In July 1989, Jean Pierre Porry, a representative of Société Guyanaise de Conseils Immobilers (SOGUCI), contracted with Project Logistics & Transportation Inc (Project Logistics) to arrange for the transport of 210 mobile homes from Tampa, Florida, to French Guyana. A representative of Project Logistics contacted Houston Sea Packing Co (Houston) concerning the transportation of the mobile homes and the construction of a stanchion assembly to hold them during shipment. Houston gathered the relevant information to determine the method and costs of transporting the homes, and contacted London Offshore Consultants Inc (London), a marine surveying company, to assist.

On 31 July 1989 Meridian Ship Inc (Meridian) and Houston entered into a Conlinebooking with Project Logistics for the shipment of the 210 mobile homes on two voyages. The booking note named the carrier as 'Meridian Ship/Houston Sea-Pack', the merchant or shipper as 'Project Logistics and Transportation Inc', and the vessel as 'Tug Barge(s) TBN'. Project Logistics was responsible for stevedoring services. A second booking note executed by Project Logistics and Florida Mercury Export Inc named the carrier as 'Project Logistics', the merchant or shipper as 'Florida Mercury', and the vessels as 'Tug: "Carol Hale" Barge "Liberty Trader"'. Both booking notes gave the time for shipment as September 1989.

On 28 August 1989, Hale Container Line Inc (Hale) as 'Owner', and Houston as 'charterer', executed a time charter in which Hale chartered the tug Alexandra Hale and barge Liberty Trader to Houston.

The first shipment was loaded on 18 September 1989, and the master of the Alexandra Hale signed a liner bill of lading in Tampa, Florida. Meridian, as agent, executed a liner bill of lading in Baltimore, Maryland. Each bill of lading contained a general paramount clause providing that the US Carriage of Goods by Sea Act (COGSA) applied, and included a list of terms and conditions including:

5. The Scope of the Voyage.

As the vessel is engaged in liner service the intended voyage shall not be limited to the direct route but shall be deemed to include any proceeding or returning to or stopping or slowing down at or off any ports or places for any reasonable purpose connected with service including maintenance of vessel and crew.

* * * * * *

9. Live Animals and Deck Cargo shall be carried subject to the Hague Rules ... with the exception that notwithstanding anything contained in Clause 19 the Carrier shall not be liable for any loss or damage resulting from any act, neglect or default of his servants in the management of such animals and deck cargo.

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13. Delay.

The Carrier shall not be responsible for any loss sustained by the Merchant through delay of the goods unless caused by the Carrier’s personal gross negligence.

The first shipment departed on 23 September 1989, but soon afterwards the tug had engine problems, and had to return to Tampa for repairs. Once repaired, the vessels left, but en route to French Guyana, the tug had to put into port in Puerto Rico because on the crew became ill, and it later stopped in Martinique with engine problems. Upon arrival, it was noted that the stanchions and supports for the fourth tier of mobile homes had started to bend, causing some of the homes to shift and sustain minor damage. SOGUCI's insurance underwriters' surveyor (Renaux) reported that the damage was caused by the improper modification of the stanchion system, a failure to properly tighten the connecting bolts, and inadequate bracing of the structure due to welding of stanchions onto the deck instead of plates on the deck.

A dispute arose between Houston and Hale concerning the amount of charter hire and other charges arising from the first voyage.

SOGUCI, at the insistence of its insurers, required Houston and Project Logistics to provide a survey of the vessel before departure on the second voyage. Houston hired NCB to assure the mobile homes were properly secured. NCB noted that nuts and bolts were not sufficiently tight. On 13 November 1989, Project Logistics advised Houston that the stevedores had completed the loading, lashing and securing of the cargo. Houston advised that some of the nuts and bolts were loose, and the crew rectified this. Following the rectification, NCB issued a document stating that the mobile home cargo was properly secured. This document was accepted by SOGUCI, and the vessels were permitted to sail.

