Aktieselskabet Cuzco v. the Sucarseco the Toluma

• Decision Date: 04 March 1935
• Docket Number: No. 524,524
• Citation: 79 L.Ed. 942,55 S.Ct. 467,294 U.S. 394
• Parties: AKTIESELSKABET CUZCO v. THE SUCARSECO et al. THE TOLUMA
• Court: U.S. Supreme Court

294 U.S. 394

55 S.Ct. 467

79 L.Ed. 942

AKTIESELSKABET CUZCO

v THE SUCARSECO et al. THE TOLUMA.

No. 524.

Argued Feb. 14, 1935.

Decided March 4, 1935.

Mr. Wm. H. McGrann, of New York City, for petitioner.

[Argument of Counsel from pages 395-397 intentionally omitted] Mr. D. Roger Englar, of New York City, for respondents.

Mr. Chief Justice HUGHES delivered the opinion of the Court.

The question in this case arises out of a collision at sea between the Norwegian vessel Toluma and the American vessel Sucarseco. Both vessels were at fault, and both were damaged. The Sucarseco proceeded on her voyage. The Toluma put into a port of refuge for necessary repairs. To permit these repairs, a part of her cargo was discharged; it was later reloaded and the Toluma completed her voyage. A general average statement was prepared which apportioned the expenses and losses, so far as they were of a general average nature, between the owner of the Toluma and the cargo owners.

Three suits were brought in admiralty and were consolidated for trial. On was a libel for damages brought by the owner of the Toluma against the Sucarseco. Another was a cross-libel for damages by the owner of the Sucarseco against the Toluma. The third libel was by the owners of cargo on the Toluma against the owner of the Sucarseco to recover their damages, including the amounts which the cargo owners had paid as general average contributions.

The only question presented here is with respect to the claim of the cargo owners. Their right to recover against the Sucarseco, the noncarrying vessel, is not contested so far as the physical damage to the cargo is concerned. The contest is with respect to the contributions of the cargo owners in general average. The Circuit Court of Appeals, reversing the District Court, allowed that recovery. The Toluma, 72 F.(2d) 690. Because of the importance of the question, which has not been decided by this Court, a writ of certiorari was granted, December 3, 1934. 293 U.S. 552, 55 S.Ct. 218, 79 L.Ed. —-.

There is no dispute that both vessels were seaworthy and that the collision was due to the fault in navigation of both vessels equally. No question has been raised as to the correctness of the general average adjustment. As, through the application to the instant case of the rule for the division of the entire loss equally between the vessels,¹ the ultimate share to be borne by the Sucarseco will not be affected by the determination of the present claim of the cargo owners, the Sucarseco is indifferent to the result and the claim is opposed by the Toluma.

The cargo was carried under a provision of the bill of lading, known as the 'Jason clause,' that in case 'of danger, damage or disaster' resulting 'from faults or errors in navigation,' and if the shipowner 'shall have exercised due diligence to make the vessel seaworthy and properly manned, equipped and supplied,' the owners of the cargo shall contribute with the shipowner in general average 'to the payment of any sacrifices, losses or expenses of a general average nature that may be incurred for the common benefit' to the same extent as if the danger, damage, or disaster had not resulted from faults or errors in navigation.² The clause is substantially to the same effect as the one sustained in the case of The Jason, 225 U.S. 32, 32 S.Ct. 560, 56 L.Ed. 969, and has received its popular designation from that decision. Petitioner contends that the liability of cargo to contribute in general average results solely from this provision in the contract of carriage; that the owners of the Sucarseco were not parties to that contract; and that the claim of the cargo owners for the refund of their general average contributions in derivative and not directly recoverable from the Sucarseco, the cargo owners being entitled only to an accounting from their carrier (the Toluma) for their ratable proportion of that carrier's recovery. Respondents insist that cargo's contributions in general average are a part of cargo's 'collision damage' and are recoverable from the Sucarseco as a tort-feasor in the same manner as physical damage.

