Green Truck Sales Inc (Green) entered into a contract with Hoegh Lines (through its general agent, the Kerr Steamship Co) for the transport of trucks, cranes, and spare parts on the Hoegh Trader from Aden to the Port of New York. The spare parts were packed in wooden cases prepared under Green's direction and carried below deck. They were damaged while the vessel was being unloaded by a floating derrick, the Colossus, in the New York harbour. The floating derrick was employed by the Hoegh Trader, because the vessel's own tackle was incapable of handling Green's heavy equipment. The cases of spare parts were lifted from the hold of the vessel by the derrick and placed on lighters hired by Green, on Green's suggestion. When the unloading was completed, the lighters were towed to Newark, New Jersey, for delivery to Green. As a result of negligent unloading, many cases were broken open and the spare parts damaged or lost.

The District Court found that some of the cases of spare parts were dropped onto the lighters, and that pieces of Green's heavy machinery were dropped onto cases of spare parts already unloaded. The District Court held that the US Carriage of Goods by Sea Act (COGSA), 46 USCA §§ 1300-1315, did not apply because the parts had been discharged before they were damaged, and that the vessel's liability was not limited to USD 500 per package or customary shipping unit under 46 USCA § 1304(5). The carrier appealed.

Held: The judgment is vacated and the case remanded for a redetermination of the damages.

COGSA defines the term 'carriage of goods' in 46 USCA § 1301(e) as 'the period from the time when the goods are loaded on to the time when they are discharged from the ship'. The consequence of this tackle-to-tackle rule is to subject the carrier to the responsibilities and liabilities, and entitle it to the rights and immunities, put forth in 46 USCA § 1302. One such right, provided in 46 USCA § 1304(5), is to have the carrier's liability for this period limited to USD 500 per package or customary shipping unit.

In Remington Rand v American Export Lines 132 F Supp 129 (SD NY 1955), the Court held that COGSA's exemption of a carrier from liability for fire did not apply to cargo that had been fully loaded onto a lighter for 24 hours. The Court stated that discharge onto a lighter is complete 'when the loading has been completed or while no other cargo is being loaded into the same lighter'. In considering when cargo is discharged, the Court cited the English case of Goodwin Ferreira & Co v Lamport & Holt Ltd (1929) 34 LLR 192, which construed the discharge provisions of the UK Carriage of Goods by Sea Act, that are identical in this respect with the US COGSA. In that case, a piece of machinery fell through the bottom of a lighter during the unloading of a vessel and caused water damage to the plaintiff's cotton yarn. The Court held that the yarn was damaged prior to discharge.

The only case that held that cargo had been discharged, although it was still being unloaded onto a lighter, was Federal Insurance Co v American Export Lines 113 F Supp 540 (SD NY 1953). In that case, the shipper's complaint was filed more than one year after the accident and the carrier contended that the action was barred by COGSA's one-year statute of limitations. The Court held that the cargo had been discharged, and that the statute of limitations in COGSA did not apply.

Thus, the Federal Insurance case is inconsistent with both the Remington Rand and Goodwin Ferreira cases, and is an unduly restrictive interpretation of COGSA. The cargo had not been discharged when it was lifted from the hold of the vessel by the tackle of the floating derrick and damaged when dropped onto the lighter.

The Court also disagreed with Knauth, Ocean Bills of Lading (1953) p 145, that when substitute tackle is used, cargo is discharged as soon as it is lifted from the hold of the vessel. Knauth cited no cases to support this statement. Knauth also stated that a settled line of cases before and after the enactment of COGSA had held that a ship's liability terminates at the end of the ship's tackle, but the cases he cited were not on point.

In this situation, COGSA applied and the carrier’s liability was limited to USD 500 per package or customary shipping unit. The fact that the lighters had been hired by the shipper and that substitute tackle was used to unload the vessel was of no significance.