Supreme Court Decision 2004Da12394 Delivered on January 27, 2005[Damages]

[Main Issues]

[1] In case where a bill of lading was issued in marine cargo transportation, and the carrier’s shipping agent stored the freight to a commercial bonded warehouse as per the de facto importer's request, and then the operator of the commercial bonded warehouse, in collaboration with the de facto importer, removed the freight without authorization and thereby caused its extinction, whether the bill of lading holder's property right to the freight is infringed upon due to the shipping agent's gross negligence (negative)

[2] Whether a carrier and its domestic shipping agent can be deemed to have the status of a commercial bonded warehouse operator's employer as a matter of civil law (negative with qualification)

[Summary of Decision]

[1] In marine cargo transportation for which a bill of lading was issued, the freight must be delivered to the bill of lading holder in exchange for the bill of lading; therefore, if the carrier or its domestic shipping agent caused the freight to be extinguished by delivering the freight to someone other than the bill of lading holder, the carrier shall be liable to pay damages to the bill of lading holder for tort. However, if the carrier's domestic shipping agent stored the freight in a commercial bonded warehouse chosen by the de facto importer as per its request, the shipping agent should be deemed to have continued its control over the freight and therefore cannot be said to have delivered the freight to someone other than the bill of lading holder, or stored the freight in a place exposed to substantial risks of unauthorized removal. Therefore, the bill of lading holder's ownership to the freight cannot be said to have been infringed upon due to the defendants' gross negligence, even though the operator of the commercial bonded warehouse, in collaboration with the de facto importer, removed the freight without authorization and thereby caused its extinction.

[2] In case where a commercial bonded warehouse operator stores imported freight under the bailment contract with the de facto importer, the commercial bonded warehouse operator should be deemed to have the status of assisting the carrier or its domestic shipping agent in performing their duties of storing the imported freight until the completion of customs clearance procedure and its delivery to the legitimate recipient. Nevertheless, the carrier or its domestic shipping agent cannot be regarded as having lost control over the imported freight to be delivered to the consignee, but should be deemed to have continued control through the commercial bonded warehouse operator. Therefore, a commercial bonded warehouse operator, in general, is an independent business operator, performing the business of storing and delivering the freight on its own responsibility and judgment and therefore cannot be viewed as performing the business of storing and delivering imported goods under the supervision and control of a carrier or its domestic shipping agent. Therefore, a carrier or its domestic shipping agent cannot be regarded as having the status of an employer of the commercial bonded warehouse operator as a matter of civil law.

[Reference Provisions]

[1] Article 788 of the Commercial Code, Article 750 of the Civil Code/[2] Article 756 of the Civil Code

Article 788 of the Commercial Code (Duty of Care and Diligence to Goods) (1) If a carrier fails to prove that he or the crew or other employee of a ship exercised his duty of care in reception, loading, stowage, carriage, keeping, discharging and delivering of the goods, he shall be liable to compensate for damages caused by loss, damage or delay of the goods.

(2) The carrier shall not be responsible for damage to the goods arising or resulting from act of the master, mariner or pilot, or the employees of the carrier in the navigation or in the management of the ship, or fire. This shall not apply where the fire was caused by actual fault or privity of the carrier.

Article 750 of the Civil Code (Definition of Tort) Whoever causes damage to another by an unlawful act, whether willfully or negligently, shall be liable to compensate for the damage.

Article 756 of the Civil Code (Employer's Liability for Damages) (1) A person who employs another to carry out an undertaking shall be bound to make compensation for damages done to a third person by the employee in the course of the execution of the undertaking: Provided that this shall not be the case, if the employer has exercised due care in the appointment of the employee, and the supervision of the undertaking, or if the damage would have resulted even if due care had been exercised.

(2) A person who supervises the undertaking in place of the employer shall also assume the same liability as set forth in Paragraph (1).

(3) In cases of Paragraphs (1) and (2), the employer or the supervisor may exercise the right to obtain reimbursement from the employee.

[Plaintiff-Appellee] Woori Bank, Inc. (Law Firm Jisung, Attorneys Kang Sung and 4 others, Counsel for plaintiff-appellee)

[Defendant-Appellant] Doowoo Marine Co. Ltd. and 1 other (Attorneys Jung Byung-suk and 4 others, Counsel for defendant-appellant)

[Judgment of the court below] Seoul High Court Decision 2003Na31079 delivered on January 20, 2004

[Disposition]

The judgment of the court below is reversed and the case is remanded to Seoul High Court.

[Reasoning]

1. With regard to the allegation of the misapplication of legal principles as to tort liability

A. The court below reasoned as follows: neither a carrier nor a shipping agent should deliver the freight unless in exchange for a bill of lading; if the carrier delivers the freight to someone other than the bill of lading holder without receiving the bill of lading in exchange, the carrier does so at his own risk and under the premise of being liable for damage resulting there-from; thus, if, in the case, the defendants, shipping agent, stored the freight in t-his case to the commercial bonded warehouse operated by Keumchun, Inc., (hereinafter referred to as "Keumchun") as per request of the de facto importer, Gold Textile, Inc. (hereinafter referred to as "Gold Textile"), and then the freight disappeared after Gold Textile dislocated the freight in this case from the commercial bonded warehouse without authorization, it constitutes an infringement of the bill of lading holder’s ownership to the freight as caused by the defendant’s grave negligence, and therefore constitutes a tort committed against the bill of lading holder.