While the damages due to a collision, when both vessels are at fault, are divided as between themselves, the innocent cargo owner may recover his full damages from the noncarrying vessel. The Atlas, 93 U.S. 302, 315, 23 L.Ed. 863; The New York, 175 U.S. 187, 209, 210, 20 S.Ct. 67, 44 L.Ed. 126; Canada Malting Co. v. Paterson Steamships, 285 U.S. 413, 418, 52 S.Ct. 413, 76 L.Ed. 837. This is so, al- though the carrying vessel may be free from liability to the cargo owners by reason of the application of section 3 of the Harter Act, 46 U.S.C. § 192, 46 USCA § 192.³ On a division of the entire damages between the two vessels, the noncarrying vessel may recoup one-half of the amount paid to the cargo owners. The Chattahooche, 173 U.S. 540, 554, 555, 19 S.Ct. 491, 43 L.Ed. 801. The direct liability of the noncarrying vessel 'for all the damage to cargo' is 'one of the consequences plainly to be foreseen,' and the responsibility of the carrying vessel to the noncarrying vessel is measured accordingly. Erie Railroad Co. v. Erie & Western Transportation Co., 204 U.S. 220, 226, 27 S.Ct. 246, 51 L.Ed. 450.

In the stipulation of facts, the parties agreed that the expenses, for which recovery is now sought as a part of cargo's damage, were 'of a general average nature.' The description is brief but adequate. It is a description which incorporates the essential conditions of general average. It means that there was a common imminent peril and a voluntary sacrifice or extraordinary expenses necessarily made or incurred to avert the peril and with a resulting common benefit to the adventure. Columbian Insurance Co. v. Ashby, 13 Pet. 331, 338, 10 L.Ed. 186; McAndrews v. Thatcher, 3 Wall. 347, 365, 18 L.Ed. 155; The Star of Hope (The Star of Hope v. Annan), 9 Wall. 203, 228, 229, 19 L.Ed. 638; Ralli v. Troop, 157 U.S. 386, 394, 395, 403, 15 S.Ct. 657, 39 L.Ed. 742; The Jason, supra, pages 48, 49 of 225 U.S., 32 S.Ct. 560. It means that the sacrifice or expenses fell upon the whole adventure and were to be assessed in proportion to the share of each in that adventure. The Star of Hope, supra; Ralli v. Troop, supra. This is the basic consideration in determining the present question.

Prior to the Harter Act, a common carrier by sea could not exempt himself from liability to the cargo owner for damages caused by the negligence of master or crew. Liverpool & G.W.S. Co. v. Phenix Insurance Company, 129 U.S. 397, 9 S.Ct. 469, 32 L.Ed. 788. The Harter Act, prohibiting by sections 1 and 2 agreements with a shipowner which would relieve him from responsibility for the proper loading, stowage, custody, care, or delivery of the cargo, or from the duty to exercise due diligence to make the vessel seaworthy, provided in section 3 that if the shipowner did exercise due diligence 'to make the vessel in all respects seaworthy and properly manned, equipped and supplied,' neither the vessel nor her owner should be responsible for damages resulting 'from faults or errors in navigation or in the management of the vessel.' The question then arose whether a shipowner who had exercised that due diligence was entitled to general average contribution for sacrifices made by him, subsequent to a stranding of his vessel, in successful efforts to save vessel, freight, and cargo. That right was denied the shipowner in The Irrawaddy, 171 U.S. 187, 18 S.Ct. 831, 43 L.Ed. 130. The point of that decision was carefully stated in The Jason, supra, page 54 of 225 U.S., 32 S.Ct. 560, 564. The Court there said that the authority of The Irrawaddy went no further than that 'while the Harter act relieved the shipowner from liability for his servant's negligence, it did not of its own force entitle him to share in a general average rendered necessary by such negligence.' But, as the Harter Act had relieved the diligent shipowner from responsibility for the negligence of his master and crew, the Court decided in The Jason that it was 'no longer against the policy of the law' for him to contract with the cargo owners 'for a participation in general average contribution growing out of such negligence.' Upon this ground, the validity of the 'Jason clause,' similar to the one now before us, was upheld.

What then is the effect of the 'Jason clause'? It in no way changes the essential features of general average contributions. It must still appear that voluntary and successful sacrifices have been made or extraordinary expenses incurred on...