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Mannesman Demag Corp. v. M/V Concert Express: the uniform misapplication of "proper delivery" and the confusion to follow.

Pursuant to the bill of lading, (1) Atlantic Container Line, Inc. (Atlantic) contracted to deliver cargo owned by Mannesman Demag Corp. (Mannesman) from Bremerhaven, Germany to the Midwestern United States. (2) The bill of lading issued by Atlantic required them to deliver the cargo not only to, but beyond the Port of Baltimore; thus, Atlantic's contract was classified as a "through bill of lading." (3) Pursuant to Atlantic's duty under the through bill, they delivered the goods to the Port of Baltimore aboard the M/V CONCERT EXPRESS where they then arranged for Trism Specialized Carriers, Inc. (Trism) to transport the cargo from the Port of Baltimore to Terre Haute, Indiana. (4) Although hired to transport the cargo from Maryland to Indiana, Trism did not issue the cargo from Maryland to Indiana, Trism did not issue a bill of lading for the inland carriage because Atlantic's contract covered the entire carriage. (5) While the cargo was en route from the Port of Baltimore to Terre Haute, and under the control of Trism, the oxygen tank and compressor rack owned by Mannesman sustained damages totaling over $145,000 when Trism's trailer overturned. (6) All parties agree that the sole and controlling document is the through bill of lading issued by Atlantic. (7)

Mannesman filed the instant suit against Atlantic, who then brought a third-party claim against Trism for contribution and indemnity. (8) Mannesman moved for summary judgment against Atlantic on the issue of liability. (9) In response, Atlantic filed a cross-motion against Mannesman averring that maritime law governs and limits liability. (10) Without opinion, the United States District Court for the Southern District of Texas granted summary judgment: (1) in favor of Atlantic on the issue of limited liability; (11) (2) in favor of Mannesman against Atlantic on the issue of liability in the amount of $1000; (12) and (3) in favor of Atlantic against Trism on the issue of liability in the amount of $1000. (13)

Mannesman appealed the damages awarded by the lower court to the Fifth Circuit Court of Appeal, and Trism cross-appealed the issue of liability. (14) Mannesman argued that the district court erred because in order to arrive at the amount awarded for damages, the court necessarily applied liability limitations enumerated by maritime law to a situation involving inland transport. (15) Thus, the issue before the Fifth Circuit was whether the Harter Act, (16) a federal maritime statute, should be compulsorily applied to the inland portion of transportation pursuant to a through bill of lading. (17) The Fifth Circuit reversed the district court's decision and held the Harter Act is not compulsorily applicable to Atlantic's bill of lading because "proper delivery" under the Harter Act occurs when the cargo is ready for inland transport, not necessarily when the cargo arrives at its final destination. (18) The express terms of Atlantic's bill of lading makes applicable two maritime acts. (19) Due to the international nature of Atlantic's carriage, the Carriage Of Goods By Sea Act (COGSA) will govern the ocean portion of transport. COGSA, found at 46 U.S.C. section 1300, outlines that every bill of lading evidencing a contract between a port of the United States and a foreign port is afforded every protection of the Act. (20) Thus, the purpose of COGSA is to protect carriers that engage in foreign trade from all liabilities, as well as, to protect the interest of shippers by ensuring that due care is exercised. (21) Additionally, and most importantly, COGSA limits the carrier's liability to an amount not to exceed $500 per package unless the parties agree otherwise. (22)

Nevertheless, pursuant to 46 U.S.C. section 1301, the term "carriage of goods" only applies from the time when the goods are loaded onto the ship until the time the goods are unloaded from the ship. (23) Although COGSA's provisions only expressly govern the period of time while the goods are on the ship, its provisions may be extended contractually to cover the entire time the goods are in the custody of the carrier; (24) or COGSA's defenses, limitations, and immunities may be contractually extended to third parties. (25) According to Atlantic's contract, they extended the provisions of COGSA to cover the period of time when the Harter Act is rendered applicable. (26)

Due to the extension of COGSA's provisions, Atlantic's bill of lading requires application and interpretation of the Harter Act. (27) The intended purpose for Congressional execution of the Harter Act, in 1893, was to prevent the efforts of carriers to insert into bills of lading all-embracing exceptions to liability or exculpatory clauses. (28) Prior to the enactment of COGSA, the Harter Act governed the liabilities of shippers in the international arena as well as the domestic. (29) However, for the most part, the Harter Act has been superseded by COGSA regarding international trade. (30)

Despite COGSA's encroachment upon the Harter Act's applicability in international maritime law, courts continue to hold that the Harter Act still governs the period after the cargo has been unloaded from the ship. (31) Consequently, the Harter Act's application is not with out end; courts have interpreted the ambiguous language of the Act to govern the liability of the carrier until "proper delivery" occurs. (32) Unfortunately, because the Harter Act does not define what constitutes "proper delivery,"33 the circuit courts have had to formulate a jurisprudential rule in light of general maritime law. (34)

The courts of appeal have ruled that "proper delivery" may be actual or constructive. (35) While actual delivery constitutes transferring the cargo completely to the consignee or agent, (36) the question remains as to what constitutes constructive delivery. The foundation for constructive delivery was initially laid in 1950 when the United States District Court for the Northern District of California, in Tan Hi v. United States, (31) stated in dicta that "the duty imposed by the common-law upon water carriers was merely to transport cargo from port to port, or from wharf to wharf." (38)