B. However, we do not agree with the court below.

In marine cargo transportation for which a bill of lading was issued, the freight must be delivered to the bill of lading holder in exchange for the bill of lading; therefore, if the carrier or its domestic shipping agent caused the freight to be extinguished by delivering the freight to someone other than the bill of lading holder, the carrier shall be liable to pay damages to the bill of lading holder for tort. However, if the carrier's domestic shipping agent stored the freight in a commercial bonded warehouse chosen by the de facto importer as per its request, the domestic shipping agent should be deemed to have continued its control over the freight and therefore cannot be said to have delivered the freight to someone other than the bill of lading holder or stored the freight in a place exposed to substantial risks of unauthorized removal. Thus, the bill of lading holder's ownership to the freight cannot be said to have been infringed upon due to the defendants' gross negligence, even though the operator of the commercial bonded warehouse, in collaboration with the de facto importer, removed the freight without authorization and thereby caused its disappearance.

Nevertheless, the court below found that if the defendants, shipping agent, stored the freight in this case in the bonded warehouse and the de facto importer dislocated the freight in this case without authorization, it constitutes an infringement of the bill of lading holder's ownership to the freight as caused by the defendant's grave negligence and therefore constitutes a tort. It should be indicated that this judgment of the court below contains an error of law of misunderstanding the legal principles as to the duty of care of carrier's domestic shipping agent, which affected the conclusion of the judgment. The ground of appeal indicating this point has merits.

2. With regard to the allegation of the misapplication of legal principles as to the employer's liability (vicarious liability)

A. The court below reasoned as follows. The court below found that the defendants, shipping agents delegated by the carrier with a task related to storage and delivery of imported freight at the port of arrival should be regarded as possessing the freight of this case through Keumchun, bonded warehouse operator, which can be regarded as the defendant's assistant, and that the defendant Doowoo Marine, Inc. and the defendant China Marine Korea Co., Ltd., around April 27, 1998 and September 3, 1999, respectively, each secured from Keumchun a letter of commitment that says Keumchun would not release the freight without a delivery instruction issued by the defendants. Therefore, Keumchun, bonded warehouse operator, has a duty to store the freight in this case and then deliver the freight to the defendants or the person designated by them according to the defendant's instructions. In relation to the consignee, Keumchun's storage and delivery of the freight in this case are performed in its capacity as an assistant or employee to the defendants, the carrier's shipping agent. Therefore, at least in regard of the storage and delivery of the freight in this case, Keumchun must carry out its business under the defendants' instruction and supervision, although Keumchun, bonded warehouse operator, has the status of an independent contractor. Accordingly, where Keumchun delivered the freight to someone other than the consignee without the legitimate consignee's instruction, the defendants are liable for tort, as Keumchun's employer, to the legitimate holder of the bill of lading, for infringing upon the ownership to the freight.

B. However, we cannot agree to the above judgment of the court below.

In case where a commercial bonded warehouse operator stores imported freight under a bailment contract with the de facto importer, the commercial bonded warehouse operator should be deemed to have the status of assisting the carrier or its domestic shipping agent in performing their duties of storing the imported freight until the completion of customs clearance procedure and its delivery to the legitimate recipient. Nevertheless, the carrier or its domestic shipping agent cannot be regarded as having lost control over the imported freight to be delivered to the consignee, but should be deemed to have continued control through the commercial bonded warehouse operator. Therefore, a commercial bonded warehouse operator, in general, is an independent business operator, performing the business of storing and delivering the freight on its own responsibility and judgment, and therefore cannot be viewed as performing the business of storing and delivering imported goods under the supervision and control of a carrier or its domestic shipping agent. Therefore, a carrier or its domestic shipping agent cannot be regarded as having the status of an employer of the commercial bonded warehouse operator as a matter of civil law.

Although, as the court below found the facts, the defendants secured a letter of commitment from Keumchun that it would not release the freight without an instruction for delivery issued by the defendants, in order to prevent an unauthorized removal of the freight, it is nothing more than calling an attention to Keumchun, bonded warehouse operator, that if Keumchun delivers the freight without a letter of delivery instruction, Keumchun, as bailee of the freight, is liable to the bill of lading holder for tort, and therefore it does not put Keumchun in the status of carrying out the business of storing, delivering, etc. of the freight under the defendants' instruction and supervision.

However, the court below ruled that where Keumchun delivered the freight to a person other than the legitimate holder of the bill of lading, the defendants, Keumchun's employer, is liable for tort, under the premise that the defendants are Keumchun's employer. The decision of the court below is erroneous in the misapplication of legal principle as to the employer-employee relationship in employer's liability, which affected the conclusion of the judgment. The ground of appeal pointing this out also has a merit.

3. Conclusion

Therefore, the judgment of the court below is reversed and the case is remanded to the court below for a new trial and determination. It is so decided as per Disposition with the assent of all participating Justices.

Justices Yoon Jae-sik (Presiding Justice)

Lee Yong-woo

Lee Kyu-hong (Justice in Charge)

Kim Young-ran