In the 1918 case of Luckenbach et al. v. W.J. McCahan Sugar Refining Company and The Insular Line, the U.S Supreme Court was tasked with determining whether a ship owner could limit their liability for damages caused by negligence in loading cargo onto another vessel under federal maritime law. The dispute arose when a steamship owned by Luckenbach Steamship Company collided with another vessel due to negligent navigation, causing significant damage to sugar cargo owned by W.J McCahan Sugar Refining Co., which had been loaded onto the other ship by The Insular Line. In its decision, the court held that while federal maritime law does allow ship owners to limit their liability for damages resulting from navigational errors made without their privity or knowledge, this limitation does not extend to cover losses incurred as a result of improperly loading cargo onto another vessel.

In the dissenting opinion for Luckenbach et al. v. W.J. McCahan Sugar Refining Company and The Insular Line, Justice Oliver Wendell Holmes Jr., joined by Justice Louis Brandeis, disagreed with the majority's decision to hold a shipowner liable for damages caused by an explosion on its vessel due to sugar cargo that had been improperly loaded by stevedores hired by the charterer of the ship. Holmes argued that under maritime law, liability should fall on those who actually performed or controlled the loading operation - in this case, not the shipowners but rather either McCahan (the consignee) or The Insular Line (the charterer). He contended that it was unjust to place responsibility on parties who did not have control over potentially dangerous situations created during loading operations.