sks123,
I think you made the right decision. Of course, packages can be dropped and not damage the item inside, but if you saw it happen you were right to refuse it.
Personal Example:
A computer was delivered to my house by FedEx (only mention the company to show that UPS isn't the only one to have made this mistake). As the girl was bringing the monitor up the steps, she was swinging it in one arm. On the back swing, it got loose, bounced on each step, then rolled to a stop in the street (just past the curb). She knew I knew. I accepted shipment and (of course) the monitor was damaged. I called the computer company and reported it. Same girl brought me a new one. As she delivered it, she angrily stated, "It wasn't from anyone dropping anything. I never would mail-order a computer because I've seen what happens during shipping." The new monitor's box had skid marks on all sides, each corner was crushed, and there was something rattling inside. I never opened it and called for a replacement. Different delivery person and, 5 years later, I'm still using that monitor. I'm sure glad the computer company believed me. They treated me extremely well. By the way, they went out of business within 6 months of that set of incidents.
You were right to refuse delivery. Saved you lots of explanations.