Northern Pacific Ry. Co. v. American Trading Co.
195 U.S. 439 (1904)

Annotate this Case

U.S. Supreme Court

Northern Pacific Ry. Co. v. American Trading Co., 195 U.S. 439 (1904)

Northern Pacific Railway Company

v. American Trading Company

No. 24

Argued October 26-27, 1904

Decided December 6, 1904

195 U.S. 439

Syllabus

A shipper in New York, after stating that .he was about to make a contract of sale of lead in Japan during the Chinese-Japanese War, and that time of delivery was of vital importance, made a written contract with the general eastern agent of the Northern Pacific Railroad, then being operated under order of the court, by receivers, for shipment of 200 tons of lead at a given rate, to be shipped from Newark before a certain date to Tacoma and thence by Northern Pacific steamer sailing on a specified date. The receivers had a contract with the steamship company authorizing it to make through rates to Asiatic ports. The lead was shipped by the required date and, after shipment, the clerk of the shipper was given a bill of lading of the railroad company which he did not read and which contained a provision that the railroad company was not liable beyond its own line and which the shipper hypothecated with his bank as collateral. The lead reached Tacoma and was loaded on the steamer sailing on the day specified, but the subcollector refused a clearance on the ground that the lead was contraband of war. The master thereupon unloaded the lead, obtained the clearance, and sailed. The collector, in answer to inquiries of the subcollector, notified him not to withhold the clearance, but the vessel had sailed and the shipment was delayed so that it did not reach Japan until six weeks after the vessel specified in the contract, and after hostilities between China and Japan had ceased. Meanwhile, the price of lead had fallen, and the lead was sold at a loss. In an action by the shipper against the Northern Pacific Railway Company, which had acquired the road subject to all liabilities of the receivers, held:

That the agent of the receivers was not the agent of the steamship company, but the contract made by him was on behalf of the receivers, who assumed responsibility beyond the line of their own road; that, under the order appointing them and directing them to operate the road, the receivers had power to make a contract of this nature, and that it was within the scope of the powers of a general agent to make the contract on their behalf.

That a special written contract to transport by more than one line and to deliver within a specified time is not affected by a provision in the printed part of a through bill of lading, delivered as this was after the shipment of the goods, to the effect that the responsibility of the carrier issuing the bill of lading ceases at the terminus of its own line.

Page 195 U. S. 440

That as it is not illegal to export articles which are contraband of war although the articles and the ship which carries them are subject to the risk of capture and forfeiture, neither any law of the United States nor any provision of international law was violated by the making of the contract notwithstanding the lead was contraband and was to be delivered in the port of a belligerent.

That a collector cannot legally refuse a clearance to a vessel bound to a port of a belligerent because it has on board articles contraband of war. That the mistaken act of a subordinate official not justified by law in refusing a clearance to a vessel entitled to sail is not sufficient as an excuse for the nonperformance of the contract similar to that involved in this case, and is not a "restraint of princes, rulers or people" within that clause of the bill of lading.

The Northern Pacific Railroad Company made a certain mortgage which was foreclosed, and the Northern Pacific Railway Company purchased the property of the former company under the mortgage at the foreclosure sale, and, by the order of the court, the purchaser was required to pay all obligations or liabilities contracted or incurred by the court's receivers, who had been appointed in the foreclosure suit. The American Trading Company, the appellee herein, intervened in that suit, and, by its petition, asked that, by virtue of the decree in foreclosure, the purchaser, the Northern Pacific Railway Company, be required to pay damages for the failure of the receivers to perform a special contract for the transportation of goods from Newark, New Jersey, to Yokohama, in Japan. The case was tried before the United States circuit court in New York city, which dismissed the petition. This decision was reversed by the Circuit Court of Appeals for the Second Circuit, and the railroad company was directed to pay the damages therein stated to the American Trading Company, the intervening petitioner. The railroad company has appealed from such decree or order to this Court. The case was tried upon the agreed statement of facts which follows:

1. In September, 1894, Thomas F. Oakes, Henry C. Payne, and Henry C. Rouse were receivers of the Northern Pacific Railroad Company, under an order made in a suit bearing the same title as the present suit, in the United States Circuit

Page 195 U. S. 441

Court for the Eastern District of Wisconsin, to which this suit is ancillary. Under that order the receivers were authorized to continue, and were continuing, to carry on the business of the railroad in their charge.

