Filed November 19, 1999
UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
DAEWOO INTERNATIONAL (AMERICA) CORP.
*SEA-LAND ORIENT LTD.; *SEA-LAND SERVICES, INC.; WICE MARINE
(D.C. Civil No. 97-608)
DAEWOO INTERNATIONAL (AMERICA) CORP.
ROUND-THE-WORD (U.S.A.) CORP.; *EVERGREEN LINES, INC.; *EVERGREEN
*EVERGREEN MARINE CORP.,
*UNION PACIFIC RAILROAD COMPANY; *SOUTHERN PACIFIC RAILROAD;
(D.C. Civil No. 97-624)
Daewoo International (America) Corp.,
*Sea-Land Orient, Ltd., Sea-Land Services, Inc., Evergreen Lines,
Inc., Evergreen Marine Corp., Union Pacific Railroad, Southern
Pacific Railroad, and CSX Railroad dismissed pursuant to Court's
order dated February 22, 1999
Appeal from the United States District Court for the District
of New Jersey (D.C. Civil Action Nos. 97-cv-00608/624) District
Judge: Honorable John W. Bissell (97-608) District Judge: Honorable
Alfred J. Lechner, Jr. (97-624)
Argued April 27, 1999
Before: SCIRICA, ROTH and MCKAY,1 Circuit Judges
(Opinion filed November 19, 1999)
Martin B. Mulroy, Esquire (Argued) 478 State Route 28, Suite
444 Bridgewater, NJ 08807
Attorney for Appellant
Wayne D. Greenfeder, Esquire Kraemer, Burns, Mytelka, Lovell
& Kulka 675 Morris Avenue, 3rd Floor Springfield, NJ 07081
Nicholas Kalfa, Esquire (Argued) Deborah R. Reid, Esquire James
J. Ruddy, Esquire Badiak, Will & Maloof, LLP 120 Broadway,
Suite 1040 New York, NY 10271
Attorneys for Appellee Wice Marine Services, Ltd.
Peter D. Clark, Esquire James R. Sanislow, Esquire Gregory
G. Barnett, Esquire (Argued) Clark, Atcheson & Reisert 535
Fifth Avenue New York, NY 10017
Attorneys for Appellee Round-The-World (U.S.A.) Corp.
1. Honorable Monroe G. McKay, Circuit Judge, United States Court
of Appeals for the Tenth Circuit, sitting by designation.
OPINION OF THE COURT
ROTH, Circuit Judge .
Daewoo International (America) Corporation purchased over
one million plastic videocassette tape holders from Hang Fung
Technology Manufacturing Company of Hong Kong. When Daewoo received
the shipment in the United States and opened the containers,
it found nothing but cement blocks. The common carriers, Round-The-World
(USA) Corporation ("RTW") and Wice Marine Services
Limited, when they issued the bills of lading, had received no
notice of any problems. This case presents the question whether,
under the Carriage of Goods by Sea Act (COGSA), 46 App.U.S.C.A.
§ 1300 et seq. , a common carrier, with no notice
that anything is awry, is obligated to inspect a sealed shipment
before issuing a bill of lading. We hold that no such duty exists.
Daewoo purchased the tape holders from Hang Fung in Hong Kong.
Hang Fung agreed to ship them to Daewoo in the U.S. In return,
Daewoo arranged for Korea Exchange Bank to issue letters of credit
in favor of Hang Fung. The letters of credit described the tape
holders, listed quantity and price, and indicated that the shipment
was to be "FOB: Hong Kong." The letters of credit were
irrevocable and did not require confirmation from Daewoo for
the bank to pay Hang Fung. Moreover, under the terms of the deal,
Hang Fung could receive payment from the bank as soon as it presented
the shipping documents, without waiting for the shipment to reach
For the shipment, Hang Fung loaded and sealed fourteen ocean
containers. It then delivered the containers to the appellees,
RTW and Wice, which are non-vessel owning common carriers. In
return, RTW and Wice issued bills of lading, which were provided
to Hang Fung (the shipper) and Daewoo (the consignee and cargo
owner). The bills of lading listed the weights and contents of
the containers as declared by Hang Fung. Hang Fung represented
that each container held pallets of "V/O Housing" and
weighed 17,500 kilograms. The container references on the bills
of lading were qualified with the terms, "Shipper's Load
and Count" and "S.T.C.," which means "said
to contain." The carriers did not weigh the containers or
break the seals to inspect the contents.
