Israel v. Luckenbach SS Co.

• Decision Date: 09 February 1925
• Docket Number: No. 173.,173.
• Citation: 6 F.2d 996
• Parties: ISRAEL et al. v. LUCKENBACH S. S. CO., Inc.
• Court: U.S. Court of Appeals — Second Circuit

6 F.2d 996 (1925)

ISRAEL et al. v. LUCKENBACH S. S. CO., Inc.^*

No. 173.

Circuit Court of Appeals, Second Circuit.

February 9, 1925.

Carter, Carter & Phillips, of New York City (Peter S. Carter and Robert Phillips, both of New York City, of counsel), for appellant.

Burlingham, Veeder, Masten & Feary, of New York City (Roscoe H. Hupper and William J. Dean, both of New York City, of counsel), for appellees.

Before ROGERS, MANTON, and HAND, Circuit Judges.

MANTON, Circuit Judge.

The appellant, a steamship company, on October 13, 1917, contracted to transport 1,500 tons of coffee from New York to Havre, at a stipulated freight rate. It failed to transport 1,048 tons contracted for October-November, 1917, but gave notice of the cancellation of this contract November 15, 1917. The question presented by this appeal is whether it lawfully canceled the contract. In its answer to the libel, it pleaded conditions contained in the contract. It alleged that, on account of the contingencies happening as embraced within the terms of these conditions of the freight contract, the appellant was unable to carry out its contract to transport the coffee; that on account of its steamers being lost, damaged, and commandeered it was prevented from the fulfillment of the terms of the freight contract.

Terms of the contract are as follows: "This contract is accepted subject to the conditions specified in line bill of lading, and is further conditional upon the continuance of the steamship company's service and the sailing of its steamers. Carriers shall not be liable for any loss, damage, or delay resulting directly or indirectly from war or hostilities between any powers."

And the following: "And is further conditional upon the continuance of the steamship company's service and the sailing of its steamers, and if at any time in the judgment of the steamship company conditions of war or hostilities, actual or threatened, are such as to make it unsafe or imprudent for its vessels to sail, the sailing of any vessel or vessels may be postponed or canceled, and in that event the steamship company may at its option cancel this contract, and shall be relieved thereafter from any liability hereunder, except to return to the shippers whatever cargo may have already been received under this contract."

On October 13, 1917, the federal government, acting through the United States Shipping Board, gave notice to the appellant that all ships registered and controlled under the laws of the United States (this included appellants' ships) were commandeered on October 15, 1917. On September 13, 1917, the Edgar F. Luckenbach and the Julia Luckenbach, appellants' vessels, were requisitioned for immediate military purposes. The appellant chartered some ships and owned others. All ships over 2,500 tons were commandeered by the government, and this, of course, included both chartered and owned vessels. There is evidence that some of their vessels were sunk by the enemy. It is argued from all this that the appellant was prevented from the continuance of its business, including the transportation of the coffee contracted to be transported. The general commandeering order was given October 13, 1917, and became effective October 15, 1917. Thereafter it had no sailings on its own account. Under clause 5A of the order commandeering ships, it was provided:

"(a) Owners who are operating their steamers in the regular trade are for account of the government and as they have been doing for themselves until they receive further instructions. (b) The owners whose steamers are chartered to others may apply to the Shipping Board for instructions regarding the future employment of the said steamers."

Thereafter the operation of the vessels was under the control of the government as to sailings and cargoes to be carried. After the appellant's fleet was taken over by the government through the commandeering order, one cargo of coffee was carried in November, 1917, but that was a government operation. Efforts were made by the appellant to complete the transportation of the balance of the coffee contracted for by appealing to the Shipping Board, and this failed. A letter of cancellation was sent to the appellees on November 16, 1917, which read as follows:

"As a result of the loss of two of our steamers by enemy submarines, and serious damage to two others of our steamers in the war zone, our freight service from New York to Havre has been interrupted, and we herewith notify you, under the following clause contained in the contract: `This contract is accepted subject to conditions specified in line bill of lading and is further conditional upon the steamship company's service and the sailing of the steamers. Carriers shall not be liable for any loss, damage, or delay resulting directly or indirectly from war or hostilities between any powers. Luckenbach S. S. Co., Inc., ____,' that we will, therefore, be unable to provide steamer space on our steamers for the cargo mentioned, and that the cargo is thereby canceled."

