The
Carlos F. Roses, a Spanish vessel, owned at
Barcelona, Spain, sailed from that port for Montevideo, Uruguay,
with a cargo which was discharged there and a cargo of jerked beef
and garlic taken on board for Havana, for which she sailed March
16, 1898. On May 17, while proceeding to Havana, she was captured
by a vessel of the United States and sent to Key West, where she
was libelled. A British company doing business in London, laid
claim to the cargo on the ground that they had advanced money for
its purchase to a citizen of Montevideo, and had received bills of
lading covering the shipments. The vessel was condemned as enemy's
property, but the proceeds of the cargo, which had been ordered to
be sold as perishable property, was ordered to be paid to the
claimants.
Held,
(1) That as the vessel was an enemy vessel, the presumption was
that the cargo was enemy's property, and this could only be
overcome by clear and positive evidence to the contrary.
(2) That on the face of the papers given in evidence, it must be
presumed
Page 177 U. S. 656
that, when these goods were delivered to the vessel, they became
the property of the consignors named in the invoices.
(3) That the British company got the legal title to the goods
and the right of possession only if such were the intention of the
parties, and that that intention was open to explanation, although
the persons holding the papers might have innocently paid value for
them.
(4) That in prize courts, it is necessary for the claimants to
show the absence of anything to impeach the transaction, and at
least to disclose fully all the surrounding circumstances, and that
the claimants had failed to do so.
(5) That the right of capture acts on the proprietary interest
of the thing captured at the time of the capture, and is not
affected by the secret liens or private engagements of the
parties.
(6) That, in this case, the belligerent right overrides the
neutral claim, which must be regarded merely as a debt and the
assignment as a cover to an enemy interest.
The
Carlos F. Roses was a Spanish bark of 499 tons,
hailing from Barcelona, Spain, sailing under the Spanish flag, and
officered and manned by Spaniards. She had been owned for many
years by Pedro Roses Valenti, a citizen of Barcelona. Her last
voyage began at Barcelona, whence she proceeded to Montevideo,
Uruguay, with a cargo of wine and salt. All of the outward cargo
was discharged at Montevideo, where the vessel took on a cargo
consisting of jerked beef and garlic, to be delivered at Havana,
Cuba, and sailed for the latter port on March 16, 1898. On May 17,
when in the Bahama channel off Punta de Maternillos, Cuba, and on
her course to Havana, she was captured by the United States cruiser
New York, and sent to Key West in charge of a prize crew.
The bark and her cargo were duly libeled May 20. All of the ship's
papers were delivered to the prize commissioners, and the
deposition of Maristany, her master, was taken
in
preparatorio. Kleinwort Sons & Company, of London,
England, made claim to the cargo, consisting of a shipment of
110,256 kilos of jerked beef and 19,980 strings of garlic, and a
further shipment of 165,384 kilos of jerked beef, alleging that
they were its owners and that it was not lawful prize of war. In
support of the claim, the firm's agent in the United States filed a
test affidavit made on information and belief. In this, it was
alleged that
Page 177 U. S. 657
Kleinwort Sons & Company were merchants in London; that the
members of the firm were subjects of the United Kingdom of Great
Britain and Ireland; that in February and March, 1898, the bark,
being then in Montevideo, bound on a voyage to Havana, took on
board a cargo of jerked beef and strings of garlic shipped by Pla
Gibernau & Company, merchants of Montevideo, to be transported
to the port of Havana, and there to be delivered to the order of
the shippers according to the condition of certain bills of lading
issued therefor by the bark to Pla Gibernau & Company; that the
members of the firm of Gibernau & Company were citizens of the
Argentine Republic; that the bark left Montevideo on March 16, and
proceeded on her voyage to Havana, until May 17, when, being at a
point in the Bahama channel off Martinique, she was captured by the
United States cruiser
New York without resistance on her
part, and sent into Key West as prize of war; that, after the
shipment of the cargo in Montevideo, claimants made advances to the
shippers and owners of the cargo in the sum of �6,297, British
sterling, to-wit, �2,714 item thereof, upon the security of said
lot of 110,256 kilos of jerked beef and 19,980 strings of garlic,
and 3,583 item thereof, upon the security of said lot of 165,384
kilos of jerked beef; that at the time of making said advances, and
in consideration thereof, bills of lading covering the shipments
were delivered to claimants duly indorsed in blank, with the intent
and purpose that they should thereby take title to said bills of
lading and to said shipments of jerked beef and garlic, and should,
on the arrival of the vessel at her destination, take delivery of
the shipments and hold the same as security for their said advances
until paid, and with the right to dispose of said shipments and to
apply the proceeds to the payment of their said advances, and
accordingly the said Kleinwort Sons & Company did become, and
ever since have been and still are as aforesaid, the true and
lawful owners of the said bills of lading and of the shipments of
jerked beef and garlic therein referred to. The affidavits further
stated that the advances were equivalent in money of the United
States to about $30,644.35, and that no part of the same had been
paid, or otherwise secured to be paid.
Page 177 U. S. 658
The cause was heard on the libel and claims of the master of the
bark and Kleinwort & Company, and the evidence taken
in
preparatorio. The vessel was condemned as enemy property, and
the court ordered the claimants of the cargo to "have sixty days in
which to file further proof of ownership;" and because of its
perishable nature, the marshal of the court was ordered to
advertise and sell the same, and deposit the proceeds in accordance
to law. No appeal was taken on behalf of the vessel. The cargo was
sold and the proceeds deposited with the assistant treasurer of the
United States at New York, subject to the order of the court. The
time for claimants to take further proofs was twice extended. No
witnesses were produced by claimants, but Charles F. Harcke,
claimants' manager in London, made three
ex parte
affidavits before the United States consul general, which were
offered in evidence by claimants. Appended to the affidavits were a
large number of exhibits purporting to be papers, of copies of
papers, relating to the shipment of the cargo, and some of the
financial transactions of some of those who had to do with it. From
these affidavits and papers it appeared that the voyage of the
Carlos F. Roses was a joint venture entered into by Pedro
Pages, of Havana, a Spanish subject, the Spanish owners of the
vessel, and Gibernau & Company. The whole cargo was made up of
two shipments, one of jerked beef and one of garlic, which had been
purchased by Gibernau & Company on commission, and by them
delivered to the
Carlos F. Roses "consigned to order for
account and risk and by order of the parties noted" in the
invoices. The shipment of jerked beef containing 275,640 kilos in
bulk was divided thus: 60%, 165,384 kilos, "to the expedition or
voyage of the
Carlos F. Roses;" 40%, 110,256 kilos, "to
Mr. Pedro Pages, of Havana." The shipment of garlic was divided
thus:9,990 strings, "account of Mr. Pedro Pages," and 9,990 strings
for "account of" Gibernau & Company. Both invoices were signed
by Gibernau & Company, and bore date March 11 and 12, 1898.
Harcke stated in one of his affidavits that
"the said cargo was ultimately destined for Don Pedro Pages, of
Havana, who in the ordinary course of business would, by payment to
or indemnification
Page 177 U. S. 659
of Kleinwort Sons & Co., or their agents in that behalf,
take up the said bills of lading and thus be enabled thereon to
take the goods. No payment whatever has been made to Messieurs
Kleinwort Sons & Co., or their agents, on account of the
payments made by them through the said advances by said Don Pedro
Pages, or by any person on his behalf, or otherwise, and the said
Kleinwort Sons & Co. have been and are wholly unindemnified in
respect of their said payments, except so far as the proceeds of
the said cargo and the insurance thereon which as the owners of the
said goods they have become entitled to collect, thereby
subrogating to their own right, to the extent of such payments, the
insurers of the said goods."
The ship's manifest appears to have been signed by Maristany,
her master, at Montevideo, on March 15, 1898, and was vised by the
Spanish consul at that port the previous day. It described the
ship's destination as Havana, and her cargo as made up of two lots
of jerked beef containing 248,076 kilos and 29,970 kilos
respectively, and one lot of garlic containing 19,980 strings, all
shipped by Gibernau & Company, "to order." On March 14,
Maristany issued three bills of lading, in which it was stated that
the shipments were received from Gibernau & Company for
transportation to Havana "for account and at the risk of whom it
may concern," one of the bills covering a shipment of 165,384 kilos
of jerked beef, another of 110,256 kilos of jerked beef, and the
third of 19,980 bunches of garlic.