Continuing in dicta, the court stated that embedded within the common-law's duty to deliver the cargo from wharf to wharf, was the obligation to notify the consignee of the cargo's arrival. (39) Additionally, the district court stated that the common-law duty to deliver included discharge upon a fit wharf, allowing for easy access and removal, and "to protect the cargo until the consignee had a reasonable opportunity to remove it from the wharf." (40) Subsequently in 1962, the Ninth Circuit Court of Appeal in Isthmian Steamship Co. v. California Spray-Chemical Corp. (41) gave weight to Tan HVs dicta. Before the Isthmian court on rehearing, (42) the appellant contended that the Ninth Circuit erred in relying upon the Tan Hi dicta because the common-law, as well as maritime rule, does not require delivery upon a fit and proper wharf. (43) In addressing this argument, the Ninth Circuit held that the cases relied upon by the Tan Hi court, namely The Eddy (44) and The Titania, (45) established the existence of a common law or maritime obligation for the carrier to unload the goods on a fit wharf. (46) These common-law requirements spawned constructive "proper delivery." (47)

Presently, circuit courts that have decided the issue essentially require the same elements to effect "proper delivery" under the carrier's general maritime obligation. The Second, (48) Fifth (49) and the Eleventh Circuit Courts of Appeal are in agreement in defining the elements of constructive "proper delivery"; delivery must first be made to a fit and customary wharf. (51) Second, constructive "proper delivery" requires that the cargo be accessible to the consignee. (52) Third, the carrier must give the consignee notice that the cargo has arrived. (53) Fourth, the carrier must give the consignee reasonable opportunity to take it into his custody. (54) Finally, the cargo must be separated by bill of lading and count. (55)

The opinions rendered by the First (56) and the Fourth (57) Circuits are limited concerning constructive "proper delivery." Nevertheless, the latest pronouncement in these circuits evidences a four-prong approach; these circuits use the same elements as the Fifth Circuit but remain silent as to whether the cargo needs to be segregated by a bill of lading from the other cargo. Additionally, the Ninth (58) Circuit applies the same analysis as the Fifth Circuit although it has not expressly enumerated that the cargo be accessible to the consignee. (59)

In 1977, the Fifth Circuit Court of Appeal, in F.J. Walker, Ltd. v. M/V LEMONCORE, (60) without analysis, held that the Harter Act, and not COGSA, was the applicable maritime act based upon the facts presented. (61) Nevertheless, the Fifth Circuit used a compilation of the constructive "proper delivery" requirements enumerated by the D.C. Circuit (62) and the First Circuit, (63) and devised the five-part test presently used by a majority of the circuits. (64) Furthermore, in 1981, the Fifth Circuit, in Allstate Ins. Co. v. Imparca Lines, (65) articulated the rule that COGSA applies until the ship unloads the cargo, thereafter rendering the Harter Act applicable only until "proper delivery". (66)

Based upon these precedents, the Fifth Circuit has consistently applied the five-part test, and has applied the Harter Act during the period of time after unloading but before "proper delivery;" decisions evidencing uniform application are Tapco Nigeria, Ltd. v. M/V WESTWIND (67) and Metropolitan Wholesale Supply, Inc. v. The M/V ROYAL RAINBOW. (68)

Despite voluminous rulings on what constitutes constructive "proper delivery" under a bill of lading when the carrier delivers the goods to the consignee or his agent, the noted case presents an unprecedented issue. The noted case applies the Harter Act's requirement of "proper delivery" to a scenario involving a land carrier, not acting as an agent for the consignee, but receiving the cargo to transport inland pursuant to a through bill of lading issued by the water carrier. (69) Although no circuit courts have decided this issue, several United States District Courts have employed a thorough analysis. (70)

In Jagenberg, Inc. v. Georgia Ports Auth., (71) the United States District Court for the Southern District of Georgia was presented with the issue of whether the Harter Act could be compulsorily applied to inland travel, thereby contractually extending the benefits of COGSA. (72) Because the facts clearly evidenced that the cargo in question never left the port and neither the consignee (nor his agent) were ever afforded a reasonable opportunity to receive the cargo, the court effortlessly reasoned that "proper delivery" under the Harter Act never occurred. (73) Nevertheless, the court discussed the application of the Harter Act to inland transport and ruled that the Harter Act does not cover the inland portion of transport under a through bill of lading. (74)

Due to the fact that all precedented Fifth Circuit case law failed to address the issue of "whether the Harter Act is compulsorily applicable to the inland portion of carriage pursuant to a through bill of lading," (75) this was an issue of first impression for the Mannesman court. (76) The court first examined the applicable maritime statutes dealing with damage to cargo, upon a vessel or delivered by a vessel and involved in international trade, (77) and noted that COGSA is only applicable from the time the goods are loaded onto the ship until the time they are unloaded from the ship, thereby, rendering the Harter Act applicable from unloading until "proper delivery." (78) Furthermore, the court noted that the Harter Act does not define "proper delivery," and determined that jurisprudential rule for constructive "proper delivery" includes: (1) delivery to a fit and customary wharf; (2) segregating the cargo by bill of lading and count; (3) placing the cargo so that it is accessible to the consignee; and (4) giving the consignee reasonable opportunity to retrieve the cargo. (79) The Mannesman court, after examining Atlantic's bill of lading, reasoned that if the Harter Act was compulsorily applicable to the inland transport, the lower court correctly limited Atlantic's liability to $500 per package. (80)

After noting the lack of circuit court decisions interpreting the Harter Act regarding constructive "proper delivery" for inland transport under a through bill of lading, the Mannesman court ruled that the United States District Court for the Southern District of Georgia's opinion in Jagenberg, Inc. v. Georgia Ports Authority (81) was thorough and highly persuasive. (82) The Fifth Circuit found that Jagenberg dealt with an Atlantic bill of lading identical to the one in the noted case. (83) Relying on the rationale of Jagenberg and the maritime nature of the Harter Act, the court held that "proper delivery" occurs before inland transport, and in this particular case, when the goods were loaded onto the trucks. (84)

The noted case is significant for two reasons. First, the noted case is significant because it decided the case according to the facts, and did not allow a party to escape liability by extending the law beyond its intended means. Second, although the case limits the Harter Act's application to the maritime arena, the decision bolsters a rationale on the elements of constructive "proper delivery" that deviates from precedent, which has the potential to create a legal lacuna.

