Balfour, Guthrie & Co. v. Portland & Asiatic S.S. Co.

• Decision Date: 08 February 1909
• Docket Number: 4,791.
• Citation: 167 F. 1010
• Parties: BALFOUR, GUTHRIE & CO. v. PORTLAND & ASIATIC S.S. CO.
• Court: U.S. District Court — District of Oregon

167 F. 1010

BALFOUR, GUTHRIE & CO. v. PORTLAND & ASIATIC S.S. CO.

No. 4,791.

United States District Court, D. Oregon.

February 8, 1909

Williams Wood & Linthicum, for libelants.

W. W Cotton and Arthur C. Spencer, for respondent.

WOLVERTON District Judge.

This is a libel for the recovery of damages for the breach of a contract of affreightment, whereby it is alleged the respondent agreed to carry 1,750 tons of flour from Portland Or., to Japanese ports. The breach consists in the refusal of the respondent to carry the flour as agreed. A dispute arose at the outset whether any contract was ever in fact consummated. This, together with the controversy following requires a statement of all negotiations had between the parties relative to the subject.

The respondent was, at the time, engaged in navigating a line of steamers for carrying freight from Portland, Or., to Japanese ports, namely, Yokohama, Kobe, and Moji, and to Hong Kong, China. Pursuant to previous communications by telephone between representatives of the libelants and respondent, J. W. Ransom, acting for R. B. Miller, who was the general freight agent of respondent, wrote the libelants, on July 30, 1904, as follows:

'Gentlemen: Referring to conversation with Mr. Jones this date. Kindly confirm reservation of space for your account on the Nicomedia about Aug. 28th for 2,000 tons flour. Will advise you later if reservation can be increased.'

To this letter the libelants replied, August 1, 1904:

'Dear Sir: Answering yours of 30th ult., we confirm reservation of 2,000 tons space per s.s. 'Nicomedia' to sail hence 28th inst., and now await to hear what further space you can put at our disposal.'

On August 2d the respondent wrote canceling the reservation:

'Gentlemen: Confirming telephone advice. Owing to war conditions in the Orient and Russian Government's declaration of food stuffs as contraband, we have been obliged to cancel all engagements of space for shipments destined Japan ports on the Nicomedia Aug. 28th. Understand that 1,750 tons of your 2,000 ton reservation on this steamer is destined Japan, and cancellation of same will leave your total reservation on the Nicomedia 250 tons for Hong Kong. If you can increase your offerings for this port will be pleased to have you do so.' On August 20, 1904, libelants wrote the respondent, as follows:

'Dear Sir: Referring to engagement made with you for 1,750 tons space on 'Nicomedia' for Japan and your subsequent declination to carry out same, we are advised we have an enforcible contract with you and now call upon you to carry out same, otherwise we will hold you liable for all loss, damage and prejudice that may come to us thereby.'

Respondent wrote libelants, August 23d:

'Replying to your letter of August 20th in regard to space on the Nicomedia, I beg to say that on August 2nd, we were compelled to cancel all engagements of space for shipments destined to Japan ports on the Nicomedia, and so informed you on that date.'

In libelants' previous negotiations with respondent for space on its vessels, a definite tonnage was reserved, but the ports of destination were not designated until the ship was ready to receive her cargo. Further than this, when the cargo was aboard, a bill of lading, reciting in specific form the contract of affreightment, was issued to respondent. This form of bill of lading contains a stipulation, as follows:

'It being mutually agreed that the carrier shall not be liable for loss or damage occasioned * * * by arrest or restraint of princes, rulers, or people.'

There is practically no disagreement in the evidence touching this method of dealing between the parties. As soon as libelants ascertained that they could secure space for shipment, they sold the flour by cable at port of destination, thus obligating themselves to make delivery thereof in due course of the ship's arrival. In pursuance of their usual custom in this respect, they sold the flour in Japan, designed to be shipped by the steamship Nicomedia, immediately upon securing space for such shipment, as per the written memorandum or agreement between the parties above set out.

