Opinion
11-10-1906
LEONARD et al. v. BOSCH et al.
McCarter & English, for complainants. R. R. & W. W. E. Donges and Thomas French, for defendants Bosch and others. Howard M. Cooper, for defendant Camden Nat. Bank.
Action by John Leonard and others against Charles Bosch and others. On bill to reform a contract. Decree for complainants.
Eight of the defendants, who were also eight of the eleven owners of a vessel on which complainants shipped a cargo, made two deposits (the first of $23,000, and the second of $2,800) with the Camden National Bank, another defendant, and payment of these deposits to complainants, John Leonard & Co., is sought by their bill. At the time of each deposit the bank signed a letter, stating its object. The first letter, dated at Camden, N. J., November 1, 1902, relating to the deposit of $23,000, was addressed to "Mr. Charles S. Belsterling, Traffic Manager American Bridge Co.," and was as follows: "The Camden National Bank, Camden, N. J., Nov. 1st, 1902. Mr. Chas. S. Belsterling, Traffic Manager, American Bridge Co., 259 So. Fourth St., Phila.—Dear Sir: The owners of the bark Primus have this day deposited with us, the sum of twenty three thousand ($23,000) dollars, to be held by us to idemnify you in the event of the loss of the cargo of old iron loaded by you in the Primus, according to the terms of a certain charter party, executed by L. St. Clare, master, and Paul Nobbe, agent for John Leonard & Co., dated October twenty-second, nineteen hundred and two. Liability in no case to exceed twenty-three thousand ($23,000) dollars. The above mentioned indemnity from loss is to be and remain in effect, as protection against loss of said cargo, from the time said bark Primus takes aboard said cargo, or any of said cargo is placed on lighters to be delivered on said bark, until full delivery of cargo at Philadelphia. Yours truly, Francis C. Howell, Cashier."
The second letter, relating to the deposit of the further sum of $2,800, made 20 days later, is addressed to "Mr. Chas. S. Belsterling," without further description, and was as follows: "The Camden National Bank. Camden, N. J., Nov. 21st, 1902. Mr. Chas. S. Belsterling, 259 So. 4th St., Phila., Pa.—Dear Sir: The owners of the bark Primus have this day deposited with us the further sum of twenty-eight hundred ($2,800) dollars, making in all twenty-five thousand eight hundred ($25,800) dollars, to be held by us to indemnify you in the event of the loss of the cargo of old iron loaded by you in the Primus, according to the terms of a certain charter party, executed by L. St. Clare, master, and Paul Nobbe, agent for Leonard & Co., dated October twenty-second, nineteen hundred and two—liability in no case to exceed twenty-five thousand and eight hundred ($25,800) dollars. The above mentioned indemnity from loss is to be and remain in effect, as protection against loss of said cargo, from the time said bark Primus takeaboard said cargo, or any of said cargo is placed on lighters, to be delivered on said bark, until full delivery at Philadelphia, Penn. Yours truly, Francis C. Howell, Cashier."
Complainants, who were the charterers, in fact loaded the cargo, and Belsterling, who was at the time their agent, as well as the traffic manager of the bridge company, acted, or intended to act, on behalf of the complainants in arranging for the deposit, and not on behalf of the bridge company, who now formally disclaim any interest in the deposit. On a suit at law brought by the complainants against the bank to recover both amounts as due to them on obligations created by these two letters, it was held by the Court of Appeals (Leonard v. Camden National Bank [1904; N. J. Err. & App.] 59 Atl. 143) that the party indicated by these writings as the beneficiary of the deposit, was the American Bridge Company, which company was not a party plaintiff to the suit, and at law could not be substituted for the complainants. The circumstance that the second letter was addressed to Belsterling, individually, and that in this second letter the bridge company was nowhere expressly named, was not referred to in the opinion as affecting the construction of the writings in regard to the parties indicated by the writings. It may be that the reference in the second letter to the first deposit, and the further statement therein that both deposits were held as one sum "to indemnify you in the event of the loss of the cargo loaded by you," was considered as requiring both letters to be construed together as intended on their fact for the benefit of the bridge company. Unless this view was taken, it is difficult to distinguish the case, so far as it relates to the construction of the written instruments, from the cases of Kean v. Davis (Err. & App. 1847) 21 N. J. Law, 683, 47 Am. Dec. 182, and Isham v. Cooper (Err & App. 1897) 50 N. J. Eq. 398, 410. 