Austin Nichols Co v. the Isla De Panay Sanchez v. Same Tolibia Co v. Same

• Decision Date: 02 March 1925
• Docket Number: Nos. 199-201,s. 199-201
• Citation: 1925 A.M.C. 447,267 U.S. 260,45 S.Ct. 269,69 L.Ed. 603
• Parties: AUSTIN NICHOLS & CO. v. THE ISLA DE PANAY. SANCHEZ et al. v. SAME. E. TOLIBIA & CO. v. SAME
• Court: U.S. Supreme Court

267 U.S. 260

45 S.Ct. 269

69 L.Ed. 603

AUSTIN NICHOLS & CO.

v THE ISLA DE PANAY. SANCHEZ et al. v. SAME. E. TOLIBIA & CO. v. SAME.

Nos. 199-201.

Argued Jan. 19, 1925.

Decided March 2, 1925.

Messrs. T. Catesby Jones, of New York City, and John W. Ryan, of Buffalo, N. Y., for petitioners.

[Argument of Counsel from pages 261-263 intentionally omitted] Mr. John W. Crandall, of New York City, for respondent.

[Argument of Counsel from page 264 intentionally omitted] Mr. Justice McREYNOLDS delivered the opinion of the Court.

These are proceedings in rem against the Isla de Panay to recover for damage to merchandise brought by her from Cadiz, Spain. They present the same issues and were heard on the same proof. It will suffice to refer to the facts disclosed in number 199.

December 21, 1917, in the United States District Court, Southern District of New York, Austin Nichols & Co., a corporation, filed a libel and complaint against the respondent steamship.

It alleged: Ownership of the damaged merchandise. Presence of the vessel within the court's jurisdiction. That 'on October 27, 1917, Rowlett Y. Pyman shipped and placed on board the steamship Isla de Panay, then lying at the port of Cadiz, Spain, 227 packages of olives in good order and condition, to be carried by the said steamship Isla de Panay as a common carrier from the port of Cadiz to the port of New York, and there to be delivered in like good order and condition as when shipped to your libelant, in accordance with the terms of bills of lading then and there issued for the said shipment and in consideration of an agreed freight. Thereafter the said steamship Isla de Panay sailed from the port of Cadiz and arrived at the port of New York in the month of November, 1917, and there discharged her cargo, not in like good order and condition as when shipped, but badly damaged.' Con- sequent damages amounting to about $11,000.

It prayed: For process according to the course and practice in causes of admiralty and maritime jurisdiction to issue against the steamship, her engines, boilers, etc. That a decree be granted for the damage sustained, and the steamer condemned and sold to satisfy the same.

The Compania Trasatlantica claimed the vessel as sole owner, obtained her release, and answered, denying liability. It admitted receipt of the goods and alleged their carriage and delivery as required by the bills of lading. It specifically admitted and alleged: 'That on or about the 6th day of November, 1917, there were shipped on board the steamship Isla de Panay, then at the port of Cadiz, Spain, and bound for the port of New York, 227 casks said to contain olives; the weight and contents of said casks and their quality, however, being stated to be unknown to the claimant, which expressly declined to be responsible therefor. * * * That it was agreed that the merchandise should be transported for a stipulated freight to the port of New York and there be delivered to the order of the libelant, subject to the conditions and exceptions from liability contained in the bills of lading issued for said merchandise at Seville, Spain, from which port said merchandise was shipped in the first instance. * * * That thereafter the steamship Isla de Panay sailed from the port of Cadiz, Spain, and arrived in due course at the port of New York in the month of November, 1917, and that it thereafter delivered at the port of New York all of the above mentioned merchandise which it received on board the ship at Cadiz in pursuance of and in compliance with the terms and conditions of the bills of lading hereinabove referred to.' That the bills of lading expressly exempted the vessel from responsibility for damage resulting from breakage of the articles and fragile containers. The ship was in all respects seaworthy properly manned, equipped, and supplied for the voyage. If the merchandise suffered loss or damage, the ship was relieved from liability by the bills of lading, particularly that clause concerning breakage and fragile containers; also by the Harter Act, approved February 13, 1893. 27 Stat. 445, 446, c. 105 (Comp. St. §§ 8029-8035).

Upon the indicated issues evidence was taken and the cause went to hearing.

