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World Products Inc. v. Central Freight Service Inc.

February 15, 1965


Author: Freedman

Before KALODNER, GANEY and FREEDMAN, Circuit Judges.

FREEDMAN, Circuit Judge.

This is an action against a warehouseman to recover damages for negligence and breach of a contract of bailment.

Plaintiff imported a quantity of pipe fittings from Japan. They ultimately were stored in defendant's main warehouse located in Edgewater, New Jersey. Part of the warehouse extended over the Hudson River.

On September 12, 1960, Hurricane Donna struck the area and as a result the tidewaters of the Hudson River rose above the first floor level of the warehouse. Cartons of plaintiff's pipe fittings were damaged by the flood waters.

Defendant segregated 1,688 watersoaked cartons of plaintiff's pipe fittings and by arrangement of the parties shipped them to the plaintiff's plant in Ohio. Plaintiff examined some of the fittings on arrival, determined that they could not be salvaged because of corrosion by the salt water and thereupon melted down the entire shipment of 1,688 cartons and sold it as scrap.

The trial court, sitting without a jury, found as a fact that although Hurricane Donna was an Act of God, defendant nevertheless was negligent in storing the plaintiff's goods without taking sufficient precautions against the flooding of the warehouse by such a severe storm, and that the negligence was a substantial factor in causing the damage to the plaintiff's goods. The court also found that the limitation of liability provision contained in the warehouse receipt limited the defendant's liability to the plaintiff to $26,271, although the plaintiff claimed $40,797.45, based on a replacement value of the damaged goods of $41,434.13, together with certain additional expenses, less a credit for salvage value*fn1

We agree with the conclusions of the court below on the liability of defendant and on the validity of the limitation of liability provision of the warehouse receipt. On this we can add nothing to the reasons well stated by Judge Augelli in his opinion reported in 222 F. Supp. 849.

Although defendant's liability is clear, there is a good deal of obscurity in the record on the question of damages.

Plaintiff, of course, had the burden of proving damages, and the judgment in its favor must rest upon a finding of the extent and amount of the damages. Although the judgment for $26,271 implies that plaintiff proved damages at least to that extent, the court below made no such express finding. There is simply a statement by the court that "plaintiff has presented evidence that the replacement value of the damaged goods was $41,343.13" and that "in addition plaintiff adds freight and labor charges and deducts salvage value, resulting in a total claim of $40,622.17". We shall, however, assume that from this a finding may be implied that damages were shown at least to the extent of the judgment of $26,271.

A careful examination of the record convinces us, however, that there is no adequate factual foundation for the result reached by the trial court in applying the limitation of liability formula.

The warehouse receipt limited the liability of defendant to 500 X the base storage rate of .07 cwt. X the weight of the goods. There is no dispute as to the number and type of damaged fittings; they are set out in detail in an inventory (P-4) of the items comprising the 1,688 cartons which defendant sent to plaintiff after the damage occurred. The controversy extends only to the weight to be applied to each item. In applying the formula the trial court accepted defendant's alleged weight of 75,060 pounds and thus found defendant's liability to be limited to $26,271. Plaintiff contends that the weight of the goods was 128,932 pounds; this would raise the limitation of liability to $45,126.20.

It is remarkable that neither party offered in evidence records of the railroad which would show the carrier's determination of the weight of the damaged fittings which defendant returned to plaintiff. Such evidence from a neutral source would have unusual probative value. It was, moreover, called for with peculiar force because the fittings were never weighed by either the plaintiff or the defendant, and were melted down and sold as scrap.

Both parties relied upon secondhand evidence as to weight. Defendant based its figure on its delivery order (P-11) which accompanied the shipment returned to plaintiff. This document, which defendant prepared, listed 1,688 cartons weighing 75,060 pounds as being "returned for salvage". No one testified how this figure was arrived at. Defendant called a former employee, Arthur, who testified that the delivery order was prepared by one Flaherty, another employee of defendant. Flaherty, however, was never called as a witness.Arthur's testimony shows that the weight which defendant attributed to the various cartons was derived from a list supplied by plaintiff which sets out the gross weight of cartons containing particular types and sizes of fittings. This list was used by defendant to ...

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