The Themis

244 F. 545, 1917 U.S. Dist. LEXIS 1067

• Court: District Court, S.D. New York
• Decided: May 28, 1917
• Status: Published

Opinion

LEARNED HAND, District Judge

(after stating the facts as above).

[1] The first question is whether the owners committed a breach in failing to deliver according to the terms of their own charter. The words used are as follows :

“To be placed at the disposal of the charterers at Philadelphia or Baltimore at owner’s option upon redelivery by Nova Scotia Steel & Coal Company between December 15th and January 5th each season as called for by charter arranged for this steamer between owners and the Nova Scotia Steel & Coal Company.”

The theory is that this clause, especially in the words “upon redelivery by,” creates an absolute engagement between the owners and the libelants to deliver only when the Nova Scotia Steel & Coal Company surrendered. The two charters were complementary. The earlier, which was the Nova Scotia, provided for delivery by the owners at Wabana between April 1st and May 15th and for the term of “nine consecutive seasons.” No period to each season is fixed in tire charter, except that contained in article 4 touching hire. That article stipulates what the hire shall be, and that it shall continue “until her redelivery to the owners (unless lost) at Philadelphia or Baltimore between December 15th and January 5th at charterer’s option.” The libelants’ charter was of the same kind; it provided for letting the ship for “nine consecutive winter seasons,” she to be placed at charterer’s disposal upon surrender “by the Nova Scotia Steel & Coal Company between December 15th and January 5th each season” as called for in that charter. This charter also did not state the length of the seasons, except in article 5, which fixed the hire and which provided that hire should continue until surrender “each season between March 10th and April 10th at charterers’ option.” The difference in the dates of surrender by the libelants and of delivery by the owner to Nova Scotia Steel & Coal Company arose from the fact that the former was to be in the United Kingdom or Continent, while the latter was to be at Wabana.

The purpose of the parties was therefore to let the ship for the whole of nine years except for a single-'westward voyage each year on the owners’ account. If we assume that each charter gave the charterer an overlap under the doctrine of The Straits of Dover (D. C.) 95 Fed. 690, Id., 100 Fed. 1005, 41 C. C. A. 156, and Anderson v. Munson (D. C.) 104 Fed., 913, the case is, of course, with the respondents, but for the present I shall assume the opposite; i. e., that Nova Scotia Steel & Coal Company, Limited, was bound to surrender the ship between December 15th and January 5th, and the libelants between March 10th and April 10th. The issue is then whether the libelants or the owners should assume the risk of a violation of the charter by Nova Scotia Steel & Coal Company, Limited. On the face of it, I think the owners are the natural parties to assume such a risk. The libelants could not, of course, control the ship, and had no knowledge of the responsibility of the Nova Scotia Steel & Coal Company, Limited. Each summer season was, as to them, a venture of the owners, and in the absence of some clear intimation to that effect, the owners ought to answer for its success or miscarriage. It is not as though the owners had parted with all control of their ship, as in the case of an ordinary bailed chattel. They had their master and crew, and could in fact at any time on the eve of a voyage have withdrawn her, if the Nova Scotia Steel & Coal Company, limited, had proved obstinate in diverting her from her prospective engagements.

Nor does the position of the clause “upon delivery by” seem to me important. Those words have a proper enough meaning, which is that they should be bound to deliver only at that time within the 16 days when the Nova Scotia Steel & Coal Company should surrender to them. Their obligation was therefore in part contingent upon that surrender, it is true, but contingent only within the period which they fixed. If the contingency was to be general, I think the clause would in substance have read “each season, if surrendered under charter arranged,” etc. There ought to have been some indication that libel-ants’ charter was conditional upon the complementary charterer’s performance.

