Earn Line S. S. Co. v. Sutherland S. S. Co.

264 F. 276, 1920 U.S. App. LEXIS 1247

• Court: Court of Appeals for the Second Circuit
• Decided: February 18, 1920
• Docket: No. 114
• Status: Published

Opinion

HOUGH, Circuit Judge

(after stating the facts as above). [1, 2] The phra.se amicus curia; means one who gives information to the court on some matter of law in respect of which the court is doubtful (Bouv. Diet., and cases cited); and it is assigned for error that the court below permitted its friend to speak. Such seeking of advice cannot with propriety be called error; the act is the right of the court, existing because it is for the public interest that the men who- happen to be judges shall be well informed in matters of public concern, and the law is always such a matter. That application was made for the privilege of so appearing is of no personal concern to the parties, and the court may grant or refuse the request, according as it deems the proffered information timely and useful or otherwise (c. g., vide The Employers’ Liability Cases, 207 U. S. 490, 28 Sup. Ct. 141, 52 L. Ed. 297).

[3] What effect the court gives to the information so received is a different matter. The friend’s statements, if of evidential value, must, like other evidence, be weighed and tested by legal rule. In this instance the substance of the suggestion offered was that the British embassy avowed as a governmental act on the part of the United Kingdom the requisitioning of the Claveresk on or about February 10, 1917, and its continuous retention in government service substantially down to the day of trial.

[4] The question whether the trial judge should or should not have received and considered this suggestion is not reviewable; but it may be and has been assigned for error that the court below held the suggestion conclusive evidence of two essential facts, viz.: (1) The compulsory nature of the Claveresk’s service; and (2) the identification of government as the compelling force. While this court feels no inclination to depart from the rulings of The Carlo Poma, 259 Fed. 396, and Agency, etc., Co. v. American, etc., Co., 258 Fed. 368, 169 C. C. A. 379, holding that a certificate such as this, describing a certain act and avowing it as governmental, is to be taken as verity, we do not find it necessary to' rest decision on this ground. The evidence in the ordinary sense of that word — i. e., the competent and material testimony of persons duly sworn and paper's produced — is sufficient for our purposes; indeed, we think this was the course pursued below.

That evidence shows that within the kingdom of England an order was given by the British Admiralty to the owner, requiring him on a day certain to place his vessel, then within (or 'soon to reach) the waters of the republic of Cuba, at the service of Admiralty agents, there to remain for an indefinite period. Thus the question is reached whether in obeying the order, Sutherland yielded to that restraint of princes excepted in the charter party.

[5] It is here to be noted that the charter was not a demise. Subject to the chartered rights of Earn Line, the shipmaster was the owner’s master, and the ship, through that master, in the owner’s possession. The Santona (C. C.) 152 Fed. 518. Therefore in legal contemplation the vessel was taken or received from the owner, and not from the charterer.

On the question last stated appellant offers two propositions: (1) The clause refers merely to physical restraint of the ship; an order to the owner is not within its meaning. (2) The order was “ultra vires,” meaning that it was not in accord with English municipal or constitutional law. •

[6,7] The first proposition is untenable. In times past, when a vessel left port, she disappeared from her owner’s ken; there was no means of communicating with her, except by other ships like her, and electricity and steam did not keep owner and ship in constant touch. In such times force, governmental or other, was more swiftly and more usefully exerted on the ship than on the owner. Now it is more efficacious to act on the ship through the owner, and (so to speak) requisition or commandeer the owner, and through him his vessel, putting upon that owner the same necessity of obedience that in former days was exercised on the master wherever the ship might be. The theory has not changed, but the method of application has been modernized. The fundamental essential of a restraint of rulers is that the restraining act should be governmental. Northern, etc., Co. v. American, etc., Co., 195 U. S. 467, 25 Sup. Ct. 84, 49 L. Ed. 269 et seq. That the restraint need not be physical was in effect held in The Styria, 186 U. S. 18, 22 Sup. Ct. 731, 46 L. Ed. 1027. And see cases cited in The Athanasios, 228 Fed. (D. C.) 558. The matter is fully covered by Lord Reading in Sanday v. British, etc., Co., [1915] 2 K. B. 802, in which case, on appeal to the House of Lords, it was said (in affirming the judgment) that “the circumstances that force was neither exerted nor present [is immaterial], for force is in reserve behind every state demand”; and it was added, in substance, that it would be

