Summary
In W.E. Hedger, this Court concluded that there was no concursus justification for marshaling claims brought under a personal contract into a limitation proceeding.
Summary of this case from Mediterranean Shipping Co. v. Pol-AtlanticOpinion
No. 9.
Argued October 11, 1933. Decided November 6, 1933.
1. Rulings of the court below that, under the circumstances of this case, a contract of charter, orally arranged by an employee of a corporate owner, was the personal contract of the owner; and that a bailee of cargo was entitled to recover for its loss due to a breach of the warranty of seaworthiness, sustained. P. 88. 2. A boat owner who has chartered his boat by his personal contract of charter can not, under U.S.C. Title 46, §§ 183, 188, 189, limit his liability for breach of his warranty of seaworthiness, even though such warranty is not expressed in the contract but is merely implied. P. 88. 3. The warranty of seaworthiness is implied from the circumstances of the parties and the subject-matter of the contract, and is as much a part of the contract as any express stipulation. It may be negatived only by express covenant. P. 88. 4. Inasmuch as the warranty of seaworthiness relates only to the fitness of the vessel at the commencement of the voyage, and not to her suitability under conditions thereafter arising which are beyond the owner's control, the denial of limitation of liability in cases where the owner by his personal contract warrants seaworthiness does not cut away the protection afforded to ship owners by the Acts of Congress. P. 88. 62 F.2d 68, affirmed.
Mr. Horace L. Cheyney for petitioner.
The decision below gives rise to a most anomalous situation. If a shipowner in New York City there receives cargo and personally issues a bill of lading, he can not limit liability. On the other hand, if the master of the vessel signs the bill, the owner can limit liability. Furthermore, if cargo is shipped on board a vessel in New York Harbor under a through bill of lading from the West, the owner can still limit liability because he has made no personal contract. It is inconceivable that Congress, in passing the Limited Liability Law, ostensibly for the encouragement of American shipping, intended such results.
Pendleton v. Benner Line, 246 U.S. 353, denied the right to limit liability because the owner had entered into a personal contract containing an express warranty of seaworthiness. This Court has never held this of an implied warranty imputed by law.
Under the Act of 1851, the right to limit liability depends upon whether or not the loss is with the privity and knowledge of the vessel owner. The sole effect of the Act of 1884 was to enlarge the scope of the limitation laws and to permit the vessel owner to limit liability against claims not included within the provisions of the earlier Act. Gokey v. Fort, 44 F. 364; Richardson v. Harmon, 222 U.S. 96; Great Lakes Towing Co. v. Mills Transportation Co., 155 F. 11.
There is conflict in the decisions of the Circuit Courts of Appeals on the question of the right of the owner to limit liability where he has made a personal contract. Second Circuit: The Republic, 61 F. 109; The Tommy, 151 F. 570; The Loyal, 204 F. 930; The Ice King, 261 F. 897; Cranford-Cumberland, 1927 A.M.C. 1615; The Soerstad, 257 F. 130. Third Circuit: The City of Camden, 292 F. 93; Tucker Stevedoring Co. v. Southwark Mfg. Co., 24 F.2d 410. First Circuit: Quinlan v. Pew, 56 F. 111. Fourth Circuit: Pocomoke Guano Co. v. Eastern Transportation Co., 285 F. 7; Wessel Duval Co. v. Charleston Lighterage Transfer Co., 25 F.2d 126. Sixth Circuit: Great Lakes Towing Co. v. Mills Transportation Co., 155 F. 11.
The Circuit Court of Appeals in this case, apparently disregarding its preceding decision in The Ice King, 261 F. 897, and the admonition of this Court in Capitol Transportation Co. v. Cambria Steel Co., 249 U.S. 334, has gone back to the decision in The Loyal, 204 F. 930.
In the Pendleton case (which was followed in Luckenbach v. McCahan Sugar Co., 248 U.S. 139), and in Capitol Transportation Co. v. Cambria Steel Co., 249 U.S. 334, it was contended that the right of the vessel owners to limit liability was fixed by the Act of 1884, and that that Act repealed the Act of 1851. We contend that the Act of 1884 did not repeal the Act of 1851, and that the right of the petitioner here is to be determined by the provisions of the latter Act.
Under that Act the right of the owner to limit liability for cargo losses depends upon whether the loss occurs with his privity or knowledge and not upon whether he had made a personal contract for the carriage of the goods.
Where there is no express warranty, this so-called implied warranty is not a part of the contract but is only a result or condition which follows from the relations which the parties have created for themselves by the contract. Steel v. State Line S.S. Co., 3 A.C. 86.
The petitioner made no contract, personal or otherwise, for the carriage of the cargo. The charter was a demise whereby the charterer became the owner pro hac vice of the boat. Monk v. Cornell Steamboat Co., 198 F. 472; The Willie, 231 F. 865; Dailey v. Carroll, 248 F. 466.
Petitioner warranted the seaworthiness of the barge to Hedger, but that warranty was only as to the seaworthiness of the boat at the time of its delivery and was not continuous. The Ice King, 261 F. 897; O'Boyle v. United States, 47 F.2d 585.
There was no implied warranty of the seaworthiness of the boat by Cullen, its owner, to the owner of the cargo; but Hedger, the charterer and carrier, did impliedly warrant the seaworthiness of the boat to the cargo-owner under the contract of carriage.
The liability in the case of a chartered vessel extends only to the vessel itself, and the owner is not personally bound for the performance of the contract of carriage made by the charterer. Taylor Bros. Co. v. Sunset Lighterage Co., 43 F.2d 700.
If the bailee merely sued on behalf of the cargo-owner or its underwriters the vessel was entitled to limit liability. The charterer, as bailee of the cargo, has no higher rights than the cargo-owner.
