Sudden v. Crossett Western Lumber Co., 270 F. 537

Sudden v. Crossett Western Lumber Co.

270 F. 537 | 9th Cir. | 1921

GILBERT, Circuit Judge

(after stating the fads as above). [1] The conclusion of the court below was based upon the rule which was applied by this court in Conner v. Manchester Assur. Co., 130 Fed. 743, 65 C. C. A. 127, 70 L. R. A. 106, where we held that an insurance certificate, containing the provision that its terms were subject to all the terms and conditions of a certain open policy in the possession of the insurance company, bound the insured to the provisions of such open policy, although he had no knowledge of Ihe contents thereof. The facts in the present case, we think, take the controversy out .of the *540rule there announced. The appellee held the Tampico under a charter from its owner. It entered into a charter party with the appellant for a prescribed voyage, giving it tire option to use the vessel for a second voyage of a similar nature. The contract was expressly made subject to the provisions of the original charter from the owner to the appellee. The appellant sent the vessel on her first voyage. At that time it had. not determined whether or not it would exercise the option for a second voyage. On December 17, 1915, the appellee wrote to the appellant, inquiring whether it would want the vessel for another voyage. On December 20 the appellant answered, saying:

“Will you please send us copy of your contracts with the Pacific Coast Company with reference to this steamer. We have a copy of the Eureka contract, but not of the charter of the Tampico. * * * As soon as we have this information, we hope to be able to answer promptly as to whether or not we will want to use the vessel for another trip.”

At that time the appellant was negotiating with W. R. Grace & Co. for the use of the Tampico for a second voyage. The letter of December 20 was sent in order to ascertain the date of the appellee’s redelivery obligation to the owner. On December 27, 1915, the appellee answered, saying that its charter of the Tampico from the owner “reads practically the same as that of the Eureka, except that we are to make redelivery about June 15,” and the letter closed with the request that on receipt thereof the appellant advised the appellee of its decision as to the option. Upon receipt of that letter the appellant closed its negotiation with. W. R. Grace & Co. and fixed the vessel for the second voyage. On December 31, 1915, the appellant wrote to the appellee:

“We will exercise our option of the second voyage of the steamer Tampico.”

On January 3, 1916, the appellee acknowledged receipt of that notice and said:

“As wo formerly wrote you, the charter of this boat expires not later than June 15, 1916.”

These communications from the appellee answered the appellant’s, inquiry as to the term of the original charter party. The appellant had asked for a copy of that charter, for the purpose of ascertaining the length of time for which the owner had parted with the right of possession. The letters conveyed that information fully and completely. The appellant had the right to rely on the information so furnished. It had the right to believe that there was no provision in that charter party by which the term thereof could be abbreviated at the option of the owner. The representation was made with the intention that it should be acted upon. It was a representation such as to induce a reasonable and prudent man to believe that it was intended to be acted upon, and the appellant .in acting upon it exercised such reasonable diligence as the circumstances required. The situation is the same as it would have been, had the appellee sent the appellant a copy of that charter party, with the optional provision in favor of the owner inadvertently omitted therefrom. The appellee knew for what purpose the information was sought, and it was advised of the *541voyage which the appellant had in contemplation. For further information it referred the appellant to the charter which the appellee had from the owner of the Eureka, a copy of which was in the possession of the appellant. That charter party contained no provision by which ihe term thereof could be abbreviated at the option of the owner.

[2] The appellee asserts, as to the case made by the cross-libel, that estoppel cannot be used as a basis of affirmative relief, and cites Dickerson v. Colgrove, 100 U. S. 578, 25 L. Ed. 618, where the court said that estoppel—

“is available only ior protection, and cannot be used as a weapon of assault. It accomplishes that which ought to bo done between man and man, and is not permitted to go beyond this limit.”

That was an action of ejectment. The defense was based upon equitable estoppel, and was held sufficient; the court ruling that the action involved both the right of possession and the right of property, and, as the facts indicated that the plaintiff was not in equity and conscience entitled to disturb the possession of the defendants, the latter might rely upon the doctrine of equitable estoppel to protect their possession. In the present case estoppel is not made the basis of the relief sought by the cross-libel. The relief sought is based only upon the terms of the contract between the appellant and the appellee, and estoppel is asserted only as against the defense which the appellee pleaded thereto, and we see no reason why it is not available for that purpose.

[3] It is contended that there can be no estoppel in cases where, as here, the representations were made without fraudulent intent. But the rule is well established that it is not necessary that the representations shall have been made with such an intent. It is sufficient if they are “of such a character as to induce a reasonable and prudent man to believe that they were intended to be acted on.” 21 C. J. 1121; 10 R. C. L. 691.

[4] One of the defenses asserted by the appellee to the damages claimed upon the cross-libel is the fact that the appellant sublet the Tampico to W. R. Grace & Co. without the consent of the appellee; the charter between the appellant and the appellee having provided, “Charterers to have the option of subletting the steamer, provided consent of owners obtained,” and Mitchell, the manager of the appel-lee, having testified that the appellee never consented to any subchar-ter. To this it is to be said that it does not appear from anything in the record that the appellant did in fact subcharter the vessel to W. R. Grace & Co., or that it entered into any agreement with that company other than a contract of affreightment. It appears, also, that the letter of the appellant to the appellee of December 20, 1915, advised the appellee that the appellant proposed to use the Tampico in performing its obligation to W. R. Grace & Co. and that no objection was made by the appellee.

[5, 6] The record presents the question of the rights and obligations between the appellant and the appellee from and after the time when the former received, on January 11, 1916, notice that the Pacific *542Coast Steamship Company demanded possession of the vessel on or before May 15, under the right which was reserved to it in the original charter. We think that from and after that date the appellant had no right to enter into contracts for the use of the Tampico in reliance upon the appellee’s said representations. The vessel was then on her way home from her first voyage. She was not sent out upon the second voyage until February 22, 1916. What the contractual relations were between the appellant and W. R. Grace & Co. on January 11 does not appear from the record. It is not shown that there was then a binding contract between them.' The appellant’s testimony that at that time the vessel was fixed for the second voyage may mean only a fixed intention in the minds of the appellants to use the vessel for a second voyage. The appellant’s defense to the original libel and its claim for damages in the cross-libel rest upon estoppel, and to establish estoppel it must show that, relying upon the representations of the ap-pellee, it changed its position to its injury. “The whole office of an equitable estoppel is to protect one from a loss which, but for the estoppel, he could not escape.” 10 R. C. L. 698.

We think the decre.e of the court below should be reversed, and the cause remanded to that court, with instructions to ascertain and adjudge the amount, if any, to be awarded to the appellee upon the issues created by the libel and the answer thereto, and the damages, if any, to be awarded to the appellant under the issues arising upon the cross-libel, and to enter a decree accordingly. The parties to have permission to take further testimony upon the issues so to be determined.

It is so ordered.