The
Johnson, an American ship, was chartered at
Valparaiso to carry a cargo of nitrate of soda, of 1938 tons, from
Caleta to Hamburg consigned to a London firm. On the way, she
sprang a leak, and put into Callao. There 1200 tons of the cargo
were transferred to the
Leslie, a British bark, and the
Johnson was repaired, the master executing a bottomry bond
to meet the expenses of the repairs. That bond bound the
Johnson, cargo and freight, hypothecated the portion of
the cargo transhipped to the bark and further provided that
"if during the said voyage an utter loss of the said vessel
[
in the singular] by fire, enemies, pirates, the perils of
the sea or navigation, or any other casualty shall unavoidably
happen, . . . then and in either of the said cases this obligation
shall be void."
Both vessels sailed for Hamburg. The
Johnson collided
at sea with the
Thirlmere, a British vessel, and was sunk
with a total loss. The bark reached Hamburg safely. The consignees,
in order to obtain the cargo, agreed to refer to arbitration by
German lawyers the question of its liability for the whole amount
of the bond. They decided that it was so liable, and the consignees
paid the amount of the bond and received the cargo. The owners of
the
Johnson libelled the
Thirlmere and its
owners. The latter were held not to be personally liable, and
judgment was rendered only for the value of the
Thirlmere.
The insurers of the
Johnson also paid to its owners the
amount of the policies of insurance, and the latter, after
receiving the amount of the judgment against the
Thirlmere, paid to the insurers their proportionate part
of it. This suit was then instituted by the consignors and the
consignees of the cargo of the bark to recover from the owners of
the
Johnson their share of the sum paid on the bottomry
bond.
Held:
(1) That the terms of the bottomry bond included not only the
Andrew Johnson and her cargo, but the cargo transhipped on
the
Leslie.
(2) That the owners of the
Johnson, to the extent of
the damages paid on account of the collision, were liable to the
libellants, as creditors of the ship.
In interpreting a contract, the whole contract must be brought
into view, and it must be interpreted with reference to the nature
of the obligations between the parties and the intention which they
have manifested in forming them, and this rule is especially
applicable to the interpretation of contracts of bottomry and
respondentia.
In an action to recover on a bottomry bond from the shipowner
for advances
Page 168 U. S. 288
made for his benefit and charged upon the property of the cargo
owner's by the master, if he questions the power of the master to
execute the instrument of hypothecation, it is his duty to plead it
in defense.
The action of the district judge in refusing to permit the
respondent to amend his answer by setting up the plea of laches and
res judicata was not error.
The case is stated in the opinion.
MR. JUSTICE WHITE delivered the opinion of the Court.
By a charter party executed at Valparaiso, Chili, on April 5,
1884, Gibbs & Co., of the place named, chartered the ship
Andrew Johnson to carry a cargo of nitrate of soda from
Iquique and Caleta "to any safe port in the United Kingdom or on
the continent between Havre and Hamburg, both included, as
ordered." After loading at the places named, the
Andrew
Johnson, pursuant to orders, sailed on July 15, 1884, for
Hamburg, the cargo on board being consigned to the order of Antony
Gibbs & Sons, a firm doing business in London. On the 4th of
August following, the vessel, being in distress, put into Callao.
Certain necessary repairs, which were advised by a duly appointed
board of survey, were made, and upon the recommendation of the
board, 8,449 bags, or about 1,200 tons, of the nitrate of soda were
transhipped to the British bark
Mary J. Leslie, to be
conveyed by that vessel to Hamburg.
To defray the expenses incurred in the port of refuge, the
master of the
Andrew Johnson executed a bottomry and
respondentia bond to the firm of Grace Bros. & Co. This bond
not only bound the ship
Andrew Johnson and her cargo and
freight, but also, in express terms, hypothecated the cargo
transhipped to the
Mary J. Leslie. Although both cargoes
were thus bound, the bond, in its defeasance clause, provided that
it should be void
"if, during the said voyage, an utter loss of the said vessel by
fire, enemies, pirates, the perils
Page 168 U. S. 289
of the sea or navigation, or any other casualty, shall
unavoidably happen."
A copy of the bond is found in the margin.
* The two vessels
sailed for Hamburg. The
Leslie arrived,
Page 168 U. S. 290
but the
Johnson perished at sea as the result of a
collision with the British ship
Thirlmere. After the
arrival of the
Leslie at Hamburg, demand was made upon the
representatives
Page 168 U. S. 291
of Antony Gibbs & Sons, the consignees of the nitrate of
soda which had been shipped on the
Leslie, for payment in
full of the amount of the bond, and, in order to obtain possession
of the cargo, the consignees entered into an agreement by which the
question of the liability of the nitrate of soda on the
Leslie for the entire amount of the bond was to be
determined by arbitration, the arbitrators to be selected by, and
their decision to be binding upon, the respective parties. It is to
be inferred that the only question controverted before the
arbitrators was whether the use of the words "said vessel" in the
defeasance clause of the bond operated to avoid the bond in
consequence of the wreck of the
Andrew Johnson and the
loss of her cargo. The German lawyers who were selected as
arbitrators found that the nitrate of soda on board the
Leslie was bound for the whole amount of the bond, and
that therefore the consignees were not entitled to the cargo unless
they paid the bond. Their award was as follows:
"We formulate the question which you, in the names of Messrs.
Antony Gibbs & Sons and Messrs. Baring Brothers & Co., have
submitted to our judgment as follows:"
"Whether the portion of the cargo of nitrate of soda of the
Page 168 U. S. 292
Andrew Johnson, brought home per
Mary J.
Leslie, is liable for the whole amount of the bottomry bond,
which was signed in Callao, and whether, consequently, the receiver
of this portion of the cargo has to pay the whole of the bottomry
bond, provided the value of this portion of the cargo is not less
than the amount of the bottomry debt?"
