Gans S. S. Line v. Wilhelmsen

275 F. 254 | 2d Cir. | 1921

Lead Opinion

HOUGH, Circuit Judge

(after stating the facts as above). The singularity of the facts, and wide range of arguments at bar, has seemed to justify the foregoing amplified statement of things proven, which is, however, merely an extension, not a varying, of the fact findings in the careful opinion of Learned Hand, J., in the court below.

[1] For what reason, if any, the owner of Themis is stated as Wilhelmsen in the Gans charter, and as the Aktieselskabet in that of Nova Scotia, docs not appear. It is now admitted that the corporation was the owner in point of fact. On this Barber & Co. base the argument that since Gans Line contracted with the individual, and Nova Scotia Company with the company, libelants can have no claim against Nova Scotia, and therefore none against Barber. No such objection is raised by Nova Scotia Company; both Wilhelmsen and his corporation appeared and answered as owners, and the pleadings contain no reference to the point, nor was it mooted below. Even were it substantial, which we do not believe, it cannot be presented to us without compliance with our admiralty rules 6-9 (267 Fed. viii, ix). No such compliance has been attempted, and we decline further consideration of the matter.

The outstanding and admitted fact in this case is that libelant lost its whole 1916 term in Themis, at a time when this neutral (Norwegian) vessel had peculiar value. This is the confessed damnum. Whether injuria also exists depends upon ascertaining (1) what, if any, human action caused the damnum in point of fact, and. (2) whether by contract the actor is protected from the normal consequences of his act.

[2] For libelants’ purposes it is, of course, enough to hold the owner, with whom alone it had direct contractual relation. It was an act (i. e., omission) that Wilhelmsen did not hand over Themis to libelant on January 5, 1916. But here, at the very opening of the case, owners seek escape by the plea that the above-quoted section of Gans charter only required the steamer to be “placed at the disposal of the charterer * * * upon redelivery by” Nova Scotia Company,, wherefore it is urged that no liability arose until that company did redeliver.

But the whole section in Gans charter must be read, in order to reach the intention of parties, and, so read, it is plain that the phrase “upon redelivery” by Nova Scotia Company is but a description of relation existing between owners and their seasonal charterers; it is not a condition precedent to delivery. This point is well disposed of in the opinion of Learned Hand, J.

But the holding rests on a broader foundation; viz. the interlocking nature of the charters of March, 1910. What was then agreed to was a regular seasonal division of Themis’ time; that time division was of the essence, and its primary importance is manifest, because the only way in which the complementary charters could be fulfilled was by holding all parties to strict conformity in respect of times for delivery and redelivery. The practical observance of these times for four years, by the practical men handling the ship, is abundant evidence of their intent, if anything more were needed than knowledge of the circumstances attending the making of the charters. It follows that owners were bound to deliver to Gans not later than January 5,, 1916, unless relieved by some applicable exception in the charter.

[3] The foregoing, however, leads to a broader holding—one affecting all the charters under consideration. It is that none of the charterers can invoke the doctrine of what are called the “overlap”' cases. That these decisions all rest on an implication of intent in the parties contracting was pointed out in Schoonmaker Co. v. Lambert Co. (C. C. A.) 269 Fed. 583. No such implication is here possible, for the intent to make time a primary or dominant factor in the contracts-is apparent. Indeed over- and under-lap is but one method of allowing a reasonable “lee way” in performing service with something so-subject to peril and delay as a ship. In this instance that “lee way” or margin for contingencies was fully and specifically allowed for by division of seasons by periods' rather than named days.

So far then as owners’ liability is concerned, it remains but to inquire whether any exception relieves. None is or can be suggested except the. “act of God,” for the Gans charter contains nothing regarding dangers of canals.

It is worth noting that to render any exception available, it is not enough to prove a fact or set of facts answering the language of exception; it is just as vital to show that such facts prevented (in the legal signification of that word) performance of the substance of engagement. But if the facts do not measure up to the definition, further investigation is idle.

