WR Grace & Co. v. Toyo Kisen Kabushiki Kaisha

• Decision Date: 15 September 1925
• Docket Number: No. 17363.,17363.
• Court: U.S. District Court — Northern District of California
• Parties: W. R. GRACE & CO. v. TOYO KISEN KABUSHIKI KAISHA.

7 F.2d 889 (1925)

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

No. 17363.

District Court, N. D. California, S. D.

September 15, 1925.

Harold M. Sawyer and Alfred T. Cluff, both of San Francisco, Cal., for libelant.

Thomas B. Dozier, Dozier & Dozier, and Dozier, Kimball & Dozier, all of San Francisco, Cal., for respondent.

PARTRIDGE, District Judge.

Libelant shipped 2,500 tons of sodium nitrate from Iquique and Antofagasta to Honolulu, on the Japanese steamer Tokuyo Maru. The ship proceeded north to San Francisco, via various ports, and thence to Portland, where she completed cargo by loading lumber. Immediately after leaving Portland, she was destroyed by fire, and all cargo lost. The nitrate, which is alleged to be of the value of $250,000, was insured by various underwriters, in the sum of about $190,000. This insurance was paid to libelant, so that the libel is prosecuted on behalf of the underwriters to the amount of the insurance paid, and the balance for the benefit of libelant.

The basis of the libel is a deviation. The direct route from the nitrate ports to Honolulu, of course, is far away from the actual voyage of the vessel; but it is not claimed that she should have taken the direct route. On the contrary, libelant bases its claim upon the proposition that the "usual and customary" route from nitrate ports to Honolulu was northerly to San Francisco, and thence directly to the port of discharge. Hence it is urged that the extension of the voyage northerly to Portland was a deviation.

Libelant is a dealer in the markets of the world on a large scale. It is also engaged in the shipping business, and has branches, agencies, and subsidiaries in many lands. Admittedly, it has a "steamship department" in Valparaiso, and subsidiaries known as "Nitrate Agencies, Limited," at Antofagasta and Iquique. This steamship department and this subsidiary corporation constitute respondent's agency in Chile; that is, it is admitted, in legal effect, that libelant, at the times here involved, was the agent of the respondent, in charge of its shipping business at the South American ports. Libelant also has a branch in San Francisco, where is located, also, respondent's principal office for the Americas. On the 19th of January, 1921, libelant's San Francisco office wrote a letter to respondent's San Francisco office, confirming telephonic conversation for a "freight engagement" for 2,500 long tons of nitrate, "March shipment from nitrate port to Honolulu," at a specified freight. This was accepted and confirmed by respondent. On the same day, libelant wrote to its branch in Valparaiso that it had "arranged shipment of this parcel through the local office of the T. K. K. on the Tokuyo Maru, scheduled to sail from nitrate port about the middle of March."

Accordingly the Valparaiso office of libelant instructed its subsidiary to load the nitrate. It was delivered to the Tokuyo, part at Antofagasta on March 15th, and part at Iquique on March 19th. On receipt of the goods, the master of the ship issued its bills of lading, both of which specified that the nitrate was shipped by Nitrate Agencies, Limited, agents of libelant, on board the Tokuyo Maru, "now laying (sic) in the port of Antofagasta (Iquique) and bound for Honolulu." There was no other designation of the route.

The libelant, however, contends that the usual language of bills of lading, or contracts of affreightment of any kind, is merely from loading port to discharging port, and that this language always implies a shipment by the usual and customary route. It is not insisted, therefore, that the ship should have gone directly from the nitrate ports to Honolulu; on the contrary, libelant shows that the respondent had for many years maintained a regular fleet of steamers between the Orient and South America, the return voyage being up the coast to San Francisco, and thence by Honolulu to their home ports. Thus the various ships of respondent made, in 1918, six such voyages; in 1919, six; in 1920, four. In the latter year, however, two of respondent's vessels returned to the Orient via Portland, but did not touch at Honolulu. In 1921, before the shipment involved here, two of respondent's ships made the return voyage, one via Portland not touching at Honolulu, and one returning by way of both Portland and Honolulu.

Libelant's position, therefore, is that the "usual and customary voyage" implied in the contract of affreightment was by way of San Francisco, and that the voyage of the ill-fated Tokuyo Maru was a deviation in that she continued northerly by way of Portland. Respondent answers that, if there was such custom and usage, it had ceased to be such because, prior to the shipments here, the last four of its vessels had returned via Portland. It insists, moreover, that it was clearly understood that the ship here involved was to visit Portland for cargo. This contention is based upon the following admitted facts:

(1) Respondent's South American line is subsidized by the Japanese government. The statute of the empire, entitled "Ocean Going Liners' Subsidy Act," provides that a subsidized company must get a permit from the Minister of Communication before it can add a port of call. On February 8, 1921, the respondent obtained such a permit, allowing the Tokuyo Maru to call at Portland. The libelant had full knowledge of the fact of the subsidy, and the provisions of the law of the empire with reference to changing ports of call.

(2) This change of route, to include Portland, was extensively advertised, both in the public prints devoted to shipping and commerce and by private communications to interested shippers, including libelant.

(3) On February 23, 1921, respondent cabled to libelant's Valparaiso office, advising that the schedule of the Tokuyo's homeward voyage was revised on account of her Portland call, and instructing libelant, as respondent's agent, to notify the master and Iquique. Upon receipt of this cablegram, libelant at Valparaiso transmitted it to the Nitrate Agencies, Limited, at Iquique. On March 11th respondent cabled libelant to stow the nitrate in such a way as to provide for loading wet lumber at Portland, and directing libelant to notify the master accordingly.

Respondent contends that all this shows that the contract of affreightment was entered into with full knowledge that the custom or usage no longer prevailed, and the presumption rebutted. Libelant, on the other hand, insists that this evidence is all inadmissible as an attempt to vary the terms of a written contract. The argument is that there is an implied agreement in every contract of affreightment to carry the goods by the usual and customary route; that parol evidence is necessarily admissible to show what that usual and customary route is, but such evidence is not admissible to show an agreement to change the usual and customary route, or an agreement as to the...