In proceedings
in rem brought by consignees against a
vessel to recover for damage to shipments of olives consigned in
casks from Seville to New York, it appeared: that the damage was
due to the weakness of the casks in which they were shipped, and
not to the ship's negligence; that this weakness was known to the
ship's agent, before he accepted the shipment from the consignors
at Seville and issued bills of lading, and to her captain when the
casks were transferred from another vessel to the libeled ship at
Cadiz; that the agent had accepted the shipment and issued the
bills of lading "clean," without noting thereon the state of the
casks, upon condition that the consignors give the shipowner a
letter of guarantee relieving it from responsibility therefor,
which was done; that the bills of lading expressly exempted the
ship from responsibility for damage resulting from fragile
containers; that the consignees had directed their Seville bankers
to pay the agreed purchase price for the olives upon presentation
of clean bills of lading, and that the consignors thus obtained
payment upon the bills in question, though there was nothing to
show that the ship or its owner knew of this arrangement between
buyer and seller or that the bank, in accepting the bills, lacked
information of the circumstances attending their issue. The
petition did not allege fraud or any peculiar trade usage at
Seville.
Held:
(a) That the evidence was insufficient to establish fraud. P.
267 U. S.
272.
Page 267 U. S. 261
(b) That the evidence, including testimony by the ship's
captain, was insufficient to establish a trade usage that bills of
lading without notations impliedly acknowledged receipt of
merchandise in apparent good order and condition. P.
267 U. S.
272.
(c) According to the long established rule, bills of lading,
like those in question, do not affirmatively represent good order
and condition, and the Harter Act (c. 105, 27 Stat. 445) does not
require that they be given a different effect, either by
construction or by estoppel. P.
267 U. S.
273.
292 F. 723 affirmed.
Certiorari to decrees of the circuit court of appeals affirming
decrees of the district court, which dismissed three libels
in
rem for damages to goods.
Page 267 U. S. 265
MR. JUSTICE McREYNOLDS delivered the opinion of the Court.
These are proceedings
in rem against the
Isla de
Panay to recover for damage to merchandise brought by her from
Cadiz, Spain. They present the same issues and were heard on the
same proof. It will suffice to refer to the facts disclosed in
number 199.
December 21, 1917, in the United States District Court, Southern
District of New York, Austin Nichols & Co., a corporation,
filed a libel and complaint against the respondent steamship.
It alleged ownership of the damaged merchandise. Presence of the
vessel within the court's jurisdiction. That
"on October 27, 1917, Rowlett Y. Pyman shipped and placed on
board the steamship
Isla de Panay, then lying at the port
of Cadiz, Spain, 227 packages of olives in good order and
condition, to be carried by the said steamship
Isla de
Panay as a common carrier from the port of Cadiz to the port
of New York, and there to be delivered in like good order and
condition as when shipped to your libelant, in accordance with the
terms of bills of lading then and there issued for the said
shipment and in consideration of an agreed freight. Thereafter the
said steamship
Isla de Panay sailed from the port of Cadiz
and arrived at the port of New York in the month of November, 1917,
and there discharged her cargo, not in like good order and
condition as when shipped, but badly damaged. "
Page 267 U. S. 266
Consequent damages amounting to about eleven thousand
dollars.
It prayed for process according to the course and practice in
causes of admiralty and maritime jurisdiction to issue against the
steamship, her engines, boilers, etc. That a decree be granted for
the damage sustained, and the steamer condemned and sold to satisfy
the same.
The Compania Trasatlantica claimed the vessel as sole owner,
obtained her release, and answered, denying liability. It admitted
receipt of the goods and alleged their carriage and delivery as
required by the bills of lading. It specifically admitted and
alleged:
"That on or about the 6th day of November, 1917, there were
shipped on board the steamship
Isla de Panay, then at the
port of Cadiz, Spain, and bound for the port of New York, 227 casks
said to contain olives, the weight and contents of said casks and
their quality, however, being stated to be unknown to the claimant,
which expressly declined to be responsible therefor. . . . That it
was agreed that the merchandise should be transported for a
stipulated freight to the port of New York, and there be delivered
to the order of the libelant, subject to the conditions and
exceptions from liability contained in the bills of lading issued
for said merchandise at Seville, Spain, from which port said
merchandise was shipped in the first instance. . . . That
thereafter the steamship
Isla de Panay sailed from the
port of Cadiz, Spain, and arrived in due course at the port of New
York in the month of November, 1917, and that it thereafter
delivered at the port of New York all of the above mentioned
merchandise which it received on board the ship at Cadiz in
pursuance of and in compliance with the terms and conditions of the
bills of lading hereinabove referred to."