March 15, Gibernau & Company drew this bill of exchange:
"No. 128. Montevideo, March 15, 1898. For �2,714 13 8. Ninety
days after sight, you will please pay for this first of exchange
(the second and third being unpaid), to the order of the London
River Plate Bank, L'd, the sum of �2,714 13 8, value received,
which you will charge to the account of Pedro Pages, of Havana, as
per advice."
"Pla Gibernau & Co."
To Messrs. Kleinwort Sons & Co., London.
On the same day, Maristany drew this bill of exchange:
"No. 129. Montevideo, March 15, 1898. For �3,583 11 6.
Page 177 U. S. 660
Ninety days after sight, you will please pay for this first of
exchange (the second and third being unpaid), to the order of Pla
Gibernau & Co. the sum of �3,583 11 6, invoice value of jerked
beef, per
Carlos F. Roses, which you will charge to the
account of P. Roses Valenti, of Barcelona, as per advice."
"Ysidro Bertran Maristany"
"To Messrs. Kleinwort Sons & Co., London."
This was indorsed by Gibernau & Company.
Valenti was the managing owner of the
Carlos F. Roses.
Both bills of exchange passed through the London River Plate Bank,
L't'd, at Montevideo. On April 6, they were accepted by Kleinwort
Sons & Company, and on May 9 were paid under discount by that
firm. Harcke alleged that at the time of the acceptance of these
bills of exchange, bills of lading covering the shipments of the
garlic, and the jerked beef shipped for account and by order of
Pages endorsed in blank by Gibernau & Company, were delivered
to claimants as security for the payment of the bills of exchange,
and that thereafter the bill of lading covering the shipment of
jerked beef made for the account and by the order of the
Carlos
F. Roses was delivered in like manner, but affiant did not
state when. It was also alleged that, on April 9, the bills of
lading and invoices covering the shipment of garlic and Pages share
of the jerked beef were mailed by Kleinwort Sons & Company to
Gelak & Company, bankers of Havana, to be held until the bills
of exchange charged to the account of Pages should be paid. Neither
the instructions sent to Gelak & Company nor a copy of them was
produced. Harcke further alleged that the bills of lading and the
invoices covering the vessel's share of the shipment of jerked beef
were retained by Kleinwort Sons & Company "pending the disposal
of the said cargo." On May 17, the day of the capture, Kleinwort
Sons & Company cabled Gelak & Company requesting them to
return the bills of lading and invoices which had been forwarded on
April 9. June 9, Gelak & Company replied that the bills and
invoices had not been received. On October 21 claimants produced
these bills of lading, alleging that they had been received from
Gelak &
Page 177 U. S. 661
Company on October 18, and that neither Pages Gibernau &
Company nor the owners of the
Carlos F. Roses had paid
claimants anything for or on account of their acceptance and
payment of the bills of exchange. The cause of the cargo was heard
a second time on the claim, test affidavit, and Harcke's
affidavits, and a decree was entered for the payment to claimants
of the proceeds of sale, from which decree the United States took
this appeal.
MR. CHIEF JUSTICE FULLER delivered the opinion of the Court.
The President's proclamation of April 26, 1898, declared the
policy of the government in the conduct of the war would be to
adhere to the rules of the Declaration of Paris therein set forth,
one of them being thus expressed: "Neutral goods, not contraband of
war, are not liable to confiscation under the enemy's flag."
The question is whether this cargo when captured was enemy
property or not. The district court held that both the title and
right of possession were in these neutral claimants at the time of
the capture, "as evidenced by the indorsed bills of lading and the
paid bills of exchange," and therefore entered the decree in
claimants' favor. As the vessel was an enemy vessel, the
presumption was that the cargo was enemy's property, and this could
only be overcome by clear and positive evidence to the contrary.
The burden of proving ownership rested on claimants.
The London
Packet, 5 Wheat. 132;
The Sally
Magee, 3 Wall. 451;
The Benito Estenger,
176 U. S. 568.
Further proofs on claimants' behalf were ordered to be furnished
within sixty days from June 2, and the time was enlarged to August
31, and again to October 15. The proofs
Page 177 U. S. 662
tendered were three affidavits of claimants' manager sworn to
September 27, October 12, and October 21, 1898, respectively, with
accompanying papers. Such
ex parte statements where
further proofs have been ordered, though admitted without
objection, are obviously open to criticism, but, without pausing to
comment on these in that aspect, we inquire whether they satisfy
the requirements of the law of prize in respect of the
establishment of the neutral character of this cargo under the
circumstances.
Gibernau & Company were citizens of a neutral state; they
were evidently commission merchants, and in each invoice a charge
for their commission on the shipment appears. The invoices
expressly provided that the goods were shipped "to order for
account and risk and by order of the parties noted below." The
consignees noted below in the invoice of the jerked beef were the
owners of the vessel, "the expedition or voyage of the
Carlos F. Roses,'" and "Mr. Pedro Pages, of Havana,"
all Spanish subjects. The consignees of the garlic were "Mr. Pedro
Pages" and "the undersigned" that is, Gibernau & Company. There
were three sets of bills of lading issued by the master to Gibernau
& Company. One covered the portion of the shipment of jerked
beef made for the account of the vessel; another, the portion of
that shipment made for the account of Pages, the third, the
shipment of garlic made for the joint account of Pages and Gibernau
& Company. All the bills set forth that the goods were taken
for the account and at the risk of whom it might concern. The
ship's manifest was signed under date March 15, and the destination
of the cargo was stated thus: "Shipped by Pla Gibernau & Co. To
order." The vise of the consul of Spain, dated the day before, was:
"Good for Havana, with a cargo of jerked beef and garlic." As the
vessel had a share in the shipment of the jerked beef, and the
consignees were named in the invoices, which set forth that the
shipments were made by their orders for their account and at their
risk, it would appear that the manifest was erroneous, and this and
the fact that the bills of lading stated that the goods were taken
"for account of whom it may concern," should be especially noted,
since the reasonable inference is
Page 177 U. S. 663
that the consignees must have been known to the master. And it
also should be observed that there was no charter party, which
would have necessarily revealed the engagements of the vessel, but
which naturally would not be entered into if the commercial venture
was that of her owner. The general rule is that a consignor, on
delivering goods ordered to a master of a ship, delivers them to
him as the agent of the consignee, so that the property in them is
vested in the latter from the moment of such delivery, though the
rule may be departed from by agreement or by a particular trade
custom whereby the goods are shipped as belonging to the consignor
and on his account and risk. We think that on the face of the
papers it must be concluded that when these goods were delivered to
the vessel, they became the property of the consignees named in the
invoices. Hence the shipments of jerked beef must be regarded as
owned by Pages, or by him and the owners of the
Carlos F.
Roses. One-half of the garlic belonged to Pages, the remaining
half was consigned to Gibernau & Company, and they did not
claim and have not claimed it, nor was it asserted that Gibernau
& Company retained the ownership of any part of the cargo after
its delivery to the vessel. Property so long unclaimed may be
treated as in any view good prize.
The
Adeline, 9 Cranch 244;
The
Harrison, 1 Wheat. 298. In fact, claimants admit
that the whole cargo "was ultimately destined for Don Pedro Pages,
of Havana." The bill of exchange drawn by Gibernau & Company
named Kleinwort Sons & Company as acceptors, and directed them
to charge the amount to the account of "Pedro Pages, of Havana, as
per advice." The bill drawn by Maristany also named Kleinwort Sons
& Company as drawees, and directed them to charge the amount
"to P. Roses Valenti, of Barcelona, as per advice." In neither of
them was there any reference to the cargo, and, so far as appeared,
the amounts were at once charged up to the persons named.
Harcke said that, when the bills of exchange were accepted by
Kleinwort Sons & Company, bills of lading covering the shipment
of 110,256 kilos of jerked beef and of the garlic were delivered to
them in consideration of the acceptance of the
Page 177 U. S. 664
draft for �2,714 13 8, and that bills of lading for the 165,384
kilos of jerked beef were afterwards delivered in consideration of
the acceptance of the draft for �3,583 11 6. But the date of the
latter delivery was not given, and it affirmatively appeared that,
whenever these bills of lading reached Kleinwort Sons &
Company, they were retained "pending the disposal of the cargo."
