Court Opinion

ID: 19609
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:26:10+00
Date Added: 2024-06-11T15:03:47.126142
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                       FOR THE FIFTH CIRCUIT

                       _____________________

                            No. 98-20722
                       _____________________

THYSSEN, INC.; FRANCOSTEEL CORPORATION,

                                               Plaintiffs-Appellees,

                              versus

M/V MED PISA, Etc.; ET AL.,

                                                         Defendants,

M/V MED PISA, her engines, boilers,
tackle, equipment, appurtenances,
etc., in rem; NARCISSUS SHIPPING LIMITED,

                                           Defendants-Appellants.
_________________________________________________________________

           Appeal from the United States District Court
                for the Southern District of Texas
                           (H-97-CV-758)
_________________________________________________________________

                         December 22, 1999

Before JOLLY, EMILIO M. GARZA, and BENAVIDES, Circuit Judges.

PER CURIAM:*

     This case falls within the grant of original jurisdiction in

admiralty to the federal courts. The defendant, and now appellant,

Narcissus Shipping Company, as claimant of the M/V MED PISA, seeks

review of the district court’s judgment for the plaintiffs, Thyssen

Incorporated and Francosteel Company (collectively, “Thyssen”),

holding that the M/V MED PISA is liable in rem for the damages to

the plaintiffs’ cargo.    The defendant argues that the district

     *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
court erred as a matter of law in holding that, because bills of

lading were issued and the ship sailed with the plaintiffs’ cargo,

the bills of lading were ratified and became the contract of

carriage.   Further, the defendant argues that the district court

erred in holding that the shipping arrangement was governed by the

terms of COGSA1 and that Thyssen was the rightful holder of a

maritime lien against the M/V MED PISA that could be enforced in

rem for any damage to its cargo resulting from its transport.

     COGSA applies to all contracts for carriage of goods by sea to

or from ports of the United States in foreign trade for which the

contracts for the carriage of the goods are evidenced by a bills of

lading.   See 46 U.S.C. § 1300 (West 1999).   By its express terms,

COGSA does not apply to the terms of vessel charters except to the

extent that those arrangements may incorporate its terms.    See 46

U.S.C. § 1305 (West 1999).   However, if bills of lading are issued

where a ship is under a charter party, the parties to that charter

party “shall comply with the terms of [COGSA].”      Id.; see also

Cactus Pipe & Supply Co., Inc. v. M/V MONTMARTRE, 756 F.2d 1103,

1113 (5th Cir. 1985).   An exception to this rule exists when bills

of lading are issued but remain in the hands of the charterer.   In

such a situation, the bills of lading are not documents of title to

which COGSA applies; rather, they are only a receipt as between the

parties to the charter, and the parties’ relationships are governed

      1
       The Carriage of Goods by Sea Act, codified at 46 U.S.C.
§ 1300 et seq. (West 1999).

                                 2
by the charter party.     See The Fri, 154 F. 333, 337 (2d Cir.

1907)(stating that “when the charterer himself ships the goods

there bills of lading operate as receipts for them, and also as

documents of title which he can negotiate . . . but they do not, as

between the shipowner and the charterer, operate as new contracts,

or as modifying the contract in the charter party”); Unterweser

Reederei Aktiengesellschaft v. Potash Importing Corp., 36 F.2d 869,

870 (5th Cir. 1930).    However, if bills of lading are issued and

transferred for value to a third party, who is a stranger to the

charter party, the bills of lading become the contract for carriage

and the relationship will be governed by the terms of COGSA.     See

The Fri, 154 F. at 336; Cactus Pipe, 756 F.2d at 1113 (holding that

when the bills of lading are transferred to a stranger to the

charter for value, they become the contract for carriage and the

relationship is governed by the terms of COGSA); 70 Am. Jur. 2d

Shipping § 691 (1987)(stating that “if bills of lading are issued

where a ship is under a charter party, they are required to comply

with the Act”).