That the bills of lading expressly exempted the vessel from
responsibility for damage resulting from breakage of the articles
and fragile containers. The ship was in all respects seaworthy,
Page 267 U. S. 267
properly manned, equipped, and supplied for the voyage. If the
merchandise suffered loss or damage, the ship was relieved from
liability by the bills of lading, particularly that clause
concerning breakage and fragile containers; also by the Harter Act,
approved February 13, 1893. c. 105, 27 Stat. 445, 446.
Upon the indicated issues, evidence was taken and the cause went
to hearing.
The agent of the owner of the
Isla de Panay stationed
at Seville, Spain, there accepted the casks of olives (each of them
weighed 1,500 pounds of more) and delivered to the consignors bills
of lading. These recited:
"M. Rowlett & Pyman has shipped on board the Spanish steamer
Isla de Panay, its captain M_____, with destination to New
York and consigned to Austin Nichols, the effects declared on back
on the following conditions, . . . ignoring weight and
contents."
They said nothing concerning order or condition of the
merchandise, and contained exemption clauses as stated in the
answer.
The casks were carried down the River Guadalquivir 75 miles to
Cadiz, on a small steamer belonging to the owner of the
Isla de
Panay, and were there delivered to her. They were loaded,
stored, transported, and landed at New York without negligence or
default by the vessel, but the casks broke and the olives were
damaged. That the casks were old, weak, and quite liable to break
was observed by the owner's agent at Seville, and because of this,
he declined to accept them until the shippers gave the following
agreement to secure against loss:
Sevilla, November 5, 1917
"Compania Trasatlantica, Sevilla."
"My Dear Sirs:"
"With reference to the shipment of 227 casks of olives that we
are making by the steamer
Isla de Panay to New York, we
understand that that company considers the containers insufficient,
and that it does not
Page 267 U. S. 268
accept responsibility for the damages that they suffer as
natural consequences of the voyage, and as guarantee of that
company, we sign the present, as you have delivered us clean bills
of lading."
"Yours very truly,"
Rowlett & Pyman
The captain of the
Isla de Panay did not see the bills,
nor did he know of the letter of guaranty until after the voyage
had been completed. He observed the bad condition of the casks
before accepting them at Cadiz, and their imperfection was noted on
the accompanying shipping orders.
It appears that Austin Nichols & Co. had directed their
bankers at Seville to pay the agreed purchase price for the olives
upon presentation of clean bills of lading. The bankers accepted
the bills presently under consideration and paid the stipulated
price to the consignors. There is nothing to show that the ship or
her owner knew of the particular arrangement between buyer and
seller.
Libelants now insist that a trade usage prevailed at Seville
under which bills without notation were regarded as receipts for
merchandise in apparent good order and condition, and to establish
this usage, they rely upon an answer in the testimony of the
vessel's captain. When asked by respondents' counsel, "Why are
these letters of guaranty given in Seville?" he replied:
"If the bills of lading are issued with a note on them, the
insurance companies or the bankers in Spain will not accept that
bill of lading on account of the condition in which the goods are;
but if they have no clause on it, they will pass it to a banking
house and the insurance company that they have been shipped by the
shipper in apparent good order and condition, although they have
issued a letter of guaranty relieving the company of any
responsibility whatsoever for the condition of the packages."
Eduardo Benjumea, the owner's agent at Seville, who issued the
bills, testified:
Page 267 U. S. 269
"In view of the above, and as was usually done in such cases,
according to custom and at the request of the shippers, in order
that their goods might not be prejudiced more than was necessary,
and at the same time to relieve the company which I represent from
responsibility, I ordered the acceptance of the letters of
guaranty. . . . The custom of demanding letters of guaranty by
steamship companies from shippers, to protect themselves from
possible claims for the arrival in bad condition of the shippers'
goods at the port of destination, is old and well established, and
based on the following: (1) The decided opposition on the part of
the shippers to notations being placed on the bills of lading which
unnecessarily prejudices their goods and leaves everything to the
good faith of the receivers. (2) Due to the general character that
would necessarily have had to be given to the notations on the
bills of lading, and it being practically impossible to examine
carefully all the casks one by one both on account of economy and
fixed dates on which the mail boats of the Compania Trasatlantica
had to depart from Cadiz for the states. We could make, with such
notations, greater damage than would be justifiable, which,
considering the honorable practices of the Compania Trasatlantica,
we naturally tried to avoid. (3) Although letters of guaranty were
always requested for the above stated reasons, an exceptional use
of these letters was made during the European war, as a consequence
of the general bad quality of the packing which during that time
was presented for shipment. This bad quality of the packing was due
to the lack of containers in good condition and an enormous demand
for containers of this class which it was impossible to meet. What
took place was the use of all available containers notwithstanding
their sometimes inferior quality -- that is, chestnut wood was
accepted in place of oak in spite of the fact that old oak
containers are stronger than new ones of chestnut. I
Page 267 U. S. 270
have been 16 years in the shipping business as shipping agent,
and have had a great experience in matters thereto pertaining,
derived from the years so spent."
