## Facts

- Royal Insurance Company, as subrogee of IBM World Trade Corporation and Semi-Alloys, Inc. (IBM), sued Amerford Air Cargo, an air freight forwarder, after a shipment disappeared.
- Amerford’s services included pickup, consolidation, arranging international air carriage on a direct airline, and delivery to the airline for flight; it charged a single fee that included air carriage and issued an air waybill.
- On November 2, 1984, IBM tendered three cartons of semi-alloy products (actual value $97,713.97) to Amerford for delivery to Hong Kong.
- Amerford picked up the cartons, stored them overnight at its warehouse near JFK Airport, and had arranged shipment on a Japan Air Lines flight scheduled to depart the next morning.
- The next morning Amerford could not locate the cartons; police and FBI investigations produced no direct evidence of theft.
- Amerford asserted liability was limited to $20 per kilogram (about $1,310) because IBM did not declare a higher value or pay any additional charge.
- IBM initially claimed the full value, then submitted an amended claim for $1,310; Royal paid IBM the full amount, became subrogated to IBM’s rights, and sued Amerford for the full loss.
- Both sides moved for summary judgment.

## Issues

1. Whether an air freight forwarder that undertakes international air carriage as an indirect carrier qualifies as a “carrier” entitled to the Warsaw Convention’s liability limitation.
2. Whether cargo loss during overnight storage at the forwarder’s warehouse, prior to delivery to the direct airline, occurred during “transportation by air” governed by the Warsaw Convention.
3. Whether an unexplained disappearance, without direct evidence of wrongdoing, establishes willful misconduct sufficient to defeat the Convention’s liability limitation.

## Decision

- The court denied Royal’s motion and granted Amerford’s motion for summary judgment.
- Amerford was treated as an indirect air carrier for the shipment and could invoke the Warsaw Convention’s liability limitation.
- The loss occurred within the Convention’s temporal scope because the warehouse storage was part of custody and handling in preparation for imminent international air shipment.
- Royal failed to produce evidence of willful misconduct; the Convention’s limitation therefore remained effective.
- Amerford’s liability was limited to approximately $1,310, not the cargo’s full value.

## Legal Principles

- An air freight forwarder that issues an air waybill, charges for air carriage, and undertakes responsibility for international shipment may be deemed an indirect air carrier covered by the Warsaw Convention.
- “Transportation by air” under the Warsaw Convention can include temporary storage and handling while the carrier has custody in preparation for scheduled international air carriage, even before transfer to the operating airline.
- The willful misconduct exception requires proof of intentional wrongdoing or reckless disregard; unexplained loss, negligence, or state-law bailee presumptions are insufficient without concrete evidence.
- A subrogated insurer acquires no greater rights than the insured and is bound by the insured’s contractual and Convention-based limitations on recovery.

## Conclusion

The court limited the forwarder’s liability under the Warsaw Convention because the forwarder functioned as an indirect carrier, the loss occurred during covered preflight custody and storage, and the plaintiff failed to prove willful misconduct that would remove the Convention’s liability cap.


Royal Ins. Co. v. Amerford Air Cargo, 654 F. Supp. 679 (S.D.N.Y. 1987)