"This question we must answer in the affirmative because,
according to the law here, ship, freight, and cargo of the
Andrew Johnson, as well as the portion of the cargo which
was transhipped into the
Mary J. Leslie, are jointly
liable for the whole amount raised on bottomry at Callao, and
therefore the
Andrew Johnson and her cargo having become a
total loss, the holder of the bottomry bond can come upon that
portion of the cargo which was shipped by the
Mary J.
Leslie for the whole amount of his claim."
"Some doubt might be raised as to whether, according to the
wording of the bottomry bond, the money was not lent or appear to
be lent contingent upon the safety of the
Andrew Johnson,
and becoming due only after her arrival at her port of destination,
but becoming null and void in the event of her nonarrival. We are
of opinion, however, that this interpretation is not consistent
with the real intention of the contracting parties, and that the
wording referred to has originated in the not sufficiently careful
use and employment of a form of bond which happened to be at hand.
This seems the less doubtful to us for this reason: that, if the
bottomry bond were interpreted in this manner, the cargo of the
Mary J. Leslie would be entirely liberated, after the loss
of the
Andrew Johnson occurred, and would not even bear a
portion of the bottomry debt, which nevertheless has arisen out of
a case of general average. Manifestly, this cannot have been the
intention of the parties interested."
Antony Gibbs & Sons paid the amount of the bond for account
of Gibbs & Co., the consignors. Subsequently the owners of the
Andrew Johnson commenced legal proceedings against the
Thirlmere to hold that vessel responsible for the
collision by which the
Johnson and her cargo were lost.
The
Thirlmere availed herself of the statute of Great
Britain
Page 168 U. S. 293
limiting the liability of shipowners, and the result was an
award finding the
Thirlmere to be wholly at fault, and
condemning her to pay the loss caused by the sinking of the
Johnson. As their proportion of the ascertained value of
the
Thirlmere, the owners of the
Johnson, for
ship and freight, were allowed the sum of �6,557 9
s.
6
d., but from this amount there was deducted about 1,500
for certain expenses. In the proceedings in question, the owners of
the nitrate of soda which was on the
Johnson also
recovered their proportion of the value of the
Thirlmere.
On account of the loss of the
Andrew Johnson, the Boston
Marine Insurance Company paid to her owner the sum of $30,000, less
$2,825.49, the amount of a premium note, with interest, and out of
the sum received by the owner of the
Andrew Johnson for
the ship and freight from the value of the
Thirlmere, the
owner of the
Andrew Johnson, in April, 1896, remitted to
the insurance company, as its share thereof, the sum of $11,456.05,
and to correct some mistake in calculation the sum of $35.60 was
also subsequently paid by the shipowner to the insurance
company.
The present suit was commenced on July 20, 1887, by a libel
in personam against the owner of the
Andrew
Johnson to recover the due proportion of the sum paid on the
bond. Those joined as libelants were eleven in number -- that is,
all the members composing the firm of Gibbs & Co., the
consignors of the nitrate of soda, and the members of the firm of
Antony Gibbs & Sons, the consignees. The original libel is not
in the record. Exceptions to it were filed on the ground that it
did not state the nature of the action and that it did not state a
cause of action. On June 6, 1888, the district judge overruled the
exception to the want of clearness in the averments of the libel,
but maintained the exception of no cause of action. Although the
learned judge found that the bottomry bond had not been avoided by
the loss of the
Andrew Johnson and her cargo, and
therefore that the payment made at Hamburg was necessary, he yet
concluded that, as the
Andrew Johnson and her cargo had
proven a total loss, nothing having been alleged in the libel as to
a recovery by reason of such loss, the libelants were precluded
from
Page 168 U. S. 294
enforcing their claims
in personam against the owner of
the
Johnson in consequence of the provision of the acts of
Congress limiting a shipowner's liability for the acts and
contracts of the master to the value of the ship and freight. 35 F.
779. As a result, on the 27th of June, 1888, an order was entered
sustaining the exception of no cause of action, and directing that,
unless the libel were amended, it be dismissed, with costs. An
amended libel was filed in July, 1888, to which an exception of no
cause of action was again sustained, with leave further to amend.
On January 4, 1889, the libel was for the second time amended, and
this was also excepted to, on the ground of ambiguity and that it
did not state a cause of action. On the 24th of October, 1890, the
libel was again amended by averring the loss of the
Johnson, the fact that it had occurred by collision with
the
Thirlmere, the institution of proceedings against the
Thirlmere by the owner of the
Johnson, and the
recovery in those proceedings on the ground that the collision had
been caused solely by the fault of the former vessel. In June,
1891, respondent filed exceptions and an answer to this amended
libel. The answer, among other things, averred as follows:
"This respondent admits that the owners of the ship
Thirlmere, having taken appropriate proceedings under the
statutes of the United Kingdom of Great Britain and Ireland,
obtained a decree limiting their liability for said collision to a
certain sum, which they thereupon paid into the court, and which
said sum was distributed between the libelants and the respondent
herein, and other parties and their attorneys, in part satisfaction
of the damages by each of them sustained by reason of said
collision; but this respondent denies that he received the said sum
of �6,557 9
s. 6
d., and avers that the amount
received by him was much less than said sum."
No allusion was made in the pleadings of the respective parties
to the fact that the owner of the
Andrew Johnson had
received the benefit of any insurance upon the vessel.
After the taking of proof, the cause was heard on the exceptions
and merits on November 23, 1893. At the outset
Page 168 U. S. 295
of the hearing, the trial court overruled all the exceptions to
the third amended libel but that of no cause of action, and
referred this latter exception to the merits. Before the case was
finally submitted, the respondent moved the court to be allowed to
amend his answer so as to plead two additional and distinct
defenses:
"First, to as much of the libelants' claim as arises out of the
limited-liability proceedings in the English court as to the
Thirlmere, the defense of laches on the part of the
libelants in not sooner bringing that matter before the court."
"Also, as to the same portion of his claim, the defense
res
judicata, because passed on by the English court."
