JA Folger & Co (Folger) shipped a cargo of coffee on the SS Mayari, a vessel belonging to United Fruit Co (United Fruit). The vessel arrived in New Orleans on 14 February 1949. Folger claimed for shortage and slackage of, and damage to, the cargo. Several weeks later, Folger's proctors conferred with United Fruit's claim agent, who agreed to recommend payment in settlement of the claim for shortage and slackage, contingent upon settlement of the claim for damage. No agreement could be reached in respect of the damage claim.

On 30 January 1950, just four days before the running of the one-year limitation period in § 3(6) of the Carriage of Goods by Sea Act, 46 USC § 1303(6) (COGSA), Folger's proctors wrote to United Fruit requesting an extension of the time within which to bring suit 'up to and including April 4, 1950'. United Fruit replied on 1 February 1950, granting Folger an 'extension in time in which to sue through April 4th, 1950 for account of the SS Mayari', with 'full reservation of all other rights accruing through the bill of lading contract and/or otherwise'.

The extension period was 60 days. The parties thereafter engaged in further settlement negotiations, the last discussions being on 7 March 1950, but no further extension was discussed or agreed. At 16h45 on 4 April 1950, the last day of the extension period, one of Folger’s proctors telephoned United Fruit to arrange an appointment to discuss damages and to obtain an additional extension, but United Fruit's freight claim office had closed at 16h30. On the morning of 5 April 1950, United Fruit's assistant freight claim agent declined to grant an additional extension, explaining that no additional extension had been discussed prior to the expiration of the original extension, that it was not the company’s policy to grant extensions of time to file suit after any preceding extension had expired, and that he was not authorised to grant any such extension. Folger filed its libel that same afternoon.

The District Court held that United Fruit had waived the statutory one-year limitation for suit, although the libel was filed after the expiration of the extension period, and entered a decree for Folger: J A Folger & Co v United Fruit Co 170 F Supp 933 (ED La 1959). United Fruit appealed.

Held: Judgment reversed (Hutcheson J dissenting). The suit was time-barred.

Section 3(6) of COGSA provides that '[i]n any event the carrier and the ship shall be discharged from all liability in respect of loss or damage unless suit is brought within one year after delivery of the goods or the date when the goods should have been delivered'.

Neither the principle that the statutory period for bringing suit may be waived (Noel v Baskin 131 F 2d 231 (DC Cir 1942)) nor the principle that a respondent may, by its representations, promises, or conduct, be estopped to assert the statute (Glus v Brooklyn Eastern District Terminal 359 US 231 (1959)) was in question. Here, however, the waiver was for a definite period only, and there was no waiver as to suit filed after the 60-day extension period.

Folger's letter requesting an extension was, in itself, an acknowledgment of the carrier's right to plead the statute once the extension expired, and United Fruit's reply gave notice that it did not intend to waive the statutory period as to any suit brought after 4 April 1950. The two letters together constituted a contract in which time was of the essence, the consideration being the benefit to each party of extending the period in order to reach a satisfactory settlement, and there was no reason why it should not be enforced according to its terms. Just as a waiver is enforced against a defendant who pleads the statute contrary to its terms, so the end-date of a waiver for a fixed time should be recognised against a plaintiff seeking to escape its own agreement

The Court agreed with the holding in The Argentino 28 F Supp 440 (SDNY 1939), but distinguished it on the facts. There, the carrier made no written reply agreeing to a specific end-date; instead, its adjuster stated verbally that 'the time to sue would be extended during the investigation of the claim and negotiations for its settlement'. The Court held that there was no public policy against extension of the one-year limitation clause in § 1303(6) COGSA; and, the extension being indefinite as to its end-date, an issue of fact was presented as to whether the carrier was estopped to assert the time limitation. Unlike the agreement in The Argentino, the agreement here was for a fixed period, and the stipulated facts showed no basis for Folger to argue estoppel against the carrier.

In this instance, the shipper's conduct was unconscionable. Having induced the carrier to grant an extension only four days before the statutory limitation period expired, the shipper effectively deprived the carrier of the opportunity to invoke the original time bar. The shipper could not then seek to destroy the effect of the very thing it had brought about, after the carrier had changed its position in detrimental reliance on the shipper’s request.

It is in the interests of all shippers and all carriers that, when a steamship company grants an extension of the time for suit, in writing, before the running of the statute, specifically limited to a fixed and reasonable time, the parties should be able to rely on the terms of their agreement. If a shipper may dishonour an unambiguous extension agreement, and if a carrier is to be penalised for being liberal towards a shipper in not requiring rigid adherence to the statute, there will be no more extensions.

Hutcheson J (dissenting): The statute having been waived, and no period shorter than one year being contractible under § 3(6) COGSA (The Argentino), the substituted two-month period was ineffective; the carrier, having stipulated its waiver, 'stipulated its limitation defense completely out of court'. The libel was timely filed and the decree below should have been affirmed.