Carman Tool & Abrasives, Inc., purchased two milling machines, FOB Taiwan, from the Dah Lih Machinery Co. Carman obtained ocean marine cargo insurance on the machines from St. Paul Fire and Marine Insurance Co.

and authorized Dah Lih to arrange for the shipment of the two machines to Los 844 Part 5 Debtor-Creditor Relationships Angeles, using the services of Evergreen Lines. Dah Lih booked the machinery for shipment on board Evergreen’s container ship, the M/V Ever Giant;

arranged for the delivery of the cargo to the ship; provided all of the shipping information for the bill of lading; and was the party to whom the bill was issued. Dah Lih then delivered the bill of lading to its bank, which in turn negotiated it to Carman’s bank to authorize payment to Dah Lih. After the cargo was removed from the vessel in Los Angeles but before it was delivered to Carman, the milling machines were damaged to the extent of $115,000. Is the insurer liable to Carman? Can the insurer recover from Evergreen? [Carman Tool & Abrasives, Inc. v Evergreen Lines, 871 F2d 897 (9th Cir)]

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