It is argued that the letter of cancellation did not state the reasons which under the terms of the freight contract would legally excuse the appellant from performance. In other words, it is said that the letters limited the reasons for the refusal to carry the balance of the cargo, and we are referred to the authority of Luckenbach Steamship Co., Inc., v. W. R. Grace & Co., Inc. (C. C. A.) 267 F. 676. In that case the letter of the steamship company placed its refusal to perform the contract on the grounds of restraint of princes only, and at the trial another excuse was offered. By the letter of November 16th attention is called to the shipper of the conditions specified in the line bill of lading, as well as to specific conditions therein expressed as to the continuance of the steamship company's service and the sailing of their steamers. It is clear from the language of the conditions above quoted that the contract would be carried out during the continuance of the appellant's service. The parties acted upon the assumption that the plaintiff's ships would continue to be available, and the record shows that some ships were lost, others were damaged, and the balance commandeered by the government. It thus appears that the entire fleet of the appellant was made unavailable for the performance of this contract.

Where parties enter into a contract on the assumption that some particular thing essential to its performance will continue to exist and be available for that purpose, and neither agrees to be responsible for its continued existence and availability, the contract must be regarded as subject to an implied condition that, if before the time for performance and without the default of either party the particular thing ceases to exist or be available for the purpose, the contract shall be dissolved and the parties excused from performing it. Texas Co. v. Hogarth Shipping, 256 U. S. 619, 41 S. Ct. 612, 65 L. Ed. 1123; Quina Export Co. v. Seebold (C. C. A.) 287 F. 626; Allanwilde Corporation v. Vacuum Oil Co., 248 U. S. 377, 39 S. Ct. 147, 63 L. Ed. 312, 3 A. L. R. 15. In the last case clearance on sailing vessels bound for the war zone was refused, and made it impossible for the ship to clear. There was no provision in the contract, excepting "the restraint of princes, rulers, and peoples." The court held that the vessel was prevented from making this voyage by the interdiction of the government, and that such impediment excused performance. In The Isle of Mull (C. C. A.) 278 F. 131, it was held that, where the availability of the vessel came to an end by requisition of the government under circumstances beyond the control of the parties, the contract is prima facie regarded as dissolved.

The conditions that prevented the appellant from carrying all of the 1,500 tons of coffee were pleaded as a defense and were established by ample proof at the trial, for it was shown that their ships were not available and it was prevented by reason of these conditions from carrying out the contract. These facts proved the involuntary discontinuance of the steamship company's service and the sailing of its steamers by reasons of condition of war or hostilities. These were actual conditions. They were sufficient to justify the decision on the part of the appellant that it was not safe for its vessels to sail, and this justified the cancellation of the contract. It relieved the appellant from any liability thereunder, except to return to the shippers whatever cargo may have been already received under the contract. It is established that an effort was made under subdivision 5A of the order commandeering the vessels to carry the cargo, and this was refused.

Nor may the appellant be held responsible because it failed to show that it could not secure ships to carry the cargo, or because of its failure to show an attempt to do so was made. One witness testified that at this time all of the ships were gradually being commandeered from all the companies for war purposes, and he was asked:

"Q. And that you say was why the total amount of goods was not carried? A. Absolutely."

The libel alleges that the appellees were "unable to secure other means of transportation for said 1,048 tons of coffee," and sought recovery in this suit for the damages sustained accordingly. But we think that, in view of the clauses of the freight contract referred to, sufficient reasons appeared to justify the appellant's cancellation of the contract. For these reasons, the decree is reversed.

Decree reversed.

ROGERS, Circuit Judge (concurring).

I concur in the result reached in the above opinion. The contract between the parties consists, as the court below found and as this court holds, in three separate contracts, one dated on October 3, 1917, another dated on October 10, and the other dated on October 16, all in the same year. Those contracts show ...