Alkan U.s.a., Inc., Plaintiff-appellee, v. Freeman Decorating Company, T/a the Freeman Companies,defendant-appellant,air Force Association, Defendant-appellee.alkan U.s.a., Inc., Plaintiff-appellant, v. Air Force Association, Defendant-appellee, v. Freeman Decorating Company, T/a the Freeman Companies, Defendant, 831 F.2d 290 (4th Cir. 1987)

Freeman Decorating Company appeals from a $61,120.80 judgment in favor of Alkan U.S.A., Inc., which was entered after a non-jury trial before Judge Richard L. Williams in the United States District Court for the Eastern District of Virginia. Alkan cross-appeals from the district court's dismissal of its complaint against Air Force Association at the close of Alkan's case. For the reasons that follow, we affirm.

In September 1984, the Association held a three-day Aerospace Exhibition at the Sheraton Hotel in Washington, D.C. Alkan leased booth space in the exhibition hall for the purpose of displaying a number of its products, including a weapon carriage release designed to carry a bomb or other weapon under the wing of a plane and release it on command. When packed for shipping, Alkan's entire display occupied twelve wooden crates.

Because the logistics of getting exhibitors' displays in and out of the hotel exhibition hall were complicated, the Association retained Freeman Decorating Company as the "Official General Service Contractor" to take charge of these activities. Freeman's duties were described in an "Exhibitors Service Kit" which "set forth in great detail all of the understandings of the parties." Appellant's Brief at 24. Both inbound and outbound traffic schedules were Freeman's responsibility. All non-official truckers making deliveries were required to check in at Freeman's "Drayage Staging Center" in Springfield, Virginia, where they were assigned unloading time at the hotel dock. Drayage of display materials from the dock to the display spaces, whether done by Freeman or an unofficial contractor, was pursuant to schedule, with time preference being given to the official contractor, Freeman.

Crates and boxes in which shipments were transported were not permitted to remain in an exhibitor's booth. Instead, they were removed and stored by Freeman until the exhibition ended. Shortly before the show closed, a public address announcement was made that blank bills of lading for outgoing display shipments were available at Freeman's exhibition desk. After a bill of lading was completed and returned to Freeman, Freeman was supposed to pick up the described shipment, dray it to the loading dock and deliver it to either a designated carrier or one selected by Freeman. The bill of lading then was signed by the carrier's representative and a copy returned to the exhibitor.

After this removal process supposedly was completed, it was Freeman's responsibility to "sweep the hall". Freeman's general manager described this procedure as follows:

We go through the hall to make sure everything has been cleared of the hall; we check to see if there is any freight shipments left; and if there are, then we just clear it and try to contact the exhibitor and find out disposition of shipments.

Freeman's freight supervisor described his duties in much the same manner.

Freeman's failure to properly perform these duties led to this litigation. Following the public address announcement, Alkan secured two blank bills of lading from Freeman. It completed one to cover the shipment of eleven crates to its plant in Dallas, Texas. It completed the other for the twelfth crate which contained the weapon carriage release. This was consigned to a customer broker at Dulles Airport in Washington. However, this crate never was shipped. Instead, it was left in Sheraton's exhibition hall, where it was found one month later by the freight supervisor of another company who was "sweeping the hall" after a subsequent convention. Because the crate was unmarked, the supervisor had it removed to his company's warehouse. It remained there unopened until the supervisor happened upon it some sixteen months later, opened it to identify the owner and returned it to Alkan. Alkan's damage resulted primarily from the fact that, in order to carry out an already executed contract for the sale of the weapon carriage release to the government, it had built a replacement device before the original was found.

In holding in favor of Alkan and against Freeman, the district court found that, after Alkan boxed and labeled its products and returned the completed bill of lading to Freeman, Alkan's property "came under the care and control of the custody (sic.) of the Freeman Companies, Inc. pursuant to the terms of the bill of lading...." He then held that "as an agent of the carriers, the Freeman Companies had complete dominion and owed the obligation that a bill of lading or receipt in law imposes upon a carrier...." He concluded that the weapon carriage release wound up in the wrong hands because of "the inept handling of it by the Freeman Companies...." Although we disagree with that portion of the district court's holding that characterizes Freeman as a carrier's agent, we are satisfied that affirmance of the award against Freeman is required under well accepted theories of both bailment and contract.

A voluntary bailment ordinarily is created by delivery and acceptance of the property itself. However, it is well established that delivery may be made in a constructive or symbolic fashion. See Elliott, Law of Bailments and Carriers, Sec. 8 (2d ed. 1929); 8 C.J.S. Bailment Sec. 15(a) (1), at 360-61; 8 Am.Jur.2d Bailments Sec. 67, at 803-04 & n. 99; 1 A.L.R. 394-95. When Alkan returned the completed bills of lading to Freeman and left the crated goods to be picked up, there was a constructive or symbolic delivery of possession of the goods, which permitted Freeman thereafter to transfer possession of them to the carriers.

