The Kimball - 70 U.S. 37 (1865)
U.S. Supreme Court
The Kimball, 70 U.S. 3 Wall. 37 37 (1865)
70 U.S. (3 Wall.) 37
1. Stipulations in a charter party requiring the delivery of the cargo within reach of the ship's tackle and providing that the balance of the charter money remaining unpaid on the termination of the homeward voyage shall be "payable, one-half in five, and one-half in ten days after discharge" of the cargo, are not inconsistent with the right of the owner to retain the cargo for the preservation of his lien.
2. A clause in a charter party by which the owner binds the vessel, and the charterers bind the cargo, for the performance of their respective covenants is sufficient to repel doubt arising upon the construction of other stipulations not plainly controlling them as to whether the lien for freight was intended to be waived by the parties.
3. By the general commercial, law a promissory note does not extinguish the debt for which it is given unless such be the express agreement of the parties; it only operates to extend until its maturity the period for the payment of the debt. The creditor may return the note when dishonored and proceed upon the original debt. The acceptance of the note is considered as accompanied with the condition of its payment. And although in Massachusetts the rule is different, and the presumption of law there is that a promissory note extinguishes the debt for which it is given, yet there the presumption may be repelled by evidence that such was not the intention of the parties, and this evidence may arise from the general nature of the transaction as well as from direct testimony to the fact.
4. Upon this ground, it is not to be presumed that the owner of a ship, having a lien upon a cargo for the payment of the freight, intended to waive his lien by taking the notes of the charterers drawn so as to he payable at the time of the expected arrival of the ship in port. The notes being unpaid, he may return them and enforce his lien.
The owner of the Kimball chartered her, in July, 1856, to a Boston firm for a round voyage from New York to Melbourne, Calcutta, and Boston. The charter party, in most of its provisions, was in the usual form. A portion of the charter money was to be paid, and was paid, before or
during the voyage; "balance," the instrument proceeded, "payable, one-half in five and one-half in ten days, after discharge of homeward cargo."
The charter party contained also a clause that the cargo should "be received and delivered within reach of the ship's tackles at the ports of lading and discharging," and concluded with the not unusual provision that for the performance of its covenants the parties bound themselves -- the party of the first part, the vessel, her freight, tackle, and appurtenances; the party of the second, the freight and merchandise to be laden aboard -- each to the other in the penal sum of $40,000.
While the ship was yet at sea, the charterers, at the owner's request, gave him their notes for $10,000. They were drawn so as to be payable near the time when it was expected that the ship would arrive, and it appeared by the testimony of the broker who had been concerned in the matter that they were given for the accommodation of the owner and were to be held over or renewed in case they fell due before the ship reached home. The owner, in a receipt for the notes, stated that he had received them "on account of the charter," and that it was "understood that this amount was to be insured by the charterers and charged to the owners of the ship." The owner used the notes, and obtained money on one of them at a bank where he had an account. The charterers effected insurance on the $10,000 in pursuance of the agreement. The vessel arrived about five weeks before the notes by their terms fell due.
Shortly before the vessel arrived home, and before the notes fell due, the charterers failed. The owner immediately tendered them back their notes, but they would not receive them.
By the terms of the charter party, the cargo was to be deliverable to the consignees, "they paying freight as per charter party," and after the arrival of the vessel, the owners, asserting a lien on the cargo for the unpaid money and refusing to credit as payment on account the notes for $10,000, filed a libel in the District Court for Massachusetts to enforce the lien. This libel was filed on the 18th March, 1858, the
notes, which were produced and tendered in court, having fallen due on the 3d preceding. On appeal to this Court from the circuit court, where the matter went on appeal from the district court, two questions arose.
1. Whether the ordinary lien of the shipowner was displaced by anything in the charter party.
2. Whether the notes of the charterers were to be considered as payment.
The circuit court, reversing the district court, had held negatively on both points.