The district court dismissed the libel. It said:
"The great weight of evidence is to the effect that the chestnut
casks containing the olives were old and insufficient at the time
the merchandise left Seville for transshipment to claimant's vessel
at Cadiz. . . . The libelants paid drafts accompanying the bills of
lading without knowledge that the containers were old and
insufficient. If there is any liability here for damages, it is
upon the theory that, by failing to note in the bills of lading any
insufficiency in the containers, the steamship misled the libelants
in their injury, and is now estopped under the doctrine of
Higgins v. Anglo-Algerian Steamship Co., 248 F. 386, to
claim that the containers were insufficient. In that case, however,
there was in the bill of lading an express representation that the
merchandise itself was in apparent good order and condition when it
was known to be injured by rainwater. Here, the parties believed
doubtless that the olives would go through, but the ship's agents
were not willing to take the risk of any liability which might
arise from old casks. No case has gone so far as to hold that a
bill of lading containing no words representing the condition of
the containers would give rise to an estoppel. The Harter Act
expressly provides that the vessel shall not be liable for any
'insufficiency of package.'"
The circuit court of appeals affirmed the decree of dismissal.
Having pointed out that the proceedings were
in rem
against the vessel, and not
in personam against the owner;
that the libel alleged the merchandise was placed on board "in good
order and condition," and was not discharged "in like good order
and condition;" that the bills were not signed by the captain; that
the containers were weak when received, etc., that court expressed
inability
Page 267 U. S. 271
to discover any ground upon which the libel could be sustained.
It found:
"In the instant cases, the damage to the merchandise came within
the exemptions of the bill of lading, which declared that the
shipowners were not responsible for breakage. That many of the
casks were broken is undisputed. The burden of proof rested upon
the libelants to establish negligence on the part of the claimant,
and this burden we have no hesitation in saying was not sustained.
On the contrary, it has been established by the overwhelming weight
of evidence that whatever damage the merchandise suffered in the
cases now before the court was due not to the negligence of the
ship, but to the old and insufficient containers in which the goods
were shipped."
And it held that the ship was not estopped to set up the bad
condition of the casks by anything done at Seville or under the
Harter Act, and that
Higgins v. Anglo-Algerian S.S. Co.,
248 F. 386, was not controlling.
Counsel for petitioners maintain that with corrupt purpose, and
as part of a scheme to defraud petitioners, the ship issued bills
of lading designed to conceal the bad condition of the casks,
knowing that the shippers intended to obtain money upon them
according to the local usage. That, under the Seville usage, bills
of lading without notations impliedly acknowledged receipt of the
merchandise in apparent good order and condition, and the ship
could not repudiate this representation. That, considering this
local trade usage, it was the positive duty of the ship to disclose
the bad condition of the casks. Failure therein made the fraud upon
petitioners possible, and "where one of two innocent parties must
suffer, he must bear the loss whose act put it into the power of
the third party to commit the wrong." That Section 4 of the Harter
Act imposed the positive duty to disclose the containers' bad
condition. And, finally, that the doctrine approved in
Higgins
v. Anglo-Algerian S.S. Co. is applicable and controlling.
Page 267 U. S. 272
Evidently the libels were drafted with the expectation of
showing that the merchandise suffered damage from bad handling.
Petitioners' witnesses testified that the casks reached New York in
good condition, but were negligently unloaded. The manager for
Austin Nichols & Co. said:
"The casks were satisfactory containers. . . . I do not claim
that the casks were bad. . . . Our claim is that these casks were
handled in a bad way, by bad methods. . . . I do not make any claim
about the casks, but we are making a claim about the manner in
which they were handled."
The courts below, correctly, we think, have found that the
overwhelming weight of evidence shows the casks were in bad
condition when received at Cadiz, but were loaded, carried, and
discharged without negligence or fault.
Petitioners did not allege fraud or any peculiar trade usage at
Seville, and there is no sufficient evidence to establish either of
these things. The mere statement by the ship's captain referred to
above is not enough to show a peculiar trade usage at Seville,
there commonly known and acted upon, and it does not appear that
the bank which accepted the bills of lading lacked full information
concerning the circumstances attending their issue. The argument of
counsel proceeds mostly upon assumption not supported by the
record.
Bowling v.
Harrison, 6 How. 248,
47 U. S. 259;
Adams v.
Otterback, 15 How. 539,
56 U. S.
545-546;
Oelricks v.
Ford, 23 How. 49,
64 U. S. 61-62.
And see Carver on Carriage of Goods by Sea, 6th ed., Sec.
181
et seq.
