Thyssen, Inc. v. S.S. Fortune Star

Thyssen, Inc. v. S.S. Fortune Star

Opinion

 [*59]  FRIENDLY, Circuit Judge:

This suit in admiralty in the District Court for the Southern District of New York was brought by Thyssen, Inc., the consignee of a shipment of 409 bundles of galvanized steel pipe, most of which were damaged while in transit between Pusan, Korea, and San Juan, Puerto Rico, against the S.S. Fortune Star; her owner, Evolution Maritime Enterprises,  [**2]  Inc.; and her time charterer, Taiwan International Lines, Ltd. (TIL). The ship and her owner were not served with process and did not appear, and the suit proceeded against the time charterer. ¹ The steel pipe was shipped under clean bills of lading which were signed by agents of TIL in Pusan "for the master," an employee of the owner, and stamped "STOWED UNDER DECK." All the pipe was originally so stowed, but at some time before commencing the trans-Pacific crossing, pursuant to an order of some officer of the vessel, 290 bundles were placed on the deck where they were covered with canvas and plastic sheets. The Fortune Star encountered bad weather in crossing the Pacific, during which the coverings for the on-deck pipe, as well as the tarpaulins covering the wooden battens on the hatches above the under-deck pipe, were badly damaged and torn. On unloading at San Juan, substantial portions of the cargo, both that stowed on the deck and that stowed under the deck, were found to be damaged at least to some extent by oxidation which resulted from corrosion of the zinc coating after prolonged contact with sea water. The complaint alleged actual damages of $65,000; it also alleged that [**3]  "by reason of the intentional fraud and deviation of defendants plaintiff claims exemplary damages of $100,000. "

TIL did not contest liability for compensatory damages either for the on-deck or the under-deck cargo but raised serious questions, hereafter discussed, about the adequacy of Thyssen's proof of the amount ² and challenged the claim for punitive damages. The judge found that what he characterized as a joint survey in San Juan had established that the cargo had depreciated an average of 23% in value; that plaintiff had contracted to sell the shipment to a customer for $214,743.70 and "was therefore required to remit to the customer $49,391.05"; and that plaintiff had spent $3,989.15 in surveyor's fees to establish the damage. 596 F. Supp. 865, 866 (S.D.N.Y. 1984). Accordingly, he  [*60]  awarded compensatory damages of $53,380.20 with interest from the [**4]  date of the delivery of the pipe. Id. at 866-67. Finding that the removal of part of the cargo from below the deck to deck stowage was an unreasonable deviation, see Jones v. The Flying Clipper, 116 F. Supp. 386 (S.D.N.Y. 1953), and was "a wilful act in derogation of [TIL's] obligation to the shipper which had specifically contracted to minimize the risk of damage to its shipment," he regarded it as "inappropriate to award merely contract damages where the conduct of the vessel indeed worked a fraud upon the owner of the cargo," citing The Idefjord, 114 F.2d 262, 266 (2 Cir.), cert. denied, 311 U.S. 707, 61 S. Ct. 175, 85 L. Ed. 459 (1940), and awarded punitive damages of $25,000. 596 F. Supp. at 866-67. TIL contends on appeal that plaintiff's evidence did not support the amount awarded as compensatory damages and that the award of punitive damages was erroneous as a matter of law.

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