Farrell Lines Inc. v. Highlands Insurance
1982 U.S. Dist. LEXIS 9295, 532 F.Supp. 77 (1982)
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Rule of Law:
Under the Harter Act, a carrier completes a 'proper delivery' and is discharged of responsibility when it delivers cargo according to the mandatory and prevailing customs, regulations, or laws of the destination port, even if this means relinquishing control to a third party like a port authority before the consignee takes possession.
Facts:
- Jomark Textiles, Inc. shipped 556 cartons of shoes from New York City to Monrovia, Liberia, aboard a vessel operated by Farrell Lines, Inc. ('Farrell').
- The vessel, 'Export Ambassador,' arrived at the Port of Monrovia on March 28, 1980.
- Farrell's stevedores discharged the shipment onto the stringpiece (the edge of the dock) between March 28 and March 30.
- The National Port Authority of Monrovia ('NPA'), a Liberian government entity with exclusive control over the port, took physical custody of the cargo at the stringpiece.
- It was mandatory practice at the Port of Monrovia for the NPA to take control of all cargo upon discharge from vessels.
- An initial tally conducted as the NPA took custody showed 7 cartons short and 24 damaged, for a loss of $5,197.50.
- Several weeks later, after the NPA had moved the goods to its transit warehouse, a new tally showed 100 non-delivered cartons and 256 damaged, for a total loss of $60,558.75.
Procedural Posture:
- Highlands Insurance Company, as subrogee for the shipper, sued carrier Farrell Lines, Inc. in federal district court to recover the full value of the lost and damaged cargo.
- Farrell Lines, Inc. filed a separate action for a declaratory judgment to limit its liability to the damage documented at the time it relinquished custody.
- The two actions were consolidated for trial in the U.S. District Court for the Southern District of New York.
- The case was submitted to the court for a decision based on stipulated (agreed-upon) facts.
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Issue:
Does a carrier make a 'proper delivery' under the Harter Act, thereby ending its liability for cargo loss, when it discharges goods into the mandatory custody of a government-run port authority at the stringpiece, as required by the custom and regulations of the port?
Opinions:
Majority - Weinfeld
Yes. A carrier makes a 'proper delivery' under the Harter Act by discharging goods into the mandatory custody of a government-run port authority at the stringpiece, in accordance with the custom of the port. The general rule requiring delivery to a consignee is subject to a well-settled exception where the custom, regulation, or law of the port provides otherwise. In this case, Farrell was compelled by the mandatory practice at the Port of Monrovia to relinquish physical custody and control to the NPA at the stringpiece. The NPA's own regulation, which stated that delivery was not complete until goods were in its warehouse, was a self-exoneration clause that could not override federal maritime law and the established 'custom of the port' doctrine. The bill of lading also specified that the carrier's responsibility ceased when the goods were discharged and taken by customs or other authorities. Therefore, 'proper delivery' occurred at the stringpiece, and Farrell is only liable for the loss identified at that point.
Analysis:
This decision reaffirms the vitality of the 'custom of the port' doctrine as a significant exception to a carrier's duty of proper delivery under the Harter Act. It clarifies that a carrier's liability can be discharged upon delivery to a compulsory third party, such as a state-controlled port authority, rather than only to the consignee. This precedent protects carriers from liability for losses occurring after they have been legally required to relinquish control of cargo in a foreign port. The ruling also establishes that local port regulations cannot unilaterally redefine 'delivery' under U.S. federal maritime law to extend a carrier's liability beyond the point of compulsory hand-off.