37 Atl. 462, 39 Atl. 760, where the written instruments were held to be equivocal on their face, and the subject of oral explanatory evidence in a court of law. It was said in the opinion of Mr. Justice Dixon, in Leonard v. Camden National Bank: "That perhaps a court of equity might be persuaded by extrinsic circumstances that the real purpose of the parties was to protect the owners of a certain cargo shipped on a vessel owned by the depositors, whoever they might be, and thus by reformation of the writings secure indemnity to the plaintiffs as such owners." It was also held that the fund deposited with the bank belonged to the depositors, subject only to the claim of the beneficiary to indemnify, and that the right of the complainants to the fund should not be established in a proceeding to which the depositors were not parties. It was further held that the sole obligation of the bank wag to hold the fund until the rights of the claimants were settled inter sese, and then to surrender the fund to the rightful claimants, and that a court of equity could give the appropriate remedy. The complainants' bill was thereupon filed against the depositors of the money, as well as the three owners of the vessel, and against the bank and the American Bridge Company; being all of the parties who have or may claim any interest in the deposit. The bill alleges the execution of a charter party between the owners of the vessel and the complainants, who were the owners of a cargo to be shipped by the vessel, in which charter party there was an agreement by the owners to deposit the sum of $23,000 with a depositary, in lieu of insurance, and that the deposits in question were made in pursuance of this agreement. This agreement was as follows: "Vessel to guaranty Insurance at lowest regular rates. Charterers not obliged to begin loading before deposit of twenty-three thousand dollars ($23,000) in guaranty of Insurance has been made: vessel responsible for any expenses caused by delay in making said deposit." It is alleged that in arranging with the owners the details for this deposit, Belsterling, who was the agent for complainants, acted for them; that Belsterling was at the same time also an agent (traffic manager) of the American Bridge Company, and that, through oversight or mistake, a portion of the correspondence was addressed to "Chas. S. Belsterling, Traffic Manager American Bridge Company," and that the contract of deposit was made not for the benefit of the American Bridge Company, who had no interest in the deposit, but for the complainants, the owners of the cargo, as the owners of the vessel well knew. It is further alleged that the vessel with its cargo was lost on the voyage, and the deposit is payable to the complainants. The bill prays a reformation or correction of the letter or letters, evidencing the contract between complainants and the bank, so as to express the fact that Belsterling was acting as complainants' agent, and not as agent of the bridge company; that the latter company may be declared to have no interest in the fund; and that the bank may pay it over to complainants, as the vessel with its cargo was worth more than the amount of deposit
The bank, denying all knowledge of the circumstances of the shipment, admits holding the deposits on the terms and conditions set out in its letters to Belsterling, but says that at the time of the deposits it was informed that Belsterling was the traffic manager of the American Bridge Company, that it was not informed that he was the agent of the complainants, and did not know that he was acting for them, and that the address of the letter to Belsterling as traffic manager was not through oversight or mistake on its part. It admits, however, that it holds the money as depositary or custodian, and is ready to pay it over as directed by the court. The American Bridge Company files an answer,and disclaimer under its seal, disclaiming any interest past or present in the fund. The depositors of the fund (being eight of the eleven owners of the vessel) deny that it was agreed that the owners of the vessel should cause the deposit of $23,000 to be made in lieu of insurance, and allege that the only agreement made with the complainants was the charter party set out in the complaint, made between complainants and the owners by their agents. They admit the deposit of $25,800 in the bank, "and deny that it was in pursuance of any other arrangement or agreement than that mentioned in the charter party." They deny that the deposit was arranged with the complainants, or with Belsterling as representing them, and allege that it was arranged with the American Bridge Company, through its traffic manager, Belsterling, without any knowledge or Information or understanding that Belsterling in any way represented complainants. They further allege that they meant and Intended the letters in question to be written to the American Bridge Company, and that the bank in so writing them followed the instructions of the trustee of defendants, acting for them on making the deposit, except that in writing the second letter, the Instruction to address to Belsterling as "Traffic Manager American Bridge Company" was not followed, and it was addressed to him individually. While the bill prays for the special relief of reformation of the letters in question, it also prays payment of the deposit to it, and adds the prayer for general relief. If, therefore, on the whole case disclosed at the hearing, it is entitled to such payment, whether or not the letters be corrected or reformed, such relief will be within the scope of the pleadings.
McCarter & English, for complainants. R. R. & W. W. E. Donges and Thomas French, for defendants Bosch and others. Howard M. Cooper, for defendant Camden Nat. Bank.
EMERY, V. C. (after statement of Issues). The questions involved are mainly questions of fact, and to determine precisely the bearing and effect of these letters relating to the deposits, upon the rights of the parties, it will be necessary to examine in detail the circumstances under which they were made, including especially the previous writings passing between the parties, or their agents, whether executed or not.
