Q&A: No Hiding From Concealed Damage

Q: I’m hoping you can answer a question on a recent delivery.

One of my fabric suppliers shipped a medium-sized load of piece goods to my warehouse via common carrier.

When the truck backs up to our door, the driver is required to load the rolls onto rolling racks we provide and bring into the truck.

This driver loaded all the rolls onto the rack, as required.

When we offloaded the rolls onto our container going to our factory in El Salvador, we noted one roll was badly damaged and located in the middle of the rack.

Of course, we signed the bill of lading clear because the driver loaded the rack and we didn’t do an on-the-spot inspection.

In cases such as this, can the warehouse sign the B/L in such a way as to state that the number of rolls have been received but not cleared until inspected?

 

A: Sure, you can do that if you like, not that it’s going to help you much.

Simply annotate the delivery receipt something like “Driver unload, received subject to inspection.” That might make the driver a little grumpy, but there’s not much he can do about it, is there? And, if you’re really so busy in that warehouse that you can’t spare somebody to watch the unloading or perform an inspection immediately afterward, that’s as good an answer as anything.

The point is, though, that it’s unlikely to help you much. Some carriers are absolute tartars about concealed damage, reflexively declining any and all claims that aren’t noted on the delivery receipt. If this is one such, your hedge on the receipt probably won’t count for much in its eyes.

Nor will it count for a great deal more if you pursue your claim in court. A clear delivery receipt is by no means a legal waiver of any rights you may otherwise have. All it says is that you didn’t notice any damage when the goods showed up. It doesn’t say there wasn’t any, and if you discover it later, you have all the same rights to claim as you ever did.

Look, a great deal of freight moves in sealed cartons. Even the most rigorous time-of-delivery examination can overlook damage to the goods inside those cartons. If that damage is found later on and can be ascribed by a preponderance of the evidence to the carrier, the law still allows you to collect.

Admittedly, yours isn't the usual case of concealed damage. From what you say, these fabric rolls move unpackaged, so damage should be immediately noticeable. Still, your receiving practice is such that none of your employees apparently are on the scene to take such notice. A court might look at you a little cross-eyed when you explain this practice, but that still doesn’t compromise your rights.

Further, any injury your rather lame explanation does to your case will be offset by the fact that the driver appears to have made an effort to conceal the damage by hiding the damaged roll away as he did. So I doubt you’ll be penalized for the way you do things.

Under the law, it’s your obligation to prove the shipper gave the carrier goods in good condition; you received them in a lesser condition; and you suffered an economic loss thereby. From there on out the burden of proof shifts to the carrier to show some exculpating evidence, and remains there. M.P.R. Co. v. Elmore & Stahl, 337 U.S. 134 (1964), reh. den. 377 U.S. 948.

You therefore need to show that the roll was undamaged when the shipper tendered it to the carrier, and that it wasn’t damaged post-delivery while it was in your possession. And that’s all you have to prove as a matter of law.

To be sure, the delivery receipt is evidence in this chain of proof, but it’s only one element and not a decisive one. The fact that you signed it clear might add slightly to the evidentiary burden you face, but no more than that, especially when you show that your delivery process doesn’t normally allow for close examination of incoming loads.

By the same measure, though, a hedged receipt — “subject to inspection” — won’t relieve you of having to prove the damage didn’t occur post-delivery. As I say, you can qualify your acceptance if you choose, but the benefit to you is going to be small.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843- 559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the most recent 351-page compiled edition of past Q&A columns, published in 2010.

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