American President Lines, Ltd. v. Federal Maritime Board

• Decision Date: 24 May 1962
• Docket Number: No. 16198.,16198.
• Citation: 317 F.2d 887
• Parties: AMERICAN PRESIDENT LINES, LTD., et al., Petitioners, v. FEDERAL MARITIME BOARD (now Federal Maritime Commission) and United States of America, Respondents.
• Court: U.S. Court of Appeals — District of Columbia Circuit

317 F.2d 887 (1962)

AMERICAN PRESIDENT LINES, LTD., et al., Petitioners, v. FEDERAL MARITIME BOARD (now Federal Maritime Commission) and United States of America, Respondents.

No. 16198.

United States Court of Appeals District of Columbia Circuit.

Argued November 8, 1961.

Decided May 24, 1962.

Mr. Seymour H. Kligler, New York City, with whom Mr. Elkan Turk, New York City, was on the brief, for petitioners.

Mr. Edward Aptaker, Asst. Gen. Counsel, Federal Maritime Commission, at the time of argument, with whom Mr. Robert E. Mitchell, Deputy Gen. Counsel, Federal Maritime Commission, and Mr. Irwin Seibel, Atty., Dept. of Justice, were on the brief, for respondents.

Mr. Richard A. Solomon, Atty., Dept. of Justice, entered an appearance for respondent United States of America.

Before WILBUR K. MILLER, Chief Judge, EDGERTON, Circuit Judge, and PRETTYMAN, Senior Circuit Judge.

PRETTYMAN, Senior Circuit Judge.

This is a petition to review an order of the Federal Maritime Board, for which the successor Federal Maritime Commission is now responsible. Petitioners are common carriers by water in the foreign commerce of the United States. The subject of the controversy is demurrage charged for cargo on docks in New York.

Ships bringing transoceanic freight into port are required by their transportation obligation, absent a special contract, to unload the cargo onto a dock, segregate it by bill of lading and count, put it at a place of rest on the pier so that it is accessible to the consignee, and afford the consignee a reasonable opportunity to come and get it. This was settled by the courts many years ago.¹ Circuit Judge Goodrich stated, in North American Smelting Co. v. Moller S. S. Co.,² that "There is no doubt that in discharging the cargo onto the pier and notifying the consignee the carrier was no longer in possession of the goods so as to suffer the risk of loss not due to any negligence on its part." The work of unloading and putting the cargo on the dock is done on behalf of the carrier by longshoremen, who are laborers skilled in this sort of thing, or by stevedoring companies under contract with the carriers, these stevedores employing longshoremen. There is not now, and does not appear ever to have been, absent a special contract, any obligation on the part of the carriers to put such cargo actually into the hands of consignees, as by putting it into trucks and hauling it to the consignees' places of business. Consignees are obligated, after notice and reasonable opportunity, to come and pick up their goods at the pier.³

A public interest is involved in the problem created when consignees leave cargo on piers for indefinite periods. A port could be blocked by such practice, to the great detriment of the whole community. This problem became acute in the port of New York. The Maritime Commission, by an order of May 29, 1947, instituted an investigation and rule-making procedure.⁴ After long consideration, involving hearings before an Examiner, exceptions, and argument before the Commission, the Commission on October 19, 1948, issued its General Order 69,⁵ dealing with the amount of time a consignee must be given to remove his goods from a pier (called "free time"), and the charges to be made upon him if he leaves his goods there too long (called demurrage charges), on import property at the port of New York. The supporting "Report of the Commission" was long and carefully done. The practices of the industry are clearly described. The Commission pointed out mishaps which may prevent a carrier from performing its duty of tender for delivery, and it diagnosed the responsibility. It pointed out that a period of "free time" is part of the transportation service of the carrier. It concluded that under conditions prevailing in New York "five days is the shortest time that affords to consignees a reasonable opportunity to take delivery of imports." It held a tariff which failed "to assure to consignees a minimum of five days of free time" would be unjust and unreasonable.

The Commission then discussed the matter of demurrage charges, which are, on a progressively increasing scale, authorized after "free time" has expired on a shipment. The Commission said "it is undisputed that the demurrage rate structure is penal in purpose, intended to clear the piers."

Then the Commission discussed the problems posed by inability of either party to perform its obligation. It depicted the difference between events which affect the carrier, so that "cargo cannot be tendered for delivery", and a case in which an event "effectively prevents consignees from removing their shipments." It referred, by way of example, to a trucking strike which blockaded the port so that "many shipments which, although available for delivery, consignees could not remove." The Commission said, "In such cases, neither carriers nor consignees are at fault." Neither, said the Commission, should be subjected to an avoidable penalty or permitted to profit from the other's disability. It held that a carrier was entitled to fair compensation for sheltering and protecting the consignee's property under such circumstances, that the demurrage charge at the lowest rate (i. e., for the first period after "free time") represented a compensatory charge, but that the increased demurrage rates were penal and could not be charged under these conditions. In the order then entered (General Order 69) were two provisions as to demurrage, one in respect to carriers and the other in respect to consignees. They were:

"3. Where a carrier is for any reason unable, or refuses, to tender cargo for delivery, free time must be extended for a period equal to the duration of the carrier\'s disability or refusal.

"4. Where a consignee is prevented from removing his cargo by factors beyond his control (such as, but not limited to, trucking strikes or weather conditions) which affect an entire port area or a substantial portion thereof, carriers shall (after expiration of free time) assess demurrage against imports at the rate applicable to the first demurrage period, for such time as the inability to remove the cargo may continue. * * *."

The ruling was quite clear, it seems to us. Its language fitted precisely into the practice of the trade. Referring to the carriers it said that if a carrier is for any reason unable, or refuses, "to tender cargo for delivery," free time must be extended. The clear underlying premise was that the obligation of the carrier was to tender for delivery, i. e., leave the goods in the designated place of pick-up, for five days.

We pause at this point to note what will become important to a decision here. "Tender for delivery" and "deliver" are distinct and different terms. The point comes up in various contexts. "Delivery", as respects goods contracted to be sold and delivered, and "tender of delivery" are distinct terms.⁶ Under a contract of carriage the carrier made a proper "tender" when it offered the goods to the consignee at the pier.⁷ If a seller notifies his buyer of the time and place of delivery according to the terms of a contract, and delivers at the time and place, there is a tender.⁸ In the industry concerned in this case there seems to us to be no room for dispute over the nature of the obligation of the carrier. It tenders for delivery; it does not deliver. It makes a valid and complete tender when it puts the cargo on the dock, reasonably accessible, properly segregated and marked, and leaves it there for five days; with notice, of course.

The second pertinent part (par. 4) of General Order 69⁹ is likewise clear. It uses language which describes precisely what happens. Its expression is "Where a consignee is prevented from removing his cargo by factors beyond his control", and it goes on to insure its meaning by specifying "such as, but not limited to, trucking strikes". Under those circumstances, says the General Order, the carrier shall assess demurrage at the first demurrage period rate.

Years later (November, 1956, and February, 1957) massive strikes of longshoremen at New York occurred. Cargo was immobilized on the docks. A dispute arose between carriers and consignees as to wharf demurrage during these periods. The carriers said that under General Order 69, where demurrage had begun before the strike took effect, they would charge the first period rate for the time during which the goods could not be moved. In other words, the carriers said that, where consignees, unimpeded, had left their goods on the dock after the free time had expired and demurrage had begun to accrue, the consignees should continue to pay, but not at...