“a strange law” which required one to resist, “till the hand of power was laid upon him, an order which it was his duty to obey. If it were an order which he was not bound to obey, and which he might have successfully resisted either by violence or by process of law, a question might arise. * * * ”

[8] The evidence here is plain that resistance was impossible; all that Sutherland could have done would have been to say:

“I refuse to order my captain to report to the Admiralty agents; I prefer to leave my sliip in tlie service of a neutral charterer.”

The supposed case need not be pursued, to the probable and proper punishment of such an act. No citizen or subject is by lawful private contract either required to or justified in proceeding to such lengths in resisting or evading the compulsion of his government.

[9] The second proposition is equally without support, even though we disregard the multiplied decisions, including our own, regarding the efficacy of the ambassadorial certificate. It is here proven, without any reference to that document, that the act commonly called “requisition” was governmental, and contained or expressed in a letter or order over the signature of the Secretary of the Admiralty. Further, that such letter or order was in assumed compliance with a proclamation dated August 3, 1914, and an Order in Council dated November 10, 1915. Whether in exercising this power the officers sending the telegram, signing letters, and issuing orders were acting in strict accord with the municipal and constitutional law of the United Kingdom, is a question with which we cannot be concerned; for there is plainly proven a governmental act done within British territory, and we, entirely agree with the court below that it is settled law that the act of another sovereign within its own territory is for our purposes legal of necessity. Hewitt v. Speyer, 250 Fed. 370, 162 C. C. A. 437, and cases cited. The requisition of the Claveresk was a restraint of princes, lawful 'so far as we are concerned to inquire; what legal complaints the owner may seek to advance within the United Kingdom is not our business, nor that of the libelant.

[10] It is next urged that “restraint of princes,” etc., does not terminate the charter, nor dissolve the contractual bonds between the parties thereto. Within limits that is true; but no rule can be understood, unless it be measured by the reason for its existence.

Ordinarily that governmental pressure, which is restraint, is but temporary; and the usual restraint clause, such as we have before us, is drawn on that assumption. Thus in Clyde, etc., Co. v. West India, etc., Co., 169 Fed. 279, 94 C. C. A. 551, we found a quarantine detention to be within the restraint clause, and held that such temporary delay did not even stop the daily hire due by charter, not only because the words of the clause did not provide for such stoppage, but because the charterer “had the use of the vessel for which it was to pay, notwithstanding the interruption.”

Whether a given act suspends or dissolves a relation is, like most matters, a question of degree. It was well put arguendo by Lord Haldane, when he pointed to the restraint clause as an instance of providing for the "partial or temporary suspension of certain obligations” of a charter, yet said:

“To the extent to which the perils mentioned interfere with the fulfillment of [charter] obligations, the parties are exempted from liability for nonperformance.” Tamplin, etc., Co. v. Anglo-Mexican, etc., Co., [1916] 2 A. C. 397, at pages 406-409.

Evidently the interference may be total; it may amount to prevention.

. The same kind of restraint, the same act of power, may at one time or in one instance produce but a temporary delay, changing the contractual obligations of no one, and at another time, or when operating on other attending circumstances, may so change the relation of parties as to destroy the contract itself.

[11] In referring to decisions or authoritative reasoning on this whole subject, it must be remembered that a charter party, a bill of lading, a freight contract, and most written agreements affecting ships as vehicles of commerce, are “mercantile contracts” (Dorrance v. Barber, 262 Fed. 489,-C. C. A.-), and the same words in .all the various contract writings of that kind should and usually do receive the same construction (The G. R. Booth, 171 U. S. 460, 19 Sup. Ct. 9, 43 L. Ed. 234). Bearing this in mind, The Styria, 186 U. S. 1, 22 Sup. Ct. 731, 46 L. Ed. 1027, and The Kronprinzessin Cecilie, 244 U. S. 12, 37 Sup. Ct. 490, 61 L. Ed. 960, are modern instances of how apprehension of restraint, something much less than actual governmental compulsion, may suffice to dissolve the obligation of a contract.

