A. O. Andersen & Co. v. Texas Co., No. 24

No. 24 | 2d Cir. | Jan 18, 1922

Lead Opinion

MAYER, Circuit Judge

(after stating the facts as above). At the base of the case is the question whether the paper, dated November 21st, was in fact a charter party, or merely an agreement for a charter party, or neither. Preliminary to that question is the inquiry as to whether the Texas Co. was induced to sign the paper by false representations on the part of libelant.

The contention as to the false representation rests upon the contents of the circular and of the letter dated November 28th. We shall assume for the purposes of this case that the defense which brings up this point is permissible in an action in admiralty. Patagonia S. S. Co. v. Gans S. S. Line, 243 F. 532" court="2d Cir." date_filed="1917-06-06" href="https://app.midpage.ai/document/patagonia-s-s-co-v-gans-s-s-line-8803938?utm_source=webapp" opinion_id="8803938">243 Fed. 532, 156 C. C. A. 230. Cf. Anderson v. S. S. Kalfarli (C. C. A.) 277 F. 391" court="2d Cir." date_filed="1921-11-16" href="https://app.midpage.ai/document/the-kalfarli-8823414?utm_source=webapp" opinion_id="8823414">277 Fed. 391, decided November 16, 1921.

[1] The testimony as to the contents of the circular is not at all clear, but we shall assume that the circular contained only what in substance was set forth in the letter of Andersen & Co., per Dormand, to Dearborn & Co., dated November 28th. There does not seem to have been the slightest motive for libelant to have made any false representation. Libelant undoubtedly was thinking, and quite naturally, of Texas Co. as an oil dealer and carrier of oil cargoes, and thus the letter of libelant stated what it regarded as “the principal point * * * in connection with carrying of oil cargoes.” This was in no sense a representation. It was nothing more than an expression of opinion. Libel-ant may have been entirely mistaken, and this may not have been “the principal point”; but whether it was or not is immaterial. The mere fact that libelant referred to “the principal point” was and should have been an indication, at that time, to business men of ordinary experience in that class of business, that there were other provisions besides the one emphasized by libelant. We are of opinion, therefore, that the question is really not whether the representation was false, but whether there was any representation in the legal sense, as distinguished from a mere expression of opinion, and we hold that all that the letter and the circular amounted to was that they embodied the opinion of Andersen & Co. as to what, quite naturally, Andersen & Co. regarded as “the principal point” in which Texas Co. would be interested. See 13 C. J. 384, 385, for collation of many cases.

[ 2, 3] The question, then, is whether or not the paper was a charter party. It is very difficult at times to determine upon which side of the line of demarcation between a contract and an agreement to make a contract a particular paper is to be placed. Williston on Contracts, § 28 et seq. In the last analysis, however, the reliable test is whether within the paper there is embodied everything which the parties have agreed to do, assuming in that hypothesis, of course, that the other necessary elements of a contract exist. 13 C. J. 237. The contract itself may be executory in some of its requirements and details, but that fact does not detract from the character of completeness which gives to the paper its name and substance as a contract, as distinguished from a preliminary agreement. Farrington v. Tennessee, 95 U.S. 679" court="SCOTUS" date_filed="1878-01-14" href="https://app.midpage.ai/document/farrington-v-tennessee-89651?utm_source=webapp" opinion_id="89651">95 U. S. 679, 683, 24 L. Ed. 558.

[4] A contract may be partly executed and partly executory, and may be executory as to one party and executed as to the other. Howe v. Howe & Owen Ball Bearing Co., 154 F. 820" court="8th Cir." date_filed="1907-05-07" href="https://app.midpage.ai/document/howe-v-howe--owen-ball-bearing-co-8764384?utm_source=webapp" opinion_id="8764384">154 Fed. 820, 83 C. C. A. 536; Galbreath Gas Co. v. Lindsey, 62 Okla. 84" court="Okla." date_filed="1916-09-26" href="https://app.midpage.ai/document/galbreath-gas-co-v-lindsey-3802717?utm_source=webapp" opinion_id="3802717">62 Okl. 84, 161 Pac. 826; 13 C. J. 245, 246.

[5] In the case at bar, stamped clause (1), supra, indicates clearly that the charter would not be “binding on owners” until they were notified that the approval of the British authorities had been obtained. Clause (2) here under consideration must be construed to the same effect. Plainly what the parties intended was that, as one of “he terms of the contract, Texas Co. must sign the rules. If it complied with its agreement so to do, the contract then, ex proprio vigore, bound Andersen & Co. There was nothing further for Andersen & Co. to do, or which it could do, to bind Texas Co., or, if so disposed, to evade the contract. So far as concerns Andersen & Co., in respect of clause (2), it had no control over the contract after it and Texas Co. signed the paper dated November 21st with this clause incorporated.

