ST. PAUL FIRE & MARINE INSURANCE COMPANY, PLAINTIFF-APPELLEE, VS. MACONDRAY & CO., INC., ET AL., DEFENDANTS, MANILA PORT SERVICE AND/OR MANILA RAILROAD COMPANY, DEFENDANTS?APPEL…

St. Paul Fire and Marine Insurance versus Macondray and Company

The Case

This is a subrogation case. St. Paul Fire and Marine Insurance Company, as insurer, paid the consignee Winthrop Stearns for a lost and damaged shipment of medicinal and pharmaceutical products, and then stepped into the consignee's shoes to sue the carriers and the arrastre operator. The action was brought against the vessel owner Wilhelm Wilhelmsen and its agents Barber Steamship Lines and Macondray and Company, and in the alternative against the Manila Port Service and the Manila Railroad Company. The case matters because it fixes the rule on the fifteen-day claim under the Management Contract: a provisional claim filed before the last package is discharged is premature and speculative, and does not comply with the contract.

Procedural History

The complaint was filed with the Court of First Instance of Manila. After trial and the submission of memoranda, the trial court found that the claim involved one undelivered carton and damage to six cartons and one drum, with a total value of 1,109 pesos and 67 centavos. It held that the shipment was discharged complete and in good order except for one drum and three cartons, so the loss of those was the responsibility of the vessel owner and its agents, while the undelivered carton and the damage to the remaining three cartons were the responsibility of the arrastre contractor and its principal. Judgment was rendered accordingly: 300 pesos against the first set of defendants, and 809 pesos and 67 centavos against the second set, both with legal interest from filing until fully paid. The Manila Port Service and the Manila Railroad Company appealed, and the case reached the Supreme Court on that appeal.

Facts

A shipment of 218 packages of medicinal and pharmaceutical products was consigned to Winthrop Stearns, Incorporated, in Manila, and loaded on the vessel SS Tai Ping. The vessel arrived in Manila on August 7, 1960, and discharged the goods into the custody of the arrastre operator, the Manila Port Service, on August 11, 1960.

The consignee suffered loss and damage, demanded and collected from its insurer the reasonable value including other expenses, amounting to 1,071 dollars and 58 cents. The insurer, as subrogee, then sued the carriers and, in the alternative, the arrastre operator and the Manila Railroad Company.

The arrastre defendants denied responsibility, saying the goods were delivered to the consignee in the same condition in which they were received from the carrying vessel, and pleaded paragraph 15 of the Management Contract. The other defendants denied liability but alleged that, to avoid litigation, they had offered to settle in full by paying the c.i.f. value, which the consignee and its subrogee declined. The trial court apportioned liability between the two sets of defendants as described above.

Issues

• Whether or not the complaint should be dismissed because the provisional claim for the lost and damaged goods was not filed within the fifteen-day period fixed by the Management Contract.
• Whether or not the amount for which the arrastre defendants would be liable should be passed upon, once recovery is held improper.

Applicable Provisions

Paragraph 15 of the Management Contract, as applied by the Court, fixes the period for filing claims against the arrastre operator:

The arrastre operator shall not be liable for any loss or damage to cargo unless a claim is filed within fifteen days from the date of discharge of the last package from the carrying vessel.

This provision governs whether the claim was timely, and the Court held that a claim filed before the last package is discharged does not comply with it.

Ruling

On the first issue, the Court ruled for the appellants. The carrying vessel discharged its last package on August 11, 1960, but the claim was filed the day before, on August 10, 1960. The Court held that a stereo-type provisional claim for any shortage or damage that may after examination be found to exist, filed against the arrastre operator before the discharge of the last package, is not a compliance with the Management Contract. Such a claim is premature and speculative, and to allow it would swamp the arrastre service with advance claims of brokers for all goods consigned to their customers.

The Court recognized an exception. In Switzerland General Insurance Company versus Java Pacific and Hoegh Lines, a claim filed in advance was held to constitute substantial compliance, but only under the conditions that, upon examination of the shipment before the discharge of the last package, certain shortages were found, and that the examination took place in the presence of representatives of both parties. Those conditions did not obtain here. The bare allegation that the claimant knew of the loss and damage before the vessel had finally unloaded all its cargo, unsupported by evidence and without any showing of how that knowledge came about, would not cause the Court to deviate from the general ruling.

On the second issue, the Court found it unnecessary to go into the other issue raised by the appellant, which merely referred to the amount for which the defendant would be held liable should recovery appear proper.

Doctrine

A provisional claim filed against the arrastre operator before the discharge of the last package from the carrying vessel is premature and speculative, and is not a compliance with the fifteen-day claim period in the Management Contract. The exception of substantial compliance applies only where, upon examination of the shipment before the last package is discharged, shortages are actually found, and the examination is made in the presence of representatives of both parties. A bare allegation of knowledge of the loss, unsupported by evidence, does not bring the case within the exception.

Disposition

The decision appealed from was reversed, with no costs.

Remember This

Memorize this line: a provisional claim filed before the last package is discharged is premature and speculative, and does not satisfy the fifteen-day period under the Management Contract. Examiners use this case to test the arrastre claim period and the narrow substantial-compliance exception requiring an actual examination and the presence of both parties.