The Fifth Circuit rendered an equitable solution, based upon the facts of the case, when the district court's decision was reversed. Although Atlantic extended the provisions of COGSA to cover the duration of the Harter Act's application, it did not intend COGSA to cover the entire duration. This is evident by the inclusion of the provision in Atlantic's bill of lading that they would be subject to the terms of the inland carrier's contracts of carriage and tariffs. (85) Additionally, if Atlantic had wanted to extend COGSA during the entire transport they could have added a Himalaya Clause that would have placed the inland carrier under the liability provisions of COGSA. (86) As the Mannesman court ruled, no case law has been presented that has allowed the Harter Act's provisions to be extended inland. (87) Needless to say, the denial of the Harter Act's extension may be due in part to the provisions of the more beneficial COGSA being extended inland. Nevertheless, courts have consistently refused to extend the provision of the Harter Act outside the maritime arena. The Mannesman decision keeps in check with the prior district court jurisprudence giving uniformity to the scope and application of the Harter Act.

Although the Mannesman court limits the scope of the Harter Act by deciding whether constructive "proper delivery" occurred before inland transport, the Fifth Circuit relies upon a rationale that can be considered convoluted at best in its determination of what constitutes constructive "proper delivery" in intermodal transportation. The Fifth Circuit discussed the applicable law and precedent, then laid out the elements of constructive "proper delivery" under the Harter Act. (88) The Mannesman court, in its enumeration of the elements required for constructive "proper delivery," disregarded the element of giving the consignee notice that the goods had arrived at the dock, as established in F.J. Walker. (89) In doing so, the Fifth Circuit, citing to Jagenberg and Palmolive, concluded that constructive "proper delivery" under the Harter Act and a through bill of lading occurred when the cargo was loaded onto the trucks of the inland transporter. (90)

The Court apparently opted for the Jagenberg rationale because it was so factually similar to the noted case, (91) despite its flawed analysis. The Jagenberg court disregarded the requirement that the consignee be given notice, and concluded that "proper delivery" under a through bill of lading occurred when the cargo had been loaded onto the truck of the subcontracted inland transporter. (92) Ironically, the court came to this conclusion after relying upon a standard "proper delivery" analysis case, which requires all five elements as enumerated in F.J. Walker. (93)

The same can be said about the Palmolive decision, the second case cited by the Mannesman court. (94) The Palmolive decision, like Jagenberg, involved the application of the Harter Act inland. (95) Additionally, after adopting the Jagenberg rationale, Palmolive concluded that "[p]roper delivery under the Harter Act and an intermodal contract occurs when the stevedore actually loads the cargo onto trucks...." (96) As authority for this proposition, the court cited cases that involved a standard Harter Act analysis, applying all elements of proper delivery. (97) Again, "proper delivery" under an intermodal analysis is apparently the same as the standard "proper delivery" analysis under the Harter Act.

The cases relied upon by the noted case either impliedly conclude that notice need not be given to the consignee or his agent under a through bill of lading, or the courts, in citing to the only available authority, overlooked a fundamental requirement of "proper delivery." The precedent, in all the circuits defining the requirements of "proper delivery," coincide and require that notice of the arrival of the goods must be given to the consignee. If this element of "proper delivery" was determined to be merely superfluous because the factual scenarios involved a through bill of lading, then the Mannesman court should have addressed the issue and not left loose ends. Although the Mannesman decision uniformly determined the scope of the Harter Act and gave it circuit court authority, its rationale is based upon the incongruent application of constructive "proper delivery." This misapplication can only lead to further confusion in determining constructive proper delivery in all scenarios.

(1.) Maritime transportation, under United States law, is governed by a negotiable bill of lading, which is a contract of carriage, and subject to the terms of the Bills of Lading Act, 49 U.S.C. app. [section][section] 80101-80116 (1994). See Stephen G. Wood, Multimodal Transportation: An American Perspective on Carrier Liability and Bill of Lading Issues, 46 Am. J. comp. L. 403, 407 (1998). Negotiable bills of lading are documents of title, and the carrier can only deliver the cargo to a person possessing one of the original bills. Id.

(2.) See Mannesman Demag Corp. v. M/V CONCERT EXPRESS, 225 F.3d 587, 588, 2000 A.M.C. 2935, 2936 (5th Cir. 2000).

(3.) See id. (citing Charles S. Donavan & Jill M. Haley, Who Done It and Who's Gonna Pay?--Rights of Shipper and Consignees Against Non-Ocean Carriers Performing Part of a Contract of Carriage Covered by a Through Bill of Lading, 1 J. Int'l L. & prac. 415, 416 (1998) (pursuant to a through bill of lading, an ocean carrier agrees to transport the goods to their final destination by hiring someone else to perform the inland portion of carriage). See id. (citing Jagenberg, Inc. v. Georgia Ports Authority, 882 F. Supp. 1065, 1068, 1995 A.M.C. 2333, 2336 (S.D. Ga. 1995) (the bill of lading was a through bill as it obligated the carrier to transport the goods through the port onto its ultimate destination)). Whether a bill of lading qualifies as a through bill the following factors must be considered by the court: "(1) whether the final destination is designated on the bill of lading, (2) the method of compensation used by connecting carriers, and (3) the conduct of those carriers." Nebraska Wine & Spirits, Inc. v. Burlington Northern Railroad Co., 1992 WL 328938, *5 (W.D. Mo. Sept. 29, 1992).

(4.) See Mannesman, 225 F.3d at 588. The original contract had a final destination of Chicago, Illinois; however, the parties later agreed to final delivery in Terre Haute, Indiana. See id. at 588, n.2.

