## Facts

- An Illinois manufacturer sold special-design machinery for shipment from the United States to Korea.
- The shipper used an intermediary to book ocean carriage with a carrier operating the M/V Bodena and separately retained a freight forwarder to handle export documentation and obtain “clean onboard” bills of lading.
- The machinery was loaded in New Orleans; most of the relevant boxes were stowed on deck, with some stowed below deck.
- The forwarder sent the carrier’s local agent a bill-of-lading form and shipping notice that did not mention on-deck stowage.
- Before sailing, the carrier’s agent unilaterally added “on deck shipper’s risk” to the paperwork and issued bills of lading containing that notation.
- The shipper received the bills but did not object; the forwarder also received them and did not review them, despite its undertaking to secure clean onboard bills.
- During the voyage, seawater severely damaged many of the boxes that had been stowed on deck.
- The shipper held an open cargo marine policy with an insurer that provided more limited coverage for on-deck stowage; the insurer denied full coverage based on the on-deck limitation and alleged lack of utmost good faith.
- After a bench trial, the district court held the carrier, forwarder, and insurer jointly and severally liable (with allocation among them); all appealed.

## Issues

1. Whether the contract of carriage required under-deck stowage, and whether a later “on deck shipper’s risk” bill-of-lading notation modified that agreement or constituted a waiver by the shipper.
2. Whether claims against the freight forwarder fell within admiralty jurisdiction and whether the forwarder breached duties by failing to obtain and review clean onboard bills of lading.
3. Whether the insurer could limit or avoid coverage based on the policy’s on-deck provisions or the doctrine of *uberrimae fidei*.

## Decision

- The Second Circuit affirmed the judgment imposing liability on the carrier, freight forwarder, and insurer, with nonmaterial adjustments to the form/allocation of relief.
- The court held that under-deck stowage was part of the carriage agreement and that the carrier’s agent’s unilateral “on deck shipper’s risk” notation did not, by itself, alter that agreement as between the original contracting parties.
- The court rejected the carrier’s waiver/modification argument based on the shipper’s receipt of the bills of lading, finding no knowing assent to deck stowage.
- The court held admiralty jurisdiction proper over the forwarder because its services were directly connected to the maritime shipment.
- The court found the forwarder liable for breaching its undertaking to obtain clean onboard bills and for failing to examine the issued bills and protect the shipper’s interests.
- The court held the insurer could not invoke the on-deck limitation or *uberrimae fidei* to deny full recovery where the shipper reasonably believed the cargo would be under deck and did not knowingly conceal or misrepresent a material risk change.

## Legal Principles

- A bill of lading may function as both receipt and contract, but a unilaterally added term that conflicts with a concluded carriage agreement does not automatically modify the parties’ original contract absent knowing assent.
- Acceptance of a bill of lading containing a material stowage-risk clause does not establish waiver or modification without proof the shipper understood and agreed to the change.
- Admiralty jurisdiction extends to claims against a freight forwarder when the forwarder’s undertaking is closely tied to the ocean shipment and documentation integral to maritime commerce.
- A freight forwarder that agrees to obtain clean onboard bills and manage shipping documents must exercise reasonable care, including reviewing issued bills and acting on adverse notations; failure can support contractual and negligence liability.
- In marine insurance, *uberrimae fidei* requires full disclosure of material facts known to the assured, but an insurer generally cannot avoid coverage based on an unknowing omission or a risk increase caused by third parties without the assured’s informed consent.

## Conclusion

The Second Circuit upheld recovery for seawater damage caused by unauthorized deck stowage, holding that a carrier could not rely on a unilaterally added “on deck shipper’s risk” notation to defeat the original under-deck carriage agreement, that the freight forwarder was liable for failing to secure and review clean bills of lading, and that the insurer could not deny or limit coverage absent a knowing, material nondisclosure by the assured.


Ingersoll Milling Mach. Co. v. M/V Bodena, 829 F.2d 293 (2d Cir. 1987)