general supervision of all conditions of water transportation which vitally affect the interests of shippers.” Alexander Report at 418, as quoted in Volkswagenwerk Aktiengesellschaft v. FMC, 390 U.S. 261, 275, 88 S.Ct. 929, 937, 19 L.Ed.2d 1090 (1968) (emphasis added by the Court). Section 1 of the Act, 46 U.S.C. § 801, provides, therefore, that, when used in the Act, the term “other person subject to this chapter” means any person not included in the term “common carrier by water” who carries on the business of furnishing “wharfage, dock, warehouse, or other terminal facilities in connection with a common carrier by water.”
Under section 17 of the Act, 46 U.S.C. § 816, all those who are subject to the Act must “establish, observe, and enforce just and reasonable regulations and practices relating to or connected with the receiving, handling, storing, or delivering of property,” United States v. American Union Transp., Inc., 327 U.S. 437, 449, 66 S.Ct. 644, 650, 90 L.Ed. 772 (1946), and the Federal Maritime Commission has the power to “stop effectively all unjust and unreasonable practices in receiving, handling, storing or delivering property,” California v. United States, 320 U.S. 577, 584, 64 S.Ct. 352, 356, 88 L.Ed. 322 (1944). In carrying out the purposes of section 17, the Commission’s power of enforcement is a broad one, which is not restricted to the regulatory provisions of the Act. New York Foreign Freight Forwarders & Brokers Ass’n v. FMC, 337 F.2d 289, 295-96 (2d Cir.1964), cert. denied, 380 U.S. 910, 85 S.Ct. 893, 13 L.Ed.2d 797 (1965).
Section 15 of the Act, 46 U.S.C. § 814, requires that every person subject to the Act must file with the Commission a true copy of every agreement between that person and a common carrier by water which fixes or regulates transportation rates or which gives special rates, accommodations or other privileges. Since section 15 makes it unlawful to carry out such an agreement in whole or in part unless Commission approval is obtained, Congress hardly could have intended that the parties to an agreement were free to violate or ignore it after it was approved. Limitations of liability and cargo valuation are inherent parts of rates. North Am. Phillips Corp. v. Emery Air Freight Corp., supra, 579 F.2d at 232 (citing Western Union Tele. Co. v. Esteve Bros. & Co., 256 U.S. 566, 571-73, 41 S.Ct. 584, 586-87, 65 L.Ed. 1094 (1921), and Kansas City S. Ry. v. Carl, 227 U.S. 639, 653, 33 S.Ct. 391, 395, 57 L.Ed.2d 683 (1913)). Section 15’s filing requirement, which is not restricted to agreements which “affect competition”, Volkswagenwerk Aktiengesellschaft v. FMC, supra, 390 U.S. at 271-76, 88 S.Ct. at 935-37, is applicable to terminal operators. Id. at 280-82, 88 S.Ct. at 939-40; United States v. American Union Transp., Inc., supra, 327 U.S. at 451-54, 66 S.Ct. at 651-52; California v. United States, supra, 320 U.S. at 583-86, 64 S.Ct. at 355-56.
Finally, section 21 of the Act, 46 U.S.C. § 820, empowers the Commission to require any person subject to the act to file “any periodical or special report, or any account, record, rate, or charge, or any memorandum of any facts and transactions appertaining” to such person’s business.
“Port terminal facilities”, as defined by the Commission, include “one or more structures comprising a terminal unit, and including, but not limited to wharves, warehouses, covered and/or open storage space, cold storage plants, grain elevators and/or bulk cargo loading and/or unloading structures, landings, and receiving stations, used for the transmission, care and convenience *319of cargo ... in the interchange of same between land and water carriers or between two water carriers.” 46 C.F.R. § 533.6(b). “Terminal services”, as defined by the Commission, include “terminal storage”, the providing of warehouse facilities for the storing of outbound cargo; “handling”, the moving of cargo about the terminal facility; “loading”, the service of loading cargo from the terminal to a means of conveyance from the facility; and “checking”, the service of counting and cheeking cargo against appropriate documents for the account of the vessel. 46 C.F.R. § 533.6(d).
