IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 98-20722
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THYSSEN, INC.; FRANCOSTEEL CORPORATION,
Plaintiffs-Appellees,
versus
M/V MED PISA, Etc.; ET AL.,
Defendants,
M/V MED PISA, her engines, boilers,
tackle, equipment, appurtenances,
etc., in rem; NARCISSUS SHIPPING LIMITED,
Defendants-Appellants.
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
(H-97-CV-758)
_________________________________________________________________
December 22, 1999
Before JOLLY, EMILIO M. GARZA, and BENAVIDES, Circuit Judges.
PER CURIAM:*
This case falls within the grant of original jurisdiction in
admiralty to the federal courts. The defendant, and now appellant,
Narcissus Shipping Company, as claimant of the M/V MED PISA, seeks
review of the district court’s judgment for the plaintiffs, Thyssen
Incorporated and Francosteel Company (collectively, “Thyssen”),
holding that the M/V MED PISA is liable in rem for the damages to
the plaintiffs’ cargo. The defendant argues that the district
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
court erred as a matter of law in holding that, because bills of
lading were issued and the ship sailed with the plaintiffs’ cargo,
the bills of lading were ratified and became the contract of
carriage. Further, the defendant argues that the district court
erred in holding that the shipping arrangement was governed by the
terms of COGSA1 and that Thyssen was the rightful holder of a
maritime lien against the M/V MED PISA that could be enforced in
rem for any damage to its cargo resulting from its transport.
COGSA applies to all contracts for carriage of goods by sea to
or from ports of the United States in foreign trade for which the
contracts for the carriage of the goods are evidenced by a bills of
lading. See 46 U.S.C. § 1300 (West 1999). By its express terms,
COGSA does not apply to the terms of vessel charters except to the
extent that those arrangements may incorporate its terms. See 46
U.S.C. § 1305 (West 1999). However, if bills of lading are issued
where a ship is under a charter party, the parties to that charter
party “shall comply with the terms of [COGSA].” Id.; see also
Cactus Pipe & Supply Co., Inc. v. M/V MONTMARTRE, 756 F.2d 1103,
1113 (5th Cir. 1985). An exception to this rule exists when bills
of lading are issued but remain in the hands of the charterer. In
such a situation, the bills of lading are not documents of title to
which COGSA applies; rather, they are only a receipt as between the
parties to the charter, and the parties’ relationships are governed
1
The Carriage of Goods by Sea Act, codified at 46 U.S.C.
§ 1300 et seq. (West 1999).
2
by the charter party. See The Fri, 154 F. 333, 337 (2d Cir.
1907)(stating that “when the charterer himself ships the goods
there bills of lading operate as receipts for them, and also as
documents of title which he can negotiate . . . but they do not, as
between the shipowner and the charterer, operate as new contracts,
or as modifying the contract in the charter party”); Unterweser
Reederei Aktiengesellschaft v. Potash Importing Corp., 36 F.2d 869,
870 (5th Cir. 1930). However, if bills of lading are issued and
transferred for value to a third party, who is a stranger to the
charter party, the bills of lading become the contract for carriage
and the relationship will be governed by the terms of COGSA. See
The Fri, 154 F. at 336; Cactus Pipe, 756 F.2d at 1113 (holding that
when the bills of lading are transferred to a stranger to the
charter for value, they become the contract for carriage and the
relationship is governed by the terms of COGSA); 70 Am. Jur. 2d
Shipping § 691 (1987)(stating that “if bills of lading are issued
where a ship is under a charter party, they are required to comply
with the Act”).
In Cactus Pipe, our court addressed the exact issues raised by
the defendant-appellant in a factually analogous situation to the
one presented by the instant case. Corinth, a Greek manufacturer
of steel tubing, contracted for the shipment of some steel aboard
the M/V MONTMARTRE. Cactus Pipe, 756 F.2d at 1106. Upon receipt
of the cargo, Delpa Shipping and Transportation Company issued nine
bills of lading covering the cargo. Id. Corinth assigned these
3
bills of lading for value to Cactus Pipe, a stranger to the charter
party. Id. While in route from Greece to Houston, Texas, some of
the cargo was damaged as a result of the unseaworthiness of the
vessel, and some of the cargo was lost. Id. Cactus Pipe sought
to recover under COGSA for damage to, and loss of some of its
cargo. Id. Addressing the in rem liability of the vessel to
Cactus Pipe, we stated:
[T]he arrangement between Corinth and the vessel was akin
to special or private carriage as to which COGSA would
not attach unless bills of lading are issued. Although
bills of lading were issued they were not issued either
by the vessel owner, Orient, or by one acting with its
authority. Therefore, as we have held above Orient has
no liability in personam. Nonetheless bills of lading
were issued and the vessel sailed with the goods on
board. Under those circumstances, Black Letter Law
translates Cleirac’s historic aphorism “Le batel est
oblige a la marchandise et la marchandise au batel”2 into
the settled maritime principle that sweeps away as
immaterial any question of the authority of the issuer of
the bills of lading to hold the ship liable in rem for
loss or damage to the cargo carried. When cargo has been
stowed on board the vessel and bills of lading are
issued, the bills of lading become binding contracts of
the vessel in rem upon the sailing of the vessel with the
cargo. The sailing of the vessel constitutes a
ratification of the bills of lading. This action gives
rise to a maritime lien which is the basis of the in rem
recovery. Even though the vessel is operating under
charter party, the lien against the vessel is not
affected. Therefore, the sailing of the MONTMARTRE with
2
Cleirac’s “clever phrase” translates into “the mutual
obligations flowing from the union of the personified ship and the
personified cargo.” Krauss Bros. Lumber Co. v. Dimon S.S. Corp.,
290 U.S. 117, 126 (1933). It historically has been used to
describe the reciprocal maritime liens possessed by the owner of
cargo upon the ship for the safe custody, due transport, and right
delivery of the same, and the lien possessed by the shipowner
against the cargo for the freight. See The Ripon City, 102 F. 176,
181 (5th Cir. 1900).
4
the cargo of steel pipes aboard constitutes a
ratification of the bills of lading.
Id. at 1113 (citations omitted). Thus, the court concluded, “there
is in rem liability for loss or damage to the cargo.” Id.
Turning to the case before us, it is clear that Thyssen was
not a party to any charter agreement. The district court, in its
finding of fact number 5, stated that at all relevant times Ocean
Pacific Carriers was the charterer of the M/V MED PISA. Further,
it is undisputed, and the district court held, that Thyssen was the
owner or duly authorized representative of the owners of the steel
shipped onboard the M/V MED PISA for which bills of lading were
issued. Thus, when the M/V MED PISA set sail with Thyssen’s cargo,
because the bills of lading were transferred for value to a
stranger to the charter party, they were ratified and became the
contract for carriage. This is true irrespective of whether the
original contract for carriage was for common or private carriage,
or whether the issuer of the bills of lading had actual authority
to issue them. Consequently, the shipping arrangement was subject
to the terms of COGSA. See 46 U.S.C. § 1305 (West 1999).
In sum, we hold that the district court did not err in holding
that the bills of lading in this case were the contracts of
carriage and that the shipping arrangement was governed by the
terms of COGSA. The judgment of the district court is
A F F I R M E D.3
3
The plaintiffs’ request that this court sanction the
5
Intervenor’s request to participate in the oral argument is
denied as moot.
defendant due to the frivolous nature of the issues raised on
appeal is DENIED.
6