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Claims Review: What is a package?
COGSA’s $500 per package limitation
Monica Textile Corp. v. S.S. Tana
952 F.2d 636, 638 (2d Cir. 1991)
Monica Textile Corp v. S.S. Tana holds that the
number of packages disclosed on a face of the bill of lading represents the number of packages
eligible for $500 per package limitations when a container is involved.
BACKGROUND
Monica Textile Corporation (referred to as “Monica” or the “shipper”) hired S.S. Tana (“carrier”) to transport a
20-foot shipping container from Africa to Savannah, Georgia. The bill of lading dictated that the 20-foot container the shipper stuffed and sealed,
contained 76 bales of cotton cloth.
The shipper brought action against the carrier for liability for damaged goods. The U.S. District Court for the Southern Division of New York granted
the carrier's motion for summary judgment, limiting their
liability to $500, on grounds the shipping container constituted
a “package” for the purpose of liability as imposed by the Carriage of Goods By Sea Act (COGSA). The shipper appealed.
During the appeals process, Judge McLaughlin held that each of the 76 bales of cloth stowed inside the shipping container, rather than the actual
container itself was a separate package for purposes of COGSA’s $500 per package limitation on liability.
The court agreed with Monica and reversed the judgment of the district court. The reversal would require the carrier to pay the shipper $38,000
(76 bales multiplied by $500).
DECISION
The appeals court took a critical look at the clauses required to define a container as a package under COGSA.
Precedent established in
Mitsui & Co. v. America Export Lines, Inc. 636 F.2d 807, 814-15 (2d Cir. 1981) held that when a bill of lading discloses on its
face what is inside the container, those contents may be reasonably considered COGSA packages, not the container.
The court recognized that when a bill of lading refers to both containers and other units susceptible of being COGSA packages, it is inherently
ambiguous.
COMMENTS – Circuit Judge McLaughlin
A. Comment 1
“When COGSA was enacted, neither the statute nor its legislative history provided any clue as to the meaning of ‘package’ in the act.
Few in 1936 could have foreseen the change in the optimum size of shipping units.”
952 F.2d 636 (2nd Cir. 1991)
B. Comment 2
“It is our belief that the purpose of COGSA was to make the carrier unable to limit their liability below a set amount. ‘Package’ is
thus more sensibly related to the unit in which the shipper packed the goods and described them than to a large metal object, functionally part of the
ship which the carrier caused them to be ‘contained.’”
952 F.2d 636 (2nd Cir. 1991)
To view the case in its entirety, please click here:
http://www.admiraltylawguide.com/circt/2ndmonicatextile.html
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