(5.) See Brief for Appellant at 2, Mannesman Demag Corp. v. M/V CONCERT EXPRESS, 225 F.3d 587 (5th Cir. 2000); see also Tokio Marine & Fire Ins. Co., v. Hyundai Merchant Marine Co., 717 F. Supp. 1307, 1309, 1989 A.M.C. 2672, 2674 (N.D. 111. 1989) (holding that a "through bill of lading governs the entire transportation of goods and applies to connecting carriers even though they are not parties to the contract").

(6.) See Mannesman, 225 F.3d at 588. The oxygen tank and compressor rack combined for a total weight of 40,000 pounds. See Brief for Appellant at 10, Mannesman Demag Corp. v. M/V CONCERT EXPRESS, 225 F.3d 587 (5th Cir. 2000). Trism's tariff limitation of liability, provided for in the Atlantic bill of lading, is $2.50 per pound, thus, totaling $100,000. Id. Mannesman also accounts for prejudgment and post judgment interest. Id. at 11.

(7.) See id. at 588. The Atlantic bill of lading provides:

3. CARRIER'S RESPONSIBILITY (1) ... If and to the extent that the provisions of the Harter Act ... would otherwise be compulsorily applicable to regulate the Carrier's responsibility for the goods ... the Carrier's responsibility shall instead be subject to COGSA, but where COGSA is found not to be applicable such responsibility shall be determined by the provisions of 3(2) below ... (2) Save as is otherwise provided in this Bill of Lading, the Carrier shall be liable for loss of or damage to the goods occurring from the time that the goods are taken into his charge until the time of delivery to the extent set out below. (B) Where the stage of carriage where the loss or damage occurred can be proved, (ii) With respect to the transportation in the United States ... from the Port of Discharge, the responsibility of the Carrier shall be to procure transportation by carriers (one or more) and such transportation shall be subject to the inland carrier's contracts of carriage and tariffs and any law compulsorily applicable. The Carrier guarantees the fulfillment of such inland carrier's obligations under the contracts and tariffs. 6. PACKAGE/UNIT LIMITATION AND DECLARED VALUE (1) Package or Unit Limitation. Where the Hague Rules or any legislation making such Rules compulsorily applicable (such as COGSA or COGWA) to this Bill of Lading apply, the Carrier shall not, unless a declared value has been noted ... be or become liable for any loss or damage to or in connection with the goods in an amount per package or unit in excess of the package or unit limitation as laid down by such Rules or legislation. Such limitation amount according to ... COGSA is U.S. $500.... 7. TIME-BAR ... All liability whatsoever of the Carrier shall cease unless suit is brought within 12 months after delivery of the goods or the date when the goods should have been discovered.

(8.) Mannesman, 225 F.3d at 590. Prior to filing the instant suit, Mannesman had previously sued Trism without involving Atlantic. Id. Trism argued that Mannesman's suit was barred by Atlantic's bill of lading and the one-year time bar expressly provided therein. Id. Mannesman, on the other hand, argued "the suit was governed by the limitations in Trism's contract of carriage and tariffs." Id. The court held that the TIME-BAR provision of the

Atlantic bill applied to all aspects of the through bill, thereby granting summary judgment in favor of Trism. Mannesman, 225 F.3d at 590.

(9.) See id. at 590-91.

(10.) See id. at 590. When the provisions of the Carriage Of Goods By Sea Act (COGSA), 46 U.S.C. app. [section][section] 1300-1315 (1994) are to apply, liability is limited to $500 per package unless otherwise stipulated. Id. (citing 46 U.S.C. [section] 1304(e)).

(11.) See id. at 591. The Fifth Circuit determined that the district court necessarily decided that the Harter Act was compulsorily applicable to the inland portion of transport when it granted Atlantic's cross-motion for summary judgment as to the liability amount. See Mannesman, 225 F.3d at 591.

(12.) See id. at 590. The court arrived at the $1000 liability figure by calculation of COGSA's $500 per package limitation. See id. at 591.

(13.) See id. at 590. "Although neither party moved for summary judgment against Trism, the court nevertheless granted judgment in favor of Atlantic against Trism. Id. at 594.

(14.) See Mannesman, 225 F.3d at 594. Atlantic did not file an appeal, thus, not contesting the finding of liability. Id.

(15.) See Id. at 591. The noted case addressed other issues, but the focus of this piece is on the compulsorily application of the Harter Act inland.

(16.) 46 U.S.C. app. [section][section] 190-196 (1994).

(17.) Mannesman, 225 F.3d at 591.

(18.) Id. at 594.

(19.) See generally Mannesman, 225 F.3d at 589-90.

(20.) See 46 U.S.C. [section] 1300 (1994). The Fourth Circuit Court of Appeal, in Wemhoener Pressen v. Ceres Marine Terminals, Inc., 5 F.3d 734, 1993 A.M.C. 2842 (4th Cir. 1993), noted:
   COGSA was prompted by the congressional aim of ensuring uniformity
   in international maritime commerce. COGSA was enacted in 1936 to
   embody the American version of an international convention known as
   the Hague Rules. By subjecting all foreign bills of lading to
   COGSA, Congress afforded to international shippers and carriers a
   greater degree of certainty and uniformity in their dealings. And,
   by permitting those parties to contractually extend application of
   COGSA to the periods prior to loading and after unloading but
   before delivery, Congress authorized shippers and carriers to place
   all of their dealings under COGSA, if they so intended. See
   Wemhoener, 5 F.3d at 741.


(21.) See id.

(22.) See id.; see also 46 U.S.C. [section] 1304(5) (1994), which states in part:
   AMOUNT OF LIABILITY; VALUATION OF CARGO. Neither the carrier nor
   the ship shall in any event be or become liable for any loss or
   damage to or in connection with the transportation of goods in an
   amount exceeding $500 per package lawful money of the United States
   ... By agreement the carrier ... and the shipper another maximum
   amount than that mentioned in this paragraph may be fixed:
   Provided, that such maximum shall not be less that the figure above
   named ....


