191 F. 744 | S.D.N.Y. | 1911
These are nine suits in admiralty, five of which are suits in personam against the Hamburg American Packet Company, the Mediterranean & New York Steamship Company, the Prince Line, Limited, the Cunard Steamship Company, and the Oceanic Steam Navigation Company, and four of which are suits in rem against the steamships II Piemonte, Giulia, Cerea, and Citta di Napoli. They were all brought by the same libelants, the firm of Schulz & Ruckgaber, to recover damages alleged to have been caused to the libelants by the unauthorized delivery by the steamships and steamship companies sued of certain shipments of lemons, the bills of lading for which were held by the libelants. The suits, by stipulation, have been tried together. They were originally brought only against the steamships or the steamship companies which imported the lemons; but subsequently in most of the cases W. H. Westervelt & Co., the importers of the lemons, and Brown & Seccomb and the Fruit Auction Company, fruit.auctioneers who sold the lemons, were brought in as defendants on petition by analogy to the practice under the fifty-ninth admiralty rule. A large amount of testimony has been taken, and elaborate and able briefs have been presented by the various counsel in the case; but the evidence, although somewhat complicated, is not contradictory in its material portions, and the substantial facts in the case are not in controversy.
In-the ordinary and usual method of proceeding, Westervelt & Co., upon receipt of the original bills of lading from Schulz & Ruckgaber, took one of the bills of lading to the customhouse, duly entered the merchandise, paid the estimated duty, and received a customhouse permit for the delivery of the goods. Upon presentation of such permit to the steamship, the goods were discharged from the steamship upon the dock. Thereafter, according to the usual custom of selling green fruit in New York, the goods were sold at auction on the dock by fruit auctioneers, who usually made considerable advances on the fruit to Westervelt & Co., and who, after the sale, accounted to them for the proceeds of the sale, after deducting advances, commissions, and charges of any kind. Westervelt & Co. deposited all moneys received from all sources in one bank account. About from 12 to 20 days before the maturity of any draft accepted by Fruhling & Goschen, Schulz & Ruckgaber sent to Westervelt & Co. a statement of the amount required to pay the draft, crediting Westervelt & Co. with the deposit already made of a dollar for every pound of the credit, and with any other proper credits, and Westervelt & Co. thereupon sent them a check for the amount called for by the statement. Westervelt & Co. rjiever sent Schulz & Ruckgaber any account of the sales of the fruit, .-and they never kept the proceeds of the business in a separate account, -and they were never requested to do so. They were never asked, and ■never undertook, to pay to Schulz & Ruckgaber the exact proceeds .-of -any specific importation. All their payments, after the introductory payment of a dollar for each pound of credit, were payments of the amounts or on account of the amounts necessary to put the bankers in funds to meet specific drafts maturing.
During the year 1905, up to June 7th, when the business relations ' .between Westervelt & Co. and Schulz & Ruckgaber ceased, Wester-,velt & Co. imported nearly 50 different lots of lemons, of which all '.but 17 lots were entered in the manner above described. Seventeen lots, however, were entered differently, and, as the libelants claim,
The lemons imported by Westervelt & Co. in the year 1905 were all sold at a heavy loss. The aggregate of the loss, of course, went on increasing as the business continued. The lemons imported were usually sold at an average of about 50 days after they were shipped from Sicily. As Westervelt & Co. were not to pay to Schulz & Ruckgaber the amount due on the drafts till shortly before the expiration of 90 days after their acceptance, considerable time passed between the sale of each shipment and the date when Westervelt & Co. paid the amount due on the draft drawn against it. During that time, in the ordinary course of business, in the spring of 1905, other shipments arrived and were sold, the proceeds of which were turned over to Westervelt & Co. The result was that Westervelt & Co. went on pay
The general legal proposition upon which these suits are based, that a carrier which issues a bill of lading for merchandise intrusted to it for carriage is only authorized to deliver the merchandise to the order of the holder of the bill of lading, is fundamental. The libelants assert that the two original bills of lading sent with each draft to Rruhling & Goschen, and by them forwarded to Schulz & Ruckgaber. were the only bills which the steamers could legally recognize as authority for the delivery of the shipments; that the “Duplicate — Not Negotiable” bills sent to Westervelt Si Co. were intended to be, and are understood in all mercantile circles to be, a mere copy of the real bills, and were sent to the importers merely for their convenience, and were not 'bills upon the production of which a delivery of the merchandise would exonerate the steamer; that, therefore, the delivery of the 17 lots of merchandise in question by the steamers to Westervelt & Co. was unauthorized, and the steamers are liable to Schulz & Ruckgaber for the value of the merchandise.
