Bell v. A. MacKay & Co.

• Decision Date: 20 April 1916
• Docket Number: 1 Div. 883
• Citation: 72 So. 83,196 Ala. 408
• Court: Alabama Supreme Court
• Parties: BELL v. A. MacKAY & CO.

72 So. 83

196 Ala. 408

BELL v. A. MacKAY & CO.

1 Div. 883

Supreme Court of Alabama

April 20, 1916

On Rehearing, June 1, 1916

Appeal from Circuit Court, Mobile County; Samuel B. Browne, Judge.

Assumpsit by Robert D. Bell against A. MacKay & Co., with attachment in aid thereof. The matter in controversy was submitted to arbitrators, and plaintiff appeals from their return. Reversed and remanded.

The defendants, MacKay & Co., leased their steamship St. Ninian to plaintiff's assignee, the Seeberg Steamship Line, and this action is for an alleged breach of contract by the lessors in withdrawing the steamship from the service of the lessee before the expiration of the lease. After suit was filed, and pursuant to a contract stipulation, the question whether the ship was rightfully or wrongfully withdrawn from the service of the lessee was submitted to three arbitrators whose award was that:

"Inasmuch as the undisputed evidence shows that there was unpaid hire due on said steamship at the time of presenting written notices of withdrawal of vessel from charter (December 1st), the owners are within their right in canceling charter of said steamship with the Seeberg Steamship Line under the terms of the charter party."

Exceptions were duly reserved to the award in accordance with section 2922, Code 1907, and notice of appeal given, and thereafter on defendants' notice, said award was entered up as a judgment of the court, and the defendants discharged. The appeal is from this judgment, and both the judgment and the award are assigned for error.

The charter party contained the following provisions which are pertinent to the issues of this case:

"(4) That the charterer shall pay for the use and hire of said vessel nine hundred and twenty-five pounds British sterling per calendar month, commencing on and from the day of her delivery as aforesaid, and at and after the same rate for any part of a month; hire to continue until her delivery in light good order and condition to the owners (unless lost) at a United States gulf port, fourteen days' notice to be given of name of redelivery port. ***

"(6) Payment of said hire to be made in cash in Mobile at the current short sight rate of exchange, or in approved bankers' sight bills on London at owner's option, *** half-monthly in advance, or as agreed, and in default of such payment the owners shall have the faculty of withdrawing said steamer from the service of the charterers without prejudice to any claim they (the owners) may otherwise have on the charterers in pursuance of this charter. ***

"(10) That, if the charterers shall have reason to be dissatisfied with the conduct of the captain, officers, or engineers, the owners shall, or receiving particulars of the complaint, investigate the same, and, if necessary make a change in the appointment."

The ship entered service on April 19, 1914, and the charter money became payable per periods dating from the 19th of each month to the 4th of the following month, and from the 4th to the 19th of each month. It was payable in advance on the 1st day of each period, "or as agreed." Of the fourteen semi-monthly payments due prior to November 19th six were made strictly on the date when due, and eight on later dates without complaint from the lessors, so far as appears. The installment due October 19th was held up pending a controversy over the retention of the captain and mate, who were charged by the lessee with drunkenness. On December 1st the lessors cabled Bestor & Young to notify lessee of their rescission of the contract, and to notify their agent Donald, also, and on that date the notice was given to both of them.

Gregory L. Smith & Son and Harry T. Smith & Caffey, all of Mobile, for appellant.

Bestor & Young, of Mobile, for appellees.

SOMERVILLE J.

The appeal in this case is properly taken under section 2922 of the Code. On the return of the award, it not appearing that the arbitrators were guilty of fraud, partiality, or corruption thereon, it was the duty of the clerk or judge to enter it up as the judgment of the court; and, its necessary legal effect being a discharge of defendants from liability, a judgment to thar effect was properly rendered by the court.