Both drafts were accepted April 6, and the bills of lading for the
110,256 kilos of jerked beef and for the garlic were forwarded to
Gelak & Company on April 9, but the bills for the 165,384 kilos
of jerked beef, whenever received, never were. The instructions to
Gelak & Company were not put in evidence, nor any of the
correspondence with Valenti or Pages. In June, Gelak & Company
cabled that the bills sent to them had not been received; in
September, they turned up, but no information was afforded as to
how they came into Gelak & Company's possession, and in
October, duplicates were also received by claimants from Gelak
& Company, with, so far as disclosed, no accompanying
explanation. And Harcke's affidavits failed to set forth the
relations, transactions, or correspondence existing and passing
between claimants and the enemy owners of the cargo. This although,
as Sir William Scott said in
The Magnus, 1 C. Rob. 31,
"the correspondence of the parties, the orders for purchase, and
the mode of payment would have been the points to which the court
would have looked for satisfaction."
The affidavits alleged that claimants were wholly unindemnified
except by the proceeds of the cargo and the insurance thereon, by
which the insurers were subrogated to their own rights, but did not
state whether the insurance contemplated a war risk, or why the
bills of lading for the larger portion of the beef were retained by
claimants and not sent to their Havana agents, or whether they
retained them upon instructions from the enemy owners, or whether
they came to claimants from Spain; nor did anything appear in
respect of the interest of Pages as consignee for himself, or in a
representative capacity, nor of Valenti, the owner of the enemy
vessel, who resided at Barcelona. The evidence of enemy interest
arising on the face of the documents called on the asserted neutral
owners to prove
Page 177 U. S. 665
beyond question their right and title. And still, for all that
appears, the documents may have been sent merely to facilitate
delivery to the agent of the enemy owners.
Bills of lading stand as the substitute and representative of
the goods described therein, and, while
quasi-negotiable
instruments, are not negotiable in the full sense in which that
term is applied to bills and notes. The transfer of the bill passes
to the transferee the transferror's title to the goods described,
and the presumption as to ownership arising from the bill may be
explained or rebutted by other evidence showing where the real
ownership lies. A pledgee to whom a bill of lading is given as
security gets the legal title to the goods and the right of
possession only if such is the intention of the parties, and that
intention is open to explanation. Inquiry into the transaction in
which the bill originated is not precluded because it came into the
hands of persons who may have innocently paid value for it.
Pollard v. Vinton, 105 U. S. 7;
Shaw v. Railroad Company, 101 U.
S. 557.
Generally speaking, in the purchase and shipment of goods on
bills of lading attached to bills of exchange drawn against them,
the bill of exchange is drawn on the consignee and purchaser, and
sent forward for collection through the banker at the place of
shipment, who advances on the draft, and thereafter realizes on it
through his correspondents, or by sale as exchange; or the banker
at some other point, or at the general exchange center, may be the
drawee of the bill of exchange instead of the consignee or real
owner, the banker standing in the place of the owner in virtue of
some arrangement with his customer or on the faith of a running
account, the pledge of other securities, or the customer's personal
liability, so that the draft may be charged up at once, and at all
events, the control of the goods is not the sole reliance of the
banker.
In the case in hand, the captors succeeded to the enemy owners'
rights, and could have introduced evidence as to the real nature of
the transactions, and so have rebutted any presumption in favor of
the bankers as purchasers for value, and although they did not do
this, the question still remains that, in prize courts, it is
necessary for claimants to show the absence of anything
Page 177 U. S. 666
to impeach the transaction, and at least to disclose fully all
the surrounding circumstances. And this we think claimants have
failed to do.
The right of capture acts on the proprietary interest of the
thing captured at the time of the capture, and is not affected by
the secret liens or private engagements of the parties. Hence, the
prize courts have rejected in its favor the lien of bottomry bonds,
of mortgages, for supplies, and of bills of lading. The assignment
of bills of lading transfers the
jus ad rem, but not
necessarily the
jus in rem. The
jus in re or
in rem implies the absolute dominion -- the ownership
independently of any particular relation with another person. The
jus ad rem has for its foundation an obligation incurred
by another. Sand.Inst.Just.Introd., xlviii.; 2 Marcade, Expl. du
Code Napoleon 350; 2 Bouvier (Rawle's Revision) 73;
The Young
Mechanic, 2 Curt 404.
Claimants did not obtain the
jus in rem, and, according
to the great weight of authority, the right of capture was
superior.
In
The Frances, 8
Cranch 418, a New York merchant claimed two shipments of goods, one
in consequence of an advance made to enemy shippers by him in
consideration of the consignment, and the other in virtue of a
general balance of account due to him from the shippers as their
factor. Both consignments were at the risk of the enemy shippers.
The goods were condemned as enemy property, and the sentence was
affirmed. This Court said:
"The doctrine of liens seems to depend chiefly upon the rules of
jurisprudence established in different countries. There is no doubt
but that, agreeable to the principles of the common law of England,
a factor has a lien upon goods of his principal in his possession,
for the balance of account due to him, and so has a consignee for
advances made by him to the consignor. . . . But this doctrine is
unknown in prize courts unless in very peculiar cases, where the
lien is imposed by a general law of the mercantile world,
independent of any contract between the parties. Such is the case
of freight upon enemies' goods seized in the vessel of a friend,
which is always decreed to the owner of the vessel. . . . But in
cases of liens created by
Page 177 U. S. 667
the mere private contract of individuals, depending upon the
different laws of different countries, the difficulties which an
examination of such claims would impose upon the captors, and even
upon the prize courts, in deciding upon them, and the door which
such a doctrine would open to collusion between the enemy owners of
the property and neutral claimants, have excluded such cases from
the consideration of those courts. . . . The principal strength of
the argument in favor of the claimant in this case seemed to be
rested upon the position that the consignor in this case could not
have countermanded the consignment after delivery of the goods to
the master of the vessel, and hence it was inferred that the captor
had no right to intercept the passage of the property to the
consignee. This doctrine would be well founded if the goods had
been sent to the claimant upon his account and risk, except in the
case of insolvency. But when goods are sent upon the account and
risk of the shipper, the delivery to the master is a delivery to
him as agent of the shipper, not of the consignee, and it is
competent to the consignor, at any time before actual delivery to
the consignee, to countermand it, and thus to prevent his lien from
attaching. Upon the whole, the Court is of opinion that upon the
reason of the case as well as upon authority, this claim cannot be
supported, and that the sentence of the court below must be
affirmed with costs."
In
The Mary and
Susan, 1 Wheat. 25, an American merchantman bound
from Liverpool to New York was captured by a privateer of the
United States during the war of 1812. In her cargo were certain
goods which had been shipped by British subjects to citizens of the
United States in pursuance of orders received before the
declaration of war. Previous to the execution of the orders, the
shippers became embarrassed, and assigned the goods to certain
bankers to secure advances made by them, with a request to the
consignees to remit the amount to the bankers, who also repeated
the same request, the invoices being for gain and risk of the
consignees, and stating the goods to be then the property of the
bankers, and it was held that the goods having been purchased and
shipped in pursuance of orders from the consignees, the property
was originally vested in them,
Page 177 U. S. 668
and was not divested by the intermediate assignment, which was
merely intended to transfer the right to the debt due from the
consignees.
In
The Hampton, 5
Wall. 372, the schooner
Hampton and her cargo had been
captured, libeled, and condemned as prize of war. The master of the
vessel was her owner, but interposed no claim, nor did anyone claim
the cargo. One Brinckley appeared and claimed the vessel as
mortgagee. The
bona fides of this mortgage was not
disputed, nor that he was a loyal citizen. But his claim as
dismissed, and, the case having been certified to this Court, it
was held that, in proceedings in prize, and under the principles of
international law, mortgages on vessels captured
jure
belli are to be treated only as liens subject to be overridden
by the capture. Mr. Justice Miller said:
"The first ground on which appellant relies is that the
mortgage, being a
jus in re held by an innocent party, is
something more than a mere lien, and is protected by the law of
nations. The mortgagee was not in possession in this case, and the
real owner who was in possession admits that his vessel was
in
delicto by failing to set up any claim for her. It would
require pretty strong authority to induce us to import into the
prize courts the strict common law doctrine which is sometimes
applied to the relation of a mortgagee to the property mortgaged.
