Robert C. Herd & Co. v. Krawill MacHinery Corp.

Background

Respondents are sellers who arranged ocean shipment of 62 cases from Baltimore to Valencia. One case held a 19-ton press. An independent stevedoring company was hired by the carrier to load the cargo. While loading, the stevedore’s employees dropped the press into the harbor and caused extensive damage. The carrier’s bill of lading, signed by the carrier’s agent, did not declare a value for the goods. Respondents sued the stevedore for negligence in federal court and won a $47,992.04 judgment; the court of appeals affirmed and the Supreme Court agreed to decide the legal question.

Reasoning

The Court addressed whether the $500-per-package limit in the Carriage of Goods by Sea Act and in the bill of lading also protects an independent stevedore. The Court said the Act and the bill of lading speak only of the “carrier” and the ship, and their history (from the Hague Rules) does not mention stevedores. Under long-settled common law, agents who cause harm by their own negligence are fully liable unless a statute or a clear contract says otherwise. The Court rejected an earlier decision that would extend the carrier’s contractual limit to unrelated stevedores and instead held the stevedore is not covered.

Real world impact

Because the Court held the statutory and contractual $500 limit applies only to the carrier, independent stevedores remain fully responsible for damage they cause. Shippers can recover full losses from negligent loaders even when a bill of lading caps the carrier’s liability. The decision resolves a split in lower courts and clarifies that hired loaders cannot rely on the carrier’s package limitation unless they are clearly intended beneficiaries of the contract.