Assuming for the argument that no bailment existed, Alkan nonetheless has a clear contractual right of recovery against Freeman, not only as a third-party beneficiary of Freeman's contract with the Association but also because of the terms and conditions contained in the Exhibitors Service Kit which, together with the Exhibitors Space Contract, constituted, in appellant's words "all of the contractual agreements between the parties." Appellant's Brief at 24. Freeman was selected as Official General Services Contractor in order to assure Alkan and other exhibitors the "highest quality" service and was made responsible for all freight handling at the hotel loading dock. Alkan's Exhibitors Service Kit instructed it to prepare a bill of lading for each outbound shipment and return it to Freeman's service desk before the end of the show. These instructions were confirmed by Freeman in a "Drayage" bulletin made part of the Exhibitors Service Kit, which states that outbound shipping instructions should be given Freeman during the exposition or immediately after its close. The bulletin continues:

All bills of lading and shipping instructions covering outbound shipments will be checked at the time of actual loading and corrections made where discrepancies exist. Freight remaining on the exhibit floor without proper instructions for disposition will be removed by the Drayage Contractor and shipped with the information available at the time.

Implicit in these undertakings and the surrounding circumstances, is an agreement by Freeman to exercise care in handling outgoing drayage and checking for leftover freight, particularly where, as here, it received specific instructions for handling it. See Perry v. Sindermann, 408 U.S. 593, 601-02 (1972) (quoting 3A Corbin on Contracts Secs. 561-572A (1960)); 11 Williston on Contracts 3d ed. Sec. 1295.

Freeman not only failed to dray Alkan's weapon carriage release to the hotel dock and there deliver it to a carrier, it also failed to make a proper sweep of the exhibition hall so as to discover the crate containing the carriage release which indubitably was there. The district court found that this was "inept handling" of the crate by Freeman. We agree.

Freeman did not assert an affirmative defense based on a limitation of liability provision in the Exhibitors Service Kit, which, if applicable, would have limited Alkan's recovery to $50.00. The district court nonetheless considered the defense and rejected it. The limitation provision states that "damage" to exhibits while they are being loaded, unloaded, or conveyed to the various booths or common carrier by Freeman will be its responsibility. Alkan is not seeking recovery for "damage" to exhibits being loaded, unloaded, or conveyed. The limitation provision next provides that Freeman will not be responsible for loss or theft of an exhibitor's materials after they have been delivered to the exhibitor's booth but before they have been picked up for loading out of the booth. Alkan is not seeking recovery for a loss of this type, "loss" in this provision quite obviously being intended to mean the disappearance of materials from exhibitors' booths. Alkan's weapon carriage release did not disappear until one month after the Association's exhibition had closed and Alkan's booth had been dismantled.

Having specified the situations in which Freeman accepts responsibility and those in which Freeman denies it, the limitation provision concludes that "in any case" Freeman's liability is limited to $.25 per pound with a maximum of $50 per claim. The district court, influenced largely by the absence of any limitation of liability provisions in the bills of lading that Alkan completed and returned to Freeman, held the $50 per claim limitation inapplicable to Alkan's damages in this case. In our opinion, the limitation clause is at best ambiguous and may not have been intended to apply to the misplacement of the weapon carriage release resulting from Freeman's failure to properly "sweep the hall." The clause reasonably could be read to apply only to the two kinds of situations described above. In construing its meaning, therefore, we start with the well-established rule that limitation of liability clauses are not favored and accordingly are construed strictly. Herd & Co. v. Krawill Machinery Corp., 359 U.S. 297, 305 (1959); Gill v. Rollins Protective Services Co., 722 F.2d 55, 58 (4th Cir. 1983). We also give "due regard to the principle of strict construction against the draftsman of a contract." Alcoa Steamship Co. v. United States, 338 U.S. 421, 424-25 (1949); see United States v. Fullerton Construction Co., 407 F.2d 1002, 1004 (4th Cir. 1969). Construing the limitation clause in this fashion, we agree with the district court that it affords Freeman no relief.

Insofar as the Air Force Association is concerned, Alkan failed to prove any obligation whatsoever on its part with respect to Alkan's property. The Association simply leased space to Alkan; it specifically disclaimed all custody or control over Alkan's display materials. There was neither claim nor proof that Freeman was acting as an agent of the Association in Freeman's dealings with Alkan.

The judgments of the district court are affirmed.

AFFIRMED