See id.

(23.) See 46 U.S.C. [section] 1301(e) (1994). This provision of COGSA refers to what is commonly referred to as "tackle-to-tackle." See Mannesman, 225 F.3d at 589.

(24.) See Haley, supra note 3, at 417. This clause is referred to as a Period of Responsibility Clause. Id.

(25.) See Haley, supra note 3, at 418. Such a clause is referred to as a Himalaya Clause. Id.

(26.) See supra note 7 and accompanying text.

(27.) See Mannesman, 225 F.3d at 589; see also 46 U.S.C. [section] 190-196 (1994).

(28.) See, e.g., Pan Amer. World Airways, Inc. v. California Stevedore & Ballast Co., 559 F.2d 1173, 1175 n.l, 1978 A.M.C. 1834, 1834 (9th Cir. 1977) (noting that Congress enacted the Harter Act to counteract the efforts of carriers to insert comprehensive exceptions to liability); see also Isthmian S.S. Co. v. California Spray Chem. Corp., 300 F.2d 41, 43, 1962 A.M.C. 1474, 1476 (9th Cir. 1962) (ruling that the Harter Act was enacted to remedy abuses of shipowners to unreasonably limit their obligations to the shipper).

(29.) See 46 U.S.C. [section] 190. Section 190 provides in pertinent part: "It shall not be lawful for the ... owner of any vessel transporting merchandise or property from or between ports of the United States and foreign ports...." Id.

(30.) See 46 U.S.C. [section] 1311 (1994). Section 1311 expressly provides that the Harter Act is superseded by COGSA except to "the duties, responsibilities, and liabilities of the ship or carrier prior to the time when the goods are loaded on or after the time they are discharged from the ship." See generally Sabah Shipyard SDN. BHD. v. M/V HARBEL TAPPER, 178 F.3d 400, 406, 1999 A.M.C. 163, 169 (5th Cir. 1999) (ruling that COGSA expressly provides that it does not supercede the Harter Act regarding obligations set forth in 46 U.S.C. [section] 1311).

(31.) See Sabah, 178 F.3d at 406 (noting that COGSA does not apply before loading and after unloading the cargo, thus the Harter Act governs those periods).

(32.) See 46 U.S.C. [section] 190. The statute provides in pertinent part: "they [vessel owners] shall be relieved from liability for loss or damage arising from negligence, fault, or failure in proper loading stowage, custody, care, or proper delivery of any and all lawful merchandise or property committed to its or their charge." See also Isthmian, 300 F.2d at 43 (concluding that once proper delivery has been made the Harter Act is at its end); see also Jagenberg, Inc. v. Georgia Port Authority, 882 F. Supp. 1065, 1071, 1995 A.M.C. 2333, 2341 (S.D. Ga. 1995) (after proper delivery, under the Harter Act, state law applies); see also David B. Sharpe, James E

Mercante & Diane M. Butler, Recent Developments In Maritime Law, 19 Tul. Mar. L.J. 301, n. 168 (1996) ("The Harter Act imposes a duty on a carrier to make proper delivery ...").

(33.) See Tan Hi v. United States, 94 F. Supp. 432, 434, 1951 A.M.C. 127, 130 (N.D. Cal 1950) (noting that "[t]he Harter Act does not define the requisites of a proper delivery;" see also Tapco Nigeria, Ltd. v. M/V WESTWIND, 702 F.2d 1252, 1255 (5th Cir. 1983) (ruling that the Harter Act does not define proper delivery itself, but only prevents the carrier from agreements which would relieve it from liability for loss arising from negligence)).

(34.) See Mannesman, 225 F.3d at 592 (noting that proper delivery includes the General Maritime Law requirements of a carrier); see also Farrel Lines Inc. v. Highlands Ins. Co., 696 F.2d 28, 29 (2d Cir. 1982) (noting that the Harter Act reinstated the common law duty of carries); see also Isthmian, 300 F.2d at 44 (noting that the carrier is under a general maritime obligation).

(35.) See Mannesman, 225 F.3d at 593; see also B. Elliot Ltd. v. John T. Clark & Son, 704 F.2d 1305, 1308, 1983 A.M.C. 1742, 1746 (4th Cir. 1983); see also Wemhoener, 5 F.3d at 741-42.

(36.) See id.

(37.) 94 F. Supp. 432 (N.D. Cal 1950). Residents of Manila ordered merchandise to be shipped from San Francisco aboard the S.S. PRESIDENT GRANT. Id. at 433. Not having recovered from the effects of World War II, perishable cargo was given priority unloading. Id. Due to inadequate storage space, cargo had to be unloaded onto the wharf, owned by the Philippine Government, where pilferage was a problem that the local authorities could not handle. Id. After the ships arrival on March 23, 1946, the cargo was unloaded according to the laws of the port to the Manila Terminal Service, an agent for the Philippine Customs. Id. While in the custody of the Philippine government, the cargo was stolen. Tan Hi, 94 F. Supp. at 433. The Manila residents sought recovery of its value. Id. at 434. See also Daniel E. Murry, Substitutes For Letters of Credit Sales: A Sellers Lot Is Not A Happy One, 101 Com. L.J. 189 (1996).

(38.) See Tan Hi, 94 F. Supp. at 434-35.

(39.) See id. at 435.

(40.) See Tan Hi, 94 F. Supp. at 434-35.

