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DELAWARE STEEL CO. v. CALMAR S.S. CORP.

August 8, 1966

DELAWARE STEEL COMPANY
v.
CALMAR STEAMSHIP CORPORATION and S.S. SEAMAR, her engines, boilers, tackle, apparel, etc.



The opinion of the court was delivered by: LORD, JR.

 JOHN W. LORD, Jr., District Judge.

 This matter is presently before this Court on the joint motions of respondent and libellant for judgment on the pleadings or, in the alternative, for summary judgment. The facts are not disputed, and both parties have agreed to adjudication of the controversy on the basis of those facts well pleaded. The only issue before this Court, therefore, is the effect of a bill of lading provision requiring that claims for loss or damage be presented in writing to the carrier, the respondent, or his agent, within fifteen (15) days after delivery of the cargo. Paragraph 22 of the bill of lading in question declares that in the absence of such written notice, any claims "* * * shall be deemed to have been abandoned and no suit shall thereafter be maintainable to recover the same." The libellant concedes that it cannot prove compliance with the above provision, but aserts that its conduct upon learning of the damage to its cargo amounted to substantial compliance, and that therefore the respondent ought not be permitted to avoid its contractual liability on the basis of a mere technicality.

 From the pleadings it appears that on December 27, 1963, the libellant's agent delivered to the respondent at Philadelphia, Pennsylvania twelve lifts of rolled steel in good condition for carriage to Long Beach, California. On January 19, 1964, the ship SS SEAMAR arrived at the port of delivery with the above mentioned cargo visibly damaged. The damages are asserted to approximate $5,748.98.

 The respondent admits that libellant's representative in Long Beach, California took written exceptions to the condition of the cargo at the time of delivery on the delivery receipt. It admits further that its own surveyor personally examined the damaged cargo. However, it adamantly maintains that no payable claim developed for the reason that the contractual provision requiring written notice and claim was not strictly complied with. The required notice of claim in writing was not forwarded to the respondent until twenty-six days after final delivery of the cargo, and some thirty-six days after delivery of the first portion thereof.

 The libellant, on the other hand, candidly admits that it had knowledge of the damage at the time of delivery, but that it cannot prove that written notice of claim was forwarded to the respondent within the specified time.

 This then leads us to an examination of the authorities regarding interpretation and application of notice of claim provisions contained in bills of lading. In Admiralty, as elsewhere in the law, we begin with the general proposition, requiring no citation of authority, that people are free to contract as they see fit, provided that neither the law nor public policy is thereby contravened. Notice provisions in insurance policies and bills of lading alike have uniformly been upheld, provided that they are reasonable in light of the individual circumstances of the case. Such provisions are " * * * interpreted as a limitation on the shipper's remedy rather than on his substantive right of recovery." 4 Williston, Contracts § 1112 at 3165-66 (rev. ed. 1936, Supp. 1957). The reasonableness of individual provisions is determined not by evaluating the utility of the clause to the parties, but instead by determining "* * * the cargo owner's ability to comply with it in the circumstances." The J. L. Luckenbach, 65 F.2d 570, 574 (2nd Cir. 1933).

 Notwithstanding the seemingly gossamer distinction between conditions precedent and subsequent, it is uniformly agreed, both in this Circuit and elsewhere, that such clauses are conditions precedent to the shipper's recovery. The Westminster, 127 F. 680 (3rd Cir. 1904), cert. denied 194 U.S. 637, 24 S. Ct. 860, 48 L. Ed. 1161 (1904); Cudahy Packing Co. v. Munson S.S. Line, 22 F.2d 898, 900 (2nd Cir. 1927); see cases collected at § 1112, n. 2a, 4 Williston, Contracts, supra. It now remains to be ascertained whether the libellant satisfied the condition.

 The notice provision in the bill of lading in question is clear and unequivocal. It required at least two things of the libellant. First, it was required to notify the respondent of the existence of the DAMAGE; second, it was obligated to present a CLAIM for the damage. Both of these items had to be furnished in writing within the prescribed period of fifteen days. This Court's examination of the facts indicates that the condition was not satisfied.

 
"The ship or its owner desires to know, not merely whether there is damage, for which no demand may ever be made, but whether there is any claim * * *, so that the necessary investigation can be made to ascertain the facts while they are fresh." (107 F. at 730). To the same effect see also The Westminster, supra.

 Thus merely advising the shipowner of the existence of damage does not operate to notify him that a claim will be made. In Anchor Line v. Jackson, 9 F.2d 543 (2nd Cir. 1925), Judge Hand commented on the issue as follows:

 
"The upshot of these cases is that notice that the goods have been damaged is not notice of a claim for recoupment. The result is perhaps a narrow interpretation, and has not been established in this circuit without strong opposition. Its existence is, however, unquestioned, and it seems to us undesirable by nice distinctions to invite perpetual litigation in its application. * * * it is one thing to advise a ship of the fact that she has discharged damaged goods and another that you mean to hold her for the loss. * * * We may concede that notice of damage ordinarily presupposes that the consignee is contemplating a claim, but it is not equivalent even to an assertion that he will make one in the future * * *. A protest is not a claim." (at 545).

 Moreover, the fact that the respondent conducted its own survey of the damage is of no help to the libellant. The shipowner's right to demand strict compliance with the terms of the bill of lading, notwithstanding his knowledge of the loss, is too well established to be needful of much discussion. See e.g. The West Arrow, 80 F.2d 853 (2nd Cir. 1936); T. M. Duche & Sons v. Lloyd Mediterraneo, 31 F.2d 496 (E.D.N.Y.1928), aff'd 31 F.2d 1010 (2nd Cir. 1929); Anchor Line v. Jackson, supra; The San Guglielmo, 249 F. 588 (2nd Cir. 1918); The Persiana, 185 F. 396 (2nd Cir. 1911); The St. Hubert, supra; The Westminster, supra. In view of these authorities the fact that the respondent had knowledge of the damage is irrelevant. This is no even though such knowledge was obtained through its own survey. See Bombace v. American Bauxite Co., 39 F.2d 867 (5th Cir. 1930). For it may well be, as respondent asserts, that notice of libellant's claim would ...


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