Court Opinion

ID: 9859100
Source: CourtListenerOpinion
Date Created: 2023-09-24 18:41:52.834555+00
Date Added: 2024-06-11T10:06:12.396682
License: Public Domain

STEIN, J.,
dissenting.
The Court meticulously has described the relevant history of maritime law and the events that led to the enactment of the Harter Act, 46 U.S.C.App. §§ 190 to -96, and the Carriage of Goods by Sea Act (COGSA), 46 U.S.C.App. §§ 1300 to -15. The Court correctly notes that those federal laws should govern a liability dispute between a stevedore hired by an ocean carrier and a shipper of goods damaged by that stevedore before delivery occurs. The Court also concludes that COGSA’s limitation on liability provision may be extended to the ocean carrier’s subcontractors until delivery occurs. The Court accurately recapitulates the facts that detail the relationship between the parties, correctly concluding that COGSA’s limitation on liability provision was extended by the parties to the period covered by the Harter Act.
I differ only with the majority’s conclusion that “proper delivery” did not occur. The Harter Act applies to a stevedore responsible for unloading cargo if the unloading function is sufficiently related to the transport of the cargo to the place of delivery. Obviously, that statute does not intend that the steve*214dore retain COGSA’s limited liability protection after unloading is completed and the goods are safely stored awaiting pickup by the consignee. On this record, it appears that unloading was completed and that the stevedore held the goods in its own storage area for six days. The record also indicates that notice that the goods were ready to be picked up had been given to the consignee.
The Court holds, however, that “proper delivery” of the goods had not occurred because the cargo remained on a mafi and therefore was not ready to be picked up by the consignee. Thus, the majority concludes that the applicability of the Harter Act and the limitation of liability provision of COGSA may turn on whether the cargo remains on a mafi. Based on that analysis the majority finds that the Harter Act and COGSA apply to plaintiffs claim and that defendant is liable only for $500 of the approximate $370,000 in damages caused by defendant’s mishandling of the cargo. Because it is evident that the goods had been delivered in this case and that “stripping cargo from a mafi,” ante at 212, 753 A.2d at 628, is not required to effectuate “proper delivery” under the Harter Act, I respectfully dissent.
I
Plaintiff is a subrogated underwriter suing in the name of its insured, M.C. Machinery Systems, Inc. (M.C.Machinery). Dia International Traffic Co., Ltd. (Dia International), a non-vessel owning common carrier, contracted with M.C. Machinery to transport a 42 kilogram plastic injection molding machine from Japan to Glendale Heights, Illinois. Hapag-Lloyd America, Inc. (Hapag-Lloyd), an ocean carrier, was hired by Dia International to transport the machine overseas from Japan to the Port of New York-New Jersey, located at Port Elizabeth, N.J., before it was to be picked up by plaintiff for transport by truck to Illinois.
On arrival of the cargo at Port Elizabeth, defendant Maher Terminals, Inc. (Maher) discharged the machine by crane from the ocean carrier to Maher’s stringpiece, part of the pier that extended alongside the ship. The machine was then placed on Maher’s *215mafi and hauled from the stringpiece to a separate storage area. A mafi is a wheeled, non-motorized flatbed trailer on which cargo can be transported from one place to another on terminal premises. The cargo stayed in storage for six days on Maher’s mafi until Maher apparently needed the mafi for other cargo. Maher’s superintendent of the storage facility stated that “Maher lifted the cargo from the mafi and intended to ground the cargo at a place in the terminal so that consignee’s trucker, who had not yet come, would have an opportunity to take delivery of the cargo.” As one of Maher’s crane operators was lifting the machine off the mafi, a cable slipped and the cargo fell to the ground. That event resulted in approximately $370,000 in damages to the machine.
Maher had a terminal operating and stevedoring contract with Hapag-Lloyd, pursuant to which it was to discharge cargo from Hapag-Lloyd’s vessels and provide storage for the cargo until the consignee arrived to retrieve it. Maher damaged M.C. Machinery’s cargo while removing the machine from its own mafi that was then needed for other cargo. Maher now seeks to limit its potential liability for mishandling the cargo to only $500, relying on its contract with Hapag-Lloyd and the limited liability provision afforded to ocean carriers under COGSA.
