## Facts

- Farrell Lines, Inc. (Farrell), an ocean carrier, received 556 cartons of shoes in New York City for shipment to the Port of Monrovia, Liberia under a bill of lading aboard the M/V EXPORT AMBASSADOR.
- The vessel arrived in Monrovia on March 28, 1980, and the cartons were discharged between March 28 and March 30 to the pier/stringpiece by stevedores retained by Farrell.
- The National Port Authority of Monrovia (NPA) was a Liberian governmental entity with exclusive authority over the Port of Monrovia and control of port activities; NPA regulations governed operations at the port.
- Under NPA policy, inbound cargo was unloaded onto the pier, then placed under NPA control, transported to an NPA transit warehouse, and later released to the consignee; Farrell did not itself make final delivery to the consignee.
- The stevedores’ role ended at the stringpiece, and Farrell and the vessel lost physical custody and control of the cargo once the cartons were discharged and received by NPA.
- At discharge to the stringpiece, NPA’s tally recorded 7 cartons short and 24 cartons damaged/pilfered, for a loss of $5,197.50.
- Several weeks later, on May 6, 1980, when the goods were received into the NPA transit warehouse, NPA’s warehouse receipt reflected 100 cartons not delivered and 256 cartons damaged/pilfered, for a claimed loss of $60,558.75.
- Highlands Insurance Company (Highlands), the cargo insurer, paid the shipper for the loss and sued Farrell (and the vessel) as subrogee to recover what it paid.
- Farrell brought a declaratory-judgment action seeking a ruling that its liability was limited to the loss shown by the pier tally, and the two admiralty actions were consolidated and tried on stipulated facts.

## Issues

1. Whether Farrell satisfied its duty of “proper delivery” under the Harter Act and general maritime law by discharging the cargo to the stringpiece and placing it under the control of the NPA, consistent with port custom and the NPA’s legal authority.
2. Whether NPA regulations or procedures suggesting that delivery is “completed” at warehouse receipt extended the carrier’s responsibility beyond discharge to the pier and transfer of custody to NPA.

## Decision

- The court held that Farrell made proper delivery when the cargo was discharged to the stringpiece and received into NPA’s exclusive control in line with the established practice at the Port of Monrovia.
- The court limited Farrell’s liability to the shortage and damage recorded at discharge: $5,197.50 (7 cartons short and 24 cartons damaged/pilfered).
- The court denied recovery for the additional shortages and damage first recorded weeks later on the NPA warehouse receipt.

## Legal Principles

- Under the Harter Act and general maritime law, a carrier’s post-discharge obligation is to make “proper delivery,” which may be shown by discharge at the customary place and transfer of custody consistent with local port practice.
- Where a governmental port authority has exclusive control over the port and, by established practice, takes custody of cargo at the pier, delivery to that authority can complete the carrier’s duty of proper delivery.
- Port regulations or administrative descriptions of later handling steps (such as warehouse receipt) do not, by themselves, keep the carrier responsible for losses occurring after it has surrendered custody to the port authority under the customary delivery method.
- A subrogated insurer may recover only what the cargo interests could have recovered from the carrier under the governing proper-delivery standard.

## Conclusion

The court concluded that Farrell’s obligation of proper delivery was met when the cartons were discharged to the Monrovia stringpiece and received by the NPA, which had exclusive control of the port; therefore, Farrell was liable only for the $5,197.50 loss shown at the pier tally and not for the larger loss reflected later in the NPA warehouse receipt.


Farrell Lines, Inc. v. Highlands Insurance Co., 532 F. Supp. 77, 1982 AMC 1430 (1982)