The ocean voyage was uneventful, and the containers were delivered
safely to Daewoo with seals intact. When the containers were
opened, it was discovered that they contained cement blocks instead
of tape holders and that the weights listed on the bills of lading
were incorrect.2 In the meantime, Hang Fung had received payment
from the bank and disappeared.
Daewoo sued RTW and Wice to recover its payment for the goods,
plus shipping expenses.3 After discovery, Daewoo moved, and RTW
and Wice cross-moved, for summary judgment under COGSA and principles
The District Court denied Daewoo's motion, granted RTW's and
Wice's cross-motions, and dismissed the complaint. It determined
that Daewoo had failed to establish a prima facie case
under COGSA because it did _________________________________________________________________
2. Daewoo's agents did not immediately break the seals and inspect
every container upon delivery. Although most or all of the containers
were delivered in February 1996, some were not opened and inspected
until March 22, 1996.
3. Daewoo also sued in a separate action ocean carriers Sea-Land
Orient Limited, Sea-Land Services Incorporated, Evergreen Lines
Incorporated, and Evergreen Marine Corporation. Although the
two suits were consolidated, this appeal concerns only defendants
RTW and Wice.
not prove that the goods were delivered to the carriers in
good condition. Daewoo's only evidence was the bills of lading.
In the court's opinion, this did not prove the contents of the
sealed containers, which were not ascertainable from the outside.
The court acknowledged that Daewoo was correct in arguing that
the weight notations on the bills of lading were prima facie
proof of receipt of that weight, despite such qualifiers
as "Shipper's Load and Count." However, the court distinguished
this case from those cited by Daewoo in which carriers were held
liable based on weight listings that were higher than actual
weight. Those cases dealt with shortages of cargo, which in the
court's opinion was different than a situation involving a substitution
of cargo. There is no indication that the substitution could
have been ascertained from the listed weights. Moreover, the
fact that the seals from Hang Fung had remained intact and that
Hang Fung had disappeared further indicated to the court that
the carriers were not at fault and that, even if the burden of
proof were to shift to the carriers, the carriers would not have
been found liable.
Daewoo appealed. The District Court had jurisdiction under
28 U.S.C. § 1333. We have jurisdiction pursuant to 28 U.S.C.
§ 1291.5 Our standard of review is plenary. See Sun Oil
Company of Pennsylvania v. M/T Carisle , 771 F.2d 805, 812
(3d Cir. 1985). We must determine, viewing the evidence in the
light most favorable to the nonmoving party, whether there are
any genuine issues of material fact and whether the moving party
is entitled to judgment as a matter of law. See FED. R.
C IV. P. 56(c).
COGSA regulates the carriage of goods by sea between U.S.
and foreign ports. See 46 App.U.S.C.A.§§ 1300,
1312. A carrier of goods has the duty to "properly and carefully
load, handle, stow, carry, keep, care for, and discharge the
goods carried." Id. § 1303(2). A carrier has
the further duty of issuing a bill of lading which contains a
description of the goods. Id. § 1303(3).4 That bill
of lading serves as prima facie evidence that the
carrier received the goods as described. Id. § 1303(4).
When the carrier delivers the goods, the bill of lading constitutes
prima facie evidence of the goods' delivery, unless the
receiver gives notice at that time, or within three days if the
loss or damage is not apparent. Id. § 1303(6).5
Under §§ 1303 and 1304, a cargo owner has to establish
a prima facie case when it has demonstrated that the cargo
was delivered to the carrier in good condition but was delivered
by the carrier to the cargo owner in a short or damaged condition.
See Sun Oil Company of Pennsylvania , 771 F.2d at 810.
Once the cargo owner has established a prima facie case,
the burden shifts to the carrier. Id. One way for the
carrier to meet its burden is to show that the loss or damage
falls within one of the exceptions to liability in § 1304(2)(a)-(p).
To establish that the cargo here was delivered to the carrier
in good condition, Daewoo points to the bills of _________________________________________________________________
4. The statute provides in pertinent part:
After receiving the goods into his charge the carrier . . . shall,
on demand of the shipper, issue to the shipper a bill of lading
showing among other things . . .
(b) Either the number of packages or pieces, or the quantity
or weight, as the case may be, as furnished in writing by the
shipper. (c) The apparent order and condition of the goods: Provided
, That no carrier . . . shall be bound to state or show in
the bill of lading any marks, number, quantity, or weight which
he has reasonable ground for suspecting not accurately to represent
the goods actually received, or which he has had no reasonable
means of checking.