2. The line of railroad in the possession of the receivers extended from Duluth, Minnesota, to Tacoma, Washington. The receivers had contracts with various carriers reaching points on their line, by which through bills of lading were issued from and to points not upon the line of the receivers' railroad, where the freight passed over some part of that line in transit. Among the carriers with whom the receivers had such arrangements was the Northern Pacific Steamship Company. This was an English company, operating a line of steamers between Tacoma and points in Japan and China, including Yokohama. The contract between the steamship company and the receivers was the contract originally made on March 30, 1892, between the Northern Pacific Railroad Company and the Northern Pacific Steamship Company, and ratified and adopted by the receivers, under the authority of an order of the circuit court of the United States, made on September 13, 1893.

The receivers held no stock in the steamship company, and had no other express contract relation with the steamship company. This stipulation is not to be accepted as an admission by the railroad company, or the receivers, or their counsel, that there were any relations between the receivers and the steamship company other than those growing out of the facts herein agreed upon.

For convenience in transacting their freight business in the eastern part of the United States, the receivers maintained an office in the City of New York, which was, in September, 1894, in charge of one George R. Fitch, who was their general eastern agent, and made arrangements for the transportation of freight over the receivers' line of railway and connections, including transportation to China and Japan.

At the time of the transactions referred to in this statement

Page 195 U. S. 442

of facts, the said Fitch had not received, nor did he receive, any direct or independent appointment or authority from the Northern Pacific Steamship Company, to act as agent of that company. His only authority as agent of the steamship company was that created by, or arising from, the contract, exhibit A. Fitch knew that an arrangement had been concluded by the receivers and the steamship company, by which contracts for through shipment to Yokohama might be made by the agents of the receivers, and through bills of lading issued, and he had been instructed by the receivers to solicit freight for through transportation upon bills of lading, of which exhibit C, hereto annexed, is a copy; but Fitch did not know the terms of the contract between the steamship company and the receivers, and the trading company did not know what company operated the steamships between Tacoma and Yokohama, or that the steamship company was a separate and independent company or that there was any contract between the receivers and the steamship company.

It is further stipulated that Fitch had no express general authority to make contracts for through transportation, except as provided by the said bills of lading, and no authority to make the contract in question, unless such express authority be found in the telegrams, of which copies are hereinafter set forth; that the American Trading Company did not know the terms of his express authority, and that this stipulation is not to be taken as an admission by the railroad company, or the receivers, or their counsel, that his implied authority was greater than his express authority.

4. The American Trading Company is, and was in September, 1894, a corporation organized under the laws of the State of Connecticut, having its principal office in the City of New York, and carried on a general commercial business with Asiatic ports.

5. In September, 1894, the trading company applied to Fitch for a rate upon a proposed shipment of pig lead from New York to Yokohama, Japan, and informed him that it

Page 195 U. S. 443

was of vital importance that the lead should be transported promptly, and go forward by the earliest possible steamer, without delay, in order to enable the trading company to fulfill a proposed agreement, which it was about to make for the sale of the lead in Japan, and which would require its delivery there at a fixed date. Fitch thereupon named a rate, and undertook to forward the lead from New York on or before September 29th, and via the Northern Pacific steamer Tacoma, sailing from Tacoma October 30, 1894.