(41.) 300 F.2d 41 (9th Cir. 1962). California Spray-Chemical (California) shipped packages of an agricultural chemical from Houston, Texas to Alexandria, Egypt aboard a ship owned by Isthmian S.S. Co. (Isthmian). See Isthmian S.S. Co., v. California Spray-Chemical Corp., 290 F.2d 486, 487, 1961 A.M.C. 2476, 2477 (9th Cir. 1961). Due to the nature of the cargo, it had to be unloaded at a designated location that the ship could not reach. Id. at 488. Consequently, the cargo was loaded onto lighters so that it could reach its destination. Id. Pursuant to a short bill of lading, the carrier's responsibility was solely to arrange for the lighterage. Id. During a storm, while the lighter was moored alongside the dock, it sank damaging the cargo. Id.

(42.) The district court ruled that the lighterage clauses, enumerated by the short bill of lading purporting to relieve the carrier of liability, were invalid. See Isthmian, 290 F.2d at 488. The Ninth Circuit, on the original hearing, affirmed the lower court's decision. Id. at 493. Additionally, on rehearing, the Ninth Circuit affirmed its prior decision. See Isthmian, 300 F.2d at 50-51.

(43.) See id. at 43.

(44.) 72 U.S. 481 (1886). The Supreme court ruled "[w]here the contract is to carry by water from port to port an actual delivery of the goods into the possession of the owner or consignee, or at his warehouse, is not required in order to discharge the carrier from his liability. He may deliver them on the wharf...." Id. at 495.

(45.) 131 F. 229 (2d Cir. 1904). The Second Circuit held "[i]n order to make a valid delivery, which relieves the carrier from liability, it is necessary to show that the goods in question were landed on the wharf...." Id. at 230.

(46.) See Isthmian, 300 F.2d at 43.

(47.) See id. at 44. The Ninth Circuit maintained "[t]here is, then, strong support for the existence of a 'common law' or maritime rule requiring delivery to a wharf unless the bill of lading specified elsewhere." Id.

(48.) See Farrell Lines Inc. v. Highland Ins. Co., 696 F.2d 28 (2d Cir. 1982) (involving a shipment of shoes, carried aboard a vessel owned by Farrel Lines, Inc., that was short when it was unloaded upon the stringpiece controlled by the National Port Authority of Liberia).

(49.) See F.J. Walker & Sons v. M/V LEMONCORE, 561 F.2d 1138, 1978 A.M.C. 300 (5th Cir. 1977).

(50.) See Philip Morris v. Amer. Shipping Co., 748 F.2d 563, 1986 A.M.C. 276 (11th Cir. 1984). Philip Morris contracted American Shipping Co., to transport tobacco from Columbia to Miami. American issued a clean bill of lading after inspecting the cargo. Id. at 565. The cargo was loaded onto American's vessel approximately two months after the bill of lading was issued. Id. Upon loading, the captain noticed the cargo had sustained damage. Id. The captain thereafter registered a formal Master's Complaint. Id. The district court found that the cargo was good when inspected by Philip Morris. Philip Morris, 748 F.2d at 565. The Eleventh Circuit affirmed and found that the cargo was damaged after the bill of lading was issued, thus it was in the custody of American's agents. Id.

(51.) See F.J. Walker, 561 F.2d at 1143. The court determines the wharf to be fit by looking at the use and custom of the port of destination. Id.

(52.) See Farrel Lines, 696 F.2d at 29; F.J. Walker, 561 F.2d at 1142; Philip Morris, 748 F.2d at 567.

(53.) See id.

(54.) See id.

(55.) See id.

(56.) See Calcot, Ltd. v. Isbrandtsen Co., 318 F.2d 669, 673, 1963 A.M.C. 1993, 1997 (1st Cir. 1963). The First Circuit decided the issue of whether the cotton that was shipped from California to Puerto Rico, had been delivered under the terms of the Harter Act when the fire on the wharf consumed the remaining bails of cotton. Id. at 671-72. The court concluded that proper delivery under the Harter Act had occurred. Id. at 673.

(57.) See Wemhoener Pressen v. Ceres Marine Terminals, Inc., 5 F.3d 734, 1993 A.M.C. 2842 (4th Cir. 1993). Despite the court's enumeration of a three-prong approach the Fourth Circuit decided the issue of whether cargo damaged after unloading and stored in terminal unit was subject to the Harter Act or had proper delivery occurred. Id. at 741-42. The court ruled that proper delivery did not occur because it was not accessible to the consignee nor was it ready to be received by the inland carrier. Id. at 742.

(58.) See Isthmian, 300 F.2d 41, 1961 A.M.C. 2476 (9th Cir. 1962).

(59.) See id. at 43; see also supra notes 40 & 41 and accompanying text.

(60.) 561 F.2d 1138, 1978 A.M.C. 300 (5th Cir. 1977). F.J. Walker, an Australian exporter, consigned several thousand cartons of frozen meat in the late summer of 1971. Id. at 1140. The M/V LEMONCORE left the port at Sydney, Australia destined for the part at Tampa, Florida, and arrived on September 9, 1971. Id. A dispute arose because the cargo was being unloaded without proper personnel or adequate freezer space. Id. at 1141-42. As a result, the meat thawed and spoiled. Id. at 1142. The consignee brought suit to recover the losses sustained in the unloading process. F.J. Walker, Ltd., 561 F.2d at 1140. The carrier argued that the district court erred when it did not find that proper delivery under the Harter Act had been made. Id.

(61.) See id. at 1143 n.l. The court notes that COGSA will not apply because "[i]t does not cover damage ashore." Id. (citing 46 U.S.C. [section] 1311 (1994)).

(62.) See Amer. President Lines, Ltd. v. Fed. Mar. Bd., 317 F.2d 887, 888, 1963 A.M.C. 2380, 2381 (D.C. Cir. 1962) (articulating the general maritime obligation to unload the cargo on a dock, segregate it by bill of lading and count, make it accessible to the consignee, and give reasonable opportunity for it to be picked up).

