Opinion
No. 166.
February 18, 1929.
Appeal from the District Court of the United States for the Southern District of New York.
Libel by the Steamship Company of 1912 against the C.H. Pearson Son Hardwood Company, Incorporated. From an interlocutory decree granting only part of libelant's demand, libelant appeals. Modified.
Libel by the Steamship Company of 1912, owner of the steamer Emilie Maersk, against C.H. Pearson Son Hardwood Company, Inc., to recover demurrage because of alleged failure to furnish cargo as fast as the steamer could properly load, and also to recover dead freight for neglect to supply the full cargo as agreed. An interlocutory decree was granted, allowing libelant dead freight because of failure to supply a part of the cargo called "fustic"; also allowing demurrage for delay in furnishing cargo, when the ship was ready to receive it and none was alongside, but denying demurrage in so far as the cargo was furnished in accordance with the custom of the port, and denying dead freight so far as it was based upon a failure to furnish the amount of logs agreed to be shipped. He referred to a commissioner the computation of the amount of demurrage.
The libelant appealed from the interlocutory decree, because it did not allow dead freight for the short shipment of logs, and laid down a rule for the computation of demurrage, which was based on the custom of the Costa Rican ports, rather than the terms of the contract of carriage. The respondent, on its part, seeks to reduce the amount of dead freight allowed in case of the fustic. Modified.
The owner of the Emilie Maersk chartered the vessel to the respondent for the carriage of "a part cargo of from 500 to 600 tons of fustic and/or hardwoods and about four hundred thousand (400,000) feet of * * * cedar logs" from certain Costa Rican ports to New York.
The charter provided as to loading time: "For loading charterers are to furnish cargo alongside steamer within reach of steamer's tackles as fast as steamer can load in suitable hours and weather, Sundays and holidays excepted." There was no reference to custom in the charter.
Testimony was offered by the libelant at the trial that the vessel could have taken from 350 to 400 tons per day, at which rate the charterer was entitled to only 4 days to bring cargo alongside for loading. The loading actually required about 18 days because of the alleged failure to bring cargo alongside as fast as the steamer could have loaded.
The charterers furnished only 371 tons and 630 pounds of fustic and 371,479 feet of logs. Accordingly libelant claimed (1) demurrage for the excess loading time at the charter rate of $200 per day, a total of $2,346.56; and (2) dead freight for charterer's failure to supply 128 tons, 1,610 pounds of fustic and 28,521 feet of logs. This, at the charter rate of $9.50 per ton of 2,240 pounds on fustic, and $20 per thousand feet on round cedar logs, and $15 per thousand feet of square logs, amounted to $1,650.65.
The trial judge held that the charter did not provide for a definite number of lay days and that the vessel had only to be loaded within a reasonable time. He admitted evidence that it was customary to load at but one or two hatches at a time at the Costa Rican loading ports, and held that respondent was only obliged to furnish cargo alongside to that extent, although there was evidence that the vessel was ready to receive at four hatches. He held that the libelant was entitled to demurrage only for time lost when no cargo was alongside. Dead freight was allowed to the extent that the libelant failed to ship the agreed amount of fustic, but the claim for dead freight on the cedar logs was disallowed because the charterer had contracted to furnish "about" 400,000 feet of logs and the shortage was only about 7 per cent.
Kirlin, Woolsey, Campbell, Hickox Keating, of New York City (Earl Appleman and L. De Grove Potter, both of New York City, of counsel), for appellant.
Burlingham, Veeder, Fearey, Clark Hupper, of New York City (William J. Dean, of New York City, of counsel), for appellee.
Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.
The most important question raised by this appeal is whether, under a charter providing that "charterers are to furnish cargo alongside steamer within reach of steamer's tackles as fast as steamer can load in suitable hours and weather," evidence was admissible that it was customary at the loading ports to load cargo into one or two hatches at a time, although the ship was prepared to receive at four hatches. All stevedoring was, under the charter, to be for account of the ship.
Evidence was adduced by the respondent that at times there was failure to load into more than one hatch when cargo was alongside for two, but that matter can be dealt with before the commissioner. It was also said that there were not stevedores enough furnished by the libelants to load at more than two hatches, but they were apparently available, and were not employed simply because cargo was not alongside in sufficient quantities to justify their presence. The contention amounts to no more than saying that the ship should have had stevedores in excess of the number she could use for the cargo supplied. If a sufficient number to meet the actual supply of cargo were not on hand, this can be dealt with before the commissioner.
There was also testimony that at two of the four ports, namely, Lacarto and Tamarindo, the vessel anchored too far out, in a place that was not customary, and in this way caused some unnecessary delay in loading, which should abate any demurrage pro tanto. Undoubtedly the vessel was obliged to go within customary distance of the port, and this again can be shown in connection with the computation of demurrage. Unless the evidence that loading into one or two hatches was customary, and the custom of the port can be read into the charter, so as to justify the respondent in not furnishing cargo as fast as the steamer could load in suitable hours and weather, the charter must be taken as it reads, and demurrage must be allowed at the full capacity of the ship, with such abatement as may be proved because of any delay on her part, caused by anchoring too far out at the ports of Lacarto and Tamarindo, and because of failure to supply sufficient stevedores for cargo actually on hand.
