J. K. Armsby Co. v. Actieselskabet Dampskibet Island

272 F. 266, 1921 U.S. App. LEXIS 1618

• Court: Court of Appeals for the Second Circuit
• Decided: February 24, 1921
• Docket: No. 134
• Status: Published

Opinions

MANTON, Circuit Judge.

This libel is filed to recover damages caused to 51 cases of prunes loaded on the steamship Esrom at New •York in August, 1915. They were consigned to a consignee in Copenhagen. The Esrom was under charter to the Interocean Transportation Company on July 15, 1915. The voyage charter contained the following provisions:

“A full and complete cargo of wheat and/or maize and/or other lawful merchandise, and being so loaded shall forthwith proceed as ordered upon signing bills of lading to Gothenburg and Copenhagen.”

“Charterers shall pay the vessel freight as follows: 67/ (fifty-seven shillings B. S.) per ton of her actual deadweight carrying capacity of cargo. Freight prepaid in New York before steamer leaves New York less 2% per cent, discount.”

“The captain shall sign bills of lading or master’s receipts as and when presented, without prejudice or reference to this charter party, and any difference between the amount of freight by the bills of lading and this charter party to be settled at port of loading before sailing, as customary.”

When, on August 11, 1915, the shipment of prunes was loaded on board, there was not a full cargo to be loaded. A bill of lading dated August 11, 1915, signed by the Interocean Transportation Company, was given in exchange for the libelant’s payment to it of. freight amounting to $1,685.04. This payment was made by an agency which booked the cargo for the appellee. The master did not sign the bill of lading, and no freight was paid to the master or the owner. Nor were there any negotiations by or on behalf of either the master or owner concerning the shipment. The ship was under contract not to sail until a full and complete cargo of merchandise was loaded, and the charter further provided that the Interocean Transportation Company was to do the loading, stowage, and trimming of the cargo at its expense. The Interocean Company did not have a full cargo on hand, and continued loading the vessel until September 16th, and even then did not furnish a full cargo. A petition in bankruptcy was filed against it on September 17th, at which time there was on board the prunes in question in the lower No. 4 hold. The Interocean Company has never paid the charter freight.

On September 22d, after the appointment of a receiver in bankruptcy, a meeting of the several shippers was had. On the same day, the appellee, through its attorney, wrote the agent of the owners of the Esrom, stating that the cargo of prunes had probably suffered serious deterioration, owing to the delay in the sailing for Copenhagen, and that additional delay would probably result in the goods becoming worthless, and demanded that the shipment be discharged and sold for the account of whom it might concern. Thereafter a shippers’ committee was formed to arrange for the forwarding of the cargo or redelivery of the perishable cargo. After demand all the cases of prunes were discharged at a dock secured on or about October 1st. An examination was then made, and it was found that some of the prunes were badly damaged; some not so badly. A sale was had of those which were in such condition that they might be sold. The damage was caused by the hot weather which existed in the port during the period that the ship was loading. Apparently they were received by the steamship in good condition.

There is expert testimony as to the cause of the damage, but the view we take of the case does not require our examining the cause of deterioration. The Ksrom sailed on October 9th for Copenhagen, and did not arrive at her destination until one year later. She had been intercepted by the British and taken into Hull, and this, pursuant to the practice of British authorities under war conditions, seizing vessels bound for Scandinavian ports. This fact is referred to becati.se the claim of the appellant is that, even though the prunes were on board, it is questionable whether the vessel would have arrived at the port of destination. However, it is a subject we need not discuss in this opinion, since for other reasons we conclude there is no liability on the part of the ship owners.