The cancellation of clause 16 in the charter signifies nothing. It was obviously undesirable to give the libelants the right to cancel the whole charter for 9 years because of one default. It is true that in the Nova Scotia charter a written clause was added limiting the right of cancellation to one season, and this might have been done in the libelants’ charter. Yet the argument from the deletion of that clause seems to me extreme that the libelants were- bound to- take the Themis for no matter how small a part of the 4 months’ season which might be left. The trade of the Nova Scotia Steel & Coal Company, Limited, contemplated no general voyages with a mixed cargo, and the leeway of 16 days was in ail probability enough to accommodate the parlies to any delays except such as would be covered by the exceptions in the charter. I conclude, therefore, that the more reasonable explanation is that the owners meant to bind themselves to a delivery to the libelants at the time when they had bound the complementary charter to surrender to them, and that they would look to that charterer if any default occurred. Their conduct when faced with that contingency was precisely that; they did not disclaim all liability, but very wisely and properly passed on the controversy to those who must in the first instance bear it, and who, it is conceded, were able financially to respond. I cannot see that they can now escape a secondary liability.

I have assumed that the Nova Scotia Steel & Coal Company, Limited, was responsible absolutely for a surrender not later than January 5th, and that the doctrine of The Straits of Dover, supra, did not apply; the propriety of that assumption now arises. In Anderson v. Munson, supra, Judge Brown, with whom it originated in this country, especially put the rule upon article 4 of the charter, and said that without it the owner was absolutely bound to deliver on the day stipulated. In all the subsequent American cases there has been a fixed term, and article 4 has been unlimited in its language. See The Rygja, 161 Fed. 106, 88 C. C. A. 270; Trechmann S. S. Co. v. Munson, 203 Fed. 692, 121 C. C. A. 650; Munson v. Elswick (D. C.) 207 Fed. 984; Id., 214 Fed. 84, 130 C. C. A. 612; Ropner v. Inter-American S. S. Co., C. C. A. 2d Circuit, April 10, 1917, 243 Fed. 549,- C. C. A.-. It is true that the same result followed upon a charter apparently without article 4 (Gray v. Christie, 5 Times L. R. 577), but the clause was present in Bucknall v. Murray, 5 Com. Cas. 312, and Istok v. Drughorn, 6 Com. Cas. 220, 7 Com. Cas. 190.

In Watson S. S. Co. v. Merryweather, 12 Asp. M. C. 353, the length of the term was fixed in article 1 of the charter, and article 4 was added with a written clause like that here, i. e., “between 15th and 31st of October.” Atkin, J., was perplexed as to what meaning to give the clause, because if he confined it to the period of the term in article 1, the clause effected nothing whatever. However, he felt bound to do this, because the iteration of the parties was an evidence of their settled purpose. That case was weaker than this, because here article 4 is not meaningless. It will be remembered that in neither the libel-ants' nor the Nova Scotia charter does article 1 fix any term to the letting; each is merely for a “season,” and the length of the season is fixed only by the added written words of article 4. If those words were not added, the court would have to decide what a “season” was from the delivery dates, and then allow any reasonable “overlap.” That would make altogether impossible the division of the year into two seasons, at least if the “overlaps” might extend for one month or six weeks. The added words were therefore necessary to the complete meaning of the charter, and were not only in limitation of the “hire to continue” clause, but of the very term of the letting. The period of 16 days was thought enough to give commercial latitude for the enterprises to be undertaken, and the event of unforeseen contingencies was amply provided for by the exceptions to be considered later. That period of 16 days was the “overlap” or “twilight” zone which gave the charterer a sufficient leeway against ordinary vicissitudes, beyond which he engaged himself not to go. Such a plan was altogether reasonable.

[2] If the Nova Scotia Steel & Coal Company, Limited, must surrender the Themis by a day certain, we should expect Barber & Co.’s subcharter to be of the same kind, and that is what we find. The term was fixed, to be sure, at 8 months from the delivery date, and the peremptory written words “not later than January 1, 1916,” added to article 4, were meant to define any possible “overlap” which might put the Nova Scotia Company in default either to the owners or to the libel-ants. Article 4 did accomplish something, nevertheless, because it gave an “overlap” in December dependent upon that day in April in which Barber & Company, Incorporated, got the ship; perhaps it was not of great consequence, but the value of fixtures had risen greatly. If the delivery was in May, on the other hand, the limitation would have cut down the term as need was, to avoid a default by the Nova Scotia Steel & Coal Company, Limited. Hence the clause was not redundant, as it was in AVatson S. S. Co. v. Merryweather. Indeed, it is hardly plausible to insist upon an indefinite “overlap” in Barber & Co.’s charter, once one concedes the unconditional obligation of Nova Scotia Steel & Coal Company, Limited, to surrender by January 5, 1916.