The respondents claim that the general principle of law relied on does not govern these cases. They argue that this is not the simple case of a single transaction, or of a series of separate transactions in which a banker advances cash or accepts a draft on the security of a bill of lading, but that the relations and liabilities of the parties must be determined by a- consideration of the general course of dealing between them for many years; that Westervelt & Co. were carrying on a large and continuous importing business, under a general arrangement with Schulz '& Ruckgaber for a banker’s credit: that, in the first place, Westervelt & Co. were the purchasers, importers, and' owners of the goods; that by their original deposit with Schulz & Ruckgaber of a dollar for every pound of credit, amounting to a little more than 20 per cent, of the purchase price, and by their payment of the freight, duties, insurance, and all charges of importation, as required by the provisions of the trust receipt, they had contributed as much as half or more than half the cost of the goods when landed on the dock ready for sale; that the interest of Schulz & Ruckgaber in the goods, as provided by the terms of the credit receipt, was that of a mere lienor holding them as collateral security for the repayment of amounts less than had been expended on them by Westervelt & Co.; and that, therefore, Westervelt & Co., as owners, had a right to demand the goods, and the steamers were justified in delivering them upon such demand. But in my opinion the simple answer to these facts is that Schulz & Ruckgaber held the bills of lading by which the steamships had agreed to deliver the goods only to the holders of
The respondents claim, in the next place, that, if Westervelt & Co. were not entitled to receive the goods as owners, they were entitled to receive them as the general agents of Schulz & Ruckgaber, having full authority to enter the goods at the customhouse, to receive the customhouse permit, and to take delivery of the goods from the steamship pursuant to the permit. They assert that by the express terms of the trust receipts, and by the unvarying course of dealing between the parties for 10 years previously, Schulz & Ruckgaber had never entered the goods or attended to any of the details of their entry, receipt, and sale; that Westervelt & Co. were always notified 1o come and take the original hills of lading with which to enter the goods, and had always done so; that in the 17 shipments in question Westervelt & Co. could have obtained the" original bills of lading by simply calling for them; that whether the entry was made upon one of the original bills or upon the “Duplicate. — Not Negotiable” hill was a matter which concerned the officials of the government only, and not Schulz & Ruckgaber; that as to Schulz & Ruckgaber Westervelt & Co. had general authority to enter the goods at the customhouse as part of the necessary proceedings by which they were ultimately sold and converted into money, and that the method in which the result was accomplished, was immaterial. But in my opinion the answer to all this is that, although Westervelt & Co. were general agents of Schulz & Ruckgaber in all other respects, they had no authority to obtain delivery of the goods except by the production of the original bills of lading. Schulz & Ruckgaber never authorized or knew of the use of the “Duplicate — =-Not Negotiable” bill with which to enter the merchandise and obtain its delivery, and, so long as they held the original bills of lading, the steamships had no right to deliver the merchandise to any other person.
The respondents assert that Schulz & Ruckgaber were bound to notify the steamships promptly of their interest in the merchandise, if they proposed to repudiate the authority of Westervelt & Co. to receive it: that the merchandise was perishable property; that, if not called for promptly, the steamships were not obliged to store it, hut were authorized to sell it and hold the proceeds for whom it might concern; that, the goods being perishable, the customhouse authorities, under a Treasury regulation, were not allowed to store them under general orders, hut were under a duty to sell them and hold the proceeds for those entitled to them, if the duties were not promptly paid; that, therefore, if Schulz & Ruckgaber did not produce (he bills of lading promptly and take delivery of the goods, the steamships, either on their own motion, or by order of the government officials, could have unloaded the lemons and sold them; that by provisions in the bills of lading the steamships were exempt from liability for the goods under such circumstances after they left the ship’s tackles ; and that, therefore, they cannot be held liable when the same result was accomplished in another way while Schulz & Ruckgaber were negligent in exercising their rights under the bills of lading which they
The respondents, assert that it has been the custom of steamships in the port of New York for many years to deliver merchandise on the production of the customhouse permit, and not to require the production of the bills of lading; that by law one original bill of lading must be filed in the customhouse on the entry of imported goods; that in some cases only one bill of lading is issued; that, where more than one is issued, the others sometimes never arrive; that, when they do arrive, it is, in the usual course of business, by a subsequent mail, and sometimes a long time after the arrival of the first bill; and that to require the actual production and delivery to the steamships of an original bill of lading in addition to the customhouse permit for delivery would cause delay, inconvenience, and loss in all importing business, and particularly in the business of importing perishable goods. But the custom of a particular port cannot abrogate the specific agreement in all bills of lading that the merchandise is to be delivered to or upon the order of the holder of the bill. The strict maintenance of this rule is essential to the security of international commerce. Most of the vast business of importing merchandise from foreign countries is done by means of banker’s credits, and it is vitally essential to such a business that the bills of lading held by the bankers should constitute an undoubted lien on the merchandise, so long as the bankers hold the bills. The steamship lines have undoubtedly found it convenient, and usually safe, to assume that, if the cus- • tomhouse officials have issued a permit for delivery, a valid bill of lading has been filed with them. But, if the customhouse officials have been induced to issue a permit for delivery on an invalid bill of lading, that is, in my opinion, no more a protection to the steamship lines than if they had themselves accepted such a bill as valid, and delivered the merchandise in reliance on it.
