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WORLD PRODS. v. CENTRAL FREIGHT SERV.

October 29, 1963

WORLD PRODUCTS, INC., Plaintiff,
v.
CENTRAL FREIGHT SERVICE, INC., Defendant



The opinion of the court was delivered by: AUGELLI

This is an action against a warehouse man to recover damages for negligence and breach of a contract of bailment. The case was tried to the Court, sitting without a jury.

Plaintiff, World Products, Inc., is a corporation of Ohio. Defendant, Central Freight Service, Inc., is a New Jersey corporation. Jurisdiction is based on diversity of citizenship and allegation of the requisite amount in controversy.

 Defendant operated four warehouses in New Jersey. One was located in Jersey City, one in Port Newark, and two in Edgewater. In 1960, a quantity of pipe fittings, imported by plaintiff from Japan, was damaged while stored in defendant's main warehouse located at 839 River Road in Edgewater. This particular warehouse extended in part over the Hudson River.

 On June 15, 1960, defendant took a first shipment of 1106 cartons of pipe fittings into its Port Newark warehouse under an arrangement made the month before with plaintiff. Subsequent shipments went to defendant's main Edgewater warehouse on July 21, July 26, August 8 and August 14, 1960. The unsold remainder of the first shipment was in the meantime transferred from Port Newark to said Edgewater warehouse.

 On September 12, 1960, Hurricane Donna struck the Metropolitan New York area, including Edgewater. The tide waters of the Hudson River rose about four feet above the mean high water mark, and entered the first floor of defendant's main Edgewater warehouse. A number of cartons of plaintiff's pipe fittings, stored therein on approximately four inches of dunnage, were damaged by the resulting tide waters which flooded the building.

 On September 17, defendant informed plaintiff by letter that certain of its merchandise had been damaged as a result of Hurricane Donna. Defendant, thereafter, segregated 1688 cartons of pipe fittings belonging to plaintiff, which had become watersoaked. On October 14, plaintiff's sales representative inspected these cartons at Edgewater. After an exchange of correspondence, plaintiff's traffic manager, on October 25, authorized defendant to send the 1688 cartons to plaintiff's plant in Ohio. Two days later, defendant forwarded to plaintiff a list of the damaged items. The goods were then shipped, and arrived in Ohio on November 29, where they were examined by plaintiff's president, treasurer, and quality control expert. They found the fittings could not be salvaged because the threads had been corroded by the action of the salt water, and that it was not possible to restore them to a condition that would make them suitable for resale. The entire shipment was melted down and sold as scrap.

 The warehouse receipts, which are in evidence, embody the agreements between the parties for each shipment of merchandise covered thereby. The receipts declare on their face that the goods listed 'were received in apparent good order, except as noted'. Only a few minor shortages are noted on several of the receipts. Other terms and conditions are stated on the reverse side. Section 10(a) of each warehouse receipt recites that in the absence of written provisions, the warehouseman has the responsibility of exercising 'the reasonable care and diligence required by law'. Section 10(e) provides that the warehouseman shall not be liable for certain types of damage caused by acts beyond his control, but does not mention floods, hurricanes, or storms. Finally, section 10(f) limits the liability of the warehouseman, for his acts resulting in damage to goods stored, to the actual valuation of the goods at the time received for storage, but not to exceed 500 times the base storage rate per month of the damaged goods, unless an excess value is declared at the time of storage.

 Plaintiff claims damages of $ 40,622.17 by reason of defendant's alleged negligence in storing the goods, and by reason of defendant's alleged breach of the bailment contract in failing to return the merchandise in the same condition as delivered or, alternatively, in failing to notify plaintiff that the goods were to be stored at Edgewater rather than at Port Newark. Defendant admits that a bailment existed, but denies a breach thereof, or any negligence. Defendant also contends that any damages to plaintiff were caused by an Act of God and that, if defendant is liable, such liability is limited by section 10(f) of the warehouse receipt to $ 26,271.00.

 New Jersey substantive law is, of course, applicable in this case. The Uniform Warehouse Receipts Act, N.J.S.A. 57:1-24, in force in 1960, *fn1" provided that:

 'A warehouseman shall be liable for any loss or injury to the goods caused by his failure to exercise such care in regard to them as a reasonably careful owner of similar goods would exercise, but he shall not be liable, in the absence of an agreement to the contrary, for any loss or injury to the goods which could not have been avoided by the exercise of such care.'

 In New Jersey, proof of loss establishes a sufficient prima facie case against a bailee. When goods are delivered to a bailee in good condition and are returned in a damaged state, the law presumes negligence, and the bailee must show that he exercised a degree of care sufficient to rebut the presumption of negligence, or that the loss did not occur through his negligence. Jackson v. McDonald, 70 N.J.L. 594, 57 A. 126 (1904); Armstrong Rubber Co. v. Erie R.R. Co., 103 N.J.L. 579, 137 A. 596 (1927); Bachman Chocolate Mfg. Co. v. Lehigh Warehouse & Transp. Co., 1 N.J. 239, 62 A.2d 806 (1949).

 The Bachman Chocolate Mfg. Co. case, supra, is somewhat similar to the case at bar. In that case, 193 bags of cocoa beans stored in the defendant's warehouse were damaged by flood water during a hurricane in 1944. The warehouseman's receipt which covered the beans contained the same language concerning reasonable care and diligence by the bailee as is found in section 10(a) of the receipt in the case at bar. In that case too, the defendant alleged that the hurricane was the sole cause of the damage, and amounted to an Act of God which relieved defendant from liability. The defendant showed that the hurricane was of such unusual severity as to constitute an Act of God. De Cicco v. Marlou Holding Co., 137 N.J.L. 186, 59 A.2d 227 (1948). See also Bauer v. 141-149 Cedar Lane Holding Co., 42 N.J.Super, 110, 125 A.2d 884 (App.Div.1956), affirmed 24 N.J. 139, 130 A.2d 833 (1957). The court, in affirming the trial judge's denial of defendant's motion for a directed verdict, determined that the case was properly submitted to the jury because of the conflicting testimony presented on the issue of whether the plaintiff had used due care in anticipating and guarding against the storm.

 Hurricane Donna certainly qualifies as an Act of God under the cases cited. The official reports of the Weather Bureau and of the Army Corps of Engineers indicate that as the storm passed over the New York City area about 12 noon on September 12, wind speeds were of hurricane velocity (over 75 miles per hour) and the highest since the Hurricane of September 1944. Because the passage of the storm nearly coincided with the time of predicted high tide, tides were the highest on record in many places along the Coast, approximately four to six feet above normal. Dr. Newstein, a meteorologist, also testified at the trial as to the extreme severity of the storm.


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