This case arose from damage sustained to an oxygen compressor and instrument rack owned by Mannesman Demag Corp (Mannesman) which were transported from Bremerhaven, Germany, to Terre Haute, Indiana, USA. Atlantic Container Line Inc (Atlantic) carried the goods from Bremerhaven to Baltimore on the Concert Express. Atlantic issued one through bill of lading for the entire transportation. When the goods arrived at the Port of Baltimore, Atlantic hired Trism Specialised Carriers Inc (Trism) to transport the goods to Terre Haute. On this leg of the journey the goods were damaged when Trism's trailer overturned.

Under US law, a shipper or consignee may recover against non-ocean carriers for the loss of or damage to cargo subject to a 'through bill of lading'. The bill of lading may, if properly drafted, limit both the amount an owner may seek, as well as the time in which recovery may be sought.

The US Carriage of Goods by Sea Act (COGSA) governs the liability of an ocean carrier on an international through bill of lading. COGSA contains important benefits to the carrier. Inland carriers frequently attempt to take advantage of the benefits afforded by COGSA. One of COGSA's most important provisions limits a carrier’s liability to USD 500 per package unless a higher value is declared by the shipper. COGSA also contains a one-year limitation for cargo claims.

COGSA applies 'tackle-to-tackle' only; it does not extend to losses which occur prior to loading or subsequent to discharge from a vessel. A Period of Responsibility clause can be used to extend COGSA's application to the entire time the goods are within the carrier's custody.

Mannesman sued Trism. Trism argued that the suit was barred by the bill’s one year time-bar, while Mannseman contended that the suit was governed by limitations in Trism's contracts of carriage and tariffs. As a matter of contractual interpretation, the District Court held that the time bar provisions in the bill of lading applied to all aspects of the through bill, and therefore granted summary judgment in favour of Trism.

Mannesman then filed suit against Atlantic, which brought a third-party claim against Trism for contribution and indemnity. Mannesman moved for summary judgment against Atlantic, which filed a cross-motion for summary judgment. The Court held in favour of Mannesman against Atlantic in the amount of USD 1,000 and in favour of Atlantic against Trism in the same amount, arriving at the USD 1,000 figure via the bill's USD 500 per package limitation.

Mannesman appealed the amount of the award and Trism cross-appealed, contesting liability.

Held: The decision is reversed and remanded.

Atlantic’s bill of lading references two statutes, COGSA and the Harter Act. Under COGSA, a carrier of goods in international commerce must 'properly and carefully load, handle, stow, carry, keep, care for, and discharge the goods carried'. The Harter Act imposes a duty of 'proper loading, stowage, custody, care, [and] proper delivery'. Although the Harter Act's applicability to international commerce was partially superseded by COGSA, COGSA is applicable only from the time goods are loaded onto the ship until the time the cargo is released from the ship's tackle at port. Therefore, the Harter Act applies to the period between the discharge of the cargo from the vessel and 'proper delivery'.

Atlantic's bill of lading provides that, to the extent the Harter Act is compulsorily applicable, the carrier's 'responsibility shall ... be subject to COGSA'. It further states that '[w]here ... [COGSA] appl[ies], the Carrier shall not ... be or become liable for any loss or damage ... in an amount per package or unit in excess of ... USD 500'. Therefore, if the Harter Act is compulsorily applicable to Trism's inland transport, the Court correctly limited Atlantic's liability to USD 500 per package.

The same contractual provision extending COGSA to the limits of the Harter Act also states: '[B]ut where COGSA is found not to be applicable [the Carrier's] responsibility shall be determined by the provisions of 3(2) below'. Paragraph 3(2)(B)(ii) provides that, where the occurrence of damage can be proved to occur during transportation 'in the United States', '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 their contracts and tariffs.'

Mannesman argues that Harter Act 'proper delivery' occurred when Trism acquired control over the goods and began inland transportation. If this is correct, at the time the goods were damaged, the Harter Act was not compulsorily applicable, in which case the bill of lading provides that Atlantic's liability is governed by Trism’s contracts and tariffs. Atlantic counters that the through bill of lading provided for carriage from Germany to Terre Haute, inclusive, and therefore that Harter Act proper delivery had not yet occurred at the time the goods were damaged.

The District Court cited the traditional definition of 'proper delivery' in Wemhoener Pressen v Ceres Marine Terminals Inc 5 F 3d 734, 741-42 (4th Cir 1993) (CMI1578) as:

either actual or constructive delivery. Actual delivery consists of completely transferring the possession and control of the 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 or put them under proper care and custody.

In Jagenberg v Georgia Ports Authority 882 F Supp 1065 (SD Ga 1995) the Court noted the complication raised by a through bill. Based on the maritime nature of the Harter Act, the Court held that inland transportation under a through bill occurs after Harter Act proper delivery. These decisions are persuasive, and therefore the Harter Act was not compulsorily applicable at the time the goods were damaged. This analysis not only avoids compulsory application of federal maritime law to non-maritime transportation, but has the benefit of not rendering superfluous the alternative liability provisions found at para 3(2) of Atlantic's bill of lading. For all of the foregoing reasons, Harter Act proper delivery preceded the damage at issue, and the awards in favour of Mannesman and Atlantic are vacated. Because the record lacks evidence of, among other things, the applicable tariff limitation and the extent of damage to the goods, the case is remanded for further proceedings.