Houston was to receive payment from Project Logistics after the bill of lading was issued for the cargo. After the vessels sailed, Project Logistics refused to pay Houston. Houston required SOGUCI to make payment of USD 456,250. When SOGUCI did not pay, Houston instructed Hale to return the tug and barge to the nearest US port. Hale ignored Houston’s instructions, unilaterally cancelled the time charter, and entered a separate agreement with Project Logistics. On 25 November 1989, while the mobile homes were under the care, custody and control of Hale and/or Project Logistics on the way to French Guyana, the mobile homes on the fourth tier of the last row shifted. At Hale's instruction, the master took the barge into Martinique.

As a result of a dispute between Hale and SOGUCI concerning the manner in which the mobile homes would be transported to French Guyana, SOGUCI instituted legal proceedings against the vessels in Martinique. The vessels were held under arrest in Martinique from 8-29 December 1989. Fifteen mobile homes were offloaded and shipped to French Guyana on another vessel, and the vessels then sailed with the remaining mobile homes. The mobile homes arrived in French Guyana in January 1990, and were again inspected by Renaux. Renaux testified that all of the mobile homes sustained damage because the steel structures were loose and the stanchions were bent, and observed many loose bolts after both voyages.

In February 1990, Hale filed an admiralty action against Houston, seeking its unpaid charter hire, fuel, and lube oil expenses, indemnification for any sums due to the cargo claimant from SOGUCI's pending action in Martinique, payment for the USD 70,895.38 of expenses incurred during the emergency call at Martinique, and for lost profits in the amount of USD 100,000. It also sought indemnification for any sums due to the cargo claimant from the action pending in Martinique, damages for detention, loss of profit, port charges, pilotage, and stevedoring costs from Meridian, NCB, D&D Welding Fabrication (D&D), and Fabricated Products. Houston counterclaimed against Hale for damages from Hale's breach of the charter agreement. NCB cross-claimed against Houston, Meridian, D&D, and Fabricated Products for indemnification or contribution on the claims brought by Hale, and against Houston for breach of contract to recover its unpaid surveying fees. SOGUCI subsequently filed a complaint for USD 700,000 in damages to the shipment of mobile homes against Houston, NCB, London, Hale, and Project Logistics.

The case proceeded to a non-jury trial. Following the submission of post-trial briefs, the District Court entered judgment for NCB, Hale, and the Alexandra Hale and Liberty Trader on SOGUCI's claims against them. It ruled against Hale on its claims against NCB and Houston for indemnity and contribution. It entered judgment for Hale against Houston on its charter party claim for USD 378,325.03 with interest, and 'on each of Houston’s claims against Hale'. It entered judgment against NCB on its breach of contract claim against Houston. After Houston and SOGUCI submitted a stipulation as to the exchange rate, the District Court granted judgment for SOGUCI on its claims against Houston for USD 337,049.52 with interest. Houston appealed, and SOGUCI cross-appealed. Houston and SOGUCI appealed from the District Court's judgment on all claims except SOGUCI's claim against Houston. After the District Court entered judgment for SOGUCI against Houston, Houston and SOGUCI appealed.

Houston argued that the District Court erred in finding that it was not a 'carrier' or independent contractor of the carrier, Project Logistics, and thus entitled to the limitations under COGSA. SOGUCI maintained that the District Court erred in finding the vessels, in rem, were 'carriers' under COGSA.

Held: Affirmed in part, and vacated and remanded in part.

The District Court's findings of fact and conclusions of law are affirmed on all issues, other than SOGUCI's loss of rental income and the calculation of that rental income. As to those issues, the District Court's findings are vacated and the matter is remanded for further consideration.

Under COGSA (Hague Rules, art 3.2) 'the carrier in relation to the loading, handling, stowage, carriage, custody, care, and discharge' of goods by sea is subjected to certain duties and entitled to certain rights. The statute defines a carrier as 'the owner or charterer who enters into a contract of carriage with a shipper'. More than one party may be a carrier, and where the owner has not completely relinquished possession, command and navigation of the ship to the charterer, both the owner and charterer may be held jointly liable. A vessel is a 'carrier', and thus liable under COGSA, where: (1) the ship transported and discharged the cargo; (2) the bill of lading was issued 'for the master'; (3) no contractual relationship existed which absolved the ship and its owner from liability for the cargo. The COGSA defences and protections may be extended to the carrier's agents and contractors by an express provision, a Himalaya clause, in the bill of lading.