A vessel, called the "Primus," owned by 11 of the defendants in the original bill (one having since died), was chartered by the complainants, partners as John Leonard & Co., to carry a cargo of scrap iron from Havana to Philadelphia. The charter party, dated on October 22, 1902, was executed In Havana between Capt L. St. Clare, "master and agent for owners of the bark Primus, now lying in the harbor of Havana, Cuba, of the first part, and Mr. Paul Nobbe, representative of John Leonard & Co., of New York, of the second part," and was signed by St. Clare and Nobbe in their individual names only. The vessel was chartered for freighting a cargo from Havana to Port Richmond, Pa., on certain terms, which included the following, bearing on the case: Leonard & Co. agreed to provide and furnish a cargo of iron in bulk of 1,600 tons, and to pay to the owners or their agent, for the use of the vessel, at the rate of $3 per ton freight, delivered on cars at port of discharge, and payable on delivery; "the vessel to load and discharge cargo at her expense"—"Lighterage at risk and expense of cargo." Sixty tons per day were to be allowed for loading at Havana and Matanzas, the lay days commencing at the port of loading from the time the captain reports himself ready and prepared to receive cargo; for each day's detention by default of the shippers, $111 per day was to be paid by the shipper or agent to the owners or agent. Bills of lading were to be signed, without prejudice to the charter, but vessel to have lien on cargo for freight and demurrage. The vessel was to report for cargo to Nobbe at Havana, and to enter on the charter when discharged at Havana, where, as appears by the charter, it then lay—"Wharfage and lighterage at ports of loading and discharge free to vessel." The insurance clauses in the charter party, out of which the litigation has arisen, were as follows: "Vessel to guaranty insurance at lowest regular rates. Charterers not obliged to begin loading before deposit of twenty-three thousand dollars ($23,000) in guaranty of Insurance has been made, vessel responsible for any expenses caused by delay in making said deposit." On October 22, 1902, the date of the charter, Nobbe addressed a letter to Capt. St. Clare, bark Primus, stating "that the insured value of the cargo of 1,600 tons of scrap iron which under the charter party of this date, I am obliged to give your vessel, amounts to 23,000 dollars U. S. currency, which amount is to be deposited on or before November 5th, 1902, in a bank of financial institution designated by and in the name of Messrs. John Leonard & Co., St Paul Building, N. Y. Further Information can be given to either the office of said gentlemen, or the office of Mr. Chas. S. Belsterling, Traffic Manager American Bridge Co., 259 South 4th St., Phila." The letter was signed "Paul Nobbe," but was written on paper with letter head describing him as "Representative General of John Leonard & Co., St. Paul Building, New York." As this letter, dated October 22d, fixed November 5th as the time of the deposit under the charter party, and under the charter party the shippers were not obliged to load, or be responsible for delay in loading, until deposit was made, it would appear that at or about the time of executing the charter party, the time when the vessel would be ready for loading wasfixed by the agent of the parties in Havana as November 5th. This letter, together with a duplicate of the charter party, were forwarded by Capt. St. Clare, and received by Dr. John W. Donges, one of the owners at Camden, on October 27th or 28th. On the latter date Mr. Donges called on Mr. Belsterling. showed him Nobbe's letter and the charter party, informed him, or was informed by him, that insurance on the vessel had been refused at Havana, and requested Belsterling to endeavor to have the vessel insured in Philadelphia; Donges agreeing that the vessel should pay all premiums over and above 1 1/2 per cent., which was the regular rate.
It is at this point proper to state that the clause in the charter party, "vessel to guaranty insurance at lowest regular rates," does not mean that the vessel itself (or the owners) are to provide insurance, for which they are to be paid the regular rates, but that the owners guaranty that insurance on the cargo by the owners was procurable at the lowest regular rates. The subsequent transactions show that both parties understood this to be the substantial meaning of the clause. There was at this time (October 28), also, a conversation between Dr. Donges and Belsterling about the deposit. On the next day, October 29th, Belsterling wrote a letter to Dr. Donges stating that he was unable to insure cargo on the vessel, "and, in accordance with the terms of the charter party I inclose herewith agreement in quadruplicate, which I wish you would sign and send to me, so that I can sign it, and also at the same time have the bank furnish us with a receipt for the $23,000 in accordance with the copy attached. If you will do this, it will answer our purpose." This letter was signed "Chas. S. Belsterling, agent John Leonard & Co.," and was kept in the files of Belsterling's business with this firm. It was written, however, on letter head of "The American Bridge Company," on which "Charles S. Belsterling, Traffic Manager," also appeared. Belsterling was at this time the agent of John Leonard & Co. in reference to the transportation of their purchases at Cuba, and since August 7th had a bank account in the Philadelphia National Bank, as agent of John Leonard & Co. This agreement inclosed to Donges recited (1) that the insurance companies were unwilling to insure a cargo of old iron to be placed on the bark Primus; (2) that the value of the cargo was $23,000; and (3) that "the owners of said cargo, John Leonard & Co., or his agent, Charles S. Belsterling, is willing to ship said cargo on said vessel, and pay her owners $3 per ton on all such iron as she may deliver, according to the terms of the charter party dated October 22, 1902, provided the vessel or her owners fully indemnify the said charterers from all loss, cost, or demurrage by the reason of the nondelivery of said cargo safely at destination, which said indemnity the owners are willing to give by the deposit of $23,000 in cash with the Philadelphia National Bank, to be for the benefit of said charterers or their assigns," and then agreed that the owners will at once make such deposit as indemnity, and the said charterers agree upon such deposit being made, to load upon said vessel said cargo with all possible despatch, according to the terms of the charter party. This agreement was to be signed by or on behalf of both parties, the owners as well as the charterers, but was not to be signed by the depository bank. A form of receipt to be signed by the bank was, however, attached, as follows: "Received Phila. Oct 1902, of Dr. Donges $23,000, according to the agreement hereto annexed." The agreement, if signed by both parties, would express their intention, both as to the parties interested and the terms of the deposit, and the receipt of the bank would be the evidence to both parties of a receipt under a written agreement between the parties in relation to the deposit.