[4] Hence it disposes of owners’ defense to the libel to hold, as we clo, that the slides causing closure of canal in October, 1915, were not the “act of God,” as that phrase has been authoritatively accepted.

[5] Without attempting finality in definition, an act of God is due to natural causes, without human intervention. There are other requirements, but we have gone far enough. The Culebra slide which blocked traffic for months after October 4, 1915, was the result, and the not surprising, nor wholly unexpected result, of a deliberate widening of the Canal, which in its entirety was a hold and daring experiment in human activity. The experimental stage was by no means over when Themis sailed, and that fact was well known to all men skilled in engineering. The cases are collected in 1 Corp. Jur. 1174, and see especially Gleason v. Virginia, etc., Rv., 140 U. S. 435, 11 Sup. Ct. 859, 35 L. Ed. 458. It follows that libelant was properly granted recovery against owners.

To adjust rights as between owners, and the other respondents requires further inquiry as to what act caused libelant’s damnum. It begs the question to say that it was either the Culebra slide or the closing of the Canal, for neither physically injured the steamer. It was Barber & Co.’s order to go on via the Cape, an order of which no other party to-this suit had, knowledge until the Themis was halfway to Africa, at the earliest.

It may he said that the other respondents were present at Colon, in the person of the master, and therefore knew. But that is a. legal inference; The fact remains that Barber’s orders for Australia, given by wire at St. Rucia, were the proximate cause of libelant’s loss, but that fact does not fix nor transfer liability, which depends upon the true construction of all three charters at bar in respect of redelivery obligations, and of the Nova Scotia and Barber charters as to liability of respondent’s inter sese.

One other question of fact requires mention. Throughout this cause it lias been charged that if Barber & Co. did not know that the Australian voyage could not be completed via Panama in time to save Cans’ rights, any reasonable man would have known it. We agree with the court below that this charge is unfounded. Judging by Themis’ past performances there was plenty of time to make the trip, provided the subcharterers availed themselves of the privileges reserved in their bills of lading, and transhipped goods for the smaller Australian ports. It was not undertaking the voyage via Panama that caused loss, but continuing it from St. Rucia via the Cape.

Taking' up now the interpretation of charters, it is plain that Barber & Co. were just as firmly bound to observe the date of redelivery as was every other party, and for the same reasons—positive covenant and consenting foreknowledge of its importance.

It is next observable that in charter to Nova Scotia Company certain dangers are “always excepted,” while in that to Barber & Co. substantially the same dangers are “always mutually excepted”; and on this difference is, grounded the assertion that, while Barber can claim exemption as against Nova Scotia, the owners only can avail themselves of the exceptions in their contracts with the latter company.

Doubtless the exceptions of a charter, varying in details, but for generations familiar in kind, were long generally thought to be inserted for the benefit of owners only. When voyage charters were almost the only kind in use, and charterers expected to lade their own cargo, this was natural. With the growth of-time chartering, and the rise of a business of which the Themis’ engagements is an extreme example, the propriety of equality between contractors became apparent, for such contractors used vessels in the same way, although one was owner and the other charterer; i. e., both hired out the ship or some part of her capacity to third parties. Therefore “mutually” was inserted, although in most contracts mutuality is assumed.

Touteng v. Hubbard, 3 B. & P. 291, decided in 1802, sets forth the early view; and the matter has been discussed rather than decided during the last 25 years in England. Barry v. Peruvian Corp., 2 Com. Cas. 50; Newman, etc., Co. v. British, etc., Co., 8 Com. Cas. 87; Braemont v. Weir, 15 Com. Cas. 101; Embiricos v. Reid, 19 Com. Cas. 263. In none of these cases was the point necessary to decision, but it has been plainly said that exceptions may be available to both •parties without the insertion of “mutually,” and this view we regard as consistent with the general law of contracts.

In this country the question has never been mooted, so far as we can discover. Clyde v. West India Co., 169 Fed. 275, 94 C. C. A. 551 (the nearest case in this court) did not present it.