The trial judge said (oral opinion, unreported): "If the charter party provides definitely for the number of lay days for loading and unloading the charterer is bound by that provision. If the number of days be not specified, then the ship must be loaded within a reasonable time. And * * * what is `a reasonable time' is dependent upon circumstances and the custom and usage of the port."
To support the foregoing statement of law the respondent relies largely on the English cases, and particularly on Hulthen v. Stewart Co., [1903] A.C. 389. There the clause in the charter read:
"The cargo to be loaded and discharged with customary steamship dispatch as fast as the steamer can receive and deliver during the ordinary working hours of the respective ports, but according to the custom of the respective ports. * * *"
Owing to the crowded state of the docks, the ship in that case did not get to her berth for 10 days after arrival. The trial court and Court of Appeals both held that the consignees had done all they reasonably could to discharge the vessel and dismissed the claim for demurrage. This disposition was affirmed by the House of Lords. It is to be observed that the clause in the charter there contained the words "according to the custom of the respective ports." Nevertheless the clause was treated very broadly, and Lord MacNaghten said:
"It is, I think, established that, in order to make a charterer unconditionally liable, it is not enough to stipulate that the cargo is to be discharged `with all dispatch' or as `fast as steamer can deliver' or to use expressions of that sort. In order to impose such a liability, the language used must in plain and unambiguous terms define and specify the period of time within which the delivery of the cargo is to be accomplished."
The English Court of Appeal in Temple v. Runnals, [1902] 18 Times L.R. 822, dealt with a clause in a charter party that contained nothing about the custom of the port, and merely said: "The cargo to be loaded and discharged as fast as steamer can receive and deliver during usual working hours." The court there held that a stipulation for a fixed number of days should not be imported by implication into the charter party, and that a contract worded as in that case "only imported an obligation on the charterer to use all reasonable skill and diligence." The court relied on the decision in Hulthen v. Stewart, which had not then reached the House of Lords, and also on Lyle Shipping Co. v. Cardiff Corp., [1900] 2 Q.B. 638. The charter in that case, however, provided that the vessel be "discharged with all reasonable dispatch as customary."
Respondent's contention as to the effect of the English cases seems to be fortified by the remarks of Carver (7th Ed.) § 614, and also by Scrutton (11th Ed.) p. 352. But in spite of the presumptive correctness of the reasoning of such eminent authorities, it is still to be borne in mind that, in the case of Hulthen v. Stewart, supra, the charter party contained the words: "according to the custom of the respective ports."
We are referred to no English case, except Temple v. Runnals, supra, which preceded the final decision in Hulthen v. Stewart, where a clause providing for loading "as fast as steamer can load" has been taken to mean no more than that the charterer shall act reasonably under the circumstances in view of the customs of the port.
But, whatever may be said of the English cases, this court, in Hine v. Perkins, 55 F. 996, and The Glenfinlas, 48 F. 758, is committed to the doctrine that the rate at which the ship can take is the measure of proper dispatch in such a clause as the one here.
In still another case, Tweedie Trading Co. v. Strong, 195 F. 929, we again held that a clause requiring "the goods are to be received by the consignee immediately the vessel is ready to discharge, and continuously at all such hours as the custom house or port authorities may give permission for the ship to work, or if necessary to discharge into lighters at the risk and expense of the consignees," required the consignees to take cargo continuously, and we held that they were not relieved of this obligation, even though they were prevented from getting lighters by acts of the Japanese government. See, also, the decision of Adams, J., in McCaldin v. Cargo of Scrap Iron (D.C.) 111 F. 411. Our decision in Steamship Rutherglen Co. v. Howard Houlder Partners, 203 F. 848, where the language used was "with all possible speed, according to the custom of the port of discharge," is not contra. Such a clause inevitably incorporated the "custom of the port," and called only for reasonable speed under all the circumstances.
Such cases as Hick v. Raymond, [1893] A.C. 32, and Empire Transp. Co. v. Philadelphia, etc., Co. (C.C.A.) 77 F. 919, 35 L.R.A. 623, where there appear to have been no clauses like "as fast as steamer can load," can have no bearing upon the present situation.
After all, the primary question is: What did the parties contract to do? It is certainly easy enough for them to insert the words "custom of the port" into the charter party, if they intend to have demurrage measured by all the surrounding circumstances, rather than by the capacity of the ship to load. We see no warrant in translating the words "as fast as steamer can load" into an indefinite obligation to act in a reasonable manner. In any event, we have repeatedly held the contrary, and adhere to our former decisions.
In respect to the minor question of the claim for dead freight upon the logs, we concur with the court below. There was testimony that a variation to the extent of 10 per cent. was a customary construction of the ambiguous word "about." We differ, however, with the trial court in allowing dead freight on fustic at the gross rate of $9.50 per ton mentioned in the charter. That award should have been based upon a net rate, instead of a gross rate, because the appellant, in order to earn its gross freight, would have had to pay for loading and discharging, and, as is contended, other expenses. The correct measure of damages for dead freight on the fustic is the gross freight on the cargo not shipped, "less any expenses saved by the steamer because of not carrying it." New York Cuba Mail S.S. Co. v. Guayaquil Q.R. Co. (C.C.A.) 270 F. 200.
The interlocutory decree is modified, so that it shall provide for an award of dead freight on the fustic, based only upon the gross freight on that cargo less any expenses saved by the steamer because of not carrying it, and shall allow demurrage in accordance with the foregoing opinion.