This request was refused, and exceptions to the refusal were
noted. The court, on the merits, held that the bottomry bond at the
time of its payment was a valid obligation; that in view of the
fact that the bond embraced not only the cargo on the
Johnson but also the cargo on the
Mary J. Leslie,
the words "said vessel" in the defeasance clause must be considered
as referring to the cargo on both vessels, and therefore the
obligations of the bond were not avoided by the loss of the
Johnson and her cargo; that the owners of the
Johnson, having recovered from the
Thirlmere, up
to the value of the latter vessel, damages for the collision, were
not discharged from personal liability under the acts of Congress,
inasmuch as the sum recovered from the
Thirlmere was
greater than the amount sought to be enforced
in personam
against the owner. 59 F. 621. In conformity to the opinion of the
court, an interlocutory decree was entered on April 3, 1894,
referring the matter to a special commissioner to ascertain and
report the amount the libelants were entitled to recover. On April
10, 1894, the respondent again applied to the court for leave to
amend his answer by setting up the two additional defenses of
laches and
res judicata, and the request was again denied.
On June 5, 1894, the report of the commissioner was filed, finding
the libelants entitled to the principal sum of $6,091.73, and on
July 16, 1894, a final decree for that sum, with interest and
costs, was duly entered. By the final decree, seven of the
libelants -- that is to say, those who composed the firm of
Page 168 U. S. 296
Antony Gibbs & Sons -- were dismissed on the ground of a
want of interest, the court having found that the bond was paid by
the consignees for account of the consignors, and they therefore
were alone interested in the suit. On appeal to the circuit court
of appeals, the judgment of the trial court was reversed. The
appellate court concluded that the words "said vessel" in the
defeasance clause of the bond were free from ambiguity, and left no
room for construction, and therefore that the loss of the
Andrew Johnson with the cargo had operated to avoid the
bond according to its tenor, and that the payment made of the
amount by the consignees was hence unnecessary, and gave rise to no
legal claim against the master or owner of the
Johnson. 67
F. 605. In consequence of the allowance of a writ of certiorari,
the cause is here for review.
In the discussion at bar, many minor questions have been pressed
upon our attention, but the pivotal controversy rests upon the
ascertainment of the true meaning of the bottomry bond and the
obligations, if any, which arose from its payment. We forego the
present consideration of the more unimportant questions in order to
at once approach the fundamental issues in the cause. The libelants
assert that from the terms of the bond as a whole, it manifestly
results that the cargo of the
Leslie was liable despite
the loss of the
Johnson and her cargo; that hence the
consignees of the cargo on the
Leslie were obligated to
pay the bond, and that, on their doing so, there arose a legal duty
on the owner of the
Johnson to pay the proper proportion
thereof, which obligation, it is claimed, can be enforced despite
the loss of the ship, since the owner had recovered and retained
the amount awarded against the
Thirlmere. On the other
hand, the respondent asserts that the words of the bond providing
for its avoidance in case of the loss of "said vessel" are free
from ambiguity, and give no room for construction, and that, even
if this be not the case, in consequence of the loss of the
Johnson, the consignors who paid the bond are not
entitled, under the limited liability acts, to recover any
proportion thereof.
There can be no doubt that, considered in themselves and
Page 168 U. S. 297
alone, there is no ambiguity in the words found in the clause of
the contract providing that
"if during said voyage an utter loss of the said vessel by fire,
enemies, pirates, the perils of the sea or navigation, or any other
casualty, shall inevitably happen, . . . this obligation shall be
void."
But the question presented involves not the interpretation of
this language apart from the whole agreement, but is, on the
contrary, the ascertainment of the meaning of the entire contract.
The fallacy which underlies the assertion as to want of all
ambiguity in the bond arises therefore from presupposing that in
order to establish want of ambiguity in a contract, a few words can
be segregated from the entire context, and that because the words
thus set apart are not intrinsically ambiguous, there is no room
for construing the contract itself. In other words, the confusion
of thought consists in failing to distinguish between the contract
as a whole and some of the words found therein. If the erroneous
theory were the rule, then in every case it would be impossible to
arrive at the meaning of a contract in the event of difference
between the contracting parties, since each would select particular
words upon which they relied, and thus frustrate a consideration of
the whole agreement. The elementary canon of interpretation is not
that particular words may be isolatedly considered, but that the
whole contract must be brought into view and interpreted with
reference to the nature of the obligations between the parties and
the intention which they have manifested in forming them.
Boardman v.
Reed, 6 Pet. 328;
Canal Co.
v. Hill, 15 Wall. 94.
This general rule of construction should especially guide a
court of admiralty in interpreting a contract of bottomry and
respondentia.
In the exercise of their jurisdiction with respect to such
bonds, courts of admiralty are not governed by the strict rules of
the common law, but act upon enlarged principles of equity (per
Story, J., in
The
Virgin, 8 Pet. 550), and the same learned justice,
in the case of
Pope v. Nickerson, 3 Story, 486, said,
"A court of admiralty, in cases within its civil jurisdiction,
acts as a court of equity, and construes instruments,
Page 168 U. S. 298
as a court of equity does, with a large and liberal
indulgence."
To quote the language of the Judicial Committee of the Privy
Council in
The Prince George, 4 Moore P.C. 28:
"Bottomry bonds for the benefit of the shipowners and the
general advantage of commerce are greatly favored in courts of
admiralty, and where there is no suspicion of fraud, every fair
presumption is to be made to support them."
We reach, then, under the light of these principles, the
consideration of the contract for the purpose of ascertaining its
meaning and enforcing the intention of the parties to be derived
from all the stipulations therein found. There can be no doubt that
the terms of the bond included not only the
Andrew Johnson
and her cargo, but the cargo transhipped on the
Leslie,
for the bond says:
"For which payment, to be well and faithfully made, I bind
myself, my heirs, executors, or administrators, and also the hull,
boats, tackle, apparel, and furniture of the said vessel, and her
cargo of nitrate of soda, including about 1,200 tons of nitrate of
soda, transhipped on board the British bark
Mary J.