Contracts of carriage, voyage charters, and other short term agreements may be terminated by “restraint of rulers,” as well as any other exception, if there is enough of it; but since the bald fact of any restraint does not per se terminate (for the sufficient reason that it was not intended so to do), the effect of the clause on time charters is unsatisfactory, because uncertain. The written charter party long commonly used, and of which the one at bar is an instance, does not contemplate a compulsory governmental use extending .over years; no such thought was present to the mind of its draftsman, and indeed the thing is still terrifyingly new. This is shown by the internal evidence furnished by the document, and is historically a matter of general knowledge.

The relief afforded by tire restraint clause is also too slow; one party always demands, both parties ought to ask, and in the interest of the public the law insists on knowing: How does the contract stand eo instanti the ship is taken away? Is the private contract living or dead, and, if dead, what killed it ? This question cannot be answered by reference to the restraint clause, or any other expressed term of the written contract; therefore another legal creation, and one underlying the words chosen by the parties, is appealed to, and we find that this charter party ended or died, and its obligations were forever dissolved, on February 10, 1917, because the commercial adventure was then frustrated.

This phrase is said to have been born in the judgment in Jackson v. Union Marine Ins. Co., L. R. 10 C. P. 125 (Bank Line v. Capel [1919] 1 A. C. 457); it has been the subject of recent exhaustive discussion in the House of Lords (Horlock v. Beal [1916] 1 A. C. 486, and the Tamplin & Bank Line Cases, supra), and the doctrine was recently applied in The Allanwilde, 248 U. S. 377, 39 Sup. Ct. 147, 63 L. Ed. 312, 3 A. L. R. 15, and Lewis v. Mowinckel, 215 Led. 710, 132 C. C. A. 88. It is so authoritatively held in the cases cited, and those on which they rely, that the doctrine of frustration applies to a variety of maritime contracts including time charters, that more than mention of the fact scarcely seems necessary. In our judgment the justification, for the holdings is best expressed by Lord Sumner (Bank Line Case, at page 454), in saying:

“Rights ought not to he left in suspense or to hang on the chances of subsequent events. The contract hinds or it does not hind, and the law ought to be that the parties can gather their fate then and there.”

But since parties almost never agree about it, courts must ascertain fate for them, by (says Lord Loreburn, in Tamplin Case at page 404) inferring, “from the nature of tbe contract and the surrounding circumstances, that a condition not expressed was a foundation on which the parlies contracted.” It follows naturally that, when the foundation is removed the superincumbent contract falls and dies; it is killed by that malignant disease — a change of circumstances. It may also be accepted on authority that frustration of adventure and termination of contract may be the instant result of an act which may he properly described as “restraint of princes,” etc. Bank Line Case, at page 442.

Applying these rules to the facts before us, it being true that government on February 10, 1917, made it impossible for either Sutherland, Earn Line, or any other private individital to use the Claveresk, and did this under circumstances clearly showing to any sensible man that such indefinite taking would almost certainly outlast the life of the charter, it further appearing that the boat was so retained far beyond the charter period, and indeed (by admission at bar) still is kept by government (cf. Bank Line Case, at page 454), it follows as a conclusion of law that the charter party was terminated by frustration on February 10, 1917.

Although this result has been worked out in the highest British court with an enormous expenditure of writing, an examination of the case law relied on shows that the doctrine of frustration as applied to time charters is regarded as a logical outcome of the Union Marine Insurance Case, supra, and Geipel v. Smith, L. R. 7 Q. B. 404, which are likewise the precedents forming the foundations of The Styria, supra, and kindred decisions.

