115 F. 669 | 1st Cir. | 1902
This appeal will be found not to concern the cargo of coal, as the title of the case would indicate, but the freight thereon.
The steamer City of Everett, belonging to the American Steel Barge Company, the libelant, was chartered by it, under a time charter, on March 1, 1898, to the Atlantic Transportation Company; the charter money being payable in monthly installments in advance. The controversy now existing arose over the installment due on December 5, 1898, which remains unpaid. At or about that time the Atlantic Transportation Company became insolvent and went into the hands of a receiver, and has since so remained. The charter, barring its formal parts, is given at length in the opinion of the learned judge of the district court. That opinion discusses very fully the question whether its legal effect is merely a chartering of
Whether or not the charter operated as a demise, the master was, for all the purposes of this case, the agent of the charterer. This is particularly emphasized by the fact that the charter closed a provision that the master should be under the orders and direction of the charterer, as follows:
“And the charterer hereby agrees to indemnify the owners from all consequences and liabilities that may arise from the captain signing bills of lading, or not otherwise complying with the same.”
Indeed, the libel alleges, and it is not controverted, that the bill of lading covering the cargo in question was signed by the master “by the direction of said charterer or its agents.” There can be no question that, so far as the controversy before us is concerned, the master was the agent of the charterer, and the bill of lading of the cargo in question was given by him as such agent.
The case turns on the following expression in the charter: “That the owners [meaning the owners of the vessel] Shall have a lien upon all cargoes and all subfreight for charter money due under this charter.” In Baumwoll Manufactur von Carl Scheibler v. Furness [1893] App. Cas. 8, Lord Chancellor Herschell spoke of this clause as one “which is a provision as between charterer and shipowner,” apparently having in mind in that connection the case where only a ship’s space is chartered. Neither the origin nor the history of the clause on which this case turns can be clearly traced. The learned judge of the district court suggested that it was framed when charterers intended ordinarily to freight ships with their own property; but it is to be noted, however, in this connection, that it attempts to give a lien on cargo, and also a lien on subfreights. The former (that is, on the cargo) was originally regarded as existing merely at common law. It has been largely so discussed in the case at bar. It is now held that the relation of the vessel to the cargo does not create a merely common-law lien, but an admiralty lien, good until it is either expressly or impliedly waived. This was explained by us in Wellman v. Morse, 22 C. C. A. 318, 76 Fed. 573. Nevertheless it may be that it was because of the old impression that the lien for freight arises at common law, and so depends on possession, that, so far as this clause gave a lien on the cargo, it was thought by some applicable only to a charter for space, or to cases where the charterer owns the cargo. That, however, it was not framed simply with reference to furnishing a lien on a cargo belonging to a charterer, seems to follow from Paul v. Birch, 2 Atk. 621, where, as early as 1743, it was held sufficient to bind to the owner of the ship a cargo in which the charterer had no interest.
It is certain, however, that this clause cannot be applied, as against the cargo owner, beyond the amount of freight stipulated in the bill of lading. We understand that this is conceded by the libelant; but, in any event, the rule is fully established by Scrutton on Charter Parties and Bills of Lading (4th Ed.) at pages 285 and 286, and by the decisions cited in the note thereto, as well as by many other cases not there cited, among which are Paul v. Birch, ubi supra; Shand v. Sanderson, 4 Hurl. & N. 381; and Gilkison v. Middleton, 2 C. B. (N. S.) 134. Paul v. Birch is very badly reported, as is well said in Carv. Car. by Sea (3d Ed.) 774. It was, 'however, carefully explained in Abb. Shipp. (5th Eng. Ed.; the last edition, revised by Lord Tenterden), at page 171, and is there shown to be clear on this point.
Inasmuch as the clause in question is clear so far as relates to subfreights, and can receive to that extent full effect without difficulty, no legal tribunal is authorized to strike it out of this charter, even though it was primarily intended for use in one which did not demise the ship. It is true that in all the English cases which we have found, including especially those cited in the note to page 286 of Scrutton’s Charter Parties and Bills of Lading, the charter was to load the vessel, which, of course, is only a contract for space; yet Leggett’s Charter Parties (1894) 530, lays down a broad rule, that it never seems to have been disputed that a shipowner can 'hold the goods to the extent of the bill of lading freight, and that, “Where the vessel has been put up by the charterer as a general ship, the same rule holds good.” While probably this must be •qualified with reference to the shipowner who has demised a ship, so far as holding the goods by a common-law possessory lien is -concerned, it need not be qualified where he has been given by the charterer an interest in the bill of lading freight, thus carrying the incidental admiralty right to pursue the goods for that freight in the event it remains unpaid.