Leslie, of Liverpool, N.S., of 815 tons register, and of which
W. S. MacLeod is now master, and the freight to be earned and
become payable in respect thereof."
In the recitals of the bond, where a statement is made of the
facts creating the necessity for the loan, the intention of the
master to include the cargo transhipped on the
Leslie is
also unequivocally expressed. Likewise in the recitals which relate
to the conditions upon which the lenders have agreed to advance the
money required, it is again stated that they have consented so to
do upon the master's executing
"this present bond or obligation and hypothecation of the said
vessel, her boats and apparel, and her cargo, including that
portion of the cargo transhipped to the
Mary J. Leslie,
and the freight to be earned and become payable in respect to the
said cargo, and the said Grace Brothers are contented to stand to
and bear the risk, hazard, and adventure thereof upon the hull,
body, or keel of the said vessel
Andrew Johnson, her boat,
tackle, apparel, and furniture, together with the cargo
Page 168 U. S. 299
laden on board as aforesaid, and the freight to be earned and
become payable as aforesaid, and for securing the repayment of the
said sum . . . he, the said James H. Killeran, doth by these
presents mortgage, hypothecate, and charge the said vessel, her
boats, tackle, apparel, and furniture, and her cargo, including
that portion of the cargo transhipped to the
Mary J.
Leslie, and the freight to be earned and become payable in
respect to the said voyage, unto the said Grace Brothers, their
executors, administrators, and assigns."
The cargo on the
Leslie having been hypothecated along
with that on the
Johnson, and the bond declaring that it
was upon the faith of such hypothecation that the money was
advanced, the claim that, because of the use of the word "vessel"
in the singular, the bond was to be avoided by the loss of the
Johnson, despite the arrival of the
Leslie,
amounts to contending that, although both parties declared that the
money was lent on the faith of both cargoes, and that without the
pledge of both it would not have been advanced, yet that they
immediately stipulated that it should be secured upon only one of
the objects hypothecated.
Deriving the meaning of the parties from their situation and
their intentions as declared in the contract, it becomes impossible
in reason to construe the word "vessel" in the defeasance clause as
not applying to both the
Johnson and the
Leslie.
It is conceded that the value of the
Johnson and her cargo
was enormously in excess of the sum of the bond. This having been
the case, to hold that the hypothecation of the cargo on the
Leslie was only to be availed of in case of the arrival of
the
Johnson and her cargo would be to determine that the
cargo on board the
Leslie was only to be resorted to by
the bondholder in the event recourse against that cargo should be
superfluous. He cannot construe a contract for security so as to
render the security available only in case resort to it should
become unnecessary. True, it is sought to escape the dilemma
resulting from this reasoning by saying that the object which the
parties had in view was a resort to the cargo of the
Leslie in case the
Johnson and her cargo arrived
in such a damaged condition as to render it necessary that the
cargo
Page 168 U. S. 300
or the
Leslie should be called upon for an average
contribution. But this explanation only accentuates the dilemma,
since it contends that the lenders were to have recourse to the
cargo of the
Leslie in case the security resulting from
the
Johnson and her cargo was partially impaired, and not
in the event that it was wholly so. But obviously, if the security
of the cargo of the
Leslie was contemplated and provided
for by the parties, as it manifestly was, the contract should not
be held as meaning that the security was to be availed of only in
the event that the value thereof was required to pay a part of the
debt, and it was not to be resorted to when a greater reason for so
doing existed. There are many other conditions of the bond which
with equal force refute the attempt to limit the word "vessel" in
the defeasance clause to the
Johnson, and which
irresistibly make the language of the defeasance clause harmonize
with the nature and extent of the security afforded by the bond.
Thus, the clause as to the arrival of the vessels made no
distinction between the
Johnson and the
Leslie.
It cannot be contended that if the
Leslie had arrived at
the port of destination before the
Johnson, her cargo
could have been discharged without payment of the bond.
The contemporaneous construction of the contract given by the
masters of the
Johnson and
Leslie is shown by the
bill of lading which was given by the one and taken by the other
for the nitrate of soda which was transshipped on the
Leslie. On this bill of lading the following endorsement
was placed:
"The 8,449 bags of nitrate of soda, as per this bill of lading,
are included in, and jointly responsible with, the nitrate of soda
specified in the bottomry and respondentia bond given to Messrs.
Grace Brothers & Company as security for the payment of the
Amer. ship
Andrew Johnson's disbursements in Callao."
We conclude that to give the construction to the bond claimed by
the shipowner would not only do violence to the expressed
intentions of the parties and their contemporaneous interpretations
of its meaning, but would also be adopting, to quote the language
of Sir James Colville in
The Great Pacific, L.R. 2 P.C.
254, "so improbable an hypothesis that the construction is only to
be admitted if there is no escape from it."
Page 168 U. S. 301
We may properly say of the bond under consideration what was
said by the Supreme Court of Pennsylvania in
Insurance Company
v. Duval, 8 S. & R. 147, in speaking of a form of
respondentia bond in use in Philadelphia, which partook of the
character of a loan coupled with a contract of insurance:
"Contracts of this kind are so different in different countries
(although they resemble each other in some prominent features) that
when disputes arise, they are to be decided by the words of the
particular contract in question, rather than by any principles of
general commercial law. In the present instance, therefore, we must
endeavor to ascertain the meaning of the bond, and be governed by
it."
In the case just referred to, the loan was upon goods ladened
upon a vessel, and it was a condition of the contract that the loan
was to be paid within a certain period
after the return of the
vessel to Philadelphia, her home port, or, in the event of an
utter loss by certain enumerated sea risks, the bond was to be
void. On the return voyage, the vessel was condemned and sold at an
intermediate port, and the goods on board were sent to Philadelphia
in other vessels, and delivered to the defendants, and, according
to an agreement annexed to the respondentia bond, were sold by
them. In an action brought to recover the difference between the
price realized from the sale and the amount of the loan, the
defendants contended, among other defenses, that the terms of the
bond did not make the repayment of the loan dependent upon the
return of the goods, but upon the return of the vessel, and that,
as the vessel did not return, the day of payment had not arrived.