The agent of the owner of the Isla de Panay stationed at Seville, Spain, there accepted the casks of olives (each of them weighed 1,500 pounds of more) and delivered to the consignors bills of lading. These recited:

'M. Rowlett & Pyman has shipped on board the Spanish steamer Isla de Panay, its captain M_____, with destination to New York and consigned to Austin Nichols, the effects declared on back on the following conditions, * * * gnoring weight and contents.'

They said nothing concerning order or condition of the merchandise and contained exemption clauses as stated in the answer.

The casks were carried down the river Guadalquivir 75 miles to Cadiz, on a small steamer belonging to the owner of the Isla de Panay, and were there delivered to her. They were loaded, stored, transported and landed at New York without negligence or default by the vessel; but the casks broke and the olives were damaged. That the casks were old, weak, and quite liable to break was observed by the owner's agent at Seville, and because of this he declined to accept them until the shippers gave the following agreement to secure against loss:

'Sevilla, November 5, 1917.

'Compania Trasatlantica, Sevilla—My Dear Sirs: With reference to the shipment of 227 casks of olives that we are making by the steamer Isla de Panay to New York, we understand that that company considers the containers insufficient and that it does not accept responsibility for the damages that they suffer as natural consequences of the voyage, and as guarantee of that company we sign the present, as you have delivered us clean bills of lading.

'Yours very truly, Rowlett & Pyman.'

The captain of the Isla de Panay did not see the bills, nor did he know of the letter of guaranty until after the voyage had been completed. He observed the bad condition of the casks before accepting them at Cadiz, and their imperfection was noted on the accompanying shipping orders.

It appears that Austin Nichols & Co. had directed their bankers at Seville to pay the agreed purchase price for the olives upon presentation of clean bills of lading. The bankers accepted the bills presently under consideration and paid the stipulated price to the consignors. There is nothing to show that the ship or her owner knew of the particular arrangement between buyer and seller.

Libelants now insist that a trade usage prevailed at Seville under which bills without notation were regarded as receipts for merchandise in apparent good order and condition, and to establish this usage they rely upon an answer in the testimony of the vessel's captain. When asked by respondents' counsel, 'Why are these letters of guaranty given in Seville?' he replied:

'If the bills of lading are issued with a note on them, the insurance companies or the bankers in Spain will not accept that bill of lading on account of the condition in which the goods are; but if they have no clause on it they will pass it to a banking house and the insurance company that they have been shipped by the shipper in apparent good order and condition, although they have issued a letter of guaranty relieving the company of any responsibility whatsoever for the condition of the packages.'

Eduardo Benjumea, the owner's agent at Seville, who issued the bills, testified:

'In view of the above, and as was usually done in such cases, according to custom and at the request of the shippers, in order that their goods might not be prejudiced more than was necessary, and at the same time to relieve the company which I represent from responsibility, I ordered the acceptance of the letters of guaranty. * * * The custom of demanding letters of guaranty by steamship companies from shippers, to protect themselves from possible claims for the arrival in bad condition of the shippers' goods at the port of destination, is old and well established and based on the following: (1) The decided opposition on the part of the shippers to notations being placed on the bills of lading which unnecessarily prejudices their goods and leaves everything to the good faith of the receivers. (2) Due to the general character that would necessarily have had to be given to the notations on the bills of lading, and it being practically impossible to examine carefully all the casks one by one both on account of economy and fixed dates on which the mail boats of the Compania Trasatlantica had to depart from Cadiz for the states. We could make, with such notations, greater damage than would be justifiable, which, considering the honorable practices of the Compania Trasatlantica, we naturally tried to avoid. (3) Although letters of guaranty were always requested for the above stated reasons, an exceptional use of these letters was made during the European war, as a consequence of the general bad quality of the packing, which, during that time, was presented for shipment. This bad quality of the packing was due to the lack of containers in good condition and an enormous demand for containers of this class which it was impossible to meet. What took place was the use of all available containers notwithstanding their sometimes inferior quality; that is, chestnut wood was accepted in place of oak in spite of the fact that old oak containers are stronger than new ones of chestnut. I have been 16 years in the shipping business as shipping agent, and have had a great experience in matters thereto pertaining, derived from the years so spent.'

The District Court dismissed the libel. It said:

'The great...