     In Cactus Pipe, our court addressed the exact issues raised by

the defendant-appellant in a factually analogous situation to the

one presented by the instant case.    Corinth, a Greek manufacturer

of steel tubing, contracted for the shipment of some steel aboard

the M/V MONTMARTRE.    Cactus Pipe, 756 F.2d at 1106.   Upon receipt

of the cargo, Delpa Shipping and Transportation Company issued nine

bills of lading covering the cargo.    Id.   Corinth assigned these

                                  3
bills of lading for value to Cactus Pipe, a stranger to the charter

party.   Id.       While in route from Greece to Houston, Texas, some of

the cargo was damaged as a result of the unseaworthiness of the

vessel, and some of the cargo was lost.         Id.   Cactus Pipe sought

to recover under COGSA for damage to, and loss of some of its

cargo.       Id.    Addressing the in rem liability of the vessel to

Cactus Pipe, we stated:

     [T]he arrangement between Corinth and the vessel was akin
     to special or private carriage as to which COGSA would
     not attach unless bills of lading are issued. Although
     bills of lading were issued they were not issued either
     by the vessel owner, Orient, or by one acting with its
     authority. Therefore, as we have held above Orient has
     no liability in personam. Nonetheless bills of lading
     were issued and the vessel sailed with the goods on
     board.    Under those circumstances, Black Letter Law
     translates Cleirac’s historic aphorism “Le batel est
     oblige a la marchandise et la marchandise au batel”2 into
     the settled maritime principle that sweeps away as
     immaterial any question of the authority of the issuer of
     the bills of lading to hold the ship liable in rem for
     loss or damage to the cargo carried. When cargo has been
     stowed on board the vessel and bills of lading are
     issued, the bills of lading become binding contracts of
     the vessel in rem upon the sailing of the vessel with the
     cargo.     The sailing of the vessel constitutes a
     ratification of the bills of lading. This action gives
     rise to a maritime lien which is the basis of the in rem
     recovery.    Even though the vessel is operating under
     charter party, the lien against the vessel is not
     affected. Therefore, the sailing of the MONTMARTRE with

         2
         Cleirac’s “clever phrase” translates into “the mutual
obligations flowing from the union of the personified ship and the
personified cargo.” Krauss Bros. Lumber Co. v. Dimon S.S. Corp.,
290 U.S. 117, 126 (1933).      It historically has been used to
describe the reciprocal maritime liens possessed by the owner of
cargo upon the ship for the safe custody, due transport, and right
delivery of the same, and the lien possessed by the shipowner
against the cargo for the freight. See The Ripon City, 102 F. 176,
181 (5th Cir. 1900).

                                      4
     the cargo of steel pipes aboard            constitutes      a
     ratification of the bills of lading.

Id. at 1113 (citations omitted). Thus, the court concluded, “there

is in rem liability for loss or damage to the cargo.”      Id.

     Turning to the case before us, it is clear that Thyssen was

not a party to any charter agreement.    The district court, in its

finding of fact number 5, stated that at all relevant times Ocean

Pacific Carriers was the charterer of the M/V MED PISA.       Further,

it is undisputed, and the district court held, that Thyssen was the

owner or duly authorized representative of the owners of the steel

shipped onboard the M/V MED PISA for which bills of lading were

issued. Thus, when the M/V MED PISA set sail with Thyssen’s cargo,

because the bills of lading were transferred for value to a

stranger to the charter party, they were ratified and became the

contract for carriage.    This is true irrespective of whether the

original contract for carriage was for common or private carriage,

or whether the issuer of the bills of lading had actual authority

to issue them.    Consequently, the shipping arrangement was subject

to the terms of COGSA.    See 46 U.S.C. § 1305 (West 1999).

     In sum, we hold that the district court did not err in holding

that the bills of lading in this case were the contracts of

carriage and that the shipping arrangement was governed by the

terms of COGSA.    The judgment of the district court is

                                                   A F F I R M E D.3

        3
            The plaintiffs’ request that this court sanction the

                                  5
     Intervenor’s request to participate in the oral argument is

denied as moot.

defendant due to the frivolous nature of the issues raised on
appeal is DENIED.

                                6