Elena M. DeSantis \u2790

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Siderius, Inc. v. M/V Amilla United States Court of Appeals, Second Circuit, 19 July 1989 880 F.2d 662

St. John's University School of Law

Admiralty Practicum Volume 1989 Issue 2 Winter 1989 Article 9 February 2018 Siderius, Inc. v. M/V Amilla United States Court of Appeals, Second Circuit, 19 July 1989 880 F.2d 662 Elena M. DeSantis '90 Follow this and additional works at: https://scholarship.law.stjohns.edu/admiralty_practicum  Part of the Admiralty Commons Recommended Citation Elena M. DeSantis '90 (1989) "Siderius, Inc. v. M/V Amilla United States Court of Appeals, Second Circuit, 19 July 1989 880 F.2d 662," Admiralty Practicum: Vol. 1989 : Iss. 2 , Article 9. Available at: https://scholarship.law.stjohns.edu/admiralty_practicum/vol1989/iss2/9 This Recent Admiralty Cases is brought to you for free and open access by the Journals at St. John's Law Scholarship Repository. It has been accepted for inclusion in Admiralty Practicum by an authorized editor of St. John's Law Scholarship Repository. For more information, please contact selbyc@stjohns.edu. SIDER IUS, INC. v. MN AM ILLA Uni te d State s  Cou rt of A ppeals, Second Ci rcui t, 19 July 19 89 880 F.2d662 Unde r the Inte r- Clu b New Y ork P rodu ce Ex ch ange A greeme nt, a fi ndi ng of u nse aw orthi ne ss base d on ci rcum stanti al evi de nce is i nsuffi cie nt to place 100% li abi li ty for cargo dam age on the ve sse l ow ner. FA CTS: Amilla Compania Naviera, S.A. <"Amilia") is the owner of the M!V Amilla. On August 4, 1983, the M!V Amilia was chartered through Astramar Cansac B.S. A.S. ( ''Astramar"l, whose performance was guaranteed by Canadian Forest Navi­gation Company, Ltd. ( "Canadian") to Siderius, Inc., as per a New York Produce Exchange form time charter party. According to the charter party, Amilla guaranteed that the M!V Amilia was "in every way fitted for ordinary cargo service." The ship was then voyage-chartered to Siderius to transport rolled steel sheets from Buitrago, Argentina to Detroit, Michigan and Chicago, Illinois. The cargo was encased in metal envelopes a�d · was inspected before loading in Buitrago and upon arrival m Detroit. These metal envelopes were not opened. The cargo inside the envelopes was reinspected later when a customer _of Siderius rejected the steel sheets because of rust. Siderius gave the customer a credit and brought this action against Amilia and Canadian. . The district court held: first, that under the Umted States Carriage of Goods by Sea Act ( COGS A), Amilia was the owner of the M/V Amilia and Canadian was her charterer; second, that Siderius had made a prima facie case by showing delivery of the steel in good condition to the carrier and damage after its trans­portation, that placed the burden on the defendants to come forward with proof that the rust damage d1d not occur durmg the voyage. This burden was not met. Third, the court held that the vessel carried no equipment to regulate the condensation or humidity level in the holds, making it unseaworthy to safely carry the steel cargo. The district court awarded Siderius $95,276.01 with interest plus taxable costs. To determine the apportionment of damages between defendants, the court relied upon and applied the New York Produce Exchange Inter-Club Agreement ( "Inter-Club Agreement") which states that payment of condensation dam­age should be apportioned 50% to the owner and 50'k to the charterer. The Inter-Club Agreement was incorporated into the charter party to the extent it was to govern the settlement of any disputes as to cargo damage. Both Amilia and Canadian have appealed. ISSUE: Whether the Inter-Club Agreement was properly applied? ANA LY SI S: The Second Circuit affirmed the decision of the district court. The court first disposed of the appeal by Amilla. The court agreed with the district court that the plaintiff had made a prima facie case which the defendants had failed to rebut by a showing that the damage did not occur on the voyage. The ship did not have a hygrometer to measure moisture, the ventilation system was hand activated, and the "drip down" occurred during the voyage, causing the rust damage. There­fore, the ship was unseaworthy to carry the steel cargo. Since Amilia had impliedly warranted through its charterer that the vessel was fit for ordinary cargo usage, the court agreed with the district court that Siderius may recover directly from Amilia. The Second Circuit has long held that "when the charterer of a ship is liable to a cargo owner" and that liability results because the vessel owner has violated its warranty of seaworthiness, the "cargo owner may hold the shipowner on his warranty to the charterer." New York Cent. R.R. v. New York, N.H. & H.R.R., 275 F.2d 865, 866 <2d Cir. 1960L ·canadian claimed, on appeal, that the use of the Inter-Club Agreement was unfair. The clause in question as it applies to the apportionment and cargo claims provides: In all cases where the Agreement applies cargo claims shall be apportioned as hereunder: Claims for loss of or damage to cargo due to unsea­worthiness -- 100% Owners Claims for damage ( including slackage/ullage) due to bad stowage or handling -- 100% Charterers Except as provided in the succeeding paragraphs of this clause, short delivery claims ( including pilferage), claims for overcarriage, and claims for condensation damage -- 50'k Owners, 50% Charterers Inter-Club New York Produce Exchange Agreement (as amended May 1984) Canadian argues that it had expert testimony which it would have used had the Agreement been introduced into evidence. Canadian moved for reconsideration by the district court of the indemnification issue claiming it had not been given a chance to present its evidence and that the district court may have been unaware of the first part of the clause placing full liability on the owner where unseaworthiness is found. The district court denied the motion for reconsideration. The court found that since the Inter-Club Agreement was incorporated in the charter party, it did not need to be judicially noticed, or separately introduced into evidence. Since Federal Rule of Evidence 201(a) "deals only with judicial notice of ad­judicative facts," it does not apply. Even if the Agreement were an adjudicative fact, the rule is satisfied because it is "capable of accurate and ready determination by resort to sources whose accuracy cannot reasonably be questioned." Fed. R. Evid. 20 1( b) The Inter-Club Agreement was properly applied. In order to hold the owner lOO'k liable, the Agreement requires clear evidence that the unseaworthiness caused the damage. The Second Circuit affirmed the district court's finding that there was only circumstantial evidence that the poor ventilation caused the damage. The court agreed with the district court that Canadian should indemnify Amilia for 50% of the damages. D ISSENT: Judge Pratt concurred in the disposal of Amilia's claim, but dissented from the decision as to Canadian. Noting that Canadian was denied a fair opportunity to present its full case on the indemnity issue, Judge Pratt discussed the unique position of Canadian in defending against both Siderius and Amilla. In an effort to defeat the overall claim, Canadian had to sacrifice its expert evidence as to the unseaworthiness of the vessel. The circuit court's reliance on the Inter-Club Agreement to determine the indemnification issue without notice to the parties effectively denied Candian the chance to present "clear" evidence of unseaworthiness. Ele na M .  De Sa nti s '90 -7-

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Siderius, Inc. v. M/V Amilla United States Court of Appeals, Second Circuit, 19 July 1989 880 F.2d 662

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