Ellis v. Atlantic Mut. Ins. Co.
108 U.S. 342 (1883)

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U.S. Supreme Court

Ellis v. Atlantic Mut. Ins. Co., 108 U.S. 342 (1883)

Ellis v. Atlantic Mutual Insurance Company

Decided April 30, 1883

108 U.S. 342




Where a vessel, before she breaks ground for a voyage, is so injured by fire that the cost of her repairs would exceed her value when repaired, and she is rendered unseaworthy and incapable of earning freight, a contract of affreightment for the carriage of cotton by her to a foreign port, evidenced by a bill of lading, containing the usual and customary exceptions and providing for the payment of the freight money on the delivery of the cotton at that port, is thereby dissolved, so that the shipper is not liable for any part of the freight money, nor for any of the expenses paid by the vessel for compressing and stowing the cotton.

In admiralty. Libel for freight. The facts appear in the opinion of the Court.

Page 108 U. S. 343

MR. JUSTICE BLATCHFORD delivered the opinion of the Court.

This is a libel in admiralty against the cargo of the ship Tornado, brought by the master and owners of that vessel to recover freight money. The district court and on appeal the circuit court dismissed the libel. The libellants have appealed to this Court. The material facts found by the circuit court are these:

On the 24th of February, 1878, the ship, while moored at the wharf in New Orleans and bound on a voyage to Liverpool, England, and before she had broken ground for said voyage, was discovered to be on fire in her hold. Her master had given bills of lading for the transportation from New Orleans to Liverpool, with the exceptions usual in bills of lading, of 5,195 bales of cotton, of which 5,008 had been put on board, 164 were on the levee, and 23 had not reached the levee. Water was pumped into the ship to extinguish the fire, and on the 26th, near 6 o'clock P.M., being filled with water, she sank to the bottom of the river alongside of the wharf, a part of her bulwarks remaining above water. While so resting upon the bottom of the river, the ship, cargo, and freight were, on the 27th, libeled in the district court for salvage by the New Harbor Protection Company, and about 2 o'clock P.M. of that day the marshal, by virtue of a warrant of seizure issued by said court on said libel, took possession of the ship and cargo. On the 28th, about noon, the ship was pumped out and raised alongside of the wharf, and the discharge of the cargo on board was commenced, all of it being damaged by water, and some of it by fire, 336 bales having been removed by the salvors in an undamaged condition before the ship sank, but after the fire was discovered, but salvage was claimed and allowed on the entire cargo. On the same day, the proctor for the salvors filed in the district court a motion in writing suggesting that the whole cargo then being discharged from the ship was greatly damaged by water, and some of it by fire and water, and would in all probability have ultimately to be sold, being in an unfit condition to be sent to its destination, and an order of the court was thereupon made directing a sale of the cargo by the marshal upon the levee as it came out of the ship, on two days' advertisement, in such lots as might

Page 108 U. S. 344

accumulate from day to day. On the same day, an application was made to the court by the master of the ship in which he represented that he was desirous and entitled to bond the ship and cargo, and asked for a rule upon the libellant to show cause on the next day, March 1, why the order to sell the cargo should not be rescinded, and the master be allowed to bond the cargo. On March 1, the rule came on for hearing. The proctor for the salvors and counsel representing the insurers of the cargo appeared and resisted the rescinding of the order of sale, and counsel appeared for the master, who filed a formal claim to the ship and cargo. On the trial of the rule, witnesses were examined orally before the judge, among them various representatives of the underwriters on the cargo, who were called as witnesses by the proctor for the salvors and who testified that if their interest were to be consulted, they preferred that the cotton should be sold by the marshal as it came out of the ship, and that the master should not be permitted to bond the cotton. The counsel for the insurers of the cargo then asked leave to be heard on their behalf. To this the counsel for the master and claimant objected, and insisted that counsel for the underwriters on the cargo could not be heard until after the proof of abandonment to them by the owners of the cargo and acceptance of the abandonment. Thereupon, Mr. Palfrey, president of the Factors' & Traders' Insurance Company of New Orleans, which was one of the companies represented by said counsel and one of the witnesses who had been called to the stand as above stated, was recalled by said counsel and testified that so far as his company was concerned, the loss on the cargo had been paid or ordered to be paid, and said company had become the owner of the cotton insured by it, and abandonment thereof had been made and accepted by his company. After this, said counsel was allowed to and did make an oral argument in behalf of the underwriters in opposition to the motion to rescind the order to sell, which had been obtained by the salvors, but no pleadings were filed in behalf of the underwriters. Upon the trial of the rule, evidence was also taken, by order of the court, in relation to the condition of the cargo and whether the same was or was not a total loss. On

Page 108 U. S. 345

March 5, and before the district court had made any decision or order on the rule to rescind the order for the sale of the cotton, a proctor representing underwriters at Lloyds, by leave of the court, filed an intervention for the interest of the insurers of the freight on the cargo, in which it was prayed that the order for the sale of the cargo be rescinded. This intervention was supported by affidavits filed by the intervenors and by a brief of the proctor. Afterwards, on March 6, after consideration of the rule taken by the master of the ship to rescind the order of sale, and of the evidence and arguments thereon, and of the last-named intervention, and of the affidavits and brief submitted therewith, the court ordered that the master be allowed to bond the ship and such of the cotton then stored in the levee steam cotton press as was in good order, amounting to 523 bales, and that the remainder of the cargo on board the ship or upon the levee, which was more or less damaged, be sold by the marshal after three days' notice, and all questions of freight were reserved by the court, and the court appointed a trinity master to advise and assist in making sale of the cotton. On the 19th of March the underwriters filed their claim, claiming all of the cargo, and procured an order from the judge of the district court to be entered on their claim, suspending the right given to the master on the 6th of March, to bond such of the cotton as was stored in the levee cotton press, to-wit, about 500 bales, until the further order of the court. On March 26, the master not having bonded the cotton a rule was taken and duly served on him to show cause why the order of March 6, so far as it allowed him to bond a portion of the cotton, should not be rescinded, and the movers of the rule, the insurers of the cargo, be allowed to bond the same. The rule was heard on March 27, the movers of the rule and the master being represented by their respective counsel, and was by the court made absolute, without opposition, and the order allowing the master to bond said portion of the cargo was rescinded, and the movers of the rule were allowed to bond the same.

On the 30th of March the present libel was filed. The unsold cargo and the proceeds of that which had been sold

Page 108 U. S. 346

were then in the custody of the marshal, in the suit for salvage. The libel recites the proceedings above mentioned, and alleges that the cotton might have been picked, dried, and rebaled, and sent to its destination, and freight have been earned thereon, but that the application of the master to bond the cargo was refused, owing to the opposition of the libellant for salvage, and especially to the opposition of the underwriters on the cargo, and that, under the contract of carriage, it was the right as well as the duty and the desire of the libellants to pick, dry, and rebale so much of the cotton as might require it, and which could easily have been done, and to carry it to its destination and earn the freight money for carrying it, which they had been unable to do because they had been denied the right to bond it, owing to the opposition of the libellant for salvage and of the underwriters on the cargo, resulting in the taking away of the cargo entirely from the master, in consequence of which the entire freight money agreed on became due, as well as money paid by the libellants for compressing and stowing the cargo in the vessel, and other expenses incident thereto, and for railroad charges, for all of which the libel claims a lien on the cargo and on the proceeds of sale.

The circuit court found the following further facts:

The libellants paid for compressing the cargo before it was put on board, and for stowing it on board, and other expenses incident thereto, $14,278.26. The gross freight on the cargo, had it been delivered at its destination in Liverpool as required by the bills of lading, would have been

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