The court pointed out the extraordinary consequences which would
follow the construction contended for, and held that even if, under
a literal interpretation, the right to recover did not exist, a
resort to the spirit of the contract and the intention of the
parties would entitle the lender to judgment, as the goods, and not
the vessel, were the sources from which the defendants expected to
derive the means of payment.
Our conclusion being that the bond was not avoided by the loss
of the
Johnson, and was a valid and subsisting
obligation
Page 168 U. S. 302
at the time of its payment by the owners of the cargo on the
Leslie, the question which arises is can the cargo owners
recover, by an action
in personam against the shipowner,
the due average proportion of the expenses at the port of refuge,
incurred for the benefit of the ship and freight? The manifest
result of the obligation of the cargo owners to pay the bond before
they could obtain delivery of the goods was that the were obliged
to discharge the part of the debt which was due by the ship
Johnson. This in effect gave rise in their behalf to a
claim against the ship for a breach of the contract of
affreightment or charter party, by virtue of which the property of
the owners was received on the
Andrew Johnson to be
transported to Hamburg, and there delivered to the order of the
consignees named in the charter party on payment of the freight
therein specified. Had a portion of the cargo not been delivered,
or been delivered in a damaged condition by the fault of the
master, the right to proceed in admiralty to recover the damage
sustained would have been clear.
The
Schooner Freeman, 18 How. 182;
Liverpool Steam
Co. v. Phoenix Ins. Co., 129 U. S. 397,
129 U. S. 462.
Delivering the cargo charged with a lien for an indebtedness of the
shipowner is no different in principle or effect from the
nondelivery of a portion or the whole in a damaged condition. It is
also analogous in principle to a jettison of a portion of the cargo
for the benefit of the ship, and the remainder of the cargo, when a
clear right to contribution would exist, enforceable in admiralty.
Dupont v.
Vance, 19 How. 162,
60 U. S. 168.
As said in the latter case by Mr. Justice Curtis, delivering the
opinion of the Court:
"The right of the shipper to resort to the vessel for claims
growing directly out of his contract of affreightment has very long
existed in the general maritime law."
And while in the same case (page
60 U. S. 169)
the power of the master to hypothecate or sell a part of the cargo
to enable him to prosecute the voyage was declared to exist, the
obligation of the shipowner, under the law of the sea, to reimburse
the cargo owner for the due proportion of the loss was clearly
stated.
The shipowner being liable for his average portion of the
Page 168 U. S. 303
loss, the question is was he discharged therefrom by the loss of
the
Johnson and her cargo, although the owner has
recovered and retains the sum awarded as damages against another
ship for having brought about the loss? The answer to this question
involves a consideration of the proper construction to be given to
the act limiting the liability of shipowners.
The original act, approved March 3, 1851, 9 Stat. 635, c. 43,
was carried forward into the Revised Statutes as § 4282
et
seq.
Section 4283 declares that the liability of the owner of any
vessel for various acts and things mentioned "shall in no case
exceed the amount or value of the interest of such owner in such
vessel and her freight then pending."
Section 4284 describes the liability as "the whole value of the
vessel, and her freight for the voyage;" and § 4285 declares that
it shall be a sufficient compliance with the law if the owner
transfer his
interest in such vessel and freight, for the
benefit of the claimants, to a trustee.
Section 4283 was amended by the Act approved June 26, 1884, 23
Stat. 57, c. 121, so as to do away with the restrictions upon the
character of debts and liabilities against which the limitation
might be asserted. This amendment, however, is not material to the
question now considered.
The clear purpose of Congress was to require the shipowner, in
order to be able to claim the benefit of the limited liability act,
to surrender to the creditors of the ship all rights of action
which were directly representative of the ship and freight. Where a
vessel has been wrongfully taken from the custody of her owners or
destroyed through the fault of another, there exists in the owner a
right to require the restoration of his property, either in specie
or by a money payment as compensation for a failure to restore the
property. Manifestly if the option was afforded the owner of the
ship to receive back his property or its value, he could not, by
electing to take its value, refuse to surrender the amount as a
condition to obtaining the benefit of the act.
In
The City of Norwich, 118 U.
S. 468, where the obligation
Page 168 U. S. 304
of a shipowner to account for the sum of assurance recovered on
the loss of his ship was fully considered, the fact was declared to
be that the provisions of the act of Congress just referred to were
in conformity with the general maritime law of Europe (502). The
text of the Ordonnance de la Marine of 1681, and the opinions of
Pardessus and other continental jurisconsuls, were referred to as
the sources from which the principles embodied in the act of
Congress were derived. The language of Pardessus clearly shows
that, under the general maritime law, the obligation of the owner
was to surrender a sum awarded as damages for the loss of his ship,
and, if he did not, he could not avail himself of the limitation of
liability. He says (Droit, Commercial, part 3, title 2, c. 3, sec.
2):
"The owner is bound civilly for all delinquencies committed by
the captain within the scope of his authority, but he may discharge
himself therefrom by abandoning the ship and freight; and, if they
are lost, it suffices for his discharge to surrender
all claims
in respect of the ship and its freight."
So, also, Kaltenborn, in a treatise published at Berlin in 1851,
as translated and quoted in the dissenting opinion in
The City
of Norwich, supra, says:
"The Roman law, which held the owner absolutely liable with all
his property, is nowhere put in practice, and was not current as
early as the Middle Ages. Indeed, the Consulate of the Sea, cc.
183, 224, 236; the law of Wisby, reasoning from Arts. 13 and 68;
that of the Hanse Towns, reasoning from Art. 2, title X, render the
owners, as a rule, answerable only to the extent of the ship's
value, and the modern maritime laws free the owners, by the
abandon of the ship and their several shares in the
vessel, from all further liability for the ship enterprise,
particularly for the acts and contracts of the captain.