The proposed agreement was not signed, either, as Belsterling says, for the reason that Dr. Donges objected to it because the statement that the insurance companies would not insure the vessel might injure it for future cargoes, or, as Dr. Donges says, because the owners were not willing to make so broad an insurance, and wished a "paper more like a marine insurance. The owners also wished to make the deposit in a bank at Camden, instead of the Philadelphia Bank, in which Leonard & Co.'s account had been opened by Belsterling as their agent, on August 7th. There is no pretense, however, that up to this time any question had arisen about the ownership of the cargo, or that the deposit, if made, was to be for the benefit of the charterers of the vessel. Dr. Donges says that on his first visit to Belsterling, at the American Bridge Company's office, he asked him: "Who is John Leonard & Co.?" to which Belsterling replied: "They are our purchasing agents," and that this was the only conversation they had about J. Leonard & Co. The inquiry strikes me as one directed rather to the identity or standing of the charterers, and if this was all that took place, there was nothing in the question nor reply which would justify any other conclusion than that up to the time of declining to sign the agreement proposed by Belsterling on behalf of John Leonard & Co., both parties supposed the contract or deposit for indemnity in lieu of insurance was to be with the charterers of the vessel as loaders of the cargo. Leonard & Co. had by an agreement with the bridge company, dated August 7, 1902, agreed to sell and deliver to the bridge company on board cars at Philadelphia all scrap iron they purchased in Cuba, and not to sell such scrap to any other person, without the consent of the bridge company. But under this agreement, as I construe it, the title to all the scrap was in Leonard & Co.until delivery at Philadelphia, and as to this particular cargo, it was proved in the case, that the bridge company, by its officers, consented to its sale to other parties, and it has now formally disclaimed any interest in the cargo or deposit
Dr. Donges and Mr. Ferris, who were present at this second interview with Belsterling, after declining to sign the proposed agreement, offered to give a paper signed by the Camden National Bank, showing that the deposit had been made—practically a certificate of deposit—as Belsterling says. Belsterling then went to his attorney's office (whether Dr. Donges accompanied him does not appear) and a second paper was then prepared by this attorney for the Camden Bank to sign, as proposed by Dr. Donges. This attorney was not the attorney for the bridge company. This certificate was drawn, and, as I conclude, was then given to Dr. Donges as a paper, or copy of a paper, which, by the arrangement then made between him and Belsterling, was to be signed by the bank. No provision was made for any writing to be signed by the parties themselves between each other. This certificate of deposit was not signed, but the certificate signed by the bank, and which was subsequently drawn by Dr. Donges' son, an attorney, who acted for the owners who made the deposit, follows this draft, and was evidently taken from it. There is one difference between the two, and, in my judgment, a vital one, and one which shows how it happened that the reference to Belsterling as traffic manager of the American Bridge Company now appeared on the papers for the first time, and also how this mere addressing him as traffic manager of the bridge company had the effect of making the certificate itself appear to be a certificate for the benefit of the bridge company, or Belsterling, as their agent. The certificate, as drawn by Belsterling's attorney and handed to Dr. Donges, was not addressed at all, and, as appears by the certificate itself, was intended to indemnify the persons who loaded the cargo on the vessel. This first draft is as follows: "The owners of the bark Primus have this day deposited with us the sum of twenty-three thousand dollars ($23,000) to be held by us to Indemnify you in the event of loss of the cargo of old iron loaded by you on Primus, according to the terms of a certain charter party executed by L. St. Clare, master, and agent for John Leonard & Co., dated October twenty-second, nineteen hundred and two. While said bark is in transit from Havana, Cuba, to Philadelphia, Pennsylvania, liability in no case to exceed twenty-three thousand (23,000) dollars."
