Cohn v. United States Shipping Board

• Citation: 20 F.2d 56
• Decision Date: 06 June 1927
• Docket Number: No. 4736.,4736.
• Parties: COHN et al. v. UNITED STATES SHIPPING BOARD et al.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

20 F.2d 56 (1927)

COHN et al. v. UNITED STATES SHIPPING BOARD et al.

No. 4736.

Circuit Court of Appeals, Sixth Circuit.

June 6, 1927.

Elias Gates, of Memphis, Tenn., for appellants.

Edouard F. Henriques, Sp. Asst. in Admiralty to Atty. Gen., of New Orleans, La. (S. E. Murray, U. S. Atty., of Memphis, Tenn., and J. Frank Staley, Sp. Asst. to Atty. Gen. in Admiralty, of Washington, D. C., on the brief), for appellees.

Before DENISON and MOORMAN, Circuit Judges, and WESTENHAVER, District Judge.

WESTENHAVER, District Judge.

This cause is a libel in admiralty based upon alleged breaches of two certain contracts to furnish a ship and transport and deliver goods. Of the libelants, the real parties in interest are Cohn & Ellett, although their agents who made these contracts in their behalf are joined with them. On behalf of the respondents, the real party in interest is the United States Shipping Board Emergency Fleet Corporation, although the United States Shipping Board is also joined. In this opinion all parties will be disregarded except the true parties in interest. For purposes of brevity they will be referred to as libelant and respondent.

A statement of facts somewhat in detail is required in order to understand the questions presented for decision. Under date of February 28, 1920, libelant contracted with respondent for freight space for 80 bales of cotton to be shipped "per S. S. Inspector or substitute, for Bremen, Germany, from New Orleans, La." No date is fixed for the delivery of the cotton to respondent, except as is implied from the words "delivery as required by steamer, prompt delivery." Under date of March 8, 1920, libelant made another contract with respondent for freight space for 300 bales of cotton to be shipped "per S. S. Saccarappa or substitute, for Bremen, Germany, from New Orleans, La." No date was fixed for the delivery of the cotton to respondent, except as implied from the words "delivery as required by steamer, prompt delivery within ten days." The words "within ten days" were added in pencil. Both contracts were made on behalf of respondent by its agent, the J. H. W. Steele Company, Inc. No question is raised as to the authority of the agent.

The two contracts are precisely the same mutatis mutandis. No date is fixed therein for the departure from New Orleans of either steamship or any substitute. No time is fixed within which the cotton was to be delivered at Bremen. The evidence shows that the usual length of time consumed in the ocean voyage between these two ports is 20 to 25 days. Both contracts are made subject to all the clauses and conditions of the ocean bill of lading on which the goods go forward, which bill of lading is also made a part of the contract. Both contracts are made subject to a certain condition reserving the right to postpone or cancel the sailing of any vessel and in that event to cancel the contracts. This reserved right of cancellation has become the basis of one important dispute. The terms of that clause and the circumstances of its asserted exercise will be later stated.

The cotton covered by the first contract was shipped from Memphis by Mississippi-Warrior River Section, United States Railroad Administration, on through bills of lading, giving Bremen, Germany, as destination with freight prepaid. No question is made as to the authority of the Railroad Administration to issue these bills of lading. They are two in number, dated March 6, calling for 82 bales, being evidently the shipment designed for the steamship Inspector. They arrived at New Orleans and were ready for delivery March 30. In the meantime the Inspector had, on March 9, sailed for Bremen. No contention is made by respondent that libelant did not make sufficiently prompt delivery of these 82 bales, or that the subsequent delay complained of was due to such a failure. Libelant now makes no contention that the Inspector was obliged to await the arrival of those bales.

The cotton covered by the second contract was hipped in part from Memphis and delivered in part from warehouses at New Orleans. A total of 115 bales was shipped from Memphis over Mississippi-Warrior River Section, United States Railroad Administration, on similar through bills of lading, giving Bremen, Germany, as destination with freight prepaid. They are three in number, dated March 13. The cotton covered by them arrived at New Orleans and was ready for delivery to respondent's steamship March 24. Another lot, amounting to 185 bales, was delivered from warehouses at New Orleans on the wharf of respondent's agent at various dates between March 18 and 24. For these bales, two separate bills of lading were issued, bearing date March 24, but, under the undisputed evidence, not issued and delivered and freight paid until May 13. All of these bales, from the time of their arrival at New Orleans for delivery on respondent's wharf, were ready to be handed over to respondent at its pleasure.