[12] Indeed, we cannot think the doctrine new except in phraseology and application; for it is elementary that among the ways in which any contract ends and is dissolved is the cessation of existence of some thing, condition, or state of things, upon the continued existence of which the contract was known to depend, provided such cessation of existence arises without fault in either contracting party. Jenks, Dig. English Civil Law, bk. 2, part 1, §1 297, citing cases.

In the present instance, what ceased to exist was Sutherland’s control of the Claveresk; that swept away the foundation of contract, as thoroughly as might a fire or shipwreck. All arguments leading to an opposite result, all suggestions that such charter as thi§ survived February 10, 1917, make of the superior force that removed every reasonable chance of doing what both parties expected to do when they agreed together, no more than an option to cancel, to be exercised after a nice calculation of possible loss or gain, by owner or charterer as the case may be. Indeed, there seems nothing left to cancel but a chance of loss; for never is it admitted that any portion of the charter survived seizure except the chance of gain. No suggestion of sharing loss-is admitted.

But a charter party is not a partnership agreement, -nor is it primarily an agreement for money payments; it is a promise to serve with and by a named ship, and when the ship is gone the charter is ended; and all the law can do is to apportion blame for the loss, guiding inquiry, first, by the words of the agreement; and, second, by the implications of underlying inherent conditions presumed to be common to sensible and honest men. It is impossible to imagine such men even wishing to agree that if government pays a high price, the advance goes all to one, while if a low price is paid, the burden falls only on the other. “Heads I win, tails you lose,” as a bargain, is beyond the pale of implication.

For these reason's, libelant can take nothing by this libel. That pleading rests solely on a breach, called a “repudiation” by the pleader; this is another of the ways in which a contract ends or dies, in which case the breach gives rise to damages. A breach is a wrong, but there was no breach, therefore there can be no damages.

[13] This situation libelant sought to prevent by proffering the “replication” above described. That pleading was not entitled to filing, because not allowed under the fifty-first rule in admiralty (29 Sup. Ct. xliv). ' _

_ [14, 15] Nor should it have been allowed if applied for, because in so far as it denied matter in the answer, it was unnecessary; and in So far as it claimed from Sutherland the difference between charter hire and admiralty payments, it was not and could not be a replication. It is really an attempt to set up a new cause of action, wholly inconsistent with that propounded in the libel. The trial court properly disregarded the paper.

[10] The legal inquiry suggested by the second part of this “replication” is whether Earn Line has any claim of any sort to whatever Sutherland gained because the admiralty payments turned out to be higher than those stipulated in the charter party. The subject is one whose difficulty has not been diminished by such dicta as that of Lord Lorebum (who to be sure was holding a charter not dissolved) that the owner will be “accountable to the charterers” for such sums as he might receive from government; while Lord Atkinson held that what was so paid came “from the bounty of the crown, they have no legal right to it” (Tamplin Case at pages 405, 422); but we are not required, nor indeed permitted, to attempt solution.

This libel was brought, and, after pleading a breach, could be brought, for libelant’s damages only; what is now demanded is respondent’s alleged profits. Profits are not damages, and Sutherland’s gains are not Earn Pine’s losses. The first statement is elementary law; the second is a fact obvious from the evidence. Whether, after a contract is dissolved without fault in either party, there can therefrom arise or remain any contractual relation between the parties, except for matters preceding dissolution; whether, if such a demand as has been stated exists at all, it is legal or equitable (cf. Agency, etc., Co. v. American, etc., Co., supra); whether admiralty has any jurisdiction affording recovery either of the certain sum suggested by the “replication” or of a sum reachable only on accounting; whether Earn Pine’s demand is affected by the subcharter; and what are the rights of the subcharterer — are questions not before us on the pleadings, and matters on which the apostles are empty of sufficient evidence to justify findings, were they permissible.

We hold, then, only that no breach of charter party has been shown, wherefore no damages can be recovered, and damages only were demanded. Beyond this it is not necessary to go; if these findings are at variance with some of the reasoning of the learned court in The Isle of Mull (D. C.) 257 Fed. 798, we prefer the views above expressed; but we are not informed as to the pleadings in that case.

Decree affirmed, with costs.