Barber & Co.’s obligation being, therefore, to return the ship not later than January 1st, or we may say January 5th, the remaining question is whether their admitted failure comes within any exception of either charter party. These exceptions for the purposes of this case may be treated as the same. Although Barber & Co. was cutting its time for a round trip down very short, I attach no importance to that. Were the question of the reasonableness of the voyage under the doctrine of The Straits of Dover, supra, such considerations would have been relevant, but not here where the parlies defined their own “overlap” at 16 days. The only question under such a charter party is whether the charterer has come within the exceptions.

[3] Every one agrees that the source of the trouble was the slide on the w est bank of the Panama Canal in October, 1915. If the case rested upon reasonable expectations when the Themis left New York, I should find not only that it was reasonable on September 12, 1915, to undertake a voyage through the canal, but that no one ought to have hesitated. That issue is, however, irrelevant unless the slides prevented surrender on January 5, 1916, and the case comes down to a definition of “prevention.” Mr. Englar throughout has proceeded upon the assumption that he need not show physical prevention, but that it is enough if the subcharterer could not have surrendered in season without the most serious financial consequences which would arise from breaking the voyage. I cannot agree in such a suggestion. Without exceptions of some kind performance of a maritime contract is not excused even when prevented by physical impossibility. Barker v. Hodgson, 3 M. & S. 267; The B. F. Bruce (C. C.) 50 Fed. 118, affirmed Lumberman’s Min. Co. v. Gilchrist, 55 Fed. 677, 5 C. C. A. 239. The general rule applies to charter parties as well as-to other commercial contracts in which impossibility of performance does not generally excuse. By hypothesis the promisee has suffered a loss through the breach, and if the promisor wishes to avoid performance according to the terms of the promise, it is for him to foresee, and provide against, the chance that he cannot realize his assurances. Exceptions, when they are put in, excuse impossible, not unprofitable (or, as Mr. Mackay prefers to sajq “impracticable”), performance. A\rcre it not so, the risk of the charterer’s ventures would be imposed upon the owners, an intolerable result. The owners’ loss through delay must be made a factor in the charterer’s decision not to surrender, else he is allowed to confiscate the enhanced value of the ship. If the added loss in surrendering in season is more than the enhanced value, usually the charterer will choose to break his promise, unless restrained by commercial scrupulousness, hut it is a strange idea that anything in the admiralty allows him at once to break that promise and disregard the losses to other persons. The reasoning escapes me by which he should be allowed to throw upon another the miscarriage of his own enterprises. It is quite true that Barber & Co., Incorporated, were involved in serious loss if they transshipped at the Isthmus; in the Antilles, at the Cape, or in New York, but the libelants were involved in more serious loss if they did not. There is a frank ingenuousness in calling upon the libelants to assume their loss.

Nor is there the least warrant for saying that the admiralty has ever recognized anything of the sort. Suppose the ship had learned of the slide when one day out of New York. Will it be seriously argued that Barber & Co. could out of hand have confiscated the libelants’ winter season? If not, when does the supposed doctrine apply? All the cases cited are where the performance has been physically prevented, except the “strikes” exception, of which more in a moment. It is true that under the “restraint of princes” clause the ship need not await actual arrest (The Kronprinzessin Cecilie, 238 Fed. 668), but that is no exception to the rule. The possibility of performance is in such cases prevented, quite as much as though a master delayed in port to avoid an advertised hurricane. Continued performance may become impossible by an imminent obstacle, though the ship does not persist in challenging the inevitable. The “strikes” clause is a true exception, but only, as Judge Ward says in The Toronto, 174 Fed. 632, 98 C. C. A. 386, because otherwise it could have no meaning. Wood v. Keyser (D. C.) 84 Fed. 688. Strikes generally arise over wages disputes, and every one knows that money will settle these; and an exception against strikes can therefore only mean an exception against the extra cost of strikes.

