Toyo Kisen Kaisha v. WR Grace & Co.

• Decision Date: 30 November 1931
• Docket Number: No. 6514.,6514.
• Citation: 53 F.2d 740
• Parties: TOYO KISEN KAISHA v. W. R. GRACE & CO.
• Court: U.S. Court of Appeals — Ninth Circuit

53 F.2d 740 (1931)

TOYO KISEN KAISHA v. W. R. GRACE & CO.

No. 6514.

Circuit Court of Appeals, Ninth Circuit.

November 30, 1931.

Knight, Boland & Christin, of San Francisco, Cal., for appellant.

Orrick, Palmer & Dahlquist, of San Francisco, Cal. (R. W. Palmer, George Herrington, and W. J. Kenney, all of San Francisco, Cal., of counsel), for appellee.

Before WILBUR and SAWTELLE, Circuit Judges, and JAMES, District Judge.

SAWTELLE, Circuit Judge.

On January 14, 1921, the appellee, at its San Francisco office, engaged space with appellant's office, also at San Francisco, for a shipment of nitrate of soda "from nitrate port to Honolulu," on appellant's steamer, Tokuyo Maru. Space and freight charges were arranged for by means of the following letter, which was confirmed by the appellant:

"Referring to our telephone conversations during the past few days, we wish to confirm freight engagement with you as follows:

"2500 Long tons Nitrate of Soda March shipment per `Tokuyo Maru' from Nitrate Port to Honolulu at $7.00 per ton of 2240 lbs., gross weight delivered.

"Freight payable in San Francisco on receipt of weights from Honolulu.

"This cargo to be loaded according to custom of port in Chile and to be discharged at rate of 400 tons per day, 2000 tons to be discharged at railroad wharf, Honolulu, and 500 tons at Inter-Island Steam Navigation Co.'s wharf, which is adjacent to the railroad wharf and only necessitates the pulling ahead of the vessel.

"One-half (½) cost of weighing to be borne by the consignee at Honolulu and one-half (½) to be paid by vessel.

"All on board to be delivered.

"Kindly confirm on copy of this letter attached herewith.

"Yours very truly "W. R. Grace & Co. "Signed F. Doelker, Traffic Department."

On the same day appellee's San Francisco office sent a letter to its shipping agent in Chile, Nitrate Agencies, Limited, notifying the latter that arrangements had been made for the shipment in question "at a rate of freight of $7.00 per 2240 lb. gross weight delivered, from Nitrate Port to Honolulu, freight payable at San Francisco * * * on receipt of weight from Honolulu."

The letter ended with the following instruction: "In making up Bs/L we would ask you to kindly omit freight therefrom, and just let the same carry the clause `freight as agreed.'"

Three days later, a similar letter, referring to another shipment covered by the same freight engagement of January 14, 1921, was sent by the appellee to its shipping agent in Chile.

On March 15, 1921, and on March 17, 1921, respectively, the cargo in question was received by appellant at the Chilean ports of Antofagasta and Iquique. Signed by the master of the ship and by appellee's agent, bills of lading were issued by the vessel, said bills providing that the freight for the cargo was "to be paid, as per margin in DESTINATION." (Capitalization according to the record.) One bill of lading reads in the margin "freight as per agreement" and the other "freight as agreed."

Each bill of lading, in printed letters, provided that "said freight is to be considered as earned, lost or not lost," and that "all liability for loss or damage to goods shall be determined by their invoice cost plus freight."

The steamship Tokuyo Maru proceeded northward on her voyage from Chile, touching at San Francisco and Portland, and was, with her cargo, subsequently lost by fire at sea.

The steamship company, which was the libelant in the court below, sued for the amount of the freight on the cargo. The lower court dismissed the libel, and the steamship company appealed.

The sole question presented herein is whether or not the oral agreement, the confirmation by letter, and the marginal notations in the bills of lading, operated to defeat the libelant's claim to having earned the freight, "lost or not lost"; or whether, on the other hand, the printed clause as to earned freight, appearing in the bills of lading, as noted above, gave the appellant the right to collect the freight, even though the cargo was lost. The appellee insists that the intention of the parties, by the stipulation that freight was payable in San Francisco on receipt of weights from Honolulu, was clearly expressed that the freight was not earned until the delivery of the cargo at Honolulu; and, in view of the destruction of ship and cargo at sea, not earned at all.