II
The Harter Act was enacted in 1893 in response to the practices of ocean carriers that inserted release-from-negligence provisions into their bills of lading in an attempt to limit their liability as carriers of goods. Pan American World Airways, Inc. v. California Stevedore & Ballast Co., 559 F.2d 1173, 1175 n. 1 (9th Cir.1977). Under the Harter Act, carriers could no longer relieve themselves “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 ... their charge” by adding broad protective language into the carriage contract. 46 U.S.CApp. § 190. The Harter Act encompassed the vessel owner’s entire period of *216liability, beginning from the time when the carrier or its agent accepted custody of the goods before loading, through the unloading of the goods from the vessel, and continuing until delivery to a common carrier occurred. Tapco Nigeria, Ltd. v. M/V Westwind, 702 F.2d 1252, 1255 (5th Cir.1983). The Harter Act was successful in striking a balance between the dominant British merchant marine that sought to avoid responsibility for any claims based on negligent handling of cargo, and shippers that sought to hold ocean carriers liable for all damages resulting from negligence during transport of the goods. Sunkist Growers, Inc. v. Adelaide Shipping Lines, Ltd., 603 F.2d 1327, 1333 (9th Cir.1979), cert. denied, 444 U.S. 1012, 100 S.Ct. 659, 62 L.Ed.2d 640 (1980).
The Harter Act was for the most part superseded by the Carriage of Goods by Sea Act (COGSA) that codified the Hague Rules in 1936. Wemhoener Pressen v. Ceres Marine Terminals, Inc., 5 F.3d 734, 741 (4th Cir.1993). The purpose of the Harter Act, COGSA, and the Hague Rules was to achieve a “fair balancing of the interests” between ocean carriers and shippers, and also “to effectuate a standard and uniform set of provisions for ocean bills of lading.” Encyclopaedia Britannica, Inc. v. S.S. Hong Kong Producer, 422 F.2d 7, 11 (2nd Cir.1969). See also 2 Thomas J. Schoenbaum, Admiralty and Maritime Law § 10-15 at 75 (2d ed.1994) (noting that COGSA’s goal was “to achieve international uniformity and to redress the edge in bargaining power enjoyed by carriers over shipper and cargo interests by setting out certain duties and responsibilities of carriers that cannot be avoided even by express contractual provision”). To effectuate that balance COGSA limits liability for cargo damage to $500 if damage occurs between the time cargo is loaded onto the ship to the time it is discharged. 46 U.S.C.App. § 1304(5). That limitation does not apply, however, if the shipper declares the value of the cargo in the bill of lading. Ibid. In contrast, the Harter Act contains no provision limiting the carrier’s responsibility for negligence to a specific dollar amount. 46 U.S.C.App. §§ 190 to -96. Further, COGSA defers to the Harter Act in dealing with questions of liability that pertain to post-discharge negligence:
*217Nothing in this chapter shall be construed as superseding any part of sections 190 to 196 of this title, or of any other law which would be applicable in the absence of this chapter, insofar as they relate 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.
[46 U.S.C.App. § 1311 (emphasis added).]
Notwithstanding those provisions, COGSA allows an ocean carrier and shipper to enter into a special agreement concerning “responsibility and liability” that extends the coverage of COGSA to the periods before loading and after discharge of the goods. 46 U.S.C.App. § 1307. In the absence of such an agreement, the Harter Act applies to damage that occurred prior to loading or after discharge of cargo until proper delivery is made because those periods are not covered by COGSA. Wemhoener Pressen, supra, 5 F.3d at 739; Allied Chemical Int’l Corp. v. Companhia de Navegacao Lloyd Brasileiro, 775 F.2d 476, 482 (2nd Cir.1985), cert. denied, 475 U.S. 1099, 106 S.Ct. 1502, 89 L.Ed.2d 903 (1986).