(63.) See Calcot, Ltd. v. Isbrandtsen Co., 318 F.2d 669, 673, 1963 A.M.C. 1993, 1998 (1st Cir. 1963) (noting that the maritime obligation of carriers also includes that the wharf be fit and that the consignee receive reasonable notice).

(64.) See F.J. Walker, 561 F.2d at 1142.

(65.) 646 F.2d 166, 1982 A.M.C. 423 (5th 1981).

(66.) See Allstate, 646 F.2d at 168. Delta Overseas, Inc. delivered a container to Imparca Lines (Imparca), due to an international order. Id. Imparca loaded the container aboard a vessel chartered by Imparca, the M/V SANTA TERESA. Id. Imparca issued a clean bill of lading providing what was contained and that the carrier's responsibilities were discharged upon delivery of the goods. Id. at 166-67. On August 4, 1977, the M/V SANTA TERESA arrived at Puerto Cabello, Venezuela. Id. at 167. Due to crowded conditions, the cargo was unloaded between August 29 and September 12. Allstate, 646 F.2d at 168. The Instituto Nacional De Puertos (National Institute of Ports) (I.N.P.) is responsible for receiving and delivering cargo. Id. The container, according the tally book, was unloaded in good condition and placed on the dock. Id. Imparca argues that the district court erred in finding that the cargo had not been delivered to the consignee. Id. at 166. The court concluded that the bill of lading coincided with the Harter Act and that proper delivery had been made when the cargo was unloaded, under the laws and customs of the port, by the I.N.P. Id. at 169.

(67.) See Tapco Nigeria, Ltd. v. M/V WESTWIND, 702 F.2d 1252 (5th Cir. 1983). On December 28, 1978, bills of lading were issued by the owner of the M/V WESTWIND for the consignment of rice purchased by Tapco Nigeria (Tapco), the original consignee. Id. at 1254. The rice was loaded in Mobile, Alabama and arrived in Lagos, Nigeria in January, 1979. Id. On January 20, the stevedores hired by the Nigerian Port Authority began to unload the rice directly to the consignee's trucks aligned along side the ship. Id. This direct delivery method requires the stevedores to effectuate unloading by the use of slings. Id. The bagged rice was in good condition when the ship arrived, but during the unloading process the stevedores ripped the bags of rice on the holds and hatch coamings of the ship, invariably causing rice to spill out. Tapco Nigeria, 702 F.2d at 1254. Additionally, persons alongside the wharf slashed the bags, causing rice to spill out, inciting pilfering. Id. Tapco argued that the relinquishment of the cargo to the Nigerian stevedores violated the requirement of "proper delivery" under the Harter Act, while the owners of the vessel argued that the release was not only proper but required, thus delivery was according to the custom of the port. Id. at 1255.

The Fifth Circuit was presented with the issue of whether cargo released to Nigerian Port Authority stevedores constituted proper delivery under the Harter Act. Id. In reaching the holding, the Fifth Circuit decided that although COGSA rendered inapplicable the Harter Act regarding most aspects of foreign trade, the Harter Act is still applicable to any period between when the goods are unloaded from the ship until "proper delivery." Id. Once the court decided that the Harter Act was applicable, the court had to determine what was "proper delivery" under the Harter Act. Tapco Nigeria, 702 F.2d at 1255. Tapco argued that "proper delivery" could only be accomplished when the cargo is unloaded from the ship and, physically, deposited on the dock. Id. The court concluded that Tapco ignored precedent because customs, regulations, or laws of the port modify the requirement of proper delivery, and that such delivery to the Nigerian Port Authority stevedores was the law of the port, constituting proper delivery. Id. at 1260.

(68.) 12 F.3d 58, 1994 A.M.C. 1435 (5th Cir. 1994). The Fifth Circuit, citing Tapco, ruled that although COGSA applies to all contracts of goods by sea between the United States and foreign ports, the Harter Act remains applicable from the time the cargo is unloaded from the ship's tackle until "proper delivery." Id. at 61. Additionally, citing Tapco, the court held that proper delivery is the discharging of cargo upon a fit and customary wharf. Id. The court ultimately held that Metropolitan had knowledge that the cargo was unloaded and fit for transport, therefore proper delivery occurred. Id.

(69.) See Mannesman, 225 F.3d at 591-92.

(70.) See id. at 593-94 (citing Jagenberg. Inc. v. Georgia Ports Auth., 882 F. Supp. 1065, 1077-78, 1995 A.M.C. 2333, 2351-52 (S.D. Ga. 1995) (holding that because the Harter Act is maritime in nature, "proper delivery" of the cargo occurred when it was loaded onto the trucks

transporting inland); Colgate Palmolive Co. v. M/V ATLANTIC CONVEYOR, 1996 WL 742861 at *6 (S.D.N.Y. Dec. 31, 1996) (holding that the Harter Act does extend to the period when the cargo is being transported inland); Abott Chem., Inc. v. Molinos de Puerto Rico, Inc., 62 F. Supp. 2d 440, 448 (D. P.R. 1999) (holding that the Harter Act only applies to a through bill of lading when the obligations that are violated are maritime); Standard Multiwall Bag Mfg. Co. v. Marine Terminals Corp., 961 F. Supp. 240, 242, 1997 A.M.C. 891, 893 (D.Or. 1996); M.C. Machinery Svs., Inc. v. Maher Terminals, Inc.. 753 A.2d 617, 2001 A.M.C. 927 (N.J. 2000).