On the other hand, there are direct cases to the contrary. Thus the Court of Appeal in Assicurazioni, etc., v. Bessie Morris Co., 7 Asp. M. C. 217, held that the exception from perils of the sea did not absolve the owner from prosecuting the voyage unless either the ship could not be got off the strand, or unless the loss involved in her repairs was equal to her whole value. In Associated Portland Cement Mfrs., Ltd., v. Cory, 31 Times L. R. 442, the defendants sought to excuse their default under the restraint of princes clause, because half their tonnage had been commandeered by the British government. It did not appear, however, that performance thereby became impossible, but only more expensive, and the court (Rowlatt, J.) held for the plaintiff. A similar case is Bolckow v. Compania, etc., 33 Times L. R. 111.

The right of Barber & Co., Incorporated, to continue the voyage is, however, also placed upon another theory; i. e., the liability of the ship to the cargo. It is, of course, well settled that the bills of lading signed by the master for the charterer create a lien upon the ship in favor of the cargo as soon as it comes aboard. The Alert, 61 Fed. 113, 9 C. C. A. 390, following the dictum of Mr. Justice Curtis in Schooner Freeman v. Buckingham, 18 How. 182, 15 L. Ed. 341. No one disputes this, but the result of its application here would be to commit the ship to the voyage as soon as any cargo had been stowed. Therefore, if the slide had occurred in September while she was still in port, instead of October, the Themis must have prosecuted her voyage, though it was obvious that it involved a breach of the charter party. Such a consequence is very near to a reductio ad absurdum. The whole basis of the theory in law disappears, moreover, when one observes that article 14 of each charter binds the charterer to indemnify the owner for any liability arising from the bills of lading. As against the ship the liens would be good, but the charterers remain, what perhaps they would have been without that article, the primary obligors. In that view the whole point adds nothing to the original position of the charterers that they were entitled to continue the voyage at the expense of the owners, or the next charterers. The liens of the shippers were expenses to which they were liable and which were indeed a necessary factor in the calculation which should have controlled their decision on October 5th to sail for the Cape. Those liens wore no more than items in that calculation, and the fact that the ship stood secondarily liable was an irrelevant incident.

No one urges that the canal slides in fact prevented the physical surrender of the ship on time. It is not as though the Themis had come back across the Pacific and found the canal blocked at Panama. The slides made impossible the contemplated voyage, but that was all, and the owners by the exception made no assumption of such a risk. Suppose, 'for example, the Themis, bound to Bombay, found herself effectively blocked by Austrian and Turkish submarines, and chose to go around the Cape.. Consistently it must be urged that under the “king’s enemies” clause she would be entitled to clear the port of New York with the certain expectation of defaulting in her surrender day. Certainly it would make no difference if she got the news at Gibraltar. The charter does not affect to touch the profits; it gives the ship and leases the use to the charterer. The exception goes no further than, the charter; it excuses the mutual performances stipulated, but only those. The charterers’ attempted interpretation in effect extends the letting by conditions dependent upon the profits of the venture, and subjects the engagements of the parties to the uncertainties of their business success. Such an interpretation is directly contrary to the very meaning of a commercial contract.

Therefore I find it unnecessary to decide whether the “accidents of canals” exception means only a strand in the canals or some other danger due to canals. The same is true of the slide as an “act of God,” or an “accident of navigation.” I may, indeed, assume that, did it prevent the surrender, it would be one of these as well as an “accident of canals.” The result is that the charter was broken-without excuse, and that Barber & Co., Incorporated, are liable.

The decree will hold both the owners and Barber & Co., Incorporated, liable with the usual clause directing the libelants first to exhaust their remedies against Barber & Co., Incorporated, and will direct a reference to ascertain the damages.