Global Terminal & Container Services, Inc. was operating a port terminal facility and furnishing terminal services, and the district court so found. On March 31,1972, Global entered into a twenty-year contract to provide these terminal services to Dart Containerline Co., an international shipping concern. Charges for the services were to be $333,333.00 per year, plus rates and charges to be billed to Dart on a vessel basis pursuant to a tariff filed by Global with the Commission. All cargo remaining in the terminal beyond the applicable “free time” was to be subject to demurrage charges in accordance with the provisions of Global’s filed tariff. The contract also provided that Dart would name Global as an express beneficiary of all the limitation of liability provisions of its bills of lading. The contract between Global and Dart became effective upon its approval by the Commission.
Although the limitation of liability provisions of section 4(5) of the Carriage of Goods by Sea Act, 46 U.S.C. § 1304(5), apply of their own force only to the period between loading and discharge, a carrier and shipper may agree to extend the limitation provisions to the period preceding loading, 46 U.S.C. § 1307. See Miller Export Corp. v. Hellenic Lines, Ltd., 534 F.Supp. 707, 710 (S.D.N.Y.1982). Dart’s bills of lading extended the $500 limitation of liability to the pre-loading period. They also provided, pursuant to the terms of the Commission-approved agreement between Global and Dart:
every exemption, limitation, conditions and liberty herein contained and every right, exemption from liability, defense and immunity of whatsoever nature applicable to the Carrier or to which the Carrier is entitled shall also be available and shall extend to protect every such servant or agent of the Carrier (including any stevedore, terminal operator or independent contractor) acting as aforesaid and for the purpose of all the foregoing provisions of this clause the Carrier is or shall be deemed to be acting as agent or trustee on behalf of and for the benefit of all persons who are or might be his servants or agents (including any stevedore, terminal operator or independent contractor as aforesaid) and all such persons shall to this extent be or be deemed to be parties to the contract in or evidenced by this bill of lading.
When appellant delivered its goods to the Global terminal, Global issued dock receipts “For the Master”, which stated in bold type:
RECEIVED THE ABOVE DESCRIBED GOODS OR PACKAGES SUBJECT TO ALL THE TERMS OF THE UNDERSIGNED’S REGULAR FORM OF DOCK RECEIPTS AND BILL OF LADING WHICH SHALL CONSTITUTE THE CONTRACT UNDER WHICH THE GOODS ARE RECEIVED, COPIES OF WHICH ARE AVAILABLE FROM THE CARRIER ON REQUEST AND MAY BE INSPECTED AT ANY OF ITS OFFICES.
My reading of the law and the facts of this case satisfies me that, insofar as Colgate’s shipments were concerned, Global’s terminal facilities were subject to a broad and comprehensive scheme of federal regulation, see California v. United States, supra, 320 U.S. at 586, 64 S.Ct. at 356; Alabama Great S. R.R. Co. v. FMC, 379 F.2d 100, 102 (D.C.Cir.1967), and Greater Baton Rouge Port Comm’n v. United States, 287 F.2d 86, 89-92 (5th Cir.1961), cert. denied, 368 U.S. 985, 82 S.Ct. 600, 7 L.Ed.2d 523 (1962), and that, although section 1304(5) did not apply of its own force to the pre-*320loading period, the construction and application of the terms of Dart’s bills of lading nonetheless were governed by federal law. I conclude, therefore, that appellant should not be permitted to. disregard its agreement covering the use of Global facilities which was incorporated in the bills of lading and to proceed against Global as a warehouseman whose liability is governed solely by New Jersey’s version of the Uniform Commercial Code. See Georgia, Fla. & Ala. Ry. v. Blish Milling Co., 241 U.S. 190, 197, 36 S.Ct. 541, 544, 60 L.Ed. 948 (1916); North Am. Phillips Corp. v. Emery Air Freight Corp., supra, 579 F.2d at 233-34; Miller Export Corp. v. Hellenic Lines, Ltd., supra, 534 F.Supp. at 711; G.A.C. Commercial Corp. v. Wilson, 271 F.Supp. 242, 247 (S.D.N.Y.1967). This conclusion, I believe, is supported by extensive authority in this and other Circuits and also by the express language of the New Jersey Act.