On the following day, October 31st, Mr. R. W. E. Donges, a son of Dr. Donges, and an attorney, selected as trustee by the owners contributing to make up the deposit, wrote the following letter to the cashier of the bank, inclosing the form of letter to be sent to Belsterling: "Camden, N. J., October 31st, 1902. Mr. Francis C. Howell, Cashier Camden National Bank, Camden, N. J.—Dear Sir: I hand you herewith draft of cashier of Camden National Bank, for twenty-three thousand ($23,000) dollars. You are to hold this amount to indemnify you against any loss occurring by reason of your having this day sent to the American Bridge Company, of Phila., Penna., the following letter: 'Mr. Chas. S. Belsterling, Traffic Manager American Bridge Co., 259 So. Fourth St., Phila. Pa.—Dear Sir: The owners of the bark Primus have this day deposited with us the sum of twenty three thousand ($23,000) dollars to be held by us to indemnify you in the event of the loss of the cargo of old iron loaded by you in the Primus, according to the terms of a certain charter party, executed by L. St. Clare, master, and Paul Nobbe, agent for Leonard & Co., dated October twenty-second, nineteen hundred and two—liability in no case to exceed twenty-three thousand ($23,000) dollars. The above mentioned indemnity from loss is to be and remain in effect as protection from loss of said cargo, from the time said bark Primus takes aboard said cargo, or any of said cargo is plated on lighters to be delivered on said bark until full delivery at Philadelphia, Penna. Yours truly, [Signed] Francis C. Howell, Cashier.' If this proposition is accepted by the American Bridge Company you are to hold this amount until you receive satisfactory evidence that your liability by reason of the above letter is canceled, when the sum of twenty three thousand ($23,000) dollars less discount, is to be returned to me. Very truly, [Signed] Ralph W. E. Donges, Trustee." Mr. Ralph Donges was called as a witness, but has not explained how or from whom he received the direction to address the letter. In this letter to the bank of October 31st, the draft of the letter to Belsterling was not dated. The bank accordingly, on the following day, November 1st, which was Saturday, wrote the letter of that date addressed, as desired, to "Mr. Chas. S. Belsterling, Traffic Manager American Bridge Co., 259 South Fourth St., Phila." The letter, except as to the address and the insertion of Paul Nobbe's name in the blank, follows verbatim the form of the draft hand ed to Dr. Donges by Belsterling on the 30th of October, up to the sentence limiting the time of the indemnity: "While said bark is in transit from Havana, Cuba, to Philadelphia, Penn." For this clause is substituted a clause reading: "The above-mentioned indemnity from loss is to be and remain in effect as protection against loss of said cargo, from the time said bark Primus leaves her wharf at Havana, Cuba, until she arrives at wharf at Port Richmond, Philadephia, Penn." The letter was written on two sheets of paper; the last page, which contained the signature of the cashier, commencing with the words "her wharf." This detail is of some importance, as another sheet was afterwardssubstituted for this second sheet. On November 1st, Dr. Donges brought to Belsterling this letter as originally signed by the cashier. He did not bring to him or advise him of the letter wrtten by Donges, trustee; to the bank, as qualifying or affecting the deposit. Some question arose at once as to whether this clause in the letter relating to the indemnity gave protection while the cargo was being loaded or unloaded by lighters, and after a further conference between Belsterling and Dr. Donges at Belsterling's attorney's office, It was agreed that the interval of lighterage should be covered, and that for the clause commencing "leaves her wharf," there should be substituted the clause, "takes aboard said cargo, or any of said cargo is placed on lighters to be delivered on said bark until full delivery of cargo at Philadelphia." It was agreed that the bank should make this change in the letter and mail it to Belsterling. A memorandum of the change was made in pencil on the second sheet by Dr. Donges, who delivered it to the cashier, and this language was followed verbatim. The bank accordingly mailed the letter of November 1st, above set out. The letter was not written anew entirely. It was contained as already stated, on two sheets, and the first sheet, as originally written, remained unchanged, except crossing out the last word "leaves," and the second sheet was rewritten and signed by the cashier. The second sheet, as originally drawn, has been preserved by the bank, and offered in evidence, and is of some importance as showing the only point discussed at the time, and to which attention was drawn. Mr. Belsterling, in making the contract for the deposit and during the negotiations, had frequent consultations with Mr. Blake, one of the members of John Leonard & Co., in reference to it, especially in reference to the substitution of the Camden Bank, as the depository for the Philadelphia Bank, in which Leonard & Co. kept their account. Belsterling says that he specially told Dr. Donges and Mr. Ferris that on this point he must consult Mr. Blake, but Dr. Donges does not recall this, and Mr. Ferris denies it.
The letter of November 1st, as re-drafted and signed, was received by Belsterling through the mail on Monday, November 3d, and, on the same day, he acknowledged receipt of the letter of November 1st by the following letter, written on the letter head of the American Bridge Company: "Nov. 3d, 1902. File: CSB—38149. Mr. Francis C. Howell, Cashier, Camden National Bank, Camden, N. J.