It is certainly much more in accordance with the liberal principles
which govern admiralty courts to treat mortgages as the equity
courts treat them, as mere securities for the debt for which they
are given, and therefore no more than a lien on the property
conveyed. But it is unnecessary to examine this question minutely,
because an obvious principle of necessity must forbid a prize court
from recognizing the doctrine here contended for. If it were once
admitted in these courts, there would be an end of all prize
condemnations. As soon as a war was threatened, the owners of
vessels and cargoes which might be so situated as to be subject to
capture would only have to raise a sufficient sum of money on them,
by
bona fide mortgages, to indemnify them in case of such
capture. If the vessel or cargo was seized, the owner need not
appear, because he would be indifferent, having the value of his
property in his
Page 177 U. S. 669
hands already. The mortgagee, having an honest mortgage which he
could establish in a court of prize, would either have the property
restored to him or get the amount of his mortgage out of the
proceeds of the sale. The only risk run by enemy vessels or cargoes
on the high seas, or by neutrals engaged in an effort to break a
blockade, would be the costs and expenses of capture and
condemnation, a risk too unimportant to be of any value to a
belligerent in reducing his opponent to terms. A principle which
thus abolishes the entire value of prize capture on the high seas,
and deprives blockades of all dangers to parties disposed to break
them, cannot be recognized as a rule of prize courts."
In
The Battle, 6
Wall. 498, the steamer
Battle and cargo were captured on
the high seas as prize of war, brought into port and condemned for
breach of blockade and also as enemy property. Two claims were set
up against the steamer in the court below, one for supplies and
another for materials furnished and for work and labor in building
a cabin on the boat. These claims were dismissed and the decree
affirmed by this Court, Mr. Justice Nelson, delivering the opinion,
saying: "The principle is too well settled that capture as prize of
war,
jure belli, overrides all previous liens, to require
examination."
Such is the rule in the British prize courts.
The
Tobago, 5 C.Rob. 218;
The Marianna, 6 C.Rob. 24;
The Ida, Spinks Prize Cases 331.
The
Tobago was a case of claim to a captured French
vessel, made on behalf of a British merchant as the holder of a
bottomry bond executed and delivered to him by the master of the
ship before the commencement of hostilities between Great Britain
and France. Sir William Scott said:
"The integrity of this transaction is not impeached, but I am
called upon to consider whether the court can, consistently with
the principles of law that govern its practice, afford relief. It
is the case of a bottomry bond, given fairly in time of peace,
without any view of infringing the rights of war, to relieve a ship
in distress. . . . But can the court recognize bonds of this kind
as titles of property, so as to give persons a right to stand in
judgment, and demand restitution of such interests in
Page 177 U. S. 670
a court of prizes? . . . The person advancing money on bonds of
this nature acquires, by that act, no property in the vessel; he
acquires the
jus in rem, but not the
jus in re,
until it has been converted and appropriated by the final process
of a court of justice. . . . But it is that the captor takes
cum onere, and therefore that this obligation would
devolve upon him. That he is held to take
cum onere is
undoubtedly true, as a rule which is to be understood to apply
where the onus is immediately and visibly incumbent upon it. A
captor who takes the cargo of an enemy on board the ship of a
friend takes it liable to the freight due to the owner of the ship,
because the owner of the ship has the cargo in his possession,
subject to that demand by the general law, independent of all
contract. . . . But it is a proposition of a much wider extent
which affirms that a mere right of action is entitled to the same
favorable consideration in its transfer from the neutral to a
captor. It is very obvious that claims of such a nature may be so
framed as that no powers belonging to this court can enable it to
examine them with effect. They are private contracts, passing
between parties who may have an interest in colluding; the captor
has no access whatever to the original private understanding of the
parties in forming such contracts, and it is therefore unfit that
he should be affected by them. His rights of capture act upon the
property, without regard to secret liens possessed by third
parties. . . . I am of opinion that there is no instance in which
the court has recognized bonds of this kind as titles of property,
and that they are not entitled to be recognized as such in the
prize court."
In
The Marianna, the vessel had been sold at Buenos
Ayres by American owners to a Spanish merchant; the purchase money,
however, had not been paid in full, but was to be satisfied out of
the proceeds of a quantity of tallow on board the vessel for sale,
consigned to the agents of the American vendors at London. The
vessel was seized on her voyage to England, documented as belonging
to a Spanish merchant, and sailing under the flag and pass of
Spain. The former American proprietors made claim to the cargo, but
the claim was
Page 177 U. S. 671
disallowed because the claimants' interest was not sufficient to
support it, and the court said:
"Captors are supposed to lay their hands on the gross tangible
property, on which there may be many just claims outstanding
between other parties which can have no operation as to them. If
such a rule did not exist, it would be quite impossible for captors
to know upon what grounds they were proceeding to make any seizure.
The fairest and most credible documents, declaring the property to
belong to the enemy, would only serve to mislead them if such
documents were liable to be overruled by liens which could not in
any manner come to their knowledge. It would be equally impossible
for the court, which has to decide upon the question of property,
to admit such considerations. The doctrine of liens depends very
much on the particular rules of jurisprudence which prevail in
different countries. To decide judicially on such claims would
require of the court a perfect knowledge of the law of covenant,
and the application of that law in all countries, under all the
diversities in which that law exists. From necessity, therefore,
the court would be obliged to shut the door against such
discussions, and to decide on the simple title of property with
scarcely any exceptions. . . . As to the title of property in the
goods, which are said to have been going as the funds out of which
the payment for the ship was to have been made. That they were
going for the payment of a debt will not alter the property. There
must be something more. Even if bills of lading are delivered, that
circumstance will not be sufficient unless accompanied with an
understanding that he who holds the bill of lading is to bear the
risk of the goods as to the voyage, and as to the market to which
they are consigned; otherwise, though the security may avail
pro tanto, it cannot be held to work any change in the
property."
These cases were cited by Dr. Lushington in
The Ida as
settling the law. In that case, claim was made by a neutral
merchant to a cargo of coffee which had been consigned to him by an
enemy on the credit of certain advances, as security for payment of
which bills of lading covering the cargo had been delivered to him.
But the court declined to recognize the lien,
Page 177 U. S. 672
and condemned the cargo as enemy property. Dr. Lushington
referred to
The San Jose Indians and Cargo, 2 Gallison
267, and subscribed to what was there said by Mr. Justice Story,
but thought his remarks inapplicable to the case in hand.
The case referred to was affirmed by this Court.
14 U. S. 1 Wheat.
208. Goods were shipped by Dyson, Brothers & Company, of
Liverpool, on board a neutral ship bound to Rio de Janeiro, which
was captured and brought into the United States for adjudication.
The invoice was headed: "Consigned to Messrs. Dyson, Brothers, and
Finnie, by order and for account of J. Lizaur." In a letter
accompanying the bill of lading and invoice, Dyson, Brothers &
Company wrote Dyson, Brothers, and Finnie:
"For Mr. Lizaur we open an account in our books here, and debit
him, etc. We cannot yet ascertain the proceeds of his hides, etc.,
but find his order for goods will far exceed the amount of these
shipments, therefore we consign the whole to you, that you may come
to a proper understanding with him."
The two houses consisted of the same persons. It was held that
the goods were, during their transit, the property and at the risk
of the enemy shippers, and therefore subject to condemnation.
Lizaur's claim was rejected, although Dyson, Brothers & Company
had the proceeds of his hides in their hands.
The Lynchburg, Blatchford's Prize Cases 57, and
The
Amy Warwick, 2 Sprague 150, are cited on behalf of claimants,
but as we read them they do not sustain their contention. The
schooner
Lynchburg, with a cargo of coffee, had been
libeled during the Civil War as enemy property, and also for an
attempt to violate blockade. Brown Brothers & Company, loyal
citizens, intervened as claimants of 2,045 bags of coffee, part of
the cargo. They alleged that they had made an advance of credit to
Maxwell, Wright & Company, neutral merchants of Rio de Janeiro,
for the purchase of the coffee, under which credit Maxwell, Wright
& Company drew drafts on Brown Brothers & Company for
�6,000 on the condition expressed therein that the coffee purchased
by claimants should be held until their advances were reimbursed
thereon. It was admitted by the United States attorney that 1,541
bags of the coffee
Page 177 U. S. 673
should be released to Brown Brothers & Company, and that was
done. As to the remaining 504 bags embraced in the general claim of
Brown Brothers & Company, in which Wortham & Co., of
Virginia, asserted an interest, it was held by the court that, as
no proof was given by claimants that the value of the 1,541 bags
restored to them was not equivalent to the sum of their advances
used in purchasing the whole 2,045 bags, the reasonable presumption
was that the restoration satisfied the entire advance. And Judge
Betts said:
"The claim to an absolute ownership of the 2,045 bags was placed
before the court in the oral argument, and in the written points
filed in the cause by the counsel for the claimants, upon the
proposition of law that a bill of lading, transmitted to them by
the shipper to cover advances, passed to them the title to the
cargo purchased therewith. If this doctrine be correct as to mere
commercial transactions, it does not prevail in prize courts, in
derogation of the rights of captors, when the interest of the
claimants is only a debt, although supported by liens equitable and
tacit, or legal and positive, even of the character of bottomry
bonds, when not signified on the ship's papers at the time of her
capture.