In the
ship are included all gains arising during the voyage, as well as
the insurance. Should the ship and the freight have perished,
it is sufficient for exoneration of the owners
if all claims
and causes of action having reference to the vessel and freight are
abandoned by them."
The same doctrine is clearly recognized in the provisions of
Page 168 U. S. 305
the general German commercial code, where, in article 778, it is
provided as follows:
"Art. 778. In cases of general average, the compensation for
sacrifice or damage takes, as against the ship's creditor, the
place of that which the compensation is to make good."
"The same rule applies to the indemnity, which in case of loss
or damage to the vessel or of nonpayment of freight when goods have
been lost or damaged, is due to the shipowner by the party who has
caused the damage by his illegal conduct."
"When the compensation or indemnity has been received by the
shipowner, he is personally responsible to the ship's creditors to
the extent of the amount received in the same manner as to the
creditors of a voyage in case of encashment of the freight."
Indeed, that a right of action for the value of the owner's
interest in a ship and freight is to be considered as a substitute
for the ship itself was decided in this Court in the case of
Sheppard v.
Taylor, 5 Pet. 675. That was a case where a vessel
had been seized, condemned, and sold by the Spanish authorities
because of a violation of the trade regulations of the Kingdom of
Spain. The King of Spain subsequently ordered the proceeds of the
vessel and cargo to be repaid to the owners, but this was not done.
Afterwards the owners, having become insolvent, assigned their
claims for the restoration of the proceeds and for indemnity from
Spain to their separate creditors, and the commissioners under the
Florida treaty awarded to be paid to the assignees a sum of money,
part for the cargo, part for the freight, and part for the ship.
The officers and seamen having proceeded against the owners of the
ship by a libel
in personam for their wages, and having
afterwards, by an amended libel
in personam, claimed
payment out of the money paid to the assignees of the owners under
the treaty, it was held that they were entitled, towards the
satisfaction of the same, to the sum awarded by the commissioners
for the loss of the ship and her freight, with certain deductions
for the expenses of prosecuting the claim before the
commissioners.
Page 168 U. S. 306
Mr. Justice Story, delivering the opinion of the Court, said (p.
30 U. S.
710):
"If the ship had been specifically restored, there is no doubt
that the seamen might have proceeded against it in the admiralty in
a suit
in rem for the whole compensation due to them. They
have, by the maritime law, an indisputable lien to this extent.
This lien is so sacred and indelible that it has on more than one
occasion been expressly said that it adheres to the last plank of
the ship. 1 Peter's Adm. note 186, 195; 2 Dodson's 13;
The
Neptune, 1 Hagg.Adm. 227, 239."
"And, in our opinion, there is no difference between the case of
a restitution in specie of the ship itself and a restitution in
value. The lien reattaches to the thing, and to whatever is
substituted for it. This is no peculiar principle of the admiralty.
It is found incorporated into the doctrines of courts of common law
and equity. The owner and the lienholder whose claims have been
wrongfully displaced may follow the proceeds wherever they can
distinctly trace them. In respect, therefore, to the proceeds of
the ship, we have no difficulty in affirming that the lien in this
case attaches to them."
Nor does the ruling in
The City of Norwich, supra, that
the proceeds of an insurance policy need not be surrendered by the
shipowner conflict with the decision in
Sheppard v.
Taylor. The decision as to insurance was placed on the ground
that the insurance was a distinct and collateral contract which the
shipowner was at liberty to make or not. On such question there was
division of opinion among the writers on maritime law and in the
various maritime codes. But, as shown by the full review of the
authorities found in the opinion of the court, and in the dissent
in
The City of Norwich, all the maritime writers and codes
accord in the conclusion that a surrender, under the right to limit
liability, must be made of a sum received by the owner, as the
direct result of the loss of the ship, and which is the legal
equivalent and substitute for the ship.
We conclude that the owner who retains the sum of the damages
which have been awarded him for the loss of his ship and freight
has not surrendered "the amount or value" (sec.
Page 168 U. S. 307
4283) of his interest in the ship; that he has not given up the
"whole value of the vessel" (sec. 4284); that he has not
transferred "his interest in such vessel and freight" (sec. 4285).
It follows that the shipowner, therefore, in the case before us, to
the extent of the damages paid on account of the collision, was
liable to the creditors of the ship, and the libelants, as such
creditors, were entitled to collect their claim, it being less in
amount than the sum of such proceeds.
The remaining questions are free from difficulty. It was urged
below, and is pressed at bar, that the amended libels disclosed no
cause of action, because it was not specifically alleged that the
master of the
Johnson communicated with the cargo owners
before consenting to the bond.
It was said in
The Julia Blake, 107 U.
S. 418,
107 U. S.
425,
"it is now the settled law of the English courts that a master
cannot bottomry a ship without communication with his owner, if
communication be practicable, and,
a fortiori, cannot
hypothecate the cargo without communicating with the owner of it,
if communication with such owner be practicable."
A particular review of the doctrine laid down by the English
courts was, however, rendered unnecessary in the case of
The
Julia Blake, as the circumstances in that case clearly
established that the hypothecation of the cargo was unwarranted,
irrespective of the failure to communicate with the owner of the
cargo. In the case of
Glascott v. Lang, 2 Phillips' Ch.
321, decided in 1847, Lord Chancellor Cottenham declared that no
authority existed to support the claim that a bottomry bond
executed upon a vessel might be avoided because the captain, though
having opportunity to do so, failed to communicate with the owners
before giving the bond. In
The Karnak, L.R. 2 Ad. &
Ec. 254, Sir Robert Phillimore thus referred to the subject:
"I think it will be found upon examination of the foreign
maritime law that the bottomry bond, under the various titles of
contract
a la grosse aventure, hypotheca, bodmer, or
cambio maritimo, was always considered as binding the
cargo, and that the necessity of a special communication, if
possible, of the master with the owner of the cargo, according to
the doctrine
Page 168 U. S. 308
of recent cases, however just in principle, is peculiar to the
English law."