Plaintiff, however, excepted to the finding of the arbitrators and assigns error thereon, and we are therefore required to review the merit of their award both as to the law and facts, just as if it were originally the judgment of the trial court itself. Code § 2922; Wilbourn v. Hurt, 139 Ala. 557, 36 So. 768; Hoffman v. Milner, 142 Ala. 678, 38 So. 758. The evidence before the arbitrators was largely documentary, and presents no substantial dispute of fact.

It is clear that defendants could, by the express terms of their charter party, declare a forfeiture of the contract and withdraw their ship from the lessee's service for any failure by it to pay an installment of charter money on the first day of each semimonthly period, unless punctual payment were waived by particular agreement, by implication from a general course of dealing, or by recognizing the contract as continuing after the default occurred (Andrews v. Tucker, 127 Ala. 612, 29 So. 34; Elliott v. Howison, 146 Ala. 568, 40 So. 1018), or, to state the last alternative somewhat differently, by failing to exercise the right of rescission promptly and within a reasonable time (Elliott v. Howison, supra; Re Tyrer, 9 Aspin. 186, 84 L.T.Rep.N.S. 653.)

With respect to the installment due to the lessors on September 19th for the half month ending October 4th, and which, it seems, has never been paid, the right of rescission and withdrawal was unquestionably lost by the failure of the lessors to seasonably assert it. We do not understand that any serious contention is made to the contrary. The installment due November 4th for the half month ending November 19th was paid to and accepted by the lessors' agent, on November 30th, the day before the declaration and notice of rescission was presented to the lessee, without objection by him.

The defendants' right of rescission must therefore be grounded, as it in fact was, on the lessee's default in the payment due on November 19th for the half month ending December 4th. It had been agreed between the lessee and defendants' agent, Donald, that this payment should be made on November 30th, but it was not paid on that day. In the absence of a custom or agreement to the contrary, and none appears, it was the lessee's duty to tender the payment to Donald at his place of business in Mobile; and its failure to do so was a default for which rescission could have been made at that time. In so declaring we do not overlook the lessee's contention that the lessors' repeated acceptance of charter money installments, without objection or warning, after the dates when they were strictly due, was such a waiver of the lessors' right of rescission as to suspend its future exercise in the absence of either a general warning that strict payment would thereafter be insisted upon, or an actual demand followed by refusal or failure to pay. That contention is based upon the soundest principles of law and justice. But we think it is clear that the express agreement in this case that the overdue installment should be paid on November 30th was, in effect, a demand for payment on that date within the spirit of the rule above stated.

So far, then, as this installment was concerned, its payment on December 1st to Donald, who had already been discharged from the lessors' service in this behalf, and who was without authority to bind them in any way, did not prevent the rescission of the contract, notice of which was on that day given to the lessee by the lessors' new agents, Bestor & Young; for the mere acceptance by the lessors of this installment, which was overdue, was not inconsistent with their right of rescission for its delay. Brooks v. Rogers, 99 Ala. 435, 436, 12 So. 61.

But on December 4th--the first day of the new period ending on December 19th--the lessee paid to the ex-agent, Donald, the full amount of the charter money in advance for that period. Donald had no authority to collect this payment, and his recognition of the charter contract as still existing could not bind the lessors. Nevertheless, when he remitted this payment to the lessors, with an explicit statement that it was paid and accepted as for a new period of extended service, but two alternatives were open to them. They were bound to reject the payment entirely, or to accept it as made.

"The general rule is that, when a party indebted to the same person on more than one account makes a partial payment, he has the unqualified right to direct its application to one debt in preference to the other. The payment is voluntary, and the debtor may declare the terms upon which it is made, and the creditor must accept them, or reject the payment. If he accepts the payment, he takes it cum onere; therefore it is that, if the debtor pay with one intent

which is known or communicated to the creditor, and the creditor receives with another intent, the payor must prevail." Pearce v. Walker, 103 Ala. 250, 252, 15 So. 568.

It can make no difference in the application of this...