The lower court, in its findings of fact, held that the clause "earned, lost or not lost," is not binding upon respondent-appellee; and that the oral agreement and the letter confirming it "constitute the contract of affreightment between the parties." As a conclusion of law, the lower court found "that the bills of lading were merely receipts for the cargo, given subsequently to the making of the special contract of affreightment, and constitute no part of the contract of affreightment."

The appellant, in its brief, concedes "that stipulations stamped on the face of a bill of lading before its delivery to the shipper referring to an earlier document incorporates the subject matter to which it refers as a part of the contract," and urges that "it is manifestly the court's duty to reconcile, if possible, the bills of lading with the earlier letter providing for the shipment in question regarding the time when and the place where the freight was to be paid."

While, as we shall see, there is authority for the trial court's holding that the bills of lading, under the circumstances, were merely receipts, it is not necessary thus to limit them in order to hold that, even if it is conceded that the bills of lading "supplement" the earlier contract, they cannot contradict or nullify it.

In its opening brief, appellant complains that "it would certainly be an anomaly if freight was deemed earned but, without the carrier's fault, be not collectible." The answer to this objection, of course, is obvious; the "anomaly" complained of disappears if one follows the directions on the bills of lading themselves, and looks to the prior agreement to ascertain what the parties contracted for in the matter of freight arrangements. That earlier agreement of January 14, 1921, is perfectly self-consistent, and does no violence to the bills of lading, provided we excluded from those bills, as is implied by their marginal directions, questions of freight.

Should there exist, however, an irreconcilable repugnancy between the prior written contract and the bills of lading, that conflict would have to be resolved in favor of the former.

On the threshold of our inquiry, we find that the provision for paying the freight after the goods were delivered, contained in the prior agreement, accords with the dictates of good conscience, with the doctrines of general law, and, according to one of appellant's own witnesses, "the usual and customary method of shipping nitrate cargo."

Leading text-writers on admiralty law and Supreme Court decisions agree that, in general, where the bill of lading is silent, the contract of affreightment carries with it the carrier's duty to deliver the cargo "safely," and that freight is collectible only on delivery of the merchandise to the consignee.

"Freight," according to Pitman's Encyclopedia of Marine Law (2d Ed.) p. 151, "signified, a sum of money to be paid by the freighter to the shipowner for the safe carriage of goods, wares and merchandise in a ship or vessel."

In Poor on Charter Parties and Ocean Bills of Lading we find the following, in section 28: "By the law, both of the United States and of England, in the absence of some stipulation to the contrary, the goods must be carried to destination before any freight is earned. It makes no difference that the shipowner is prevented by some obstacle beyond his control."

So also Scrutton on Charter Parties and Bills of Lading: "`Freight,' in the ordinary mercantile sense, is the reward payable to the carrier for the carriage and arrival of the goods in a merchantable condition, ready to be delivered to the merchant. The true test of the right of freight is the question whether the service in respect of which the freight was contracted to be paid has been substantially performed * * *" Article 136 (12th Ed.). See, also, Carver on Carriage of Goods by Sea (6th Ed.) § 543; Merriam, Claims Between Shippers and Carriers, § 881.

In Pollard v. Vinton, 105 U. S. 7, 8, 26 L. Ed. 998, the Supreme Court said of a bill of lading: "It is a contract to carry safely and deliver."

That case is cited with approval in Missouri Pacific R. Co. v. McFadden, 154 U. S. 155, 162, 14 S. Ct. 990, 38 L. Ed. 944, and in Louisville & Nashville R. Co. v. Central Iron & Coal Co., 265 U. S. 59, 67 note, 44 S. Ct. 441, 68 L. Ed. 900. See, also, The Gracie D. Chambers (C. C. A. 2) 253 F. 182, 183, affirmed 248 U. S. 387, 39 S. Ct. 149, 63 L. Ed. 318.

We have dealt at some length upon the principles of general law applicable to this case, for the reason that a consideration of such principles leads us to the conclusion that, a priori, there is no valid ground for not giving full effect to the provisions of the prior oral and written agreements as to freight payment.

Appellant's interpretation of this prior written agreement is not consistent. In some portions of its brief it asserts that the letter of January 14 "was not such a complete contract. It required to be supplemented by the bills of lading"; "the bills of lading taken together with this earlier space engagement contained in the letter of January 14 constitute the contract of carriage"; "we concede that stipulations stamped on the face of a bill of lading before its delivery to the shipper referring to an earlier document incorporate the subject matter to which it refers as part of the contract"; "reading, then, all these documents together and reconciling them as far as possible," etc.; but, on the contrary, we find the following language on another page of the brief: "(8) That the space engagement was silent as to the ports where...