The rule declared to be settled in Great Britain by the cases of
The Bonaparte, 8 Moore, p. C. 459;
The Hamburg,
B. & Lush. 253, 273;
s.c., 2 Moore P.C. (N.S.) 289,
320;
Navigation Company v. Morse, L.R. 4 P.C. 222, was in
1877 thus stated by the Privy Council in
Kleinwort v. Cassa
Marittima, 2 App.Cas. 157:
"That it is a universal rule that the master, if in a state of
distress or pressure, before hypothecating the cargo, must
communicate, or even endeavor to communicate, with the owner of the
cargo, has not been alleged, and is a position that could not be
maintained; but it may safely, both on authority and on principle,
be said that in general it is his duty to do so, or it is his duty
in general to attempt to do so. If, according to the circumstances
in which he is placed, it be reasonable that he should -- if it be
rational to expect that he may -- obtain an answer within a time
not inconvenient with reference to the circumstances of the case,
then it must be taken upon authority and principle that it is the
duty of the master to do so, or at least to make the attempt."
As in the case of The Julia Blake, however, we find it
unnecessary to determine in the case now before us whether the rule
laid down by the courts of Great Britain is the doctrine of this
Court. Under that rule, it is only where,
under all the
circumstances of the case, communication with the owners of
the cargo was feasible that a failure to attempt to communicate
will avoid the bond. Now in the case at bar, the pleadings do not
aver, nor does the evidence establish, whether communication was
had by the master with the owners of the cargo before the execution
of the bond, nor that such communication was feasible, or might
reasonably have been had. While it may be inferred from the
averment in the libel that the libelants assented to the bond,
"believing that the said bond was properly and necessarily issued,"
that such assent was given subsequent to the execution of the bond,
the language used does not imply that the master had not
communicated with the cargo owners before making the hypothecation.
As
Page 168 U. S. 309
the bond does not import to the contrary, the master must be
presumed to have lawfully executed it. The necessity for the
hypothecation, and that the course pursued was for the best
interests of the cargo owners, is established by the evidence.
Under such circumstances, we think the duty was upon the party who
questioned the power of the master to have executed the instrument
of hypothecation to plead it as a matter of defense.
The
Virgin, 8 Pet. 550. Particularly is this the case
when, as here, the recovery sought from the shipowner is for
advances made for
his benefit, which were charged upon the
property of the cargo owners by the representative as well of the
shipowner as of the owners of the cargo. Whether, under the
circumstances, an estoppel might not arise need not be
determined.
But one matter remains to be considered, and that is as to the
action of the district judge in refusing on the hearing and
subsequently to permit the respondent to amend his answer by
setting up the plea of laches and of
res judicata as
respects the allegation for the first time made in the third
amended libel of the receipt by the owner of the
Andrew
Johnson of partial compensation from the owners of the ship
Thirlmere for the loss of the
Andrew Johnson and
her freight. The third amended libel was filed October 28, 1890,
and the exceptions and answer thereto were filed June 22, 1891. The
trial took place on November 22, 1893. It appears from the papers
used in support of the motion filed after the trial of the case
that the claim made in the admiralty proceedings in England that
the cargo owners should be credited from the ship's share of the
moneys paid into court by the owners of the
Thirlmere with
the ship's proportion of the bottomry bond was rejected because of
a supposed want of jurisdiction. Indeed, the proctor for the
respondent, in an affidavit filed in support of the renewed
application for leave to amend the answer, stated as a reason for
not setting forth the defenses in question in the answer to the
amended libel that he "was then of the opinion that his client was
entitled to judgment on the defenses then set up," and that he
"was then advised that the presentation and rejection by the
English admiralty court of the libelants'
Page 168 U. S. 310
claim, founded on their payment of the bottomry bond, did not,
according to the law of England, amount to an adjudication thereon
for the reason that the said English court of admiralty was without
jurisdiction thereof."
It is also clearly inferable from the statements in the
affidavit we have referred to that when the answer to the third
amended libel was filed, the proctor for the respondent knew of the
transaction with the insurance company. Even, therefore, if the
fact was, as claimed, that the respondent would have been entitled
to receive from his underwriters one-half of whatever decree the
libelants might be entitled to recover had the same been secured
with reasonable diligence, and that respondent had lost said
recourse by reason of the bar of the statute of limitations, still
there is no pretense that the respondent was misled into believing
that the libelants had abandoned their claim against him, and the
fact was that they promptly brought suit in this country to recover
against the shipowner. Without considering the averment in the last
amendment to the libel, by which the recovery by the owner of the
Johnson from the
Thirlmere was alleged, the first
libel informed the respondent that the claim arising from the bond
was pressed against him. If between the time of the filing of the
first libel (July 20, 1887) and the time of the hearing (November
22, 1893) a claim against an insurance company in favor of the
respondent was lost by laches, such loss was the result of his own
conduct.
Under all the circumstances, particularly as the rejection of
the claim in the courts of Great Britain was not upon the merits,
we are of opinion that the trial court did not abuse its discretion
in refusing leave to amend the answer.
The decree of the circuit court of appeals must be reversed,
and that of the district court affirmed, and it is so
ordered.
*
"Know all men by these presents that I, James H. Killeran,
master mariner and commander of the ship or vessel called the
Andrew Johnson, of Thomaston, Maine, of the measurement of
nineteen hundred and thirty-eight tons, or thereabouts, now lying
in the port of Callao, am held and firmly bound to Messrs. Grace
Brothers & Co., carrying on business at Lima and Callao under
the firm of Grace Brothers & Company, in the penal sum of
thirteen thousand two hundred and thirty-seven Peruvian silver
soles 72/100 at forty pence to the sole, equal to two thousand two
hundred and twelve pounds 5
s. 9
d. of good and
lawful money of Great Britain, to be paid to the said Grace
Brothers & Co., or any of them, or to their or any of their
order, certain attorney, executors, administrators, or assigns, or
to such person or persons as they, or any of them, shall appoint by
endorsement thereon in the name of their firm of Grace Brothers
& Co. to receive the same."