Neither the Harter Act nor COGSA apply after “proper delivery” of the goods by the carrier is effectuated. Wemhoener Pressen, supra, 5 F.3d at 741; B. Elliott (Canada) Ltd. v. John T. Clark & Son, 704 F.2d 1305, 1307 (4th Cir.1983). Although “proper delivery” is not defined in the Harter Act, that term has been interpreted to include both actual and constructive delivery:
Actual delivery consists [of] completely transferring the possession and control of goods from the vessel to the consignee or his agent Constructive delivery occurs where the goods are discharged from the ship upon a fit wharf and the consignee receives due and reasonable notice that the goods have been discharged and has a reasonable opportunity to remove the goods to put them under proper care and custody. Upon ‘proper delivery* the Harter Act ceases to govern the relationship between the parties, and a sea carrier’s strict liability, as such, terminates. Thereafter, the carrier’s responsibilities are those of a bailee or warehouseman to take ordinary care of the property and not to abandon it or negligently expose it to injury.
[Orient Overseas Line v. Globemaster Baltimore, Inc., 33 Md.App. 372, 365 A.2d 325, 335 (1976) (citations omitted) (emphasis added).]
That interpretation has been adopted in eases that considered whether delivery had occurred prior to the occurrence of damage. Jagenberg, Inc. v. Georgia Ports Auth., 882 F.Supp. 1065, 1076-77 (S.D.Ga.1995); Wemhoener Pressen, supra, 5 F.3d at 741-42; B. *218Elliott, supra, 704 F.2d at 1308. See also Tapco Nigeria, supra, 702 F.2d at 1255 (noting that proper delivery requires discharge of cargo “upon a fit and customary wharf’); Allstate Ins. Co. v. Imparca Lines, 646 F.2d 166, 168 (5th Cir.1981) (same); Union Steel America Co. v. M/V Sanko Spruce, 14 F.Supp.2d 682, 694 (D.N.J.1998) (holding that Harter Act “imposes a duty on carriers to deliver the goods from wharf to wharf, to notify the consignee of the vessel’s arrival, and to protect the cargo until the consignee has a reasonable opportunity to remove it”); Morse Electro Products Corp. v. S.S. Great Peace, 437 F.Supp. 474, 486 (D.N.J.1977) (defining proper delivery “as the discharge of ... cargo to a fit and proper pier”).
Courts also have distinguished the liability of a carrier from the liability of a warehouser of delivered cargo. In Goya Foods, Inc. v. S.S. Italico, 561 F.Supp. 1077, 1086 (S.D.N.Y.1983), a federal district court held that
proper delivery thus ends ‘(t)he liability of the carrier as carrier/ [but] it does not negate the carrier’s responsibility safely to store the cargo until the consignee comes to remove it. Instead, a ‘carrier in possession of goods not yet called for is liable as a bailee for negligence in the storage of the goodsand must answer for damage caused by its own negligence or that of a stevedore acting as its agent.
[Citations omitted (emphasis added).]
That court has held that a carrier that merely offloads cargo does not satisfy the requirements of “proper delivery” and that “[i]n order to satisfy [a carrier’s] obligations under the Harter Act, the carrier must, at least, place the goods in a secure and suitably sheltered place accessible to the consignee, giving the consignee notice and a reasonable opportunity to pick up the goods.” United States Fire Insurance Co. v. S.S. MEE MAY, 1990 WL 154696 at *3 (S.D.N.Y.1990).
Ill
The correctness of the majority’s conclusion that COGSA and the Harter Act would govern Maher’s liability if the goods had been damaged during discharge but before delivery is not disputed. Maher was a sub-contractor as defined in Hapag-Lloyd’s bill *219of lading, and the bill of lading extended COGSA so that its provisions applied “while the Goods are in the custody of the Carrier or his Sub-contractor at the sea-terminal in the United States of America before loading onto the Vessel or after discharge therefrom as the case may be.” However, once proper delivery occurs applicability of the Harter Act and COGSA ceases and the stevedore then becomes responsible for the goods under the law of bailments. Goya Foods, supra, 561 F.Supp. at 1086.