6. Thereupon the trading company cabled to its agents at Yokohama, naming a price, and a date at which the lead could be delivered there, and thereupon its agents in Yokohama made a contract for the sale of the lead, which contract provided that it should be delivered in Yokohama by overland route, and the most direct connection at San Francisco, Tacoma, or Vancouver, and that, in case of unusual or extraordinary delay in transit, the contract should be null and void. Neither Fitch nor the receivers knew, until September 24th, that any contract for the sale of lead in Japan had been concluded by the trading company, and, except as hereinbefore and hereinafter stated, they never received any information in regard to its terms, as made or proposed. Upon the conclusion of its Japanese contract, the trading company purchased two hundred tons of pig lead in bond, from the Balbeck Smelting & Refining Company.

7. On September 19, 1894, Fitch, in confirmation of his previous statement, wrote and sent to the trading company the following letter:

"Northern Pacific Railroad Company"

"Thomas F. Oakes, Henry C. Payne, Henry C. Rouse, Receivers"

"Geo. R. Fitch, General Eastern Agent, 319 Broadway"

"Traffic Department, New York City, Sept.19, 1894"

"American Trading Co. 182 Front St., City."

"Gentlemen: I hereby confirm rate quoted you this day,

Page 195 U. S. 444

and accepted by you on shipment of pig lead for export to Japan, as follows:"

"Pig lead, New York to Yokohama, Japan, $15.00 per ton of 2000 lbs., shipment not to consist of less than 400,000 lbs., and to be forwarded from New York on or before Sept. 29th, in accordance with shipping instructions given you by me, and to be forwarded from Tacoma, Wash., via Northern Pacific steamer sailing from thence October 30th. Kindly forward your acceptance of the above as early as possible. Thanking you for the favor, I remain,"

"Yours truly,"

"Geo. R. Fitch"

bas

"G. E. Agent"

The trading company wrote and sent in reply (accepting the proposition) the following letter:

"Sept. 20th, 1894"

"The Northern Pacific R. Co., New York City."

"Dear Sirs: In reply to your esteemed favor, Sept.19th, we beg to accept the rate quoted to us in your letter of Sept.19th, namely, on 200 tons of pig lead, N.Y. to Yokohama, Japan, $15,00 per ton of 2,000 lbs., shipment not to consist of less than 400,000 lbs., to be forwarded from N.Y. on or before September 29th, in accordance with shipping instructions to be given by you, and to be forwarded from Tacoma, Washington, via Northern Pacific Steamer sailing from that port Oct. 30th. Kindly let us know as soon as possible the shipping instructions, so that we can forward them to our supplier, and oblige, with best respects,"

"Very truly yours,"

"The American Trading Co."

"(Signed) Frank P. Ball"

On September 22, 1894, Fitch wrote and sent to the trading company the following letter, giving shipping instructions:

Page 195 U. S. 445

[445]

"Northern Pacific Railroad Company"

"Thomas F. Oakes, Henry C. Payne, Henry C. Rouse, Receivers"

"Geo. R. Fitch, General Eastern Agent, 319 Broadway"

"Traffic Department, New York City, Sept. 22, 1894"

"American Trading Co., No. 182 Front St., City."

"Dear Sir: I hereby confirm routing given you over the telephone yesterday on your shipment of pig lead for export to Yokohama, Japan, as follows: to be shipped from Newark, N.J. via Penn. R. Co., marked Anchor Line rail and Lake, care Northern Pacific, care A. O. Canfield, agent N. P. R. Co., Tacoma, Wash. Please advise me, as soon as possible, who the shippers will be, that I may order the cars, and also see that same are rushed through without delay to connect with our steamer at Tacoma."

"Yours truly,"

"Geo. R. Fitch, G. E. Agent"

"A. H. P."

8. Before naming a rate for the transportation of the lead, Fitch had expressed some doubt as to whether it might not be excluded from transportation as contraband, in view of the war then existing between China and Japan. In fact, the shipment of pig lead was not prohibited by the Treasury Department at Washington during the war between China and Japan, and on September 25th, 1894, the trading company made another shipment of pig lead via Pacific Mail steamer sailing from San Francisco, which was, without trouble or delay, transported and delivered in Yokohama.