[1] The ship may be held liable in rem for damages to the cargo, even though no bill of lading or contract of affreightment was signed by the master. A shipowner may be held to the common-law liability. In Brower v. Water Witch, Fed. Cas. No. 1,971, affirmed 66 U. S. (1 Black) 494, 17 L. Ed. 155, it was held that where a shipment of cotton was damaged, even if no bill of lading or other agreement was entered into by the master, the receipt of the merchandise, by the vessel consenting to its being loaded for a port of destination, subjected the ship to liability; that the agents of the charterers in whose services the brig was at the time, and who were interested in procuring cargoes, and who entered into an agreement fixing the terms upon which the shipment was to be made, made the vessel bound by such agreement. The obligation is imposed as a common-law obligation of the carrier. In The Euripides (D. C.) 52 Fed. 161, it was said:

“But the liability of the ship would be the some without any hill of lading. The original charterers undertook to transport these goods; this was done by the authority and consent of the shipowners, for such was the very object of the charter. The ship is therefore answerable for any negligence that causes damage to the goods, and is answerable to the shipper, or to his vendee, upon the implied contract to transfer safely, whether a bill of lading is issued or not.”

In the Centurion (D. C.) 57 Fed. 412, Judge Brown said:

“The charter contains nothing that oven by implication excludes the ordinary security of a lien in favor of the cargo against the ship for the performance of the ship’s duties in the business for which she was chartered. The ship is therefore liable for bad stowage, because the duty to stow properly is one of the duties of carriage which the owner has expressly authorized. The Freeman v. Buckingham, 18 How. 182; Niagara v. Cordes, 21 How. 7. The ship is liable for damage from bad stowage, whether the stowage is done by the owners’ agent or the charterers’, and equally so whether there is any bill of lading or not. It was therefore immaterial whether the bill of lading, was signed by the master or by the charterers.”

In the case of The Sprott (D. C.) 70 Fed. 327, a steamer was held in rem for damages to cargo which was carried on deck although the bills of lading were signed by the charterer. It was there said:

“I do not think it is any defense to the ship that the bill of lading signed by the master recited the shipment of all the cargo as having been made by the charterers. The ship is not entitled to claim from that circumstance that it was dealing with the charterers alone, and had no privity with the actual shippers. For the master knew to the contrary. His own bill of lading recited the actual shippers, and he knew that the usual bills of lading had been given to those shippers on the ship’s account. To suffer the ship, therefore, to deny any privity with the actual known shippers, under cover of a single bill of lading given to the charterers as sole shipper, would be to uphold a mere subterfuge, and a virtual fraud upon the shippers; since the ship’s bills of lading were given to shippers with the master’s knowledge and concurrence, and on his account. The master, knowing that clean bills of lading had been given for the 163 bales, knew that the charterers had no authority to ship them on deck at shipper’s risk. His own bill of lading to the charterers, with that exception inserted, is therefore, no protection to him or to the ship; and if he repudiates the bill of lading signed in his behalf by the charterers, as respects goods other than the charterers’ goods, he is in the situation of a master who has received goods for transportation without giving any bill of lading for them at all; and upon that theory he would be bound to carry the goods in the customary manner; that is, under deck. The Delaware, 14 Wall. 579.”

If negligence were proved, or fault shown, the Esrom would be responsible to the libelant independent of the form of contract of af-freightment, or even though the bill of lading was not signed by the master.

[2] There were reciprocal liens between the Esrom and the cargo of prunes, which arose at tire time the cargo was received on board and obligations were then imposed. In Vandewater v. Mills, 60 U. S. (19 How.) 82, 15 L. Ed. 554, it was said;

“But this duty of the vessel, to the performance of which the law binds her by hypothecation, is to deliver the cargo at the time and place stipulated in the bill of lading or charter party,, without injury or deterioration. If the cargo be not placed on board, it is not bound to the vessel, and the vessel cannot be in default for the nondelivery, in good order, of goods never received on board.”