(71.) 882 F. Supp. 1065, 1995 A.M.C. 2333 (S.D. Ga. 1995) Atlantic Carrier Line (Atlantic) contracted with Jagenberg, Inc. (Jagenberg) to deliver twenty-five packages, twenty two of which where containerized, from Rotterdam, Netherlands, to the port of Savannah, Georgia with ultimate delivery being in Macon, Georgia. Id. at 1068-69. The bill of lading is a through bill because it obligated the carrier to deliver the goods beyond that of the port to the ultimate destination. Id. at 1068. Georgia Ports Authority (GPA) was the agent of Atlantic, and acted under agreement to handle the cargo at the Port of Savannah. Jagenberg, 882 F. Supp. at 1068. The cargo arrived in Savannah on May 15, 1993, and was temporarily placed in the possession of the GPA until the arrival of the land carrier. Id. at 1069. All but a few items of the cargo had been trucked to Macon, Georgia; however, a GPA employee, while retrieving the remaining items to be trucked to Macon, damaged the cargo. Id.

(72.) See id. at 1076.

(73.) See id. at 1077-78. The court held that proper delivery did not yet occur because the goods had not been loaded onto the truck owned by the inland carrier. Jagenberg, 882 F. Supp. at 1078 (citing Philip Morris, 748 F.2d at 566, the court found that delivery is effected when the cargo is picked up by the inland carriers).

(74.) See Jagenberg, 882 F. Supp. at 1076-79. The court reasoned, "the Harter Act is at its core maritime" and "designed solely to regulate the liability of seagoing carriers"; thus, private parties may not contractually extend federal maritime legislation beyond its intended boundaries. Id. In so concluding, the district court decided that "proper delivery" occurs before inland transport. Id. Nevertheless, the court reasoned that because the Harter Act does not cover inland transport it makes no difference that Atlantic subcontracted the inland trucker; however, the court ruled that the identity of the inland carrier's principal is not dispositive although the analysis would have been easier if Jagenberg had hired the trucker. Id. Interestingly, the district court noted that the analysis involves an intermodal contract making the analysis more complicated than determining whether constructive "proper delivery" under the Harter Act occurred, but implying the use of a heightened analysis. Id. Despite the district court's implication that a more intricate analysis for "proper delivery" be applied under a through bill of lading, it opted to apply the customary analysis, where the trucker was acting as

an agent to the consignee. See Jagenberg, 882 F. Supp. at 1076-79. The court cited the dissenting opinion in Hiram Walker & Sons, Inc. v. Kirk Line, 30 F.3d 1370, 1379, 1995 A.M.C. 879, 892 (11th Cir. 1994) and held that '"legal delivery took place, at the latest,' when the cargo was physically transferred from cargo containers to the trucks." Id.

(75.) See Mannesman, 225 F.3d at 593.

(76.) Id. at 592. The court states that Metropolitan Wholesale Supply, Inc. v. M/V ROYAL RAINBOW, 12 F.3d 58, 1994 A.M.C. 1435 (5th Cir. 1994), see supra note 68 and accompanying text; Tapco Nigeria, Ltd. v. M/V WESTWIND, 702 F.2d 1252 (5th Cir. 1983), see supra note 67 and accompanying text; and, F.J. Walker, Ltd. v. M/V LEMONCORE, 561 F.2d 1138, see supra note 60 and accompanying text, are inapplicable because they do not deal with inland transport. See id. at 592 n.8.

(77.) See Mannesman, 225 F.3d at 592.

(78.) See id. at 592 (citing 46 U.S.C. [section] 1301(e) (1994) & Tapco Nigeria, Ltd. v. M/V WESTWIND, 702 F.2d 1252, 1255 (5th Cir. 1983)).

(79.) See id. Although the Mannesman court did not mention notification to the consignee, this is also an element of constructive "proper delivery." See F.J. Walker, 561 F.2d at 1142.

(80.) See Mannesman, 225 F.3d at 592-93.

(81.) 882 F. Supp. 1065, 1995 A.M.C. 2333 (S.D. Ga. 1995); see supra note 70, 72 & 73 and accompanying text.

(82.) See Mannesman, 225 F.3d at 593.

(83.) Id.

(84.) The Fifth Circuit then cited to Colgate Palmolive Co. v. M/V ATLANTIC CONVEYOR, 1996 WL 742861 at *15, 1997 A.M.C. 1478, 1485 (S.D.N.Y. Dec. 31, 1996) a decision that also adopted the Jagenberg rationale; see also Mannesman, 225 F.3d at 594. The Colgate court concluded, "proper delivery occurs when the cargo is ready for inland transport." See id. (citing Jagenberg, 882 F. Supp. at 1077-78). Finding the Jagenberg decision, as well as the Palmolive decision persuasive, the Mannesman court held that the Harter Act was not compulsorily applicable at the time Mannesman's goods were damaged, thus COGSA's liability limitation did not apply. Id.

(85.) See Mannesman, 225 F.3d at 590.

(86.) See generally Haley, supra note 3 at 418.

(87.) See Mannesman, 225 F.3d at 594 (noting that the Jagenberg and Palmolive courts, in addition to the parties to the instant suit, were not aware of a single case extending the Harter Act inland). Id.

(88.) See Mannesman, 225 F.3d at 592.

(89.) See F.J. Walker, 561 F.2d at 1142.

(90.) See Mannesman, 225 F.3d at 594.

(91.) See id. at 593.

(92.) See Jagenberg, 882 F. Supp. at 1078.

(93.) See id. In coming to the conclusion that loading the inland truck effects proper delivery, the Jagenberg court cited Hiram Walker, a case not involving a through bill, but a factual scenario where loading the truck evidenced that all requirements had been met, including notice to the consignee.

(94.) See Mannesman, 225 F.3d at 594.

(95.) See Palmolive, 1996 WL 742861 at *3.

(96.) See Palmolive, 1996 WL 742861 at *3.

(97.) See id. (citing Wemhoener, 5 F.3d at 742 & Philip Morris, 748 F.2d at 566).
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Author:Davis, Dustin M.
Publication:Loyola Maritime Law Journal
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Date:Mar 22, 2002
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