9. In September, 1894, J. B. Baird was the second assistant general freight agent of the receivers and J. M. Hannafford was the general freight agent of the receivers, and telegrams of which the following are copies, relating to proposed shipments of pig lead, including the shipment in question, passed between the said Fitch and Baird and Hannafford, but were not disclosed to the American Trading Company:

Page 195 U. S. 446

"New York, September 14, 1894"

"J. B. Baird, second A. G. F. A.:"

"Please wire quick lowest rate one hundred ton lots pig lead from Chicago and Duluth to Yokohama."

"George R. Fitch"

"September 14, 1894"

"Geo. R. Fitch, 319 Broadway, New York, N.Y.:"

"You may quote as low as sixty cents from Duluth and seventy cents from Chicago to Yokohama on pig lead in one hundred ton lots. Get more if possible."

"J. B. Baird."

"New York, September 17, 1894"

"J. B. Baird, 2d A. G. F. A.:"

"Your wire fourteenth. Shall I accept fifty cents on pig lead Duluth to Yokohama? Also name lowest rate on two hundred tons St. Louis to Yokohama."

"Geo. R. Fitch."

"September 18th, 1894"

"Geo. R. Fitch, 319 Broadway, New York:"

"Cannot accept less than sixty cents on pig lead Duluth to Yokohama. Will quote from St. Louis later."

"0.900 J. B. Baird. WDB."

"September 19, 1894"

"G. R. Fitch, 319 Broadway, New York:"

"You may quote seventy cents on the pig lead in one hundred ton lots St. Louis to Yokohama. Advise if accepted."

"0.900 J. B. Baird. WDB"

"New York, September 22, 1894"

"J. B. Baird, N. P. R'y, St. Paul, Minn.:"

"Wire best rate two hundred fifty tons pig lead Duluth to Shanghai."

"Geo. R. Fitch "

Page 195 U. S. 447

"September 22, 1894"

"G. R. Fitch, 319 Broadway, New York:"

"N. P. Steamship Co. have now declined to handle lead for Yokohama, Kobe, Hong Kong, or Shanghai. Please cancel your quotation."

0.900.

"0.900 J. B. Baird. WDB"

On September 24, 1894, Fitch informed the trading company that he declined to ship the lead upon the ground that it might be contraband of war, and thereupon on the same day, the trading company wrote him a letter stating that they would hold his company responsible for any loss from failure to fulfill the contract, which letter is as follows:

""

"Geo. R. Fitch, Esq., General Eastern Agent N. P. R. Co., No. 319 Broadway, City"

"Dear Sir:"

"Respecting your notice just received by us through your Mr. Post that your company now decline to ship for us, via Tacoma, the 200 tons of pig lead specified in your contract with us, under date Sept.19th, and confirmed by us under date Sept. 20th, we beg to advise that we shall hold your company responsible for any loss or damage we may suffer from the nonfulfillment of this contract with you."

"We remain, dear sirs,"

"Very truly yours,"

"The American Trading Co."

" (Signed) Wm. H. Stevens, Treas."

Thereupon, telegrams, of which the following are copies, were sent and received as indicated, in relation to the shipment in question, but were not disclosed to the trading company:

"New York, Sept. 24, 1894"

"J. B. Baird, N. P. R'y, St. Paul, Minn.:"

"Shipment, lead to Yokohama, is now being made; shippers

Page 195 U. S. 448

refuse to accept withdrawal; we have given shippers written contract."

"Geo. R. Fitch"

"New York, Sept. 24, 1894"

"J. M. Hannafford, N. P. R'y, St. Paul, Minn.:"

"Have notified American Trading Co. that shipment will be refused. They state they will hold us to contract. They are shipping hundred tons from Denver to Yokohama by steamer City of Rio from San Francisco, Oct. fourth, and expect to forward this shipment same was; will charge us difference in rate. Advise quick."