Strictly speaking, the charter money of a ship chartered on time -is not freight. Yet it is such in common parlance, and also such in the law of insurance. This fact is sufficiently explained in Abb. Merch. Ships (14th Ed.) 662, 663. Therefore it cannot reasonably 'be questioned that “subfreights,” which is an expression in common use and easily understood, embraces all freights which a charterer stipulates to receive for the carriage of goods, whether he takes the ship by demise or otherwise. It follows that we must .hold that the parties to this charter intended to bind to the owner
Even at common law it has long been settled that the owner of a vessel can sell or pledge the future freights to be earned by virtue of an enterprise which she has entered on, although in an inchoate condition. The text writers are to this effect, and also the courts. Leslie v. Guthrie, 1 Bing. N. C. 697, explaining in this respect the earlier case of Robinson v. Macdonnell, 5 Maule & S. 228. The rule is, of course, so settled in equity. Lindsay v. Gibbs, 22 Beav. 522, 528. It must be even more freely admitted in admiralty, which proceeds on broad equitable principles, as we have already stated. It requires no line of argumentation to demonstrate that this rule reaches the relations of the owner to the charterer, whether the charterer enters into the possession of the vessel or not. In the present case, if the charterer did not enter into possession, the clause in question merely reaffirmed a lien which the owner already had, even at common law. If the charterer entered into possession of the vessel, he stood as owner, and could, as such, pledge inchoate freights. His charter was, moreover, in this particular, a qualified one,^ and his title to all freights accruing thereunder necessarily qualified as of the date of the charter, and in this respect precisely analogous in principle to one who obtains a qualified title to a chattel. Applying either of these lines of reasoning, the rights of the owner of the vessel under the clause in question reverted to the date of the execution of the charter, and did not accrue as of the date of the giving of the bill of lading, as now supposed by the owner of the cargo.
As, therefore, on the broad rules of the admiralty, the owner of the vessel had a lien on this freight, which accrued as of the date oí the charter, he stood, in the eyes of the admiralty, which requires no formal instrument, with all the rights of an assignee under a deed of assignment. In the admiralty, his position and rights are exactly those of the holder of a bottomry bond of both ship and freight, who may, if his bond comes due, discharge the cargo from the lien therefor by receipt of the freight (Benson v. Chapman, 2 H. L. Cas. 696, 721), or may proceed in his own name in admiralty against the freight for the collection thereof, as was explained, under
The proper remedy in admiralty, which does not have the strict regard to parties which is had by the chancery courts, is a libel, in the name of the party holding the bottomry bond, or other lien on freight, against the freight. It is not necessary to make party to the proceeding the assignor, or whomsoever has the remaining beneficial interest in the freight, as is required in equity, for the reason that the admiralty has no strict rules as to parties, and because, also, the proceeding being in rem, all the world are parties thereto. In accordance with admiralty rule 38, which only reiterates the uniform and ancient practice of the admiralty, the appropriate primary process is a monition to the holder of the bill of lading, or owner of the cargo, requiring him to pay the freight into the registry of the court. It is of interest to refer to the earlier stages of Place v. Potts, 8 Exch. 705, 707, as pointing out fully the method of proceeding. In view of these observations, the libel-ant correctly states the case when he argues that the lien asserted is primarily the lien reserved on the subfreight, and that it is not a lien on the cargo simply as cargo, but on it as representing the bill-of-lading freight, and as bound to the vessel therefor. The obscurity of the case has come mainly, if not entirely, from the fact that the proceedings in the district court apparently followed the terms of the charter, and claimed, not merely a lien on the sub-freight, with a lien incidental thereto on the cargo, but directly a lien on both freight and cargo. The proper proceeding would have been to file a libel against the subfreight alone, naming the party charged with the possession thereof, who in this case was the holder of the bill of lading, or the owner of the cargo, and asking process requiring him to bring into court what would be due from him on discharge of the vessel, all as provided in admiralty rule 38. Then, if the freight according to the bill of lading had not been brought into court, or sufficient cause shown to the contrary, summary process would have issued on a supplemental libel or petition against the holder of the bill of lading, or against the cargo if the lien for freight had not been lost. At the proper time, and under the proper circumstances, a libelant holding a lien on subfreight becomes subrogated to all the remedies of the charterer, which includes a proceeding in personam against the holder of the bill of lading, or against the cargo in the event the lien for freight has not been lost; but also, like the charterer, he could not properly institute this proceeding until there had been default in payment of the freight, unless under very peculiar circumstances, which do not arise in the case at bar.
