California & Hawaiian Sugar Refining Corp. v. Rideout

• Decision Date: 02 November 1931
• Docket Number: No. 6394.,6394.
• Citation: 53 F.2d 322
• Parties: CALIFORNIA & HAWAIIAN SUGAR REFINING CORPORATION et al. v. RIDEOUT et al.
• Court: U.S. Court of Appeals — Ninth Circuit

53 F.2d 322 (1931)

CALIFORNIA & HAWAIIAN SUGAR REFINING CORPORATION et al. v. RIDEOUT et al.

No. 6394.

Circuit Court of Appeals, Ninth Circuit.

November 2, 1931.

S. Hasket Derby, Joseph C. Sharp, James A. Quinby, and Lloyd M. Tweedt, all of San Francisco, Cal., for appellant.

Lillick, Olson & Graham, of San Francisco, Cal., for appellee Rideout.

Gregory, Hunt & Melvin, T. T. C. Gregory, William H. Hunt, and Wallace Sheehan, all of San Francisco, Cal., for appellee Bay Transport Co.

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

SAWTELLE, Circuit Judge.

Involving two libels for the loss of a cargo of sugar and flour transported on the barge Rideout No. 7, this is an appeal from a decree of dismissal. The trial court found that failure to deliver was caused by the capsizing of the barge, which capsizing, in turn, was "proximately caused by the unexpected and `freak' storm encountered in San Pablo Bay." In other words, the court below held that the appellee carriers were excused from liability because the existence of a "peril of the sea" had been established by them.

The libel of the California & Hawaiian Company is against both appellees for the failure to deliver 4,500 bags of refined sugar received on board the barge at Crockett, Cal., on May 25, 1929, destined for San Francisco. The libel of the Sperry Flour Company is limited to E. V. Rideout only; the Bay Transport Company, the other appellee, not being a party to the contract of affreightment. The Sperry Company's libel alleges that, also on May 25, 1929, it delivered 415 sacks of feed and 20 sacks of flour to the Rideout barge, at Vallejo, Cal., likewise for transportation to San Francisco.

Appellees admit the receipt and the nondelivery of the shipments, but urge as their defense a "peril of the sea." In addition, a special defense has been interposed by the appellee Bay Transport Company; namely, that the California & Hawaiian Corporation held a policy of insurance covering its shipment, and that such policy contained a rider under which the insurance company waived "all claims that it might have in law and equity against the Bay Transport Company for reimbursement of any losses paid to the assured." The waiver applied only to "shipments by steamers or barges the property of the Bay Transport Company."

The Bay Transport Company claims that the present action was instituted by the appellants on behalf of the Switzerland General Insurance Company, Limited, and "that the latter had endeavored to defeat the provisions of the bill of lading as to the full benefit of insurance to be enjoyed by the carrier by taking from the California & Hawaiian Sugar Refining Corporation a loan receipt, which is set forth in Libelants' Exhibit No. 10."

The special defense of the Bay Transport Company may be disposed of readily. In the first place, the insurance policy containing the rider relied upon was excluded from the record, and no cross-appeal complaining of such exclusion has been filed by the appellee. Secondly, the rider itself specifically provides, as we have seen, that it shall apply to shipments by vessels that are "the property of" the Bay Transport Company. To hold that the Rideout barge was the property of the Bay Transport Company, even so far as the California and Hawaiian Company's shipment, would not only be doing violence to both the legal and the popular acceptation of the term "property," but also would be ignoring the holding of the court and the statements of the appellees themselves.

As a matter of fact, found by the lower court and not excepted to by the appellee, the Bay Transport Company was a party to the contract of affreightment, and in turn employed Rideout to transport the shipment to San Francisco. The court also found that the barge was the property of Rideout, notwithstanding certain vague language used by the trial judge during the discussion of the insurance policy during the argument. The appellee is foreclosed from now denying this basic fact, and claiming ownership of the barge and the tug.