[8] With authority lacking, but the English dicta inclining toward what we regard as the reason of the matter, we hold that such exceptions in charter parties as are here presented are intended to protect both owners and charterers, whether the word “mutually” is inserted or not, unless the context clearly shows an intention to protect owners only, or possibly charterers only.

Since, as shown in our fact statement, Barber’s defense as pleaded rests fundamentally on an alleged superior obligation to shippers, evidenced by the bills of lading, it is necessary to examine, not only Barber’s duty, but the liabilities thrust upon the other respondents, by the employment sections of charter and subcharter, and especially by the direction given the master to sign bills of lading as ordered by charterers.

[7, 8] It is sufficiently shown in Judge Hand’s opinion that by acceptance of cargo, the ship became liable in rem for due performance of the contract of affreightment But when (Barber & Co.’s authority to sign for the master being undisputed) the master of a ship chartered but not demised, which was the condition of Themis, issues bills of lading; we hold that the contract evidenced thereby is not only the ship’s contract, and that of the time or other charterer who caused their issue, but that of the owner, whose master (i. e., authorized agent) issued the same. Therefore in this instance the shippers had, beyond the obligation of the ship, the right to look to all three respondents, and hold any or all of them personally liable for right fulfillment of the bills. This point also seems new in American courts, but it is well settled in Great Britain (Tillmans v. Knutsford, 13 Com. Cas. 244, 334; Manchester Trust v. Furness, 8 Asp. M. C., 57), where it is far more likely to be urged, owing to the weakness of maritime liens in the English admiralty.

But it does not follow from this ruling, that as between themselves, owner, charterer, and subcharterer made but one carrier entity; on the contrary, inter sese the Australian venture from its inception was Barber’s alone, and by the indemnification clauses of the charter parties that respondent was and is bound to save the others from any liability growing out of Barber & Co.’s method of performing the contracts of carriage evidenced by the bills of lading issued hy Barber for the master.

We have already indicated the nature of that contract of carriage, but now emphasize the point that there was no obligation to- fulfill it with Themis; there was an agreement to get the goods to Australia, but by multiplied provisions, unnecessary to quote, that agreement would be fulfilled, though there were transshipments “at any place or places.” In short the document is a thorough “war bill”; and, as above stated (and pleaded), it contained the exception, running through both the respondents’ charters, of danger and accident of canals.

To fully consider not only Barber’s pleading, but the relation of respondents to each other, it is now necessary to decide whether the Culebra slide was an accident or danger of canal. Authority is absent, owing to the novelty of such constructions as that at Panama. Cases of freezing of rivers and canals (e. g., Allen v. Mercantile, etc., Co., 44 N. Y. 437, 4 Am. Rep. 700) are of no assistance, for freezing plainly responds to the phrase “act of God.”

[8, 10] Every phrase of every commercial contract, including the exceptions, is to be construed in the light of the whole document, to the end that there shall be no more overlapping of phrases than is necessary, and in the light of matters known of all men, and capable of judicial cognizance. Canals for deep water vessels had been known since Suez at latest, Panama was building when Themis was launched, and “dangers of navigation” would cover stranding on unknown shallows in any navigable waters, including canals. lienee we conclude that “accident of canals” should reasonably cover catastrophic events, short of acts of God, by which the Canal temporarily ceased to exist; and the Culebra slide was such a happening.

[11] Thus is reached the final question: Did this accident of canals, in fact or by law, prevent Barber & Co. from performing either or both of their engagements, viz. their chartered obligation to redeliver, and their contracts of affreightment as stated in bills of lading.

In point of fact, there was no physical prevention. Barber & Co. have not in evidence attempted to prove that it was physically impossible to tranship. To be sure they did not even “try” at the time; but under the exigencies of suit they have given much evidence regarding the difficulties and dangers of unloading and reloading cargo at the Isthmus; there is no evidence regarding conditions at the nearer North American ports, those in the West Indies, at Durban or nearer in Africa,—nor anywhere else in the world sufficiently near to “north! of Harteras” to enable redelivery to be made.