When the Inspector sailed, the steamship Saccarappa was in New Orleans, assigned to sail on the Bremen route. She had arrived and docked March 6. She was taken off this service March 26, and put on a berth for Bordeaux-Dunkirk, and sailed on that route April 8. Thus it appears that all the cotton, except 82 bales, had arrived at New Orleans and was at the disposal of the respondent two days at least before the Saccarappa was withdrawn from the Bremen route, and that as to the 82 bales they had arrived and were ready for delivery eight days prior to such sailing. At the time the Saccarappa was so withdrawn, respondent had no other steamer available as a substitute, and no prospect of getting one for an indefinite period in the future. In point of fact, the steamship next obtained by the respondent was the Newburgh, which did not leave Norfolk, Va., until April 26, and did not arrive in New Orleans until May 6.

The entire lot of 382 bales was loaded on the Newburgh between May 10 and May 18. At the time the cotton was so loaded, the Newburgh was not in condition to put out to sea. Upon her arrival it was discovered that substantial repairs were necessary in order to put her in a seaworthy condition. No objection was made by libelant to the loading of the cotton at this late date. It is claimed by respondent that, when such loading took place, it believed, with good reason, that the repairs could be made contemporaneously and the vessel gotten ready for the voyage within a reasonable time. However, on May 18, the machinists' union in New Orleans began a strike, which prevented the completion of these repairs until the latter part of July, and even prevented the unloading of the cotton. As soon as the strike was broken, the repairs were promptly completed, and on August 2 the Newburgh sailed, and on August 26 arrived at Bremen. In the interval between May 1, the approximate date when the cotton would have arrived at Bremen if the Saccarappa had sailed as contemplated, the market price of cotton had heavily declined, both in the Bremen and the New Orleans market.

Libelant's action is to recover damages for this delay. The chief item of damage is this decline in market value. Libelant's theory is that the two freight engagement contracts contemplated reasonably prompt, if not an immediate, sailing of the Saccarappa or some substituted ship, and a reasonably prompt transportation and delivery of the cotton, and that these contract obligations were broken, first, by a wrongful cancellation of the sailing of the Saccarappa without provision within a reasonable time of a substitute ship; and, second, that the respondent wrongfully loaded the cotton on the Newburgh while she was in an unseaworthy condition, and under such circumstances that the respondent knew or should have known that she could not be put in a condition to sail within a reasonable time. The defenses, and the facts on which they are rested, will appear in the course of this opinion. We shall discuss at length such propositions only as are deemed necessary to a disposition of the case.

1. Respondent excepted to the libel on the ground that the United States Shipping Board was improperly made a defendant. It urges that this board is a commission and agency of the United States, and is not subject to suit. This exception was overruled below, apparently because of a failure to distinguish between the Shipping Board and the United States Shipping Board Emergency Fleet Corporation. In our opinion, the United States Shipping Board is not subject to suit, and the exception should be sustained.

2. The respondent, in its answer, makes the point that the United States Shipping Board Emergency Fleet Corporation is not subject to suit, because it was designated by the United States Shipping Board as a division for operating vessels owned by the United States, and was functioning, not in its corporate capacity, but as a governmental agency. Neither in counsel's brief, nor in oral argument, was this point stressed, nor is any question raised as to the jurisdiction of the District Court in which the libel was filed. It has been held in a long series of cases, both on contract and on tort, that the Emergency Fleet Corporation is subject to suit and liable for tort and breaches of contract as are other private corporations.¹

3. Upon the merits, the controlling question turns on the obligation, if any, imposed by the two freight engagement contracts upon respondent to ship the cargo on the Saccarappa, or some substitute ship, with reasonable promptness. This involves an inquiry into the nature of the contract obligation entered into by the parties and the excuses advanced by respondent for its withdrawal of the Saccarappa from the Bremen route and its failure to provide a substitute ship within a reasonable time. As already stated, the contracts bear no date when either the Inspector or the Saccarappa would sail, or within which any ship substituted for them would sail. Hence, except for...