—Dear Sir: We have your favor of the 1st inst., advising that the owners of the bark Primus have deposited with you the sum of twenty three thousand dollars ($23,000) to be held by you to indemnify us in case of loss of cargo of old iron, loaded on said bark, and that said protection or indemnity against the loss of said cargo is to start from the time said bark Primus begins to take aboard the said cargo, or any of said cargo is placed on lighters to be delivered to said bark, until delivered at Philadelphia. We will advise you as soon as the material is received at this port, and have to-day cabled our representative in Cuba to start loading as soon as practicable. Yours truly, Charles S. Belsterling, Treffie Manager." A line was drawn through the upper portion of the word "Traffic" and the upper portion of the first three letters of the word "Manager," and at the hearing the question was raised whether the words "Traffic Manager" were intended to be erased. It appears, however, that Mr. Belsterling in signing his name sometimes drew a line under his signature, as part of it, and after examining closely this signature, and the exhibits offered, showing other signatures. I am inclined to the conclusion that this line was drawn as part of the signature and was not intended to erase the words. Belsterling, on receipt of the letter of November 1st, cabled to Nobbe at Havana to load the vessel, and the loading of cargo was accordingly commenced. Before the loading was completed, Belsterling received word from Nobbe that the captain of the vessel had decided to take 200 tons more cargo on the boat, and Belsterling brought that fact to the attention of the owners and of the bank by correspondence— a letter to the bank, dated November 15th, written on the letter head of the American Bridge Company, as follows: "American Bridge Company of New York. Cable Address: 'Pencoyd,' New York. Traffic Department, 259 South Fourth Street, Philadelphia, Nov. 15, 1902. Charles S. Belsterling, Traffic Manager. File CSB-48149. Mr. Francis C. Howell, Cashier, Camden National Bank. Camden, N. J.—Dear Sir: Referring further to your favor of the 1st inst., and our reply of November 3d, in relation to the deposit being made by the owners of the bark Primus, of twenty-three thousand dollars ($23,000), to be held by you to Indemnify us in case of loss of cargo of old iron, to be loaded on said bark, please note that the captain has decided to take 1,800 tons, which will require an additional deposit of twenty-eight hundred dollars ($2,800), representing the value of the extra 200 tons, and we would ask that you please advise us as soon as this additional deposit is made, to indemnify us in case of loss of cargo of old iron. Yours truly, Chas. S. Belsterling. Traffic Manager, S. Pond." Belsterling's signature to this letter was not written by himself but by his chief clerk, who added thereto in his own handwriting the words "Traffic Manager. S. Pond." Belsterling dictated the letter, but does not seem to have seen this signature before the letter was sent. On November 21st the bank mailed to Belsterling the second letter, above referred to, the same having been written pursuant to a letter of instructions from Donges, trustee, similar in all respects to the letter of instructionson making the first deposit The bank, however, addressed the second letter to Belsterling individually, and not as traffic manager. But neither the letter of instructions from Donges, trustee, nor the fact that it had been given was communicated to Belsterling. The additional cargo was thereupon loaded at Havana, and on November 20, 1902 (two weeks after the second letter), a bill of lading was executed by the master of the vessel, reciting a shipment of 1,250 tons of old iron to be delivered at the port of Philadelphia (dangers of the seas only excepted), unto order of John Leonard & Co., or to their assigns, he or they paying freight as per charter party of October 22, 1902. On this bill of lading was indorsed a receipt by the master to Nobbe, for $1,080, "on account of freight, to be discounted on settlement of same, plus cost of insurance and charges, at the rate of 4 p. c." This further indorsement relating to deposit and insurance was made: "It is understood that the amount of freight advanced is included in the deposit of $25.800 made by the owners of the vessel in guaranty of the value of the cargo. Charterers, in addition to freight to pay owners at the rate of 1 1/2 per cent. for insurance on the value of the iron delivered at Philadelphia at the rate of $14 per ton of 2,240 pounds, plus the amount, of freight advanced." On December 13th, a like bill of lading for an additional cargo of about 503 tons, to be delivered to Leonard & Co., or assigns, was executed by the master at Matanzas, and delivered to Nobbe, and a receipt Indorsed for $7(50 "that will be paid back on the same conditions that the amount received in the same trip in Havana." No further communication, either verbal or written, seems to have taken place between the parties after the loading of the vessel and before its loss at sea, of which loss notice was given on January 7, 1903, by the attorney of Belsterling as agent for Leonard & Co. It should be noted, however, that after the deposits, Mr. Ferris, on behalf of the owners, on November 21st, inclosed to Belsterling a bill for insurance of 1 1/2 per cent. to which Belsterling, on the 4th of December, replied, claiming that this rate was subject to a reduction of 40 per cent., and that if a corrected bill was sent, they would include the payment of same when they settled for freight. Ferris wrote again on December 6th, in reference to this insurance (the letter was not produced), and Belsterling replied on the 8th, explaining that the reduction was allowed for insuring in first-class schooners, and that the owners could not expect to charge more. These letters were both signed by Belsterling as traffic manager, and the bearing on the case is to show, not only that the "guaranty of insurance" made in the charter party was a guaranty that charterers would be themselves able to procure insurance at regular rates, but also that the owners, having made deposit "in lieu of insurance," as required by the charter party, were by the understanding of both parties interested the owners of the cargo as well as of the vessel, entitled to receive the regular rates for insurance, and that the owners by their agent in Philadelphia agreed to pay these rates. In reference to the address of the letters, Belsterling's statement is that he overlooked the fact that the first letter was addressed to him as traffic manager. The fact that in some of the letters signed by him the words "Traffic Manager" In typewriting are added to his signature, he says, is due to the error of his stenographer, who was responsible for these details in the extensive correspondence carried on in his different agencies. Nor did Belsterling notice that the second letter was addressed to him individually and not as traffic manager. No evidence has been given on the part of the defendants, showing how or by whom the address of the first letter to Belsterling as traffic manager was directed. His letter inclosing the rejected agreement was signed as agent for John Leonard & Co. The proposed draft of certificate to be signed by the bank, delivered at the attorney's office in Philadelphia to Donges, was not addressed to any one, and Mr. Ralph Donges, who first directed the address in his letter to the bank, though called as a witness, has not explained how it came to be made.