Several cases have absolved carriers from liability after proper delivery has occurred on the basis that the Harter Act no longer applies to the shipment. Hillcrest Sales, Inc. v. Chilean Line, Inc., 1998 WL 961894, *5 (E.D.Pa.1998) (finding that cargo was properly delivered when carrier “placed [goods] in the sheds pursuant to normal practice at the port to await ... pick-up by plaintiffs contractors and/or agents”); J. Kinderman & Sons v. Nippon Yusen Kaisha Lines, 322 F.Supp. 939, 941-42 (E.D.Pa. 1971) (concluding that proper delivery occurred with discharge to a fit and customary wharf, reasonable notice given to the consignee, and fair opportunity for removal of goods from the pier). The majority relies on two Fourth Circuit cases to conclude “that proper delivery has not occurred even though a consignee had notice of the cargo’s arrival and the cargo had been discharged onto a fit and proper pier and later placed in storage.” Ante at 212, 753 A.2d at 627. However, in those cases the carrier was required to perform additional duties beyond discharging the cargo properly. Koppers Co., Inc. v. S/S Defiance, 704 F.2d 1309, 1312 (4th Cir.1983) (noting that “bill of lading required [carrier] to load the cargo on one or more trucks for delivery”); B. Elliott, supra, 704 F.2d at 1308 (finding that carrier’s stevedore was obligated “to have the cargo removed from the container and placed in or on the overland truck”).
The majority’s conclusion that proper delivery under the Harter Act had not occurred until the cargo was stripped from the mafi and prepared for pickup is unpersuasive. Surely a stevedore cannot avoid liability as a bailee simply by refusing to remove *220goods from a mafi, irrespective of the period of retention. The record reveals that the cargo had been held on a mafi owned by Maher for six days. If that period had been six weeks, the Court would be hard pressed to conclude that proper delivery had not occurred. In my view, retention of the goods on a mafi, while relevant, should not determine time of delivery. The more relevant inquiry is whether, as a practical matter, the unloading process has been completed and the cargo has been placed by the stevedore in storage on a fit pier. That standard clearly has been satisfied-here.
The majority correctly notes that M.C. Machinery had not assumed actual physical control of the goods when they were damaged. Ante at 213, 753 A.2d at 628. However, assumption of physical control of the machinery by the consignee is not required in determining whether proper delivery had occurred. Orient Overseas Line, supra, 365 A.2d at 335 (stating that proper delivery includes both actual or constructive delivery); Morse, supra, 437 F.Supp. at 486. The Harter Act, whose original purpose was to protect shippers of cargo, should not be construed to apply indefinitely after cargo has been delivered but has not been picked up by the consignee or its agent. Morse, supra, 437 F.Supp. at 487 (finding that “[n]o term of the bill of lading extends the application of the Harter Act beyond its statutory reach”). The Court’s result is incongruent with the purpose of the Harter Act and of COGSA, and extends the definition of “proper delivery” unnecessarily beyond the intended scope of those statutes.
Proper delivery occurred in this case. Port Elizabeth is without question a “fit and customary wharf’ for purposes of proper delivery under the Harter Act. Pursuant to its contract with Hapag-Lloyd, Maher unloaded the cargo from the ocean carrier on its own stringpiece without incident. Maher then placed the machine on one of its own mafis to transport it to its storage area. The machine remained in storage for almost a full week and was available for pickup by the consignee. Hapag-Lloyd’s own “Arriv*221al Notice” that was issued to M.C. Machinery stated that the cargo would be available for pickup on the date of discharge, and further provided:
ALL CARGO WHEN DISCHARGED ON WHARF IS AT OWNER’S RISK AND, IF NOT REMOVED WITHIN THE FREE TIME, BECOMES SUBJECT TO DEMURRAGE CHARGES
Therefore, the cargo had been removed safely from the ocean carrier, moved to a storage facility without incident, and proper notice had been given of the cargo’s arrival and availability for pickup. Proper delivery, as contemplated by the Harter Act, clearly had occurred because the ocean carrier had fulfilled its obligations to discharge the cargo to a suitable place accessible to the consignee, and to give the consignee notice and a reasonable opportunity to pick up the cargo.
IV
Because I believe proper delivery had occurred where the cargo had been discharged onto a fit and proper pier, notice was properly given to the consignee, and the cargo was made available for pickup for six days after discharge from the vessel, I conclude that the Harter Act and COGSA’s $500 liability limitation are inapplicable to this matter. I would reverse and remand the case to the Law Division for trial to determine the amount of damages defendant is liable for as bailee of the cargo.
Justice LONG joins in this opinion.
For affirmance — Chief Justice PORITZ and Justices O’HERN, GARIBALDI, COLEMAN and VERNIERO — 5.
For reversal and remandment — Justices STEIN and LONG— 2.