The Frances, 8 Cranch 418;
The Tobago, 5 C.Rob. 218;
The Marianna, 6 C.Rob.
24. Here, the vessel was enemy's bottom; the bill of lading
consigned the cargo to order or assigns at large at an enemy's
port, and, on the surrender of the principal portion of the
consignment to the claimants, no other evidence was given in
establishing the fact that the remainder of the shipment was owned
by them, or yet stood under hypothecation to them on the bill of
lading."
The 504 bags were condemned, "because, by intendment of law,
that portion belonged to Wortham & Co., and was not shown by
the proofs to be exempt from capture as prize."
In
The Amy Warwick, J. L. Phipps & Company, of New
York, British subjects, purchased 4,700 bags of coffee, part of the
cargo of an enemy vessel, which they had purchased through Phipps
Brothers & Co., their firm at Rio, with funds of an enemy firm,
and �2,000 of their own money by draft on Phipps & Co., their
firm at Liverpool. They took from the master
Page 177 U. S. 674
a bill of lading which stated that Phipps Brothers & Company
were the shippers of this coffee, and that it was to be delivered
to their order. Indorsed on the bill of lading was a statement
declaring that a portion of the coffee was the property of British
subjects. Phipps Brothers & Company indorsed the bill of lading
over to J. L. Phipps & Co. They also delivered to the master
another part of the bill of lading, an invoice of the coffee, and a
letter of advice to be conveyed to the firm in New York. This
letter stated that the coffee was shipped for account of merchants
at Richmond, Virginia, and that a bill of lading would have been
sent to them had it not been deemed advisable by reason of the
unsettled state of political affairs, for the better protection of
the property, and to prevent privateers from molesting the vessel,
to have it certified on the bill of lading that a portion of the
coffee was British property, and that this referred to the portion
against which they had valued on Liverpool. It was held that the
facts led plainly to the conclusion that claimants ought to be
repaid the amount they had expended from their own funds in the
purchase of the coffee and that the residue of the proceeds should
be condemned. It was said that as the coffee was purchased at Rio
by the claimants, and shipped by them on board the vessel under a
bill of lading by which the master was bound to deliver it to their
order, and they ordered it to be delivered to J. L. Phipps &
Co. -- that is, to themselves -- they were the legal owners of the
property, and could hardly be said to have a lien upon it. Their
real character was that of trustees holding the legal title and
possession with a right of retention until their advances should be
paid. The doctrine of liens was considered, and
The Frances,
The Tobago, The Marianna, and other cases examined. Judge
Sprague was of opinion that the rule in such cases ought not to be
that which stops at the mere legal title, but that which ascertains
and deals with the real beneficial interest,
"for if the court were never to look beyond the legal title, the
result would be that when such title is held by an enemy in trust
for a neutral, the latter loses his whole property, but when the
legal title is in a neutral in trust for an enemy, the property is
restored to the neutral, not for his benefit, but
Page 177 U. S. 675
merely as a conduit through which it is to be conveyed to the
enemy. To refuse to look beyond the legal title is to close our
eyes for the benefit of the enemy. It would enable him always to
protect his property by simply putting it in the name of a neutral
trustee."
We agree with counsel for the United States that,
notwithstanding the indorsement of Gibernau & Company on the
bills of lading, the proof of a neutral title was not sufficient.
Even if when the neutral interest is adequately proved to be
bona fide, the claim of the captors may be required to
yield, yet in this case the belligerent right overrides the neutral
claim, which must be regarded merely as a debt, and the assignment
as a cover to an enemy interest.
Something was said in argument in relation to the character of
the cargo. It is true that, by the modern law of nations,
provisions, while not generally deemed contraband, may become so,
although belonging to a neutral, on account of the particular
situation of the war or on account of their destination, as, if
destined for military use, for the army or navy of the enemy, or
ports of naval or military equipment.
The Benito Estenger,
176 U. S. 568;
The Panama, 176 U. S. 535;
The Peterhoff,
5 Wall. 28; Grotius, De Jure Belli et Pacis, lib. III., c. 1, § 5;
Hall, § 236.
Doubtless in this instance the concentration and accumulation of
provisions at Havana might fairly be considered a necessary part of
Spanish military operations
imminente bello, and these
particular provisions were perhaps especially appropriate for
Spanish military use; but while these features may well enough be
adverted to in connection with all the other facts and
circumstances, we do not place our decision upon them.
We are of opinion that a valid transfer of title to this enemy
property to claimants was not satisfactorily made out, and that
The decree below must be reversed, and a decree of
condemnation directed to be entered, and it is so ordered.
Page 177 U. S. 676
MR. JUSTICE SHIRAS dissenting:
This is an appeal from a decree of the District Court of the
United States for the Southern District of Florida awarding to
Kleinwort Sons & Company, the claimants, the proceeds of the
sale of the cargo of the Spanish bark
Carlos F. Roses.
The vessel sailed under the Spanish flag, and was owned,
officered, and manned by Spaniards. On or about March 14, 1898, Pla
Gibernau & Company, a firm of commission merchants doing
business at Montevideo, in the Republic of Uruguay, shipped on
board the bark, then lying at Montevideo, a cargo consisting of
about 275,000 kilos of jerked beef and 20,000 strings of garlic.
The property was consigned upon three bills of lading to the order
of the shippers, and two bills of exchange at ninety days, were
drawn upon the claimants, Kleinwort Sons & Company, British
subjects, domiciled and doing business as bankers at London,
England. One of these bills, for �2,714 3 8, was drawn by Pla
Gibernau & Company to the order of the London & River Plate
Bank, Limited, a banking concern doing business in Montevideo; the
other, for �3,583 11 6, was drawn by the master of the
Carlos
F. Roses to the order of Pla Gibernau & Company, and was
by them indorsed to the order of the London & River Plate Bank,
Limited.
The bills of exchange and the bills of lading came that day,
March 15, 1898, into the possession of the London & River Plate
Bank, which cashed the drafts, and forwarded them for acceptance to
Kleinwort Sons & Company at London, who accepted them on April
6, 1898, and paid them when due. At the time these bills of
exchange were accepted, the bills of lading, indorsed by Pla
Gibernau & Company, came into the possession of the
claimants.
The vessel sailed from Montevideo for Havana on March 16, 1898.
On April 25, 1898, war between Spain and the United States was
declared, and on May 17, when in the Bahama channel, on her course
to Havana, the
Carlos F. Roses was captured by a war
vessel of the United States, and sent in charge of a prize crew to
Key West.
Page 177 U. S. 677
On June 2, 1898, the district court condemned the vessel as
enemy's property seized upon the high seas. On February 9, 1899,
the district court held that, as it satisfactorily appeared from
the proof that both the title and the right of possession to the
cargo were in a neutral at the time of the capture, as evidenced by
the indorsed bills of lading and the paid bills of exchange
presented at the hearing, the claim should be allowed, and it was
so ordered. Thereupon the United States took this appeal.
It is admitted that if the cargo in question belonged to a
neutral, and was not contraband of war, it was not liable to
confiscation though found in an enemy's vessel -- this upon well
established principles of international law, and as within the
President's proclamation of April 26, 1898, expressly declaring
that "neutral goods, not contraband of war, are not liable to
confiscation under the enemy's flag."
It can scarcely be pretended that in this instance the cargo
consisted of articles contraband of war. They were the ordinary
products of the Republic of Uruguay, a country with which the
United States were at peace, and were purchased and shipped six
weeks before war was declared. Little, if anything, is left for the
commerce of neutrals if such goods, shipped in such circumstances,
are not within the protection of the President's proclamation.
The question is whether the district court erred in finding that
the goods in question were neutral goods and exempt as such from
condemnation.
