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CASES DECIDED

IN

THE UNITED STATES COURT OF CLAIMS

February 1, 1959, to May 31, 1959, and other cases not heretofore published. Opinions are not ordinarily published until final judgment is rendered. Cases in which motions have been filed are not published until disposition of such motions.

THE FLYING TIGER LINE INC., A CORPORATION V. THE UNITED STATES

[No. 77-58. Decided February 11, 1959]

ON PLAINTIFF'S AND DEFENDANT'S MOTIONS FOR SUMMARY JUDGMENT

Carriers; carriage of goods; Warsaw Convention; counterclaims.-In an action to recover charges for carriage of freight by airplane where the Government attempted to offset against those charges a loss incurred in an earlier transportation of the Government's goods by the plaintiff, it is held that although the Warsaw Convention is applicable, in general, to the earlier transportation of goods, the Government did not lose, by application of the limited liability provision of the Convention, whatever right it had to recover from the plaintiff for the loss, because the plaintiff had failed to comply with the require ments necessary to obtain the benefits of the limitation on liability, but the Government's failure to bring suit against the plaintiff for such loss within two years from the date of loss extinguished its right to damage. The Government's decision to pay itself out of funds otherwise due the plaintiff for the later transportation of Government property is not the substantial equivalent of the lawsuit required by the Warsaw Convention. The mere withholding of the amount claimed by the Government within two years of the loss did not toll the two-year period of limitations on a suit under the Warsaw Convention. Plaintiff is entitled to recover.

Limitation of Actions 41

United States 130(3)

Counterclaims—in general.—A setoff or counterclaim is, in its nature

and effect, like an independent action by the defendant against the plaintiff, and, as a general rule, a party cannot avail him574580-61——2

1

Syllabus

145 C. Cls.

self of a claim as a setoff or counterclaim unless it is a legally subsisting cause of action upon which he could maintain an independent action.

Setoff and Counterclaim 24

Limitation of actions.-A statute of limitations may be pleaded against a setoff or counterclaim.

Limitations of Actions 41

Carriers; carriage of goods; Warsaw Convention; limitation of liability—failure of carrier to give notice of to shipper.-Article 9 of the Warsaw Convention (49 Stat. Part 2, 3000) provides that if a carrier accepts goods without requiring an air waybill from the shipper containing, inter alia, a statement that liability is limited, i.e., notice of the waiver of the ordinary rules of liability, the carrier cannot avail itself of the limitation of liability provided for in the Convention. Where the plaintiffcarrier failed to require the Government shipper to make out an air waybill, plaintiff is precluded from availing itself of the limitations on liability provision of the Convention. The requirement that the carrier give the shipper notice of the waiver of the ordinary rules of liability is not satisfied by a reference in the Charter Agreement to a second document (the applicable tariff) which in turn referred to a third document (official rules), which third document contained a statement that the carrier's liability was subject to the limitations of the Warsaw Convention.

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Carriers; carriage of goods; Warsaw Convention; limitation of action.-Article 29 of the Warsaw Convention (49 Stat. Part 2, 3000), provides that the right of a shipper to sue for damages is extinguished if action is not brought within two years. Where the Government-shipper did not bring suit within the two years specified, it may not, after the expiration of the two years, assert its claims by way of setoff or counterclaim in an action brought by the plaintiff for unpaid transportation charges, even though within the two-year period the Government recouped its losses by unilaterally withholding the amount claimed due it from other moneys owing to the plaintiff, such withholding not serving to toll the two-year statute of limitations.

Limitation of Actions 41, 1041

Mr. Norman L. Meyers for the plaintiff. Mr. Elmer E. Batzell, Messrs. Meyers & Batzell and Mr. S. P. Meyers were on the briefs.

Mr. Curtis L. Wagner, Jr., with whom was Mr. Assistant Attorney General George Cochran Doub, for the defendant.

1

Opinion of the Court

MADDEN, Judge, delivered the opinion of the court:

The plaintiff, a carrier of freight by airplane, earned $71,817.02 by transporting freight for the United States Air Force. The Government paid the plaintiff $5,829.92, but refused to pay the balance of $65,987.10, claiming that the plaintiff was indebted to it in that amount, because the plaintiff had lost an earlier shipment of goods of the Air Force of that value, and was liable to the Government for the loss. In its amended answer the Government says that the plaintiff's liability to it was in the amount of $67,159.91, and it makes a counterclaim for $1,172.81, the difference between what it has already collected by offset, and the value which it now places upon the lost goods.

It is apparent from the above that the real controversy between the parties concerns the prior transaction in which the Government's goods were lost while being carried by the plaintiff. The plaintiff's plane was carrying them from a base in California to Tokyo, Japan. When the plane was some 1,000 miles west of Honolulu, it was wrecked in the ocean because its crew did an unskillful job in trying to transfer fuel from one tank to another.

The plaintiff says that it is not legally responsible for the loss. Under ordinary rules applicable to carriers of goods, the plaintiff would, of course, be liable to the shipper of the goods. But the plaintiff says that its liability is to be measured by the provisions of an international treaty to which the United States and Japan are parties and which limits the liability of carriers by air, when the carriage is between two countries which are parties to the treaty. The treaty in question is commonly known as the "Warsaw Convention", 49 Stat. Part 2, pp. 3000 ff.

There is no serious question as to the applicability, in general, of the Warsaw Convention to the transportation involved in this case. But there is a serious question as to whether certain requirements of the Convention were complied with, which compliance, the Government says, was necessary to create the limited liability which the plaintiff claims, and, the Government says, was lacking.

Article 20 (2) of the Convention says:

Opinion of the Court

145 C. Cls.

In the transportation of goods and baggage the carrier shall not be liable if he proves that the damage was occasioned by an error in piloting, in the handling of the aircraft, or in navigation and that, in all other respects, he and his agents have taken all necessary measures to avoid the damage.

The plaintiff says that the goods here in question were lost by an error in piloting, and we will assume, for present purposes, that this is the fact. The Government points out that Chapter II of the Convention, entitled "Transportation Documents" provides in Section III, Article 5, that the carrier has the right to require the shipper "to make out and hand over to him a document called an air waybill." Article 8 lists under letters (a) to (q) the information which the air waybill is to contain. In (q) is to be "A statement that the transportation is subject to the rules relating to liability established by this convention."

Then Article 9 says:

If the carrier accepts goods without an air waybill having been made out, or if the air waybill does not contain all the particulars set out in article 8 (a) to (i), inclusive, and (q), the carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his fiability.

The plaintiff did not require the Government to make out a document labeled an "air waybill." It was given a Government bill of lading in the form prescribed by the Comptroller General. The plaintiff says that the bill of lading contained all the information listed in the Convention's Article 8 except (c) and (q). Item (c) calls for the names of "the agreed stopping places." The plaintiff says that the parties were well aware of that information, and that to have inserted it would have been useless, and its omission should not affect the rights of the parties. We are inclined to agree with the plaintiff, and we assume, for present purposes, that the plaintiff is right on this point.

As to (q), however, there is difficulty. The plaintiff points out that the carriage in question was made under a "Charter Agreement" between it and the Government, designated MCH 33-9-56, which contained paragraph 10, as follows:

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