"For which payment to be well and faithfully made I bind myself,
my heirs, executors, or administrators, and also the hull, boats,
tackle, apparel, and furniture of said vessel and her cargo of
nitrate of soda, including about twelve hundred tons of nitrate
soda, transhipped on board the British bark
Mary J.
Leslie, of Liverpool, N.S., of 815 tons register, and of which
W. S. MacLeod is now master, and the freight to be earned and
become payable in respect thereof, firmly by these presents, sealed
with my seal. Dated this fifteenth day of September, in the year of
our Lord one thousand eight hundred and eighty-four."
"Whereas the said vessel lately sailed from Caleta Buena laden
with a cargo of nitrate of soda, bound therewith to Hamburg, in
Germany, and during the prosecution of the said voyage sprang a
leak, whereby she took in water at sundry times to such an extent
that it was deemed expedient by the said master, for the safety of
the vessel and the benefit of all concerned, to bear up for Callao,
which was accordingly done, and on arrival at Callao aforesaid the
vessel was duly surveyed by competent surveyors, and certain
repairs were recommended to be done to enable the said vessel to
continue the voyage with safety, and also to tranship to another
vessel about twelve hundred tons of the cargo laden on board the
aforesaid
Andrew Johnson in order to enable her to proceed
on her voyage with perfect safety."
"And whereas all necessary repairs and supplies have been made
to the said vessel, and the said portion of cargo transhipped to
the
Mary J. Leslie to enable her to prosecute her said
voyage, and she is now in a seaworthy condition, and ready to
proceed to sea, but the said James H. Killeran having unavoidably
incurred certain debts for such repairs and other necessary and
lawful matters and things relating to his said vessel, which he is
totally unable to defray and make good, save and except upon the
security of the bottom of his said vessel and her cargo and
freight, hath been necessitated to raise the sum of thirteen
thousand two hundred and seventy-three Peruvian soles, 72/100
silver, or its equivalent in British sterling, for the payment of
the debts incurred as aforesaid, and to enable the said vessel to
proceed to sea on the said intended voyage, and which sum the said
master has been unable to obtain on his own credit, or that of the
owners of the said vessel, or in any other way than by bottomry and
hypothecation of the said vessel, her boats, apparel, cargo, and
freight."
"And whereas, the said Grace Brothers & Co. have at the
request of the above-bounden James H. Killeran, agreed to lend and
advance to him the sum of thirteen thousand two hundred and
seventy-three soles, 72/100 silver, or its equivalent at forty
pence as aforesaid, in British sterling, for the purposes
aforesaid, upon his executing this present bond or obligation and
hypothecation of the said vessel, her boats and apparel and her
cargo, including that portion of the cargo transhipped to the
Mary J. Leslie, and the freight to be earned and become
payable in respect of the said voyage, and the said Grace Brothers
& Co. are contented to stand to and bear the risk, hazard, and
adventure thereof upon the hull, body, or keel of the said vessel
Andrew Johnson, her boats, tackle, apparel, and furniture,
together with the cargo laden on board as aforesaid, and the
freight to be earned and become payable as aforesaid, and for
securing the repayment of the said sum of thirteen thousand two
hundred and seventy-three Peruvian soles, 72/100 silver, or its
equivalent in British sterling, as aforesaid, the loan whereof is
hereby acknowledged, he, the said James H. Killeran, doth by these
presents mortgage, hypothecate, and charge the said vessel, her
boats, tackle, apparel, and furniture, and her cargo, including
that portion of the cargo transhipped to the
Mary J.
Leslie, and the freight to be earned and become payable in
respect of the said voyage, unto the said Grace Brothers & Co.,
their executors, administrators, and assigns:"
"Now the condition of this obligation is such that, if the said
vessel shall forthwith set sail from Callao aforesaid, and without
unnecessary delay or deviation proceed on her intended voyage to
Hamburg, and if the above-bounden James H. Killeran shall and do
within the space of five days next after the arrival of the vessel
at her final port of destination, and before commencing to
discharge the cargo free of any average whatever at the then
current rate of exchange on London, well and truly pay or cause to
be paid unto the said Grace Brothers & Co., or any of them,
their or any of their order, attorneys or attorney, executors,
administrators, or assigns, or unto such person or persons as they
or any of them shall appoint by endorsement under their or his hand
or hands in the name of their or his firm of Grace Brothers &
Co., or otherwise, upon this present obligation the sum of two
thousand two hundred and twelve pounds 5
s. 9
d.
British sterling money, being the principal money of this
obligation, and the further sum of three hundred and eighty-seven
pounds three shillings of like money for the maritime interest or
bottomry premium thereon at the rate of seventeen pounds 10
percentum, making together the sum of two thousand five hundred and
ninety-nine pounds 8
s. 9
d. British sterling, and
also do and shall on demand well and truly pay or cause to be paid
unto the said Grace Brothers & Co., or any of them, or to their
or any of their order, attorneys, endorsers, executors,
administrators, or assigns, all such costs, charges, and expenses
as they or any of them shall or may have incurred, sustained, or be
put to in or about the recovery of the aforesaid principal money
and premium, or any part thereof, or otherwise howsoever in the
premises."
"Or if during the said voyage an utter loss of the said vessel
by fire, enemies, pirates, the perils of the sea or navigation, or
any other casualty shall unavoidably happen, to be sufficiently
proved by the said James H. Killeran, then, and in either of the
said cases, this obligation shall be void, or otherwise to be and
remain in full force and virtue."
"In testimony whereof, the said James H. Killeran hath, to these
presents, and to a duplicate and triplicate thereof, set his hand
and seal after careful reading, in the presence of the undersigned
witnesses, the day and year first before written."