The first contention, on behalf of the United States is that the
affidavits and exhibits relied on by the claimants to prove their
title were not competent evidence, and it is urged that the
evidence should have been in the form of depositions, taken under a
commission, and of documents duly proved.
We think it is a sufficient reply to this objection that the
proofs were received and considered by the district court upon the
trial entirely without objection on the part of the United States
or the captors, and that the action of the court in receiving the
evidence was not among the assignments of error made and filed
under the appeal.
Page 177 U. S. 678
"If, however, evidence in the nature of further proof be
introduced and no formal order or objection appear on the record,
it must be presumed to have been done by consent of parties, and
the irregularity is completely waived. In the present case, no
exception was taken to the proceedings or evidence in the district
court, and we should not therefore incline to reject the further
proof, even if we were of opinion that it ought not, in strictness,
to have been admitted."
The
Pizarro, 2 Wheat. 241, per Mr. Justice Story.
Rule 13 of this Court is as follows:
"In all cases of equity and admiralty jurisdiction heard in this
Court, no objection shall hereafter be allowed to be taken to the
admissibility of any deposition, deed, grant, or other exhibit
found in the record as evidence unless objection was taken thereto
in the court below and entered of record; but the same shall
otherwise be deemed to have been admitted by consent."
It is next contended that the claimant's evidence, regarded as a
whole, does not support the decree of the court below. It is said
that the burden of proof is upon the claimants, and that this
burden has not been sustained.
This was not the view of the district court, which, as we have
heretofore stated, held that it appeared satisfactorily from the
proof that both the title and right of possession were in a neutral
at the time of capture.
What are the matters urged against this finding of the court
below?
It is argued that, because it appears in the invoices and in the
manifest that the shipments were made partly on account of "the
expedition or voyage of the
Carlos F. Roses," partly on
account of "Mr. Pedro Pages, of Havana," and partly on account of
the shippers -- that is, Gibernau & Company -- it is a
reasonable inference that it must have been known to the master
that the consignees were, as to some of the cargo, enemies, and
that it must be concluded on the face of the papers that when the
goods were delivered to the vessel, they became the property of the
consignees named in the invoices.
Such a view loses sight of the decisive and indisputable facts
that the money used by Gibernau & Company in the purchase
Page 177 U. S. 679
of the goods was procured from the London & River Plate
Bank, which cashed the drafts drawn on Kleinwort Sons &
Company, the claimants, and that when the latter company, on April
6, accepted the drafts, they were furnished with the bills of
lading covering the entire shipment; that the said bills of lading
at the time of such delivery, were duly indorsed in blank by
Gibernau & Company, the shippers, and to whose order the said
cargo was by the terms of the bills of lading to be delivered, all
with the intent and result of entitling Kleinwort Sons &
Company to the said bills of lading and to the cargo described
therein as security for their acceptance of the drafts. It hence
was entirely immaterial whether the ultimate consignees were, as to
some of the cargo, residents of the enemy's country, and whether
that fact was known to the master. Under the facts proved by the
claimants, the latter, through the London & River Plate Bank,
had furnished the money used in the purchase of the goods before
the sailing of the vessel. This is made plainly to appear by the
invoices furnished by the shippers, and wherein is stated that the
master received the goods from Pla Gibernau & Company, and
wherein also there is a statement of the cost of the goods and of
the commissions charged by Gibernau & Company, corresponding in
amount to the drafts.
The fact that the claimant's proofs do not set forth the
correspondence between the claimants and the ultimate consignees is
made a matter of unfavorable comment. But the transactions were
substantially described in the affidavits, and it is not easy to
see what further light would have been afforded by such
correspondence, if indeed there was such correspondence.
The purchase of the goods, the drawing and cashing of the
drafts, the endorsement and delivery of the bills of lading, all
took place before the sailing of the vessel, and long before the
declaration of war and before there was any reason to anticipate
hostilities. The drafts were accepted before the war, and were paid
before the seizure of the vessel.
No counter-evidence was offered by the United States, although
the case was pending in the district court from June 6, 1898, to
February 9, 1899, when the decree in favor of the claimants was
entered. It is, of course, true that the burden
Page 177 U. S. 680
of proof was on the claimants, but when the government elected
to stand on the proof adduced by the claimants, every fair and
reasonable intendment must be made in favor of that proof. If the
case so made out is consistent with the rightfulness of the claim,
it should not be defeated by mere suggestions and suppositions not
founded on evidence.
"All reasonable doubts shall be resolved in favor of the
claimants. Any other course would be inconsistent with the right
administration of the law and the character of a just
government."
Prize Cases, 2
Black 635.
The final contention on behalf of the United States is that even
if the facts of the case were as set forth in the claimants' proofs
and as found by the district court, yet as matter of law the
claimants cannot succeed, because
"the right of capture acts on the proprietary interest of the
thing captured at the time of the capture, and is not affected by
the secret liens of private engagements of the parties; that hence
prize courts have rejected in its favor the lien of bottomry bonds,
of mortgages, for supplies, and of bills of lading; . . . that
claimants did not obtain the
jus in rem, and, according to
the great weight of authority, the right of capture was
superior."
To sustain this proposition, the following cases are cited:
The Mary and
Susan, 1 Wheat. 25;
The
Frances, 8 Cranch 418;
The Sally
Magee, 3 Wall. 451;
The
Hampton, 5 Wall. 372;
The
Battle, 6 Wall. 498;
The Tobago, 5 C.Rob.
218;
The Marianna, 6 C.Rob. 24;
The Ida, 1 Spinks
Prize Cases 331.
The
Mary and Susan was a case where an American house
had ordered the purchase of goods in England before the declaration
of war, and where their English agents had assigned the goods to
certain brokers to secure advances made by them. The goods were
captured en route to America, and were libeled in the District
Court of the District of New York as prize of war. But it was held,
both in the circuit court and in this Court, that the property had
vested in the American firm, who were the claimants, before and at
the time of shipment, and was not divested by a mere request made
by the shippers to the consignees to remit the purchase money to
the bankers, although in the invoice it was stated that the goods
were the property of the bankers.
Page 177 U. S. 681
The transaction was regarded not as a transfer of the goods, but
as merely intended to transfer the right to the debt due from the
consignees. No bills of exchange were drawn on the consignees in
favor of the English bankers, nor were any bills of lading endorsed
to them. The evidence of the transaction was found only in letters
addressed to the consignees by the shippers, requesting them to pay
the purchase money to the bankers, and this Court held, after a
careful examination of the evidence, that there was no intention to
secure the bankers by any transfer of the title of the property,
but only to secure them by a transfer of the debt due from the
consignees.
The case of
The Frances was an appeal from the sentence
of the Circuit Court of Rhode Island condemning certain British
goods captured on board
The Frances, and which were
claimed by Thomas Irvin, a domiciled merchant of the United States,
on the ground of lien. It was stated by Mr. Justice Washington
that
"it is not pretended that the real ownership in these goods was
not vested in the consignors, enemies of the United States; but the
claimant founds his pretensions on a lien created on the goods
consigned, . . . in consequence of an advance made to the shippers,
in consideration of the consignment, by his agent in Glasgow, and .
. . in virtue of a general balance of account due to him as their
factor."
And it was held that while, according to the common law, a
factor has a lien upon the goods of his principal in his possession
for the balance of account due him, and likewise a consignee for
advances made by him to the consignor, yet that this doctrine is
unknown in prize courts unless in very peculiar circumstances. And
the court referred to the case of
The Tobago, 5 C.Rob.
218, where it was held that a lien on a vessel created by a
bottomry bond was not protected from capture.
It will be seen that in this case of
The Frances, as in
the case of
The Mary and Susan, there was no question of
the effect of a transfer of title by bills of lading, but a mere
assertion of a lien by virtue of common law principles.
The Sally Magee is the next case cited. This was the
case of an enemy's vessel bound for an enemy's port. A portion of
the cargo was claimed by Fry, Price & Company for Coleman
&
Page 177 U. S. 682
Company, a Rio firm, because, as was alleged, Coleman &
Company, as factors and commission merchants, had been directed to
purchase and ship for the account of Davenport & Company, of
Richmond, Virginia, a cargo of coffee, if procurable at not over
ten and a half cents per pound; that Coleman & Company did make
the shipment of the cargo claimed to the consignment of Davenport
& Company, but that, by the invoice thereof, it appeared that
the said purchase was not made at or within the said limit, for
which cause Devenport & Company had refused to receive it as
purchased for their account or otherwise than on account of the
shippers, Coleman & Company, and as agents of necessity for
them, and that Davenport & Company had authorized to receive it
in their place and behalf. Another claim related to the residue of
the cargo, also coffee, consigned to Dunlap & Company, of
Richmond. It was not denied that this portion of the cargo was
enemy's property, but the claimants alleged a lien because of a
balance due claimants by Dunlap & Company.
