New York Law Review

J.M. Rodriguez & Co. v. Moore-McCormack Lines, 32 N.Y.2d 425 (1973): Measure of Damages for Lost Goods Delayed by Strike

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J.M. Rodriguez & Co., Inc. v. Moore-McCormack Lines, Inc., 32 N.Y.2d 425 (1973)

When goods are lost following a strike that delayed delivery, the measure of damages is the market value of the goods at the end of the strike when the carrier failed to deliver, not when the ship initially docked.

Summary

An importer sued a carrier for non-delivery of cloves shipped under a marine bill of lading. The cloves disappeared after a longshoremen’s strike delayed unloading. The bill of lading exempted the carrier from liability for delays due to strikes. The key issue was determining the proper time for valuing the lost goods: when the ship arrived (lower value) or when the strike ended (higher value). The court held that the strike suspended the carrier’s obligation to deliver, and because the loss was not attributable to the strike but to an unexplained disappearance, damages were assessed based on the market value at the strike’s end, when the carrier’s duty to deliver resumed.

Facts

Moore-McCormack Lines loaded 200 sacks of cloves onto its ship in Madagascar, destined for J.M. Rodriguez & Co. in New York. Rodriguez held a clean bill of lading. The ship arrived in New York on December 20, 1968, but a longshoremen’s strike prevented unloading until February 15, 1969. Upon resumption of unloading, the cloves were missing. The market value of the cloves was $19,680 on December 19, 1968, and $41,070 on February 15, 1969.

Procedural History

Rodriguez sued Moore-McCormack for non-delivery. The Appellate Division ruled that damages should be determined in February when the cause of action accrued, awarding Rodriguez $41,070. Moore-McCormack appealed, arguing damages should be based on the December value.

Issue(s)

  1. Whether the strike exemption clause in the bill of lading and the Carriage of Goods by Sea Act (COGSA) affects the determination of when the breach occurred for purposes of calculating damages for non-delivery.
  2. Whether the strike was the proximate cause of the loss of the cargo or merely the delay in delivery.

Holding

  1. Yes, because the strike exemption clause suspended the carrier’s duty to deliver until the strike ended, thus shifting the time of breach to when delivery should have occurred after the strike.
  2. No, because the total loss of the goods was due to the carrier’s fault or responsibility and was not proximately caused by the strike, which only caused a delay in delivery.

Court’s Reasoning

The court stated the general rule: “damages for breach of contract are computed at the time of breach.” In cases of non-delivery of goods, damages are the value of the goods at the port of destination when they should have been delivered. The strike clause, however, suspends the carrier’s duty to deliver, and must be construed strictly against the carrier because it limits common-law liability. The carrier bears the burden of proving the strike caused the damage. The court distinguished this case from Badhwar v. Colorado Fuel & Iron Corp., where the strike only caused a delay, and the goods were eventually delivered. Here, the cloves were lost, and the loss wasn’t attributable to the strike. The court reasoned that the carrier violated its duty to the importer when it failed to deliver the cloves on February 15, 1969, and the market value on that day fixes the amount of damages. The court emphasized that “the shipper’s loss by the carrier’s breach of contract is the difference between what his position would have been, had the contract been performed, and his situation as it is.” The court also noted practical business problems faced by the importer, who could not mitigate the damages by purchasing replacement cloves until the strike ended. The court rejected the argument that the carrier shouldn’t be held to a higher amount due to the strike clause, clarifying the difference between clauses limiting liability and those limiting the measure of damages. The court found the Carriage of Goods by Sea Act treats exemptions from liability and limitations on damages separately, finding each type of exemption is covered narrowly with particularity. The court found strikes are an excuse for delayed delivery and not for the disappearance of goods, and, consequently, delayed delivery merely postpones the time for delivery and any consequences proximately caused by delay without fault of the carrier.

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