COGSA governed the carriage of the mobile homes from Tampa to French Guyana by virtue of clauses incorporated in the bills of lading. Each bill of lading contained a clause paramount which provided that COGSA applied to the carriage of the cargo, cl 9 provided that deck cargo shall be carried subject to COGSA's provisions, and cl 19 provided for a Himalaya clause extension of the rights provided to the carrier to agents, servants, and independent contractors of the carrier.

The District Court found that the vessels, in rem, qualified as carriers under COGSA because they: (1) transported and discharged the cargo of the mobile homes; and (2) the master of each voyage, by transporting the cargo, signed the bills of lading. It found that Project Logistics was also a carrier as it signed both bills of lading, booked the cargo through its booking note with SOGUCI, hired the stevedores to load and discharge the cargo, received payment from SOGUCI, and disbursed payment to other parties. However, it concluded that Houston was neither an agent nor an independent contractor of Project Logistics. It noted that Houston was not directly employed by Project Logistics, did not receive payment for its services from Project Logistics, had no contractual relationship with Project Logistics, and was not rendered an agent by Project Logistics as Project Logistics did not consent to have Houston act on its behalf. Although the 31 July 1989 booking note listed 'Meridian Ship/Houston Sea-Pack' as the carrier, the District Court noted that Houston's representative, Don Jones, was neither a party to the contract nor signed the booking note.

In considering the vessels' 'carrier' status, the District Court noted the qualifications for a vessel, in rem, to qualify as a carrier, and found that the vessels met those requirements because a master's sailing of the vessel with cargo aboard constitutes a ratification of the bill of lading. The Court made no findings as to Houston’s implicit ratification of the bills of lading.

In considering Hale’s 'carrier' status, the District Court found that:

[n]o Hale representative signed the November 13, 1989 bill of lading. Although Captain Anderson signed the September 18, 1989 bill of lading, he did so without actual or apparent authority to bind Hale as the vessels’ owner. The time charter between Hale and Houston defined the respective duties of each party ... and provided that the captain would serve under the orders and directions of the charterer, Houston, with respect to employment and agency. The time charterer further provided that the charterer’s agent would sign bills of lading in place of the captain. Captain Anderson, therefore, signed the bill of lading in contravention of the time charter. Moreover, any authority conferred on Captain Anderson to sign the bills of lading flowed from Houston as a principal to the Captain as its agent ... .

The District Court did not find that the master signed the bills of lading on behalf of Houston, but only that he did so without actual or apparent authority, and any of his authority would have flowed from Houston under the time charter. Similarly, as the District Court noted in denying Hale's 'carrier' status claim, Houston neither booked the cargo nor hired stevedores to load the cargo on the vessel, and did not receive any payment directly from SOGUCI.

The District Court's conclusions that the vessels in rem were carriers, and that Houston was not a carrier, are correct.

SOGUCI maintains that the District Court erred in finding that the vessels were entitled to the USD 500 per package limitation of liability under COGSA. It contends that the District Court improperly found that the vessel's captain exercised due diligence in loading and stowing the cargo on the second voyage, and that the vessels were not liable for the costs of discharging and transhipping the 15 mobile homes offloaded in Martinique. It maintains that the vessels were not entitled to the COGSA limitation on liability because they did not give SOGUCI an opportunity to declare a higher value per package.

Under COGSA, a shipper establishes a prima facie case by proving that the carrier received the cargo in good condition, but unloaded it in damaged condition at its destination. Once the shipper presents a prima facie case, the burden shifts to the carrier to prove that it either exercised due diligence to prevent damage to the cargo by handling, stowing, and carrying the cargo in a seaworthy ship, or that the harm resulted from an excepted peril. The determination of whether due diligence and proximate cause are matters of fact, and this Court will not overturn the District Court’s findings on these issues absent a finding that the findings are clearly erroneous. This Court may not reverse the District Court’s findings on the evidence if they are plausible in light of the record viewed in its entirety, even if we would have weighed the evidence differently and arrived at a contrary conclusion. Independent surveyor reports and testing can be considered as 'very strong evidence of due diligence'.