In respect to the first claim, it was held that if Coleman &
Company, as factors, bought the coffee at a price exceeding the
limit prescribed by Davenport & Company, and the latter, on
learning the fact, repudiated the purchase, the title of the
factors thereupon became absolute, and none passed to the
principals for whom the purchase was made, but that there was an
entire failure on the part of the claimants to prove the facts as
alleged, although more than two years had elapsed between the
filing of the claim and the time when the decree was rendered.
Accordingly, the decree of condemnation as to that portion of the
cargo was affirmed.
The language of the Court in disposing of the second claim was
as follows:
"The other claim relates to the coffee consigned to Dunlap &
Co. of Richmond, and it is not denied that this was enemy's
property. The claimants allege a lien. The claim states that Dunlap
& Co. owed them a balance of upward of $35,326, and that they
were authorized and directed by that firm to receive and sell the
coffee, and apply the proceeds, as far as necessary, to the payment
of the debt, and to hold the
Page 177 U. S. 683
balance for the account of the debtor firm. The same affiant
made the test affidavit, as in the other case. He referred, as in
that case, to an important correspondence, and failed to produce
it. The same remarks apply upon the subject. It is to be inferred
also that the letters were written after the shipment of the cargo,
and indeed after the capture. In either case, the arrangement was
made too late to have any effect."
"The ownership of property in such cases cannot be changed while
it is
in transitu. The capture clothes the captors with
all the rights of the owner which subsisted at the commencement of
the voyage, and everything done thereafter, designed to encumber
the property or change its ownership, is a nullity. No lien created
at any time by the secret convention of the parties is recognized.
Sound public policy and the right administration of justice forbid
it. This rule is rigidly enforced by all prize tribunals. The
property was shipped to the enemy. It was diverted from its course
by the capture. The allegation of a lien wears the appearance of an
afterthought."
It will be observed that there was no effort in this case to
claim property vested or transferred by bills of lading. Indeed, it
appeared that the bills of lading were made out in favor of the
consignees at Richmond, and it was said by the court that the legal
effect of a bill of lading was to vest the ownership in the
consignees, citing
Lawrence v.
Minturn, 17 How. 100, in which it was said that
"the general effect of a bill of lading to raise a presumption of
property in goods in him to whom it makes them deliverable, is
conceded."
Next comes the cited case of
The Hampton, libeled and
condemned as prize of war in the Supreme Court for the District of
Columbia. It was held that mortgages on vessels captured
jure
belli are to be treated only as liens, subject to be
overridden by the capture, not as
jura in re, capable of
an enforcement superior to the claims of the captor.
Then comes the case of
The Battle, where there were
claimants against the proceeds of sale of an enemy's vessel for
supplies furnished and for materials furnished and for work and
labor. The claims were dismissed by the district court of the
United States, and on appeal that decree was affirmed by this
Court,
Page 177 U. S. 684
which, through Justice Nelson, said: "The principle is too well
settled that capture as prize of war
jure belli overrides
all previous liens to require examination," citing the cases of
The Hampton and
The Frances.
These are all the American cases cited, and it is to be observed
that in none of them was the Court called upon to decide the
question whether bills of lading made or endorsed to neutrals
before the declaration of war on account of money furnished to
purchase cargoes are protected as neutral goods from capture within
the general international rule and the President's proclamation
protecting such goods, when not contraband, from condemnation as
prize of war. The doctrine of these cases simply amounts to the
proposition that bottomry bonds, mortgages, and private agreements
that factor's balances and advances should be preferred claims are
mere liens which create no property rights in vessels or cargoes,
superior to the captor's rights.
Let us now examine the English cases cited.
The first is that of
The Tobago, 5 C.Rob. 218. This was
the case of a bottomry bond, and it was held that such a bond
confers no property in the vessel; that the property continues in
the former proprietor, who has given a right of action against it,
but nothing more. In the case of
The Marianna, 6 C.Rob.
24, there was a claim against a Spanish vessel for unpaid purchase
money on the vessel which had been sold by an American owner to a
Spanish merchant, but which was to be satisfied out of the proceeds
of a quantity of tallow consigned to England on board this vessel
for sale. Sir William Scott said:
"A claim is given on behalf of the former American proprietor in
virtue of a lien which he is said to have retained on the property
for the payment of the purchase money, but such an interest cannot,
I conceive, be deemed sufficient to support a claim of property in
a court of prize."
In respect to the goods which were said to have been pledged to
secure the payment of the purchase money of the ship, Sir William
Scott said:
"Then as to the title of property in the goods, which are said
to have been going as the funds out of which the payment for
Page 177 U. S. 685
the ship was to have been made. That they were going for the
payment of a debt will not alter the property. There must be
something more. Even if bills of lading are delivered, that
circumstance will not be sufficient, unless accompanied with an
understanding that he who holds the bill of lading is to bear the
risk of the goods as to the voyage, and as to the market to which
they are consigned; otherwise, though the security may avail
pro tanto, it cannot be held to work any change in the
property."
It will be noticed that the shipper of the goods in this case
was the Spanish merchant, an enemy.
Finally, the case of
The Ida is relied on. 1 Spinks
Prize Cases 331. The statement of the case was as follows:
"The claim of neutral merchants for 2,650 bags of coffee,
consigned to them on the credit of advances made by them, was
disallowed. The claim is that of lien, which cannot be upheld
against captors. Further proof cannot be allowed when there has
been an attempt to deceive the court by simulated papers."
In considering the evidence in the case, Dr. Lushington
said:
"Now that simulated bill of lading was certainly framed for some
purpose or other by desire of the master. It is a well known rule
of this court that where there are contradictory papers, the burden
of proof lies on the claimant to show that the contradiction is not
inconsistent with the rights of a belligerent power, and, I must
say, I have not heard any satisfactory explanation of how or why
these papers were framed except it was for the purpose of deceiving
those who might have to determine whether it was an enemy's
property or not."
In discussing the law of the case, Dr. Lushington said:
"It has been contended by counsel that the property is in
Behrens & Company by virtue of the endorsement of the bills of
lading, and cases from common law have been cited in support of
this. I believe that under some circumstances that would be the
case. They would have a legal title to the property, but I have
considerable doubt whether it is not the law of this court that the
claimant must show that he has not only a legal, but an equitable,
title. If a mere legal title would justify the court in restoring
property, the consequences would be most alarming,
Page 177 U. S. 686
for nothing would be more easy than to cover enemies' property
from one end of the Kingdom to the other. I strongly object to the
doctrine that if a legal title be shown, this court is bound to
restore, for I hold that an equitable title is also necessary to
support a claim in this court."
Upon the whole, the learned judge was of the opinion that the
property belonged to an enemy, subject to claimant's charges, and
that it was not possible to doubt for a single moment that there
was an intention in the case, by means of colorable bills of
lading, to deceive and defraud Great Britain of its belligerent
rights by attempting to cover enemy's property as neutral.
The case of
The Ida can therefore be cited as conceding
that if the claimants had vested in them the legal title to the
goods by virtue of the endorsement of the bills of lading, and had
also an equitable title, they would be entitled to a judgment of
restoration. But the court was of opinion that there was no
evidence whatever of any portion of the cargo belonging to a
neutral. While it was true that the claimants exhibited a bill of
lading endorsed to them, yet another bill of lading not endorsed
was found on capture in possession of the master. Such a state of
facts justly created a belief that the transaction was essentially
fraudulent, as an attempt to cover enemy's property.
We shall now consider some of the cases cited on behalf of the
claimants.
The
Amy Warwick, 2 Sprague 150;
67 U. S. 2 Black
635, is in several respects a leading case, and is decisive of the
present one. It was there held that where a neutral commission
merchant purchased a cargo of coffee for enemy correspondents,
partly with their funds and partly with his own, and shipped it
under a bill of lading by which it was to be delivered to his
order, having a legal title and a beneficial interest, a prize
court should award him the amount of his advances, although the
residue of the property will be condemned as enemy's.