Nor does physical ownership of the craft determine the Bay Transport Company's liability as a common carrier. The appellees' own reply brief establishes that fact:

"We can find no situation similar to these circumstances other than in the law applicable to connecting carriers. Under the Carmack Amendment to the Interstate Commerce Act, whenever an initial carrier accepts goods for shipment to a point on another line, it is conclusively treated as having made a through contract of shipment and will be liable for any loss or injury occurring on any connecting line over which the goods may pass. (49 USCA § 20.)

"It has been held in the decisions rendered under this amendment that the liability of the initial carrier is the same as if it owned a continuous line from the point of shipment to the point of destination and it makes the connecting carrier the agent of the initial carrier." Cases cited.

From the above, it will be seen that the initial carrier is liable for any loss occurring on any connecting line "as if it owned" a continuous line from the point of shipment to the destination, and the initial carrier is regarded as the principal and the connecting carrier as the agent. This statement clearly indicates that the principle involved is one of contractual responsibility, as contradistinguished from the question of the ownership of the physical instrumentalities by which the contract is carried out.

Adverting, then, to the major defense of "peril of the sea," we find that the carrier's responsibility is prescribed by statute (Harter Act § 3, 46 USCA § 192), as follows: "If the owner of any vessel transporting merchandise or property to or from any port in the United States of America shall exercise due diligence to make the said vessel in all respects seaworthy and properly manned, equipped, and supplied, neither the vessel, her owner or owners, agent, or charterers, shall become or be held responsible for damage or loss resulting from faults or errors in navigation or in the management of said vessel nor shall the vessel, her owner or owners, charterers, agent, or master be held liable for losses arising from dangers of the sea or other navigable waters, acts of God, or public enemies, or the inherent defect, quality, or vice of the thing carried, or from insufficiency of package, or seizure under legal process, or for loss resulting from any act or omission of the shipper or owner of the goods, his agent or representative, or from saving or attempting to save life or property at sea, or from any deviation in rendering such service."

As a condition precedent to claiming the benefit of this statute, the carrier must prove that he and all his employees have exercised due diligence as to the seaworthiness, manning, equipment, and supplies of the vessel. This rule, with its full implications, was clearly expounded by Mr. Justice Day in The Southwark, 191 U. S. 1, 8, 13, 24 S. Ct. 1, 3, 48 L. Ed. 65, cited with approval in The Wildcroft, 201 U. S. 378, 389, 26 S. Ct. 467, 50 L. Ed. 794, and in Carlisle Packing Company v. Sandanger, 259 U. S. 255, 259, 42 S. Ct. 475, 66 L. Ed. 927.

"The effect of this Harter law is not to relieve the owner from the general duty of furnishing a seaworthy ship, but to limit his liability in certain particulars and upon the condition named in the statute. The Carib Prince, 170 U. S. 655, 18 S. Ct. 753, 42 L. Ed. 1181. Before the passage of the act, the initial obligation could be limited in certain particulars by special contract not involving negligence of the owner. Since the passage of the act, as to cases coming within its terms, before the owner can have the benefit of the relief provided by § 3 he must have exercised due diligence to provide a seaworthy vessel, capable of performing her intended voyage. * * *

"As we have before stated, the right of the carrier to be exonerated in the respects named in the Harter Act 46 USCA §§ 190-195 depends upon the exercise of due diligence upon his part in discharging the primary duty of providing a seaworthy vessel. The burden of proof being upon the carrier to show that he has exercised due diligence to provide a seaworthy vessel at the time he received the meat and started upon the voyage, the question arises, Was this duty discharged? `This due diligence required,' said the Chief Justice, in delivering the opinion in International Navigation Company v. Farr & Bailey Manufacturing Company, supra 181 U. S. 218, 21 S. Ct. 591, 45 L. Ed. 830, `diligence to make the ship in all respects seaworthy; and that, in our judgment, means due diligence on the part of all the owners' servants in the use of the equipment before the commencement of the voyage and...