The duty to load, stow, and discharge cargo in the carriage of goods under a time charter is on the ship and its owner. Use of stevedores to load and discharge the cargo does not relieve the ship and its owner of responsibility for any consequent cargo damage. However, a shipper may contract with another party to exercise control over the loading and unloading of the cargo, and liability will be found by determining who controlled the loading and storage.

The doctrine of deviation provides that, when a ship deviates from the contract of carriage or varies the conduct in the carriage of goods, increasing the risk of shipment of the goods, COGSA does not apply, because the bill of lading, which acts as the contract of carriage, is nullified. The doctrine of deviation has been applied sparingly for geographical departures and unauthorised on-deck stowage. Where a ship leaves port badly stowed or unseaworthy, courts have held that the ship did not deviate in seeking a port of refuge. A ship's master is empowered to exercise their good faith judgment during his command where the safety of the crew, vessel and cargo are concerned.

Under COGSA, the shipper has the burden of declaring the value of its goods and paying higher freight if it wants to have greater liability placed on the carrier. Where the carrier demonstrates that the shipper was given a fair opportunity to declare a higher value on paying a higher freight by being offered a choice of rates and valuations, the burden shifts to the shipper to demonstrate that a fair opportunity did not exist. The USD 500 per package limitation applies to on-deck shipments where it is plain on the face of the bill of lading that the cargo is to be carried on deck and that COGSA is to be applied.

The District Court found that Hale was not liable for the discharging and transhipment of the offloaded mobile homes in Martinique because it exercised due diligence 'to ensure seaworthiness of the vessel with respect to the stanchion system'. It noted that, although the vessel's captain 'had reason to know of a potential deficiency in the design of the stanchion system prior to the second voyage', he was reassured by Houston that the stanchion system was safe, and 'properly deferred to the judgment of the engineer who designed the system and the surveyors who certified the suitability of the system'. It noted that the captain was not present during the repairs, and the time charter placed full responsibility for the system in Houston's care.

The District Court's finding as to due diligence is not clearly erroneous. Under the time charter, Houston, as charterer, assumed full responsibility for the stanchion system. Houston hired a surveyor, as required by SOGUCI, to assure that the mobile homes were properly secured prior to the sailing of the vessels, and the surveyor inspected the system, and issued a document stating that the mobile home cargo was properly secured. SOGUCI accepted the surveyor’s document and permitted the vessel to sail. The master was not informed of the surveyor’s apprehension of inadequacies of the stanchion system. The evidence showed that the master reasonably relied on the surveyor, and the engineer responsible for the repairs of the stanchion system.

The District Court also found that, when the vessels sought a port of refuge at Martinique, it was necessary to remove 15 mobile homes from the barge in order to safely continue the second voyage. The decision to remove the mobile homes was made by SOGUCI's insurance underwriter's surveyor, Renaux. The vessel's master agreed with the decision to remove the 15 mobile homes and indicated that he would not continue the voyage until the mobile homes could safely make it to French Guyana. After removal, the 15 mobile homes were transhipped on another vessel to French Guyana. The District Court found that 'any loosening of bolts on the second voyage' was attributable only to the extreme strain placed on the system by the improper design of the stanchion system.

Although the offloading of the mobile homes in Martinique may have been a change in the time charter, it was not a 'deviation'. The vessel's captain was empowered to exercise his good faith judgment where the safety of the cargo was involved, and in reliance on the opinion of SOGUCI's surveyor. The vessels were not, therefore, liable for the costs of discharging and transhipping the 15 mobile homes offloaded in Martinique.

As the vessels, in rem, were not liable and the issue was not decided by the District Court, it is unnecessary to consider the application of the COGSA package limitation.