After a full statement of the facts, the conclusion was thus
stated by Judge Sprague:
"The claim of J. L. Phipps & Co. was filed on the 4th of
September last. It alleges that this coffee was purchased by them
partly by funds of Dunlop, Moncure & Co., of Richmond,
Page 177 U. S. 687
and partly by �2,000 of their own money; that the legal title
has always remained in them, and that no other person is the legal
owner, except the equitable interest of said Dunlop, Moncure &
Co."
"These facts seem plainly to lead to the conclusion that the
claimants ought to be repaid the amount which they expended from
their own funds in the purchase of the coffee, and that the residue
of the proceeds should be condemned. This result I shall adopt
unless precluded from doing so by authority."
"The counsel for the captors contend that the claimants had only
a lien on this cargo, and that liens will not be protected or
regarded in a prize court. This position is sustained by the
authorities as to certain kinds of liens. The extent of this
doctrine and the reasons on which it is founded are stated by the
Supreme Court in
The Frances, 8 Cranch 418.
It is there said that"
"cases of liens created by the mere private contract of
individuals, depending upon the different laws of different
countries, are not allowed, because of the difficulties which would
arise in deciding upon them, and the door which would be open to
fraud."
"Similar reasons are given by Lord Stowell in
The
Marianna, 6 C. Rob, 25, 26, and in several other cases. These
reasons are especially applicable to latent liens created under
local laws. They do not reach the case now before the court. This
coffee was purchased by the claimants at Rio, and shipped by them
on board this brig under a bill of lading by which the master was
bound to deliver it to their order, and they ordered it to be
delivered to J. L. Phipps & Co. -- that is, to themselves. They
then retained the legal title, and the possession of the master was
their possession. Being the legal owners of the property, they can
hardly be said to have a lien upon it, a lien being in strictness
an encumbrance on the property of another. Their real character was
that of trustees holding the legal title and possession, with a
right of retention until their advances should be paid. . . . The
case of
The St. Jose Indians, 1
Wheat. 208, has been cited by the counsel for the claimants, and
they contend that it sustains their whole claim, and requires all
the coffee to be restored to them. That case is a stringent
authority to the extent of the �2,000 which the claimants invested
or advanced
Page 177 U. S. 688
in the purchase, but I do not think that it authorizes me to go
further."
This case was taken to the circuit court and there affirmed. No
appeal was taken to the Supreme Court from that part of the decree
which allowed the claim of Phipps & Company. The decree of
condemnation of the residue was affirmed.
67 U. S. 2 Black
635.
The bark
Winifred was captured in May, 1861, off Cape
Henry, and confiscation of vessel and cargo was demanded as being
enemy's property. The cargo, consisting of 4,200 bags of coffee,
had been purchased by Phipps & Company in Rio as agents for
Crenshaw & Company, Richmond merchants. Phipps & Company
advanced their own funds to the extent of three eighths of the
cargo. The consignment formally was to shipper's order, but the
bills of lading were sent forward endorsed to Crenshaw &
Company. Subsequently, Phipps & Company made further advances
of $20,622 on April 26, while the goods were in transit, and, after
the outbreak of hostilities, taking a reassignment of the bills of
lading. The district court ordered a restoration of three eighths
of the cargo to Phipps & Company, but refused to allow their
claim for the further advances on the other five eighths of the
cargo, citing
The Marianna, 6 C.Rob. 24, and
The Frances, 8
Cranch 418. But on appeal, the circuit court, while affirming the
decree allowing the claim against the three eighths of the cargo,
reversed that part of the decree which refused the claim for the
further advances, allowed further proofs, and in December, 1863,
allowed the entire claim of Phipps & Company, with interest.
The Winifred, Blatchford's Prize Cases page 35, and
note.
The Lynchburg was captured with her cargo in May, 1861,
at the mouth of Chesapeake Bay. Two thousand and forty-five bags of
coffee, part of her cargo, had been purchased by Maxwell, Wright
& Company as agents for Wortham & Company, of Richmond.
Maxwell, Wright & Company took bills of lading, consigning the
cargo to their own order, and drew against them on Brown, Shipley
& Company, of London, for �6,090, who accepted the drafts and
subsequently paid them. The entire cargo was destined ultimately
for enemies. Wortham &
Page 177 U. S. 689
Company, of Richmond, claimed 504 bags of this shipment, subject
to the lien of Brown, Shipley & Company. The district court
restored to Brown, Shipley & Company 1,541 bags, but condemned
the 504 bags claimed by Wortham & Company as enemy's property.
Judge Betts said:
"The claim to an absolute ownership of the 2,045 bags was placed
before the court in the oral argument and in the written points
filed in the cause by the counsel for the claimants, upon the
proposition of law that a bill of lading, transmitted to them by
the shipper to cover advances, passed to them the title to the
cargo purchased therewith. If this doctrine be correct as to mere
commercial transactions, it does not prevail in prize courts, in
derogation of the rights of captors, when the interest of the
claimant is only a debt, although supported by liens equitable and
tacit, or legal and positive, even of the character of bottomry
bonds, when not signified on the ship's papers at the time of her
capture.
The Frances, 8 Cranch 418;
The Tobago, 5 C.Rob. 218;
The Marianna, 6 C.Rob.
24."
On appeal, the circuit court affirmed as to the allowance of the
claim of Brown, Shipley & Company for the 1,541 bags, but
reversed the refusal of their further claim for 504 bags, allowed
the claimants to give further proofs, and ultimately the 504 bags
were restored by consent to the claimants.
The Lynchburg,
Blatchford's Prize Cases 51 and note on p. 52.
The exigencies of trade have called a class of instruments into
being which are substantially acknowledgments by public or private
agents that they have received merchandise, and from whom or on
whose account, and usage has made the possession of such documents
equivalent to the possession of the property itself. Among them the
most notable is the bill of lading, in respect to which, and
replying to the question whether at law the property of goods at
sea passes by the endorsement of a bill of lading, Buller, J.,
said, in his opinion in
Lickbarrow v. Mason:
"Every authority which can be adduced, from the earliest period
of time down to the present hour, agree that at law the property
does pass as absolutely and as effectually as if the goods had been
actually delivered into the hands of the consignee. "
Page 177 U. S. 690
Smith's Leading Cases, vol. 1, part 11, 7th Am. ed., under the
head of
Lickbarrow v. Mason.
The conclusion warranted by the cases is that as well advances
made for the purchase of goods as an absolute purchase are
protected by bills of lading, whether made out directly to the
party purchasing or making the advancements, or endorsed to him by
the shipper.
While possession of the bills of lading imports a legal title to
the goods, yet in prize cases it is permitted for the courts to go
behind the bills of lading if there is evidence tending to show
that the party in whose name they are issued or to whom they have
been endorsed has no equitable interest or is a mere cover to an
enemy. In the present case, there was no transfer of the property
from an enemy to a neutral. Up to the time of shipment, the entire
cargo was owned by Pla Gibernau & Company. They transferred it
to the London & River Plate Bank, Limited, who in turn
transferred it to Kleinwort Sons & Company, who produced the
bills of lading at the hearing and moved the payment by them,
before the capture of the vessel, of the drafts whose negotiation
furnished the moneys used in the purchase of the goods. The entire
issue of each set of bills of lading was possessed by Kleinwort
Sons & Company, under endorsements which gave to them only the
right to demand delivery from the vessel.
The case falls plainly within the law as administered in
The
Amy Warwick, The Winifred, and
The Lynchburg.
If the rule asked for by the captors in this case should be
upheld -- namely that bills of lading endorsed to neutrals, acting
in good faith, who have advanced money to purchase goods shipped
long before the declaration of war do not create a right of
property in the goods -- there would be very little room left for
the operation of the President's proclamation exempting neutral
goods from condemnation. Such a rule would be very unfortunate as
respects the commerce of the United States in case of hostilities
between European countries. Owing to the limited amount of merchant
shipping owned in the United States, the greater part of their
products, whether breadstuffs or manufactured goods, has to be
carried in foreign vessels, and
Page 177 U. S. 691
it is quite evident that bankers and capitalists could not
afford to advance the moneys needed to make purchases if they could
not be protected against seizure by foreign belligerents by the
endorsement to them of bills of lading. Only those who actually own
the goods could safely ship them on vessels owned by belligerents,
and, what constitutes the larger part of international trade, the
purchase and shipment of merchandise by factors with moneys
advanced by banking houses would, in case of war, have to
cease.
The decree of the district court should be affirmed.