"Geo. R. Fitch"

"Sept. 25, 1894"

"G. R. Fitch, 319 Broadway, New York:"

"Your wire this date to Mr. Hannafford: Dodwell, Carlill & Co. have consented to accept the lead already contracted. Do not contract for any more. Advise quick number of pounds contracted by you and say how it will be routed. Think we should receipt for lead subject to delay."

"0.900 J. B. Baird. WDB"

Dodwell, Carlill & Co., mentioned in the last telegram, represented the steamship company.

10. Thereupon the refusal to accept the shipment was withdrawn, and the shipment was made under the contract, and the lead, consisting of 200 tons, was, in accordance with the shipping instructions given in Fitch's letter of September 22, 1894, shipped at Newark, new Jersey, in September 27th, 1894, by the Balbeck Smelting & Refining Company for the account of the American Trading Company. This was the first shipment ever made by the American Trading Company over the line of the Northern Pacific Railroad Company and its connecting carriers. The shipment was made in bond, for exportation at Tacoma, and was secured upon the cars by government locks and customs seals. On the afternoon

Page 195 U. S. 449

of September 27, 1894, the shipment left Newark, and started on its journey, and was transferred via the Anchor Line, a carrier operating between eastern points and points on the Lakes, to Duluth, and carried from Duluth via the receivers' railroad to Tacoma, which it reached in time for shipment by the steamship company's steamer, Tacoma, sailing October 30, 1894. On September 28th, a check for the freight upon the lead from Newark to Yokohama was handed by the trading company to Fitch, of which check, with its indorsements, the following is a copy:

"The American Trading Co."

"Check"

"New York, Sept. 28, 1894. No. 6096"

"The National Bank of North America"

"Pay to the order of the Northern Pacific R. Co. $3,360.05. Thirty-three hundred and sixty & 05/100 dollars."

"The American Trading Co."

"Wm. H. Stevens, Treas'r"

"A. Proctor, Jr.,"

"Cashier"

"Endorsements"

"For deposit in"

"Ninth National Bank"

"to Cr. of Geo. R. Fitch"

"Gen. East'n Ag't"

"Ninth Nat'l Bank"

"Endorsement,"

"guaranteed"

"of the City of N.Y."

The amount of the check was credited at the Ninth National Bank to the account of "George R. Fitch, General Eastern Agent," which was the style of the account opened by Fitch as agent of the Northern Pacific Railroad, and the account was never drawn upon in favor of the Northern Steamship Company; but all through freights received

Page 195 U. S. 450

were deposited to the credit of this account and remitted to the railroad company, or its receivers, and were divided and distributed by them under their contract with the steamship company.

11. On September 28, 1894, a shipping receipt for the shipment was issued to the Balbeck Smelting & Refining Company, of which shipping receipt a copy is hereto annexed marked exhibit "B," and was delivered by the Balbeck Smelting & Refining Company to the American Trading Company, and was forthwith surrendered by the trading company to Fitch.

A bill of lading in the usual printed form, a copy of which is herein annexed marked "C," was subsequently issued by Fitch to the American Trading Company. It was received by the clerk of the trading company without stated objection to its terms, but was not read or examined by him, or by any officer of the company, and was immediately hypothecated with the Hong Kong and Shanghai bank, as collateral security for moneys borrowed thereon by the trading company. The original of the bill of lading was negotiable, and did not have stamped upon it the words "Not negotiable; shipper's copy," which appear on the shipper's copy hereto annexed, but was similar to the shipper's copy in all other respects.

On September 29th, 1894, Fitch sent a copy of this bill of lading to Dodwell, Carlill & Co., with a letter (not disclosed to the American Trading Company) of which the following is a copy:

"Northern Pacific Railroad Company"

"Thomas F. Oakes, Henry C. Payne, Henry C. Rouse, Receivers"

"George R. Fitch, General Eastern Agent, 319 Broadway"

"Traffic Department, New York City, Sept. 29, 1894"

"Dodwell, Carlill & Co., Tacoma, Wash."