The Harter Act provides:
"Sec. 4. It shall be the duty of the owner or owners, masters,
or agent of any vessel transporting merchandise or property from or
between ports of the United States and foreign ports to issue to
shippers of any lawful merchandise a bill of lading or shipping
document stating, among other things, the marks necessary for
identification, number of packages, or quantity, stating
whether
Page 267 U. S. 273
it be carrier's or shipper's weight and apparent order or
condition of such merchandise or property delivered to and received
by the owner, master, or agent of the vessel for transportation,
and such document shall be
prima facie evidence of the
receipt of the merchandise therein described."
"Sec. 5. For a violation of any of the provisions of this act,
the agent, owner, or master of the vessel guilty of such violation,
and who refuses to issue on demand the bill of lading herein
provided for, shall be liable to a fine not exceeding two thousand
dollars. . . ."
In the present case, the bills of lading were issued as agreed
by the parties; no demand was made for bills with different
recitals. According to the long established rule, bills like those
before us do not affirmatively represent good order and condition
(
Atchison, Topeka & S. F. Ry. v. Harold, 241 U.
S. 371), and we find nothing in the Harter Act which
requires that they be given a different effect, either through
construction or by estoppel.
Higgins v. Anglo-Algerian S.S. Co., supra, is
essentially different from the present cause. There, the bill of
lading expressly recited that the merchandise had been received in
good order and condition, and the ship was seeking to escape
liability by setting up its own wrongful action.
The decrees below must be
Affirmed.
MR. JUSTICE SUTHERLAND, dissenting.
I am unable to agree with the opinion just delivered. It seems
to be conceded, but, in any event, I think it must be conceded,
that, if the bills of lading had contained a recital that the
merchandise was received in good condition, the ship would have
been estopped from asserting that in fact it was in bad condition.
Higgins v. Anglo-Algerian S.S. Co., 248 F. 386, 160 C.C.A.
396. Here, I think, the circumstances are such as to make the
omission of a recital
Page 267 U. S. 274
upon the subject the equivalent of a statement of good
condition.
The shipment was accepted and the bills of lading issued by the
ship's agent,
* who testified
that he was aware of the bad condition of the merchandise and that
the letters of guaranty were taken with the understanding that no
notation to that effect would be made on the bills. They were what
are known as "clean bills," which meant, in this case at least,
according to the evidence, bills which "a banker will accept and
attach to a draft and on which he will make payment against a
letter of credit, and which
indicates that the merchandise was
in good condition when it was received from [by] the steamship
company." Without going into detail, I think it is fairly to
be deduced from the evidence that the usages of the trade required
a notation, and the evidence is clear that a notation of bad
condition would have been made except for the letters of guaranty.
The master of the Panay testified:
"If a letter of guaranty is given me relieving me or the ship of
all responsibility, as was done
Page 267 U. S. 275
in this case, no notation will be put on the bill of lading, but
if there is no letter of guaranty given, then a notation will be
put on the bill of lading."
Consignees had instructed their bankers in Spain to pay the
purchase price of the goods only upon presentation of clean bills
of lading, and there is evidence to the effect that, if bills are
issued with a notation of bad condition they will not be accepted
by insurance companies or bankers in Spain, but if such note be
omitted they will pass, upon the assumption that the goods have
been shipped in apparent good order and condition. Upon this
assumption, the bills were passed and payment made. Under these
circumstances, the omission of the notation in respect of the
condition of the goods was nothing short of a suppression of the
truth in order to further the fraudulent designs of the shippers.
Upon every principle of fair dealing, it should be regarded as the
equivalent of a false notation of good condition which the ship is
estopped to deny as against the claims of the consignees who relied
upon it. To hold otherwise is to permit the wrongdoer to take
advantage of his own misconduct, which a court of admiralty cannot
allow with due regard for those equitable principles by which it is
governed.
I am authorized to say that the CHIEF JUSTICE and MR. JUSTICE
VAN DEVANTER concur in this dissent.
* Section 4 of the Harter Act makes it the duty of the owner,
master or agent of the vessel to issue a bill of lading. The bills
of lading recite that the merchandise in question has been shipped
on "the Spanish steamer
Isla de Panay" and purport to be
issued by the "agent of the steamer." The agent at Seville, who
issued the bills, in one place calls himself an agent of the
company, and in another place speaks of "this agency for the S.S.
Isla de Panay." The fact is that the question of agency
was not seriously in issue in the trial court, and the statements
in the evidence relating thereto were more or less casual, but
enough appears to make it clear to my mind that the relation of
agent to the ship was fairly established. A point is made of the
fact that the bills of lading were delivered at Seville while the
merchandise was delivered to the
Panay at Cadiz. But
delivery of the merchandise at Seville to the small steamer
belonging to the same owner, for the sole purpose of transshipment,
was in effect a delivery to the
Panay. Bulkley v.
Naumkeag Steam Cotton Co., 24 How. 386;
The
City of Alexandria, 28 F. 202, 205, 206.