The respondent was operating its vessels between Portland, Or., and Japan and China, at all times during the negotiations for shipment of the flour, and at all such times, and for some time prior thereto, Russia and Japan were and had been at war. Some time in June or early in July, 1904, Russia issued a proclamation declaring flour contraband of war, which continued in force until after the Nicomedia entered upon her intended voyage. Mr. Schwerin testifies that Russia had at that time also 'practically notified the world of an active blockade of the Japan coast. ' Further on, however, he says, referring to the seizure of Arabia by Russian gunboats:

'We had previously carried flour while the discussion of these questions was going on, because, according to advices I had from Japan, Russia was not maintaining a blockade according to international law, although she had declared Japan's ports blockaded.'

Whatever the historical fact may be touching any proclamation of Russia declaring Japan's ports blockaded, the proofs here adduced do not show that any effective blockade of any port of Japan was ever maintained by that country. The most that can be said under the evidence is that the Russian Vladivostok flying squadron was for a time harassing shipping plying to and from Japanese ports, which squadron made some seizures of vessels of neutrals as prizes of war. Notably, it is shown that the respondent's steamship Arabia was seized by three Russian cruisers on July 22d, 30 miles off Cape Inuboe, and taken to Vladivostok as a prize of war. Her cargo, consisting of flour and car bodies, was alone condemned, however; the ship being released about a month later. The Calculus, a steamship of the Blue Funnel Line, out of Seattle, was seized about the same time, presumably by the same squadron. The respondent had definite advices of the Arabia's seizure in Portland about the 25th or 26th of July, and very clearly it had such advices prior to writing the letter of July 30th requesting confirmation of space for account of the Nicomedia. It further appears, from Mr. Schwerin's testimony, that the respondent was well advised at the time touching war conditions as they affected shipping to and from Japanese ports. Indeed, he assigns such conditions as a reason why the respondent should not accept further shipments for Japan, and it was through his authority that the alleged contract of affreightment was canceled. The libelants had knowledge of these war conditions also, and knew of the seizure of the Arabia. Mr. Burns, the manager of the libelant company, says, relative to entering into the contract, 'We were taking the risk of losing our flour. ' So that both parties entered into whatever contract was the result of their negotiations with full knowledge of the war conditions affecting shipping on the Japanese coast at the time.

It is first insisted by respondent that no contract to carry flour to Japan on the Nicomedia was consummated, because the reservation of space by the libelants was general, without specification of any ports of delivery. In view of the previous manner of negotiation between the parties, of reserving space generally, and designating the ports of delivery when the ship was ready to receive cargo, I am of the opinion that there was an undertaking, by implication, to carry so much of the cargo for which space was reserved to the Nicomedia's regular ports of call in Japan as the libelants might specify when she was ready to receive cargo. There was no designation of any port of delivery, but it was very well understood that the ship would sail on her accustomed voyage to the Orient on August 28th; her ports of call being Hong Kong, in China, and Yokohama, Kobe, and Moji, in Japan. And so it was that space was reserved for that voyage. The libelants had been shipping to ports in Japan, as well as to Hong Kong, over this line, so that, by the very reservation of space generally, there remained the right or privilege in the libelants to name in due time the ports of delivery for the cargo. Upon like principle, the conditions contained in the usual bill of lading issued by the respondent before sailing days must be regarded, as the respondent contends, as containing the stipulations of the parties; all negotiations being had in anticipation of the issuance of such a paper and its acceptance by the libelants.

There is contention of counsel that the charter party was dissolved by reason of the alleged Russian blockade of Japanese ports; the contention proceeding upon the well-established rule that it is unlawful for a neutral to enter a blockaded port, for which offense the ship and cargo is subject to seizure and condemnation as good prize. Indeed, the law is so strict that a neutral vessel cannot approach a blockaded port with intent to enter, or even for the purpose of making inquiries of a blockading vessel, without subjecting itself to seizure. The Cheshire, 3 Wall. 231, 18 L.Ed. 175; The Adula, 176 U.S. 361, 20 Sup.Ct. 432, 44 L.Ed. 505. This is according to international law, which applies in prize cases. The inhibition cannot help the respondent, however, as it has not been shown that any blockade existed at the time of the negotiations in question or of the sailing of the Nicomedia. Under none of the authorities does the blockade have the effect claimed for it, unless it be real and effective in fact. See The Spartan (D.C.) 25 F. 44. And it has certainly not been proven that any blockade of such character was maintained for any length of time.

The next contention of respondent, strenuously urged, is that the...