Reviewing the entire evidence in the case, the written documents, executed as well as unexecuted, and the oral evidence bearing upon their execution, I reach the conclusion that in arranging for the deposit, Belsterling. on the part of the shippers, and Dr. Donges and Mr. Ferris, on the part of the owners, both intended that the deposit was to be made in pursuance of the terms of the charter party, and in execution of the clause contained in the charter party, that "the charterers not obliged to begin loading before deposit of $23,000 in guaranty of insurance has been made." The charter party itself not expressly providing for the precise form of the deposit, or for the execution of any further writing expressing its terms and scope, these terms and the scope of the guaranty were afterwards defined by the mutual agreement of both parties, evidenced by the certificate of deposit signed by the cashier of the bank, after these terms and conditions had been expressly discussed, and, in one particular point, changed after the first draft. It was not intended that any formal or written agreement between the parties themselves, as to the deposit or its terms, should be executed, but both parties understood the deposit to be the satisfactory execution of the contract relating thereto, contained in the charter party, so far as related to the terms or scope of the indemnity. And I further find that both Belsterling, as complainants' agent, and Dr. Donges and Mr. Ferris, acting on behalf of the owners of the vessel, intended that the deposit should bemade in order that the cargo might be loaded on the vessel, and become subject to the terms of the charter party, for the common benefit of the charterers and the owners of the vessel, and that the cargo was loaded by the agent of complainants at Havana, in the belief on the part of both the shippers' and the owners' agents, that the same was loaded under the protection of a deposit under the charter party. I conclude also, that, in contracting for and arranging the deposit, both Belsterling, and Dr. Donges and Mr. Ferris for the owners, intended the deposit to be made for the benefit of the owners of the cargo, and that Belsterling, on his part, throughout the negotiations, acted and intended to act solely as the agent of John Leonard & Co. as the owners of the cargo, and that, on giving the orders to load the vessel, after receiving the letters of the bank, he supposed that John Leonard & Co., as the loaders of the cargo, were secured by the deposit, as made for their benefit as loaders under the charter party. I find also that through mistake due to oversight, Belsterling, at the time of directing the loading of the vessel, in completion of the owners' duty under the charter party, did not notice that the letters, by reason of the form of address, indicated, or might be construed to Indicate, that the American Bridge Company was the person or party to whom the letters were directed, and for whom they were intended, as the loaders of the cargo, under the terms of the charter party; and that he accepted the letters, and directed the loading under this mistake or misapprehension of their character or legal effect. On the other hand, I find that Dr. Donges and Mr. Ferris also intended to make the deposit, to carry out the provisions of the charter party, that the terms and conditions of the deposit (as to the extent of the guaranty) were evidenced by the certificate, and that they also intended that the deposit should be made for the benefit of the owners of the cargo as charterers of the vessel. I further find that, through some mistake or misapprehension, the cause of which has not been clearly disclosed, the address of the certificate or letter was written in the form adopted. There is no evidence whatever, on either side, of any oral discussion of the question of the ownership of the cargo, as between John Leonard & Co. and the bridge company, pending the negotiations for the deposit, or of any reference to the ownership by the bridge company previous to the address on the first letter. In delivering the letters of the bank, or causing them to be delivered, to Belsterling, I think the owners intended an execution, of the contract relating to deposits in the charter party, and that their trustee made the deposit for the benefit of the American Bridge Company, as the persons supposed to be the owners of the cargo, and for whom John Leonard & Co., the charterers, acted as agents. I do not think, however, that the evidence will justify the conclusion that the trustee intended to have the letters addressed to Belsterling as the agent of John Leonard & Co. The mistake on his part in reference to the letters was that he supposed the bridge company to be the owners of the cargo, and in that capacity, to be entitled to the benefit of the deposit which they had agreed to make in order to get: the cargo on board.
This being the mistake of fact which arose in reference to the execution of the letters relating to the deposit, the legal question arises, as to its effect on the rights of the shippers and the owners of the cargo to the deposit, on the faith of which the cargo was loaded on the vessel by these owners, the complainants. If the letters were written, contracts between the owners and the charterers relating to the deposit, the case, as to reformation of the letters, might perhaps come within the application of the rule, that although rescission of a written contract may be granted on proof of mistake of one party, reformation of a written contract cannot be made, except upon proof of a mutual mistake. Green v. Stone (Err. & App. 1896) 54 N. J. Eq. 387, 395. etc., 34 Atl. 1099, 55 Am. St Rep. 577; Herron v. Mullen (Err. & App. 1898) 56 N. J. Eq. 839, 42 Atl. 1016; Lutjen v. Lutjen (Err. & App. 1902) 64 N. J. Eq. 773, 778, 53 Atl. 625. The letters, however, were not in form, and were not intended by either party to be written contracts between the parties themselves relating to the deposits, but were, and were intended by both parties to be, acts in execution of the written contract relating to the deposit made by the charter party. Therefore the substantial and real question in the case is, whether, notwithstanding the mistake or misapprehension on one side, as to the address of the letter, and on the other, as to the bridge company's ownership of the cargo, the complainants have, on the whole evidence, an equitable interest in this deposit as a deposit made to carry out the contract of the charter party relating to the deposit. As between the bank and the person to whom it was delivered, the certificate of deposit is conclusive evidence of their legal relation; but as between the shippers and the owners, no written agreement relating to the deposit was made or executed, and the letters are only evidence in connection with the other evidence in the case, as to the relation which these parties sustain to each other in reference to the deposit. Both parties now prove by oral evidence, outside of the letters, that, as between each other, they agreed that the terms and extent of the guaranty or indemnity should be as stated in the letter of the bank, and both sides agree in their evidence, that the deposit was made in order to procure the loading of the vessel by the owners of the cargo. Therefore the mistakes in the address of both of the letters of the bank were not mistakes in any written contractbetween the parties, which are to be reformed, but are mistakes made in attempting to carry out a previous written contract by the charter party for a deposit, without which the owners' vessel would not have been loaded, and on the faith of which its loading was secured. So far as the owners of the vessels and the shippers, by themselves, or through their agents, agreed on the terms and conditions defining the extent of the guaranty by the deposit, which terms are evidenced by the letters which both parties agreed on, the deposit so limited must be taken as a further limitation or definition of the contract for guaranty, and to bind both parties as to what in this respect the execution of the charter party requires.