In principle, the case is somewhat analogous with Orr v. Doubleday, Page & Co., 223 N.Y. 334" court="NY" date_filed="1918-04-23" href="https://app.midpage.ai/document/orr-v--doubleday-page-co-3593039?utm_source=webapp" opinion_id="3593039">223 N. Y. 334, 119 N. E. 552, 1 A. L. R. 338. There the tenant had an option of renewal. It was held that the exercise of the option renewed the lease, that the acts of the tenant alone were required, and that any act of the landlord was unnecessary. So here the charter party might be paraphrased, in effect, as follows:

“We have agreed upon all the terms. Andersen herewith charters the vessel to Texas Co. for an agreed compensation, and, as a part of our mutual arrangements, Texas Co. must sign the British bunker rules, and, failing so to do, Andersen will not be bound; but if Texas Co..does what it has agreed to do, as part of the contract, then Andersen is automatically bound.”

In The Tribune, 24 F. Cas. 191" court="None" date_filed="1837-11-15" href="https://app.midpage.ai/document/the-tribune-8637987?utm_source=webapp" opinion_id="8637987">24 Fed. Cas. 191, No. 14,171, the master signed the following:

“I hereby agree, within three days, to be ready at Hampden, with a new suit of sails on the Tribune, to load for T. W. Letson [the libelant], and proceed without delay to Lubec, to take in what may be wanted to constitute her cargo, and proceed to Havana, and back to any port of the United States; also that the charter party shall not commence until she is loaded at Lubec, provided I am not detained over seven days in loading said vessel.”

Below the foregoing, Letson signed:

“I agree to allow said vessel, on said charter party, five hundred Spanish dollars per month. The charter to be made at Lubec. Bangor, Nov. 23, 1836.”

•Mr. Justice Story held this to be a charter party, and, in addition to disposing of the particular question before him, he discussed the underlying principles. It is sufficient to quote the following as applicable to the case at bar:

“The making of a mere formal instrument under such circumstances may be treated rather as a farther assurance than as the inception of a maritime charter party. Nor is this doctrine at all new, even at the common law. It is not uncommon for agreements to be made for a lease for years, with suitable covenants for the due execution of a future formal lease; and in many cases of this sort, notwithstanding such covenants for a formal lease, the agreement fias been held to amount to a present demise, where it seemed better adapted to carry into full effect the intention of the parties. Without going at large into the cases, it is sufficient to cite on this very point the case of Warman v. Faithfull, 5 Barn. & Adol. 1042, where it was established that an agreement for a lease for a definite period, for a fixed rent, amounted to a present demise, notwithstanding a more formal instrument was to bo executed, upon tbe intelligible ground that it best carried into effect the apparent intention of the parties. Upon a similar ground, I think the present instrument might well be construed to amount to a charter party for the voyage, loose indeed, and informal, notwithstanding a more formal instrument of the same nature was contemplated. * . * * ”

Though, of course, the facts in The Tribune and in the case at bar are different, the principle upon which each case rests is essentially the same, and, ’in some respects, the case at bar is, perhaps, stronger than The Tribune. Here the precise acts which each party was to perform were set forth in the charter party, and the rights and obligations of each required no further nor complementary writing nor agreement between the parties. See also American Hawaiian S. S. Co. v. Willfuehr et al. (D. C.) 274 F. 214" court="D. Maryland" date_filed="1921-06-29" href="https://app.midpage.ai/document/american-hawaiian-s-s-co-v-willfuehr-8821349?utm_source=webapp" opinion_id="8821349">274 Fed. 214; Maury & Co. v. Culliford & Clark (C. C.) 10 Ted. 388; The Alberto (C. C.) 24 Ted. 379; Keyser v. Blue Star S. S. Co., Ltd., 91 Fed. 267, 33 C. C. A. 496.

Concluding, then, that the writing under discussion was a charter party, no question arises as to the right of Texas Co. to determine whether or not it would sign the British bunker rules. Having agreed, according to our construction, to sign these rules, it was, of course, bound to do so as part of its obligation under the charter party, and when it failed so to do, after the expiration of a reasonable time (November 28th or 29th to December 20th), it was guilty of a breach.

We think the other questions raised by appellee were properly disposed of by the District Court. In respect of the assertion that the vessel could not have sailed to Paramaribo, it is enough to refer to the testimony of the master that he showed to the Texas Co. representative a cablegram from his owner giving him authority to go to Paramaribo, and there is no doubt that the master would have loaded and sailed, if libelant had ordered him so to do.

[6] Further, in the circumstances, there was no need of an useless tender; and all the facts surrounding the delay at Port Arthur and the effort urging Texas Co. to sign the rules point to the conclusion that the vessel would have been at the disposal of Texas Co. as agreed, if Texas Co. had carried out its obligation to sign the British bunker rules. The case thus becomes one for damages for breach of charter party.

The decree is reversed, with costs, and the District Court is instructed to enter an appropriate interlocutory decree in favor of libelant in accordance with this opinion.

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Dissenting Opinion

HOUGH, Circuit Judge

(dissenting). If the paper writing sued on herein be construed as in the foregoing opinion, viz. as a positive engagement that Texas Co. would sign the bunker rules, all the rest follows easily enough.

The word “effective” is, however, of plain meaning, signifying by universal definition something producing the intended effect or result, something operative and efficacious. The agreement (whatever it be properly called) was in express terms not to become “effective” until charterer signed the rules. It seems to me that no meaning can be given such words, except by holding that there was nothing efficacious as a written contract, until those rules were signed by the charterer.

The suit is on a charter party; it is not for damages for failure to complete a charter party. As I believe there never was a charter party, the result reached below seems to me correct.