46 App.U.S.C.A. § 1303(3).
5. The statute provides in pertinent part:
Unless notice of loss or damage and the general nature of such
loss or damage be given in writing to the carrier . . . at the
port of discharge . . . at the time of the removal of the goods
into the custody of the person entitled to delivery thereof under
the contract of carriage, such removal shall be prima facie evidence
of the delivery by the carrier of the goods as described in the
bill of lading. If the loss or damage is not apparent, the notice
must be given within three days of the delivery.
46 App.U.S.C. § 1303(6).
lading. It contends that the carriers should have inspected
the cargo to verify that the information provided by Hang Fung
was correct before they listed that information on their bills
of lading. Daewoo argues that once the carriers listed the information
on the bills of lading, they were responsible for any inaccuracies.
Although a bill of lading, attesting to the apparent good
order and condition of the goods, normally constitutes prima
facie evidence of the goods as described, see §
1303(4)(c), a bill of lading is not prima facie evidence of the
contents of a sealed container because the contents are not discoverable
from an external examination. Bally, Inc. v. M.V. Zim America
, 22 F.3d 65, 69 (2d Cir. 1994); Westway Coffee Corp.
v. M.V. Netuno , 675 F.2d 30, 32-33 (2d Cir. 1982); Caemint
Food, Inc. v. Brasileiro , 647 F.2d 347, 352 (2d Cir. 1981);
see Plastique Tags, Inc. v. Asia Trans Line, Inc. , 83
F.3d 1367, 1370 (11th Cir. 1996).
Daewoo also contends that RTW and Wice are bound by the weight
listed on the bills of lading. Daewoo claims that the carriers
should have verified the information by weighing the containers
on public scales in Hong Kong. If they had, Daewoo argues, they
would have discovered that the weight information provided by
Hang Fung was incorrect. Daewoo contends that the weight differential
would have put the carriers on notice that the shipment was not
as described; the carriers would then have been obligated to
break the seals to inspect the contents of the containers. Daewoo
argues that if the carriers had done so, they would have discovered
the substituted cement blocks.6
Unlike the contents of a sealed container, the weight of a
container is usually "readily verifiable." See §
1303(c). A bill of lading, then, is prima facie proof that the
carrier received that weight from the shipper. Bally ,
22 F.3d at 69. This holds true regardless of limiting language,
such as "said to weigh" and "shipper's load and
count." Id. For this reason, carriers have been held
liable in cases involving a shortage of cargo where the actual
weight of cargo at outturn was _________________________________________________________________
6. Daewoo concedes that the containers held cement blocks even
before they were delivered to RTW and Wice.
less than the weight listed on the bill of lading. See
Westway Coffee Corp. , 675 F.2d at 31-32, 33.
Although the weight of a container can be a signal that there
is a shortage of cargo, weight is not logically related to whether
cargo is in "good condition" when there has been a
substitution. Had RTW and Wice weighed the cargo upon receipt,
the weight differential would not have revealed the condition
of the goods inside. Nor has Daewoo presented any evidence of
the weight of the correct quantity of tape holders. Indeed, had
Hang Fung weighed the containers and provided the actual weight
of the cement blocks, there would have been no weight differential
The only way that the carriers could have discovered the substitution
was if they had broken the seals on the containers. We conclude,
however, that, absent notice that something was amiss, the carriers
did not have an independent duty to break the seals. Instead,
Daewoo, the owner and consignee, was better positioned to prevent
the loss. For instance, it could have instructed the carriers
to break the seals for inspection at loading, or it could have
designated a representative to be present when the containers
were loaded. Daewoo could also have required the bank to withhold
payment for thirty days after delivery or until the containers
had been inspected. Consequently, Daewoo has failed to establish
its prima facie case.
We note, moreover, that, even if the common carriers should
have been held responsible for the contents of the containers
on receipt, Daewoo did not inspect the containers when they were
delivered to determine if cargo was missing or damaged. Some
containers were not opened until weeks after delivery. Nor did
Daewoo give timely notice of the missing cargo to the carriers
as required by § 1303(6).
Because Daewoo presented no evidence that the cargo was lost
while in the carriers' possession, it cannot recover from RTW
and Wice for its loss.7 _________________________________________________________________
7. We decline to reach Daewoo's estoppel argument.
For the reasons stated above, we will affirm the decision
of the District Court.