Indeed, this part of Barber’s defence rests on what in argument is called “commercial impossibility,” which on the evidence is no more than emphasis on the expense of keeping both engagements; and the result of the contention is undisguisedly that it would have cost Barber & Co. so much to keep both promises that therefore they have the right to put the loss on some one else, a contention sufficiently treated in the opinion below.

J12] But assuming that the doctrine of commercial impossibility might-be invoked, the evidence does not require us to discuss it, in point of law. If impossibility of performance, commercial or otherwise, or the same thing disguised as “frustration of venture,” be a defense (as it sometimes is), It is one whereof the burden of proof is very heavily on him that advances it, and this record does not show effort anywhere, nor even the probable results thereof at any place, except at the Isthmus. This is not enough.

But taking Barber’s testimony at its fullest value, and holding that it would have been difficult, dangerous, and enormously expensive to deliver Themis cargo otherwise than in Themis, failure to redeliver by January 1st is still not excused. Assume that all the respondents had agreed with shippers to get that cargo to Australia, it remains true that they had agreed with each other than Gans Line should have the steamer by January 5th. Therefore it was their duty, and that of each of them, so to arrange their commitments as to keep all their contracts; and this they did by the form of bill of lading used. That bill left it possible to keep all engagements, under all circumstances that actually occurred, and, as between themselves, the duty of getting the.goods to Australia was on Barber & Co.—assuming that the other partie's did nothing to hinder or prevent them.

If the bill of lading had not permitted all the varieties of carriage that it did, if it had committed Themis to go to Australia, and the slide had happened as it did, the case would have been wholly different. Again, if the steamer had gone through the Canal in September, and, when entering Balboa on her return trip, had encountered a canal closure in latter December, the exception of accident of canal would have taken on quite a different meaning, or produced a different result.

It is further urged that owners have no recourse to the other respondents because all respondents acquiesced in “continuation of the voyage, after the Panama Canal was closed.” This is the legal inference above referred to, and rests on the truth that by the master the owner was at all times in possession.

The point becomes this: Either the master on his own responsibility should have refused to leave St. Lucia for Durban, or the owners or charterers should have ordered him at Durban to turn back. After Durban it was too late. There is no proof as to radio possibilities, nor evidence that Themis had a wireless apparatus.

As to the first possibility, it was the master’s duty under the employment article to obey all lawful orders of the subcharterer; there was nothing obviously unlaw Eul In the order. As to the second, the damage was done by that time. It was best to let bad enough alone.

If it wTere true in fact that all the respondents united in doing something for the pecuniary profit of Nova Scotia Company (which gained i5,000 for every month Barber St Co. detained the Themis from Gans), and to save Barber from transhipping expenses, much might still be said, on other grounds, for holding all respondents; but on the record it is enough to sum the matter up thus; The canal accident exception did not relieve Barber & Co. from carriage to Australia, because it did not prevent such carriage; the same exception did not relieve from the duty of timely delivery because there veas no physical prevention of delivery, no proven “commercial impossibility” of delivery, and there was, under the bills of lading, a way to keep all lawful engagements, which is the highest duty of all men.

We have assumed throughout this case that all exceptions apply as completely to the primary or dominant duty of redelivery as to all or any other obligations. It is not necessary to discuss the possibilities of its importance.

It follows that the decree appealed from is right as to its findings of liability, and directions as to order of payment.

[13] The measure of damages under the abnormal condition of affairs during the great war is very perplexing. All parties concede that the Cans Tine could not secure a steamer like the Themis. W'e do not think that it was its duty to secure two steamers aggregating her dead weight tonnage. To estimate the profits it would have earned had it received and used the steamer involves speculation lo a degree, which as the Commissioner and the court below found, makes such a measure entirely unsatisfactory. It seems to us that the fair measure of damages is what the Gans Tine could have got for the steamer in the market had she been delivered to it in time.