As to the beneficiaries of the deposit, both parties agreed and intended that it should be made in execution of the charter party, and for the benefit of the owners who were loading the cargo under the charter party. The mistake of the owners of the vessel, or their agent, in directing the letters of the bank relating to the deposit, to be addressed to Belsterling, individually, or as traffic manager of the American Bridge Company, as the person whom they supposed to be the owners loading under the charter party, and the mistake of the owners' agent in overlooking this address, prevented, perhaps, an actual concurrence or meeting of the minds of the owners of the vessel and of the cargo, in reference to the person who should be indicated, in the letters of the bank, as the owner, but this failure of the minds of the parties to agree did not annul or render ineffective the contract for the deposit itself, as made in fact for the purpose of carrying out the charter party, and for the benefit of the owners loading on the faith of it. The deposit being clearly made, and admitted to be made by the owners of the vessel, or on their behalf, to secure the loading of the vessel by the charterers under the charter party, I think the latter are entitled to hold the deposit as so made for their benefit, without regard to any mistake made either by the bank or the owners in addressing the certificate or letters relating to the deposit to another party. The original proposal of Nobbe was that a deposit should be made in the name of John Leonard & Co. Suppose that a deposit, intended to secure the owners, had been made, not in the name of John Leonard & Co., but in the name of a third party, who had no interest in the fund, whose name had been given by mistake of the owners of the vessel, and not corrected by the shippers through another mistake, could not Leonard & Co. have shown that the fund was intended to carry out the contract with them, and for their benefit, and have enjoined the third party from withdrawing the fund? Counsel for the owners, admitting that the deposit was made to secure the loading of the vessel, contend that this was the sole object of it; and that this having been effected, the terms of the letter (including its address, as being solely for the benefit of the bridge company) must be considered as alone defining its beneficiaries as well as its terms that John Leonard & Co., being no parties to the letter or the contract created thereby, have no interest in the deposit, and that the only contract between complainants and John Leonard & Co. is the contract to make a deposit in guaranty of insurance, which contract is still outstanding and unperformed, and for breach of which contract complainants have still an action at law. But this view overlooks, I think, the real situation as to this deposit and its substantial aspect as intended to be in performance of the charter party. And it overlooks, also, the distinctive character of the contract of affreightment made by the charter party, and the effect of the loading under it. Such contracts commence from the loading of the vessel, and from the time the cargo is delivered to the vessel each party is bound to the other for the full performance of the contract. 3 Kent, Comm. # 208; The Eliza Lines (October term, 1908) 199 U. S. 132. 26 Sup. Ct. 119, 50 L. Ed. 115. After loading, the master was obliged to perform the voyage, and the charterers on their part were bound to allow the cargo to proceed. Therefore the provision that the charterers were to load on deposit, compelled them, on loading, to take the risk of the vessel for the whole voyage, and they must, under the contract, be entitled to the benefit of the deposit as security for the whole voyage, or at least until insurance for their benefit was effected by the owners of the vessel. The obligation of the shippers to procure, or attempt to procure, insurance for themselves, expired when the deposit was made, and the owners of the vessel not having themselves subsequently procured or tendered insurance on behalf of the shippers, no question arises as to the right of the owners to withdraw the deposit, or of the shippers to be protected by it. The extent to which they were to be protected was fixed by the mutual agreement of the parties on making the deposit, and was expressed in the letters of the bank. The complainants must be declared to be the beneficiaries of this fund as owners of the cargo loaded on the vessel, and the bridge company not to have any interest in it. The equitable jurisdiction in the case is based, as it seems to me, on the second ground stated in Mr. Justice Dixon's opinion, viz., that the obligation of the bank created by these letters was to hold the fund for the settlement of the rights of the claimants inter sese, and then to surrender the fund to the rightful claimant, a remedy appropriate only to a court of equity. A reformation of the letters is not, as it seems to me, either required for the purpose of declaring the rights to the fund or appropriate to the relief.
I will advise a decree directing that complainants, as owners and shippers of the cargo,go, are the persons entitled to be secured by the deposit, and directing payment to them of the value of the cargo, less the rates for insurance. If there is any dispute as to this value on the evidence taken at the hearing, I will settle this question at the settlement of the decree.