But the obligation between the ship and cargo is mutual and reciprocal, and does not attach until the cargo is on board or in the custody of the master. The Lady Franklin, 75 U. S. (8 Wall.) 325, 19 L. Ed. 455; Scott v. Ira Chaffee (D. C.) 2 Fed. 401. This rule is not inconsistent with the authorities cited, which hold that the vessel’s lien upon the cargo is subject to be defeated if, before the vessel breaks ground, she becomes unseaworthy or disabled and unable to finish her voyage. Tornado, 108 U. S. 342, 2 Sup. Ct. 746, 27 L. Ed. 747; Eugene Viesta (D. C.) 28 Fed. 762. But the lien of the vessel upon the goods and of the goods upon the vessel attaches from the moment the goods are laden on board, and not from the time only when the ship breaks ground. Bird of Paradise, 72 U. S. (5 Wall.) 545, 18 L. Ed. 662; Bulkley v. Naumkeag Co., 65 U. S. (24 How.) 386, 16 L. Ed. 599.

This court said in National Steam Nav. Co., Ltd., v. International Paper Co., 241 Fed. 862, 154 C. C. A. 565:

“Tlie obligation of the ship to carry, and of the shipper to pay for the carriage, accrues when the goods are delivered to the ship.”

[3, 4] The obligations which are created one to the other, then, are that the ship is bound not to injure the merchandise by improper stowage or rough handling, and, if she does, then there will be a liability in rem, even before the voyage is begun. If the voyage is begun, the vessel must carry the goods to destination on the terms agreed by the shipper with the charterer; for when the vessel starts upon the voyage, by implication, there is a ratification and adoption by the ship of the charterer’s contract with the shipper. Then the shipper is deprived of an opportunity to retake his goods, and the goods are in the sole possession and control of the ship. So, too, the ship is then bound by the charterer’s bill of lading, under which the freight is prepaid, and cannot collect further freight at destination. The Ada (I). C.) 233 Fed. 325. Before sailing, the vessel owner is protected by his opportunity to refuse to carry the goods on the terms agreed, by the charterer before the voyage is commenced.

[5, 6] But in the case at bar the libelant made its contract for freight with the Interocean Transportation Company, and not with the ship, and the libelant must be charged with knowledge that the Esroin was a chartered vessel, owned in ‘Denmark, and not by the Interocean Company. Such knowledge on the part of the shipper is clear. It is pleaded in the libel. If the shipper intended to hold the shipowner in place of the charterer to the terms of the bill of lading, it should have required the bill of lading to be signed by- the master. The Delaware, 81 U. S. (14 Wall.) 579, 20 L. Ed. 779. The charter was a contract by the terms of which the ship was bound. She could not sail until she had a full cargo. Slie would therefore have breached the contract if she had sailed any time before full cargo was obtained. On September 22d, after the receiver was appointed, was the first time that the shipowner was requested to do anything concerning the prunes to prevent deterioration or decay. Up to this time the charter was supreme in imposing' duty and responsibility on the ship owner. The obligations of the ship to the cargo were determined by its terms. There is no claim of fault in handling the boxes of prunes or in their stowage.

Reliance must therefore be placed wholly upon the delay in sailing which resulted in the damage. Delay alone does not necessarily establish liability for damage. The Bohemia (D. C.) 38 Fed. 756. Unless the vessel has reasonable ground to believe that the delay will damage the cargo, liability will not be imposed. N. Y. & P. R. S. Co. v. Guanica Centrale, 231 Fed. 820, 145 C. C. A. 640. During the time which elapsed between the failure of the Interocean Company and the date when the prunes were unloaded pursuant to the directions of the attorneys for the receiver of the Interocean Company, the vessel did all that could be expected of it under the circumstances. Before that time, it was not permissibk for tire vessel to violate its contract with the Interocean Company, even upon the shipper’s demand. Therefore it was not incumbent upon the ship or her owner to violate the contract with the Interocean Company and sail, for to sail would have breached the requirement to wait until a full cargo was secured.

We think that no liability can be imposed upon the vessel, and that it was error below to sustain the libel.

Decree reversed.