October 25 Barber & Co. offered the libelant 25 shillings per dead weight ton per month for a steamer of similar description. This Gans Tine accepted, but when it named the Themis, Barber & Co. refused to take her as not available, she being then on her way to New Zealand. This acceptance was persuasive evidence of what they thought the value of the charter party. December 9 the Gans Tine gave up further negotiations with Barber & Co., and chatter rates had by that time risen, and were gradually rising. We find that 30 shillings per ton per month would have been a fair market rate for the steamer at and shortly after the last-named date.

Decree modified by reducing damages to 30 shillings per dead weight ton per month, and, as modified, affirmed, with half costs in this court to the appellants.

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Dissenting Opinion

WARD, Circuit Judge

(dissenting in part). I agree with the opinion of the court except as to the allocation of the Gans Tine’s damages between tlie owners, the Nova Scotia Company, charterers, and Barber & Co., Inc., subchartcrers. My opinion is that the owners only should be held liable.

Imprimis, I lay out of the case two considerations to which great weight is given both by the District Judge and by this court.

The first is the provision contained in the charters and in the sub-charter that; while the master shall sign bills of lading as presented, the charterers will indemnify the owners against “all consequences or liabilities that may arise from the captain so doing.” This very familiar clause applies only to claims of shippers under the bills of lading, and no such claim ever arose in this case.

The second consideration is the provision in Barber & Co.’s bills of lading as to transshipment. This was a privilege to the carrier, but both the District Judge and this court hold that it is a privilege which Barber & Co., Inc., were bound to avail of. On the contrary, I think they were not bound to do so if the transshipment would have prejudiced the shipper under the bills of lading, which manifestly was Barber & Co.’s view. The owners and the Nova Scotia Company, charterer, were likewise so bound, because the bills of lading, signed by the master, or by Barber & Co. for the master, were as much theirs as they were Barber & Co.’s.

It seems to me unreasonable to say that Barber & Co. should have discharged the cargo of 11,000 tons of general merchandise accepted by them as common carriers on a concededly proper voyage because the unexpected closure of the Canal made it impossible to redeliver thé steamer at the dates fixed in the charters if the voyage were performed, or to say that the failure of Barber & Co. to instruct the master to transship at the island of Santa Lucia in the West Indies or at Durban, South Africa, and not the closing of the Canal, made redelivery on the agreed dates impossible.

It is very significant that this suggestion as to transshipment was made for the first time at the trial. Neither at the time the events happened nor in the pleadings in the cause did these experienced merchants and eminent lawyers make any such claim. No one of the parties interested dreamed of abandoning the Australian voyage, and after it had been performed the libel filed by the Gans Line and the petitions of the owners and of the Nova Scotia Company under the fifty-ninth rule (29 Sup. Ct. xlvi) was not that the voyage around the Cape violated the charter, but that the voyage originally planned, beginning September 12, 1915, via the Canal, violated the charter, because it made redelivery of the steamer at the charter dates impossible. Upon this latter question, however, both the District Judge and this court hold that the original voyage was reasonable and could have been performed in time for redelivery of the steamer to the owners, as agreed.

The question is whether the exception of dangers and accidents in the Canal contained in the charters to Nova Scotia Company and to Barber & Co., Inc., protects them against liability for failure to redeliver the steamer at the agreed dates because of the unexpected closure of the Canal. Of course this exception would not protect either the owners, the Nova Scotia Company, or Barber & Co., Inc., against claims of shippers if the voyage to Australia had not been performed, because manifestly the closure of the Canal would not have prevented performance, hut would only have made the time of performance longer. On the other hand, going around the Cape of Good Hope did make it impossible to redeliver the steamer at the agreed date, and, if it was the duty of the owners and of the Nova Scotia Company and of Barber & Co. to perform that voyage, a,s I think, and they apparently thought it was, then the owners have no claim against Nova Scotia Company or Barber '& Co., Inc., for doing so.