The court below has denied the right of the petitioner to limit liability because it made a personal contract, notwithstanding it had never made any contract, personal or otherwise, for the carriage of the cargo and had no contractual relations whatsoever with the cargo-owner.
Hedger filed his claim merely as bailee of cargo. He made no claim to recover on account of his liability over, and it is not shown that he was liable over.
The boat owner is entitled to limit liability because the contract of charter was not made by any of its managing officers but by an employee.
Mr. Thomas H. Middleton, with whom Mr. Forrest E. Single was on the brief, for respondent.
A corporation can act only through its agents, but if a corporation gives its marine superintendent authority to charter its boat, the charters are no less personal contracts of the corporation than they would be if entered into by its president or other authorized officer. The test of "personal contract" is not the name of the officer but his authority to bind the corporation. Procter Gamble Co. v. Atlantic Oil Trans. Co., 65 F.2d 589; Great Lakes Towing Co. v. Mills Transportation Co., 155 F. 11; In re P. Sanford Ross, 204 F. 248.
The warranty of seaworthiness which the law affirmatively implies in every such contract was admittedly breached by petitioner; there is no valid ground for a distinction between an express warranty and an implied warranty in such cases, and this Court, in Capitol Transportation Co. v. Cambria Steel Co., 249 U.S. 334, established the rule that the breach of an implied warranty of seaworthiness will defeat limitation.
Respondent was demise charterer of the scow and bailee of her cargo at the time of the loss, and its right to maintain a suit to recover the cargo loss as bailee thereof, for breach of the warranty of seaworthiness, was declared by this Court in Pendleton v. Benner Line, 246 U.S. 353.
Petitioner failed to show that the unseaworthy condition of the scow was without its privity or knowledge.
The petitioner owned a deck scow known as Cullen No. 32. The respondent wished to use her to lighter ore from ship-side in New York harbor to the plant of the Grasselli Chemical Co., the consignee of the ore. A charter for an indefinite term, at a fixed daily rate of hire, was orally arranged by telephone with the petitioner's marine superintendent. The day following the demise, while being loaded from the ship, the scow capsized, dumped her cargo, and damaged an adjacent wharf and vessel. Suits ensued, one of them by the respondent as bailee of the cargo, against the petitioner as owner of the scow. Limitation of liability was sought by the petitioner, but the district court refused a decree for limitation, finding that the scow was unseaworthy at the time of the demise.
The circuit court of appeals concurred in this finding and based its affirmance of the trial court's decision upon the ground that as the charter was the personal contract of the owner and included an implied warranty of seaworthiness the petitioner was precluded from the benefit of the limitation statutes.
R.S. 4283, 4289; Act of June 26, 1884, c. 121, § 18, 23 Stat. 57; U.S. Code, Tit. 46, §§ 183, 188, 189.
The petitioner, conceding that where the owner personally expressly warrants seaworthiness he is not entitled to the benefit of the limited liability statutes, ( Pendleton v. Benner Line, 246 U.S. 353; Luckenbach v. McCahan Sugar Refining Co., 248 U.S. 139), correctly states that despite the decision of this court in Capitol Transportation Co. v. Cambria Steel Co., 249 U.S. 334, the contrariety of opinion which existed in the various circuits prior to that case, as to the effect of the implied warranty of the owner, still persists. We therefore granted certiorari.
Quinlan v. Pew, 56 F. 111; The Republic, 61 F. 109; The Tommy, 151 F. 570; Great Lakes Towing Co. v. Mill Transp. Co., 155 F. 11; The Loyal, 204 F. 930.
The Ice King, 261 F. 897; Pocomoke Guano Co. v. Eastern Transp. Co., 285 F. 7; The City of Camden, 292 F. 93; Tucker Stevedoring Co. v. Southwark Mfg. Co., 24 F.2d 410.
289 U.S. 717.
We pass, without discussion, the contentions that the court below erred in its rulings that the owner's contract was personal and that the respondent as bailee of the cargo was entitled to recover from the charterer, as we are of opinion that both points were correctly decided ( The Benjamin Noble, 232 F. 382; 244 F. 95; Capitol Transportation Co. v. Cambria Steel Co., supra; Pendleton v. Benner Line, supra, 355-356), and come to the question of petitioner's right of limitation notwithstanding the implied warranty of seaworthiness. The Capitol Transportation case is an authority against the right. As appears by the opinion of the district court (232 F. 382) the contract of the owner in that case was oral and no express warranty was given.
We see no reason to restrict or modify the rule there announced. The warranty of seaworthiness is implied from the circumstances of the parties and the subject-matter of the contract and may be negatived only by express covenant. It is as much a part of the contract as any express stipulation. Hudson Canal Co. v. Penna. Coal Co., 8 Wall. 276, 288; Grossman v. Schenker, 206 N.Y. 466, 469; 100 N.E. 39; United States v. Bentley Sons Co., 293 F. 229.
Lawrence v. Minturn, 17 How. 100, 110; Work v. Leathers, 97 U.S. 379; The Caledonia, 157 U.S. 124, 130; The Carib Prince, 170 U.S. 655; The Irrawaddy, 171 U.S. 187, 190; The Southwark, 191 U.S. 1.
The petitioner urges that the denial of limitation in cases like this will sweep away much of the protection afforded to ship owners by the acts of Congress. But this view disregards the nature of the warranty. The fitness of the ship at the moment of breaking ground is the matter warranted, and not her suitability under conditions thereafter arising which are beyond the owner's control. Compare Armour Co. v. Fort Morgan S.S. Co., 270 U.S. 253; The Ice King, 261 F. 897; The Soerstad, 257 F. 130.
The judgment is
Affirmed.