Thor v. Tropical Fruit Co., 281 F. 740

281 F. 740 | 2d Cir. | 1922

HOUGH, Circuit Judge

(after stating the facts as above). [1] The pleadings herein are singular, in that, after Atlantic Company had been impleaded under the former fifty-ninth rule (29 Sup. Ct. xlvi), an amended libel was filed against both that company and Tropical Company as respondents; such amendment quite changing the theory of recovery. It is not necessary to pick and choose between the various schemes of law presented by the pleadings. It is sufficient to apply the doctrine of The Volunteer, 149 Fed. 723, 79 C. C. A. 429, viz. that it is the practice in admiralty to bring all parties before the court, and to determine the controversy on the merits as it appears from the proof, regardless of technicalities of pleadings—always assuming (as may be done here) that no party is surprised or injured by that equitable proceeding.

From a business standpoint this case inquires: What rate of compensation should have been paid for the use of the Cuneo between May 11 and 24? Was it the rate of the three-year charter, or the current rate ? There is the further question: Who should pay such rate when fixed? The practical reason for the bungling out of which the litigation grew was that one broker (Hellieson) had made the three-year charter and collected hire thereunder. There had been changes in the ownership of the Cuneo, and the three-months charter was made by another broker (Bennett), and while Bennett knew of the three-year charter, Hellieson knew nothing of the three-months charter, and the owners were in Norway.

A question of law, however, lies at the bottom of the matter, viz.: Did or did not the three-year charter expire on May 10, 1918—a day when the Cuneo was lying empty in a port of redelivery under that document? Since that charter period was “about three years,” the legal query must be answered in accordance with the principles (the exact question has not heretofore arisen) of Munson v. Elswick (D. C.) 207 Fed. 984, affirmed 214 Fed. 84, 130 C. C. A. 612, Prebensens Dampskibsselskabet v. Munson, 258 Fed. 227, 169 C. C. A. 295, and Schoonmaker-Conners v. Lambert (C. C. A.) 269 Fed. 583, and cases there referred to. The rule there laid down, and succinctly stated in 214 Fed. at page 85, 130 C. C. A. 612, is that if the overlapping voyage be reasonable it is compulsory; but if the time remaining when in a redelivery port is so short that no reasonable voyage can be undertaken under cover of the overlap, the charterer may redeliver or the owner may withdraw; yet it depends upon the language of the charter party whether such redelivery is a privilege conferred by the owner on the charter, or a contractual obligation of the charterer to the oaraer.

[2] This three-year charter plainly imports a contractual obligation on the charterer (Tropical Company) to redeliver, and that obligation became effective and binding when the Cuneo was in a port of redelivery within a few hours of the termination of the flat period, and with no possibility of making a further reasonable voyage under cover of the overlap or the “about.” We hold, therefore, as matter of law that the three-year charter terminated at New Orleans, and further that the act of Tropical Company in fixing another delivery port (i. e.; one north of Hatteras) in its subcharter did not and could not vary its pre-existing obligation to the Cuneo’s owners.

The fact is proven that Tropical Company, knowing the steamer to be at New Orleans, and making no inquiry as to whether she was there to completely unload, represented to Hellieson (in substance) that owing to its subcharter to Atlantic Company it would not be ready to redeliver the steamer under the three-year charter until the vessel arrived in New York, and Hellieson acquiesced in this suggestion, and apparently expected (though the evidence is confused) to receive no more for the period from May 11 until arrival in New York (May 24) than at the rate of the three-year charter. The most favorable view of this matter for Tropical Company is that the actors both for that company and for Hellieson were laboring under a mistake of law, and believed that a charter for “about three years” would not expire until the Cuneo arrived at a port north of Hatteras; i. e., New York.

[3] A mistake of law arises when persons having full knowledge of the facts come to an erroneous conclusion as to their legal effect. But no estoppel can be grounded merely on such mistake. 21 Corp. Jur. 1126. And if Hellieson had extended, or be thought to have tried to extend, the three-year charter at the old rate, or any rate, the evidence is clear that he was entirely without authority so to do. Whether an estoppel could have arisen, had any party pleading estoppel been led by this mistake of law to change his position for the worse, is a question not presented by this record. Tropical Company wanted to bring the steamer to New York, in order to get as much as possible out of its profitable subcharter to Atlantic Company. This it did, and by so doing as matter of law used the Cuneo beyond the charter period, viz. from May 11 to May 24, and therefore it is obliged to pay for that breach of charter damages measured by the current rate of hire. Atlantic Fruit Co. v. A Cargo of Sugar, 249 Fed. 871, 162 C. C. A. 105.

The decree below is not complained of as to amount, and we assume that the current rate has been awarded. The bungling above alluded to resulted in the new brokers for the ship acquiescing in the erroneous interpretation of the charter put forward by Tropical Company, and the three-months charter to Atlantic Company was treated as becoming effective May 24th. Thus, by an erroneous construction of the three-year charter on the part of Hellieson and Tropical Company, and without the knowledge of libelant, Tropical Company profitably enjoyed the ship for about a fortnight without right; for that enjoyment it must pay, and pay at substantially the same rate as it did itself collect. But it does not pay because it collected, nor what it collected; the fact of profitable collection is only mentioned to show that it never changed its position for the worse in any respect.

[4] With this use by breach of charter party the Atlantic Company had no concern. Contractually there was no relation between the sub-charterer and the owner (The Banes, 221 Fed. 416, 137 C. C. A. 214); this action is for breach of the three-year charter. Therefore no reason appears for asserting any liability, immediate or contingent, against Atlantic Company.

As that company did not appeal, it can recover no costs in this court; but the decree below is modified, by striking therefrom the words relating to possible or ultimate recovery from Atlantic Company and the cause remanded, with directions to dismiss the amended libel as against Atlantic Company, with costs to that company as against the libelant.