The seminal decision in this area of the law is Robert C. Herd & Co. v. Krawill Mach. Corp., 359 U.S. 297, 79 S.Ct. 766, 3 L.Ed.2d 820 (1959). In that case, the Court held that the provisions in an ocean carrier’s bill of lading limiting its liability to $500 per package did not apply to or limit the liability of a negligent stevedore, because section 4(5), of the Carriage of Goods by Sea Act, 46 U.S.C. § 1304(5), made no reference to stevedores or other agents of the carrier and the bill of lading involved there did not express a clear intent to limit the stevedore’s liability. In so holding, the Court obviously implied that a stevedore’s liability in tort could be limited by clearly worded language in a bill of lading. Id. at 305, 79 S.Ct. at 771.
Accordingly, we consistently have interpreted the Herd decision to mean that a bill of lading provision which expresses a clear intention to limit the liability of a carrier’s agent, such as a stevedore or terminal operator, will be enforced for the benefit of the agent. The first post-Nerd case so holding was Carle & Montanari, Inc. v. American Export Isbrandtsen Lines, Inc., 275 F.Supp. 76 (S.D.N.Y.1967), aff’d, 386 F.2d 839 (2d Cir.), cert. denied, 390 U.S. 1013, 88 S.Ct. 1263, 20 L.Ed.2d 162 (1968). That case was followed by Bernard Screen Printing Corp. v. Meyer Line, 464 F.2d 934 (2d Cir.1972), cert. denied, 410 U.S. 910, 93 S.Ct. 966, 35 L.Ed.2d 272 (1973), and has never been overruled. Thus, in Toyomenka, Inc. v. S.S. Tosaharu Maru, 523 F.2d 518, 520 (2d Cir.1975), we said, “It is axiomatic that parties to a bill of lading may extend the $500 limitation of liability to third parties.” In Cabot Corp. v. S.S. Mormacscan, 441 F.2d 476, 478 (2d Cir.), cert. denied, 404 U.S. 855, 92 S.Ct. 104, 30 L.Ed.2d 96 (1971), we said that “there is no doubt that the parties to a bill of lading may extend a contractual benefit to a third party by clearly expressing their intent to do so.” See also Schiess-Froriep Corp. v. S.S. Finnsailor, 574 F.2d 123, 127 (2d Cir.1978); Miller Yacht Sales, Inc. v. M.V. Vishva Shobha, 494 F.Supp. 1005, 1015 (S.D.N.Y.1980).
Our decision in Leather’s Best, Inc. v. S.S. Mormaclynx, 451 F.2d 800 (2d Cir.1971), does not constitute authority to the contrary. In that case, the district court held that the terminal operator was “rendering services in connection with performance of this contract” as specified in the bill of lading and that its liability therefore was limited, as was that of the carrier, to $500 per package. 313 F.Supp. 1373, 1382-83 (S.D.N.Y.1970). On appeal, we held that the plaintiff had failed to satisfy its burden of proof as to the terminal operator’s negligence, and we found it unnecessary to decide the limitation of liability issue. 451 F.2d at 814, 817. The district court, on remand, again considered that issue and held that the terminal operator was entitled to the benefit of the limitation of liability provision in the carrier’s bill of lading. 346 F.Supp. 962, 968 (S.D.N.Y.1972).