But the counsel for the libelants asserts that most of the money paid over was not the proceeds of the lemons, and that, therefore, his clients have not received such proceeds. • This claim is based on the fact that Brown & Seccomb and the Fruit Auction Company, the auctioneers who sold the lemons, made advánces to Westervelt & Co. of $1.50 a box on the arrival of the shipments, in order to provide funds for the payment of duties, freight, and other charges of importation, which were charged in the accounts rendered after the sale. The libelants claim, if I understand the claim correctly, that these advances were loans, the reimbursement of which absorbed to that extent the proceeds of the sales, and that the only proceeds of the sales of the lemons which reached Schulz & Ruckgaber were the cash balances paid over by the auctioneers on the final settlement of the accounts of sales of each shipment.
But the libelants claim that Westervelt’s unauthorized entry of the 17 shipments in question concealed the insolvent condition of Westervelt & Co., and caused Schulz & Ruckgaber to go on granting further credits, by means of which the total indebtedness of Westervelt & Co. and the consequent loss of Schulz & R’.uckgaber was increased beyond what it would have been if the unauthorized entries had not been made. It is asserted that Schulz & Ruckgaber assumed, so long as Westervelt & Co. had not obtained from them the original bills of lading, that the shipments had not been entered and the proceedings not started which would result in a sale; but that, in fact, such goods having been entered, the sales were had earlier than Schulz & Ruckgaber supposed, and thereby funds were obtained which were applied to the payment of maturing drafts, and in this way the business was kept running and the indebtedness increasing longer than would otherwise have occurred. The libelants’ counsel thus states liis position in Ills brief;
“Selralz & Ruckgaber would have discovered Westervelt & Co.'s financial difficulties long before the confession of June 7, 1005, * " * if, in the tii'st place, the steamship companies had not issued to the shippers the triplicate bills of lading 'to order signed; * * * if, in the second place, the steamship companies liad insisted upon the product ion of at least one original bill of lading before surrendering any particular shipment.”
It was undoubtedly an act of carelessness on the part of the steamship companies to sign the bill of lading sent to Westervelt & Co. It was stamped, “Not negotiable,” was only meant to be used as a copy, and in many instances .such bills are, in practice, not signed by the officers of the vessels issuing them. The custom of providing in such bills that the merchandise is to be delivered to order, which seems to have become more usual in recent years than formerly, is also a careless one. If the bills in these cases had been made to the order of Kruhling & Goschen, on whom the drafts were drawn, the master's copy of the bill retained on the steamer would have shown that bankers held the bills of lading and had a lien oil the goods, and the entry of the goods by Westervelt &, Co. by means of the “Duplicate — Not Negotiable” bill of lading would have been much more difficult, and would _probably not have been attempted. But 1 cannot perceive how the entries made on the unauthorized bills of lading protracted the business or increased the indebtedness. It appears in evidence that the original bills of lading in all but 4 of tlie 17 shipments in question were received by Schulz & Ruckgaber from Rondon long enough before the sales to have permitted the merchandise to be entered upon them and sold at the same time and manner in which it was sold. It only takes an hour or two to make a customhouse entry. In the case
My conclusion is that, while the libelants have a technical cause of action, they have suffered no damage from the acts complained of. The libels in all the cases are dismissed on the merits, with costs to the respondents.