"Gentlemen:"

I hand you herewith my B/L 1507 covering shipment of pig lead for export to Amer. Trading Co. Yokohama, Japan. As I have previously advised you, I have made

Page 195 U. S. 451

contract guaranteeing delivery of this supplement at Yokohama by our S.S. Tacoma sailing Oct. 30th. Will you kindly see that this connection is made without fail.

"Yours truly,"

"(S'g'd) Geo. R. Fitch, G. E. A."

The previous letter of advice, referred to by Fitch in the foregoing letter, is lost, and no copy of it exists. It appears, however, from the following letter of acknowledgment to have borne date on September 27th:

"Tacoma, Wn., October 2nd, 1894"

"George R. Fitch, Esq., G.E.A., N.P. R. Co., 319 Broadway, New York"

"Dear Sir:"

"We beg to own receipt of and thank you for your favor of the 27th ultimo, and advising the engagement of 40 tons of condensed milk and 225 tons of pig lead for our steamer Tacoma, sailing hence the 30th instant. Please keep us frequently advised of freight engagements, as we have applications now for more space for flour than our steamers will carry, and we are shutting out considerable of the latter every voyage."

"Yours truly,"

"(Sig.) p.p. Dodwell, Carlill & Co."

"A. T. Pritchard"

12. At Tacoma, the lead was delivered by the receivers to the Northern Pacific Steamship Company, and was loaded upon the Tacoma, the vessel of the steamship company which was to sail on October 30th; but about 4 o'clock in the afternoon of that day, the deputy collector of the United States at that port refused to clear the vessel while the lead was on board, upon the ground that it was contraband of war, and telegraphed to the collector at Port Townsend for instructions. On the following day, which was the 31st of October, the deputy collector at Tacoma received a telegram

Page 195 U. S. 452

from the collector of the United States at Port Townsend, which was as follows:

"Department advises that, unless you have evidence tending to show that the pig lead at Tacoma, and referred to in your telegram of yesterday, is to be used in the war between China and Japan, no reason is perceived why shipment should not be permitted."

In the meantime, however, the master of the vessel unloaded the lead, which delayed the ship until 9 A.M. on the morning of October 31st, when he sailed without it.

The petitioner was not notified of the delay in the transhipment of the lead until November 5, 1894.

The next vessel on the line was the Sikh, which did not belong to the steamship company, but was a chartered ship. Her captain declined to take the lead on the ground that it was contraband. The Northern Pacific Steamship Company cabled to the owners of the vessel in London, and they adhered to the position taken by the captain.

13. The lead went forward on the next vessel, the Victoria, on December 11, 1894, and did not arrive in Yokohama until on or about January 4, 1895, instead of on or about November 18, 1894, when it would have arrived had it gone forward on the 30th of October, 1894.

14. In the meantime, hostilities between China and Japan had ceased, the price of lead had fallen very considerably, and the purchaser of the shipment refused to accept it, and declared the contract null and void in consequence of the failure to deliver it promptly in accordance with the terms of the contract.

15. The price of the lead under the contract would have been $38,610.17. The lead was delivered to the trading company in Yokohama upon the surrender of the bill of lading, and, in consequence of the failure of its vendee to accept the lead, the trading company sold it for $11,331.60, which was the best price obtainable therefor at the time of the sale. The sale was made as soon as a purchaser could be found.

Page 195 U. S. 453

The value of the lead on January 4, 1895, in Japan, was $11,906.16.

16. Upon the case arising on the foregoing facts, the American Trading Company has duly presented to the receivers, and to the Northern Pacific Railway Company, its claim, amounting to the sum of $ 26,704.02, with interest thereon from the 4th day of January, 1895, and has demanded payment thereof; but payment has been refused, and no part thereof has been paid.

Page 195 U. S. 457

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