All expressions, if any such there be, that any party, whether the holder of bottomry, or a seaman, or a formal assignee, or other lienor, having a right to proceed against freight, may properly at once libel the cargo therefor, must be considered with regard to the circumstances of the particular case. One of the leading authorities relied on by the libelant, and understood by him to be cited to this effect in Williams & B. Adm. Prac. (2d Ed.) 251, is The
But on the whole, the question involved in this branch of the case is merely one of the order of procedure, and it could affect only the costs. Under the broad rules of admiralty, if a warrant of arrest issues prematurely, and it is afterwards ascertained that there is in fact a contest which would probably have ultimately resulted in its issue, the arrest will be retained, and the fact that it is premature compensated for in costs. Moreover, on this appeal the cargo was not, in fact, arrested; but, on a warrant for arrest issuing, bail was.
This brings us to the only difficult propositions in the case. The answer, as amended, alleges that on December 30, 1898, which was the date of the bill of lading, the owner of the cargo, in whose interest the bill of lading was held, paid the master, on account of the freight to become due, $201.64, in order to provide money for trimming charges, and also on the same day, on account of freight, the further sum of $1,500. It further alleges that both payments were made in good faith, and that at the time the payments were made the owner of the cargo had no knowledge as to the ownership of the vessel. These facts are not disputed, and, indeed, it cannot be denied that the owner of the cargo had not at that time been advised that the owner of the vessel had reserved in the charter any lien on the sub-freight. Probably a knowledge of these facts would not have affected the propriety of the payment of the $201.64 required by the vessel to enable her to get out of port with her cargo; and the absence of that knowledge protected the holder of the bill of lading in the payment of the $1,500, on rules so well settled and so universally known that it would be a waste of words to discuss that particular proposition. We will, however, refer to The Karnak, L. R. 2 P. C. 505, clearly asserting it. The earlier case of The Salacia, Lush. 578, held, perhaps, otherwise; but, of course, the decision of the privy 'council in The Karnak must be accepted as the last statement of the law in England. It is so accepted in Abb. Merch. Ships (14th Ed.) 209. Therefore, so far as the two items of $201.64 and $1,500 are concerned, they must be allowed to the claimant of the cargo as against the freight reserved in the bill of lading.
By amendment to the answer, made several weeks after the original was filed, the claimant of the cargo, who is its owner, alleges that on or before December 30, 1898, the charterer (that is to say, the corporation known as the Atlantic Transportation Company) was indebted to the claimant in a sum largely exceeding the freight in question; that the Atlantic Transportation Company became insolvent
This brings us to the question whether the claimant of the cargo is entitled to a general set-off against this freight, notwithstanding the libelant’s lien. We have shown that the owner of the cargo was entitled to look to the charterer as the party with whom it was dealing with reference to the cargo and the freight thereon. Moreover, the rule, of course, is well settled that, inasmuch as the Atlantic Transportation Company has gone into judicial administration as insolvent, all set-offs are to be allowed, so far as can be done with due regard to the equities of strangers. Hutchinson v. Le Roy, 113 Fed. 202, decided by us in January, 1902. Neither can it be questioned that, as an ordinary rule, every assignee of a chose in action not in its nature negotiable takes it subject to all equities, including, of course, the rights of set-off existing between the original parties. Many authorities sustaining this well-known proposition may be found in Pom. Eq. Jur. (2d Ed.) § 704. Yet after all, in cases like that at bar, not governed by express statute provisions, the equities of other parties must be considered before all the rights of set-off can be determined; and the result of the consideration must be in favor of the one having the greater equity; or, if equities are balanced, then in favor of the one having priority. This rule is too well settled to need discussion. We have said that the burden rests on the party claiming a set-off to maintain it, so that he must fail if the equities are otherwise equally balanced, unless he shows that his equity is the earlier. On this appeal the claimant of the cargo, as we have stated, has not shown that its equity was prior in date to that of the libelant.
In Wilson v. Gabriel, 4 Best & S. 243, the queen’s bench held that the assignee of a freight in the course of being earned is subject to the rules of set-off which we have stated to be the usual ones; but this case must be regarded as rendered inapplicable to admiralty proceedings, or as reversed by the house of lords in Weguelin v. Cellier, L. R. 6 H. L. 286, where it was held that in admiralty there can be no set-off against freight which by the terms of the bill of lading is payable on delivery of cargo, to the prejudice of one who had become an assignee thereof before the unlading. Inasmuch as, on this record, the libelant intervened before the delivery of the cargo had been completed to the extent of discharging the lien for freight, the case seems to come within Weguelin v. Cellier, last cited. Nevertheless it
This opinion has pointed out sufficient circumstances to make it plain that, from the equitable positions held by the admiralty with reference to costs- and interest, neither party is entitled to either the one or the other.
The decree, of the district court, is reversed, and the case is remanded! to that court, with directions to enter a decree in favor of the libelant' for. the amount of the freight according to the bill of lading, less the-sum of $71,701.64; and neither party will recover any interest or costs in either court.