Reference to the following cases will disclose that our interpretation of Herd has been adopted in most, if not all, of the Circuits which customarily pass upon shipping claims:
Third Circuit
PPG Indus., Inc. v. Ashland Oil Co., 527 F.2d 502, 505-07 (3d Cir.1975); *321De Laval Turbine, Inc. v. West India Indus., Inc., 502 F.2d 259, 269-70 (3d Cir.1974).
Fourth Circuit
La Salle Mach. Tool, Inc. v. Maher Terminals, Inc., 611 F.2d 56, 59-60 (4th Cir.1979);
Koppers Co. v. S/S Defiance, 542 F.Supp. 1356, 1364-67 (D.Md.1982), aff’d, 704 F.2d 1309 (4th Cir.1983); Mediterranean Marine Lines, Inc. v. John T. Clark & Son, 485 F.Supp. 1330, 1334-37 (D.Md.1980).
Fifth Circuit
Brown & Root, Inc. v. M/V Peisander, 648 F.2d 415, 422-25 (5th Cir.1981); Secrest Mach. Corp. v. S.S. Tiber, 450 F.2d 285, 286-87 (5th Cir.1971);
Croft & Scully Co. v. M/V Skulptor Vuchetich, 508 F.Supp. 670, 673-75 (S.D.Tex.1981), aff’d in relevant part, 664 F.2d 1277 (5th Cir.1982);
Dorsid Trading Co. v. S/S Fletero, 342 F.Supp. 1, 6 (S.D.Tex.1972)
Ninth Circuit
Tessler Bros. (B.C.) Ltd. v. Italpacific Line, 494 F.2d 438, 442 (9th Cir.1974)
Eleventh Circuit
Certain Underwriters at Lloyds’ v. Barber Blue Sea Line, 675 F.2d 266, 269-70 (11th Cir.1982).
The consistently similar holdings of the above cases should not be placed at naught by the provisions of a State-adopted Uniform Commercial Code. Section 7-103 of the Code, as adopted in both New York and New Jersey, provides “To the extent that any treaty or statute of the United States, regulatory statute of this State or tariff, classification or regulation filed or issued pursuant thereto is applicable, the provisions of this Article are subject thereto.” The New Jersey Commission to Study and Report on the Uniform Commercial Code, in an Introductory Commentary by its Chairman, said that the Code “encompasses the entire law of documents of title to goods involved in intrastate transactions. Interstate and international shipments of goods are covered by Federal Law.” 12A N.J. StatAnn., preceding Chap. 7 at 3. With specific reference to section 7-103, the Commentators said:
Section 7-103, therefore, states what is obvious: that federal law is paramount under the ‘supremacy clause’ of the United States Constitution where it constitutionally applies to a case also covered by state law.
12A N.J.Stat.Ann. § 7-103, at 10.
This is a correct statement of the law. See Missouri Pac. R.R. Co. v. Elmore & Stahl, 377 U.S. 134, 137, 84 S.Ct. 1142, 1144, 12 L.Ed.2d 194 (1964); Iligan Integrated Steel Mills, Inc. v. SS John Weyerhaeuser, 507 F.2d 68, 73 n. 5 (2d Cir.1974), cert. denied, 421 U.S. 965, 95 S.Ct. 1954, 44 L.Ed.2d 452 (1975); National Garment Co. v. New York, C. & St. L.R. Co., supra, 173 F.2d at 35; M. & T. Trust Co. v. Export Steamship Corp., 262 N.Y. 92, 96-97, 186 N.E. 214 (1933). I believe that federal law is paramount in this case and that appellant cannot avoid the effect of this law and the clearly expressed provisions of the bill of lading by asserting its claim under the law of New Jersey. I would affirm.

. Section 81 provides that “[b]ills of lading issued by any common carrier for the transportation of goods ... from a place in a State to a place in a foreign country ... shall be governed by [the Federal Bill of Lading Act].”

. House Comm, on Merchant Marine and Fisheries, Report on Steamship Agreements and Affiliations, H.R.Doc. No. 805, 63d Cong., 2d Sess. 415-24 (1914).