Isthmian Steamship Co. v. California Spray-Chem. Corp.

• Decision Date: 26 January 1962
• Docket Number: No. 16812.,16812.
• Citation: 300 F.2d 41
• Parties: ISTHMIAN STEAMSHIP COMPANY, a Corporation, Appellant, v. CALIFORNIA SPRAY-CHEMICAL CORPORATION, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

300 F.2d 41 (1962)

ISTHMIAN STEAMSHIP COMPANY, a Corporation, Appellant, v. CALIFORNIA SPRAY-CHEMICAL CORPORATION, a Corporation, Appellee.

No. 16812.

United States Court of Appeals Ninth Circuit.

January 26, 1962.

McCutchen, Doyle, Brown & Enersen, by Russell A. MacKey and Bryant K. Zimmerman, San Francisco, Cal., for appellant.

Hall, Henry, Oliver & McReavy, by Lyman Henry and Stephen McReavy San Francisco, Cal., for appellee.

Before POPE, BARNES, and HAMLIN, Circuit Judges.

On petition for rehearing appellant filed a vigorous and extensive¹ brief. It raises questions regarding all of the main issues which were before the court on the original consideration of the appeal. We granted a rehearing, and the matter was again argued at length, and we again affirm the judgment below.

1. Validity of the Lighterage Clauses.

This court's opinion rested, essentially, upon the reasoning embodied in the trial court's decision. Both decisions hold that appellant cannot, by contract, avoid liability for negligent injury to cargo when such injury occurs before the cargo is delivered to a fit and proper wharf. This result stems from an application of Section 1 of the Harter Act, 46 U.S.C. § 190.

The Harter Act was adopted

"* * * to remedy abuses which had arisen through the efforts of shipowners engaged in common carriage to limit unreasonably their obligations as carriers of goods. Sections 1 and 2 (46 U.S.C.A. §§ 190, 191) forbid them to relieve themselves from certain responsibilities incident to their public calling, even by contract with the shippers * * *." (Koppers Connecticut Coke Co. v. James McWilliams Blue Line, 2 Cir. 1937, 89 F.2d 865 at 866.)

In pertinent part, Section 1 of the Act provides:

"It shall not be lawful for the manager, agent, master, or owner of any vessel * * * to insert in any bill of lading * * * any clause, covenant, or agreement whereby it, he, or they shall be relieved from liability for loss or damage arising from negligence, fault or failure in proper loading, stowage, custody, care or proper delivery * * *. Any and all words or clauses of such import inserted in bills of lading * * * shall be null and void and of no effect."

It would seem, then, that any attempt by the carrier to avoid liability for losses arising before delivery must fail. Once proper delivery has been made, however, the carrier's liability, as far as the Harter Act is concerned, is at an end. It is, therefore essential to determine what a proper delivery is, and when such delivery is completed. The court below and this court on appeal held that a proper delivery, as defined by general maritime law, occurred when the cargo was deposited upon a fit and proper wharf. Appellant contends that there was no common law or maritime rule requiring such delivery and chides this court for discovering such a rule relying upon a dictum in Tan Hi v. United States, N.D.Cal.1950, 94 F.Supp. 432.

It is true this court did cite and rely upon Tan Hi, but Tan Hi in turn relies upon numerous cases, only one of which is cited or discussed by appellant. These cases establish the existence of a common law (maritime) obligation on the part of the carrier to deposit or "land" the goods on a wharf. As stated in The Mary Washington, 16 Fed. Cas. page 1006, No. 9,229, "The duty of a carrier by water is not fulfilled by transportation from port to port. The goods must be delivered, or at least landed * * *." And in The Eddy, 1886, 5 Wall. 481, 495, 72 U.S. 481, 495, 18 L.Ed. 486, it was said: "Where the contract is to carry by water from port to port an actual delivery of the goods into the possession of the owner or consignee, or at his warehouse, is not required in order to discharge the carrier from his liability. He may deliver them on the wharf * * *." (Emphasis added.) In The Titania, 2 Cir. 1904, 131 F. 229, 230, the court noted that: "In order to make a valid delivery, which relieves the carrier from liability, it is necessary to show that the goods in question were landed on the wharf * * *." (Emphasis added.) See also Vose v. Allen, 28 Fed.Cas. page 1283 No. 17,006; The Illinois, 29 Fed.Cas. page 259, No. 17,185; The Grafton, 10 Fed.Cas. page 907, No. 5,656 aff'd. 10 Fed.Cas. page 905, No. 5,655 and 2 Parsons, On Contracts, 5 ed. 1886, pp. 190-193. We also note that the dictum in Tan Hi was quoted at length, with approval, in Norjac Trading Corp. v. The Mathilda Thorden, E.D.Pa.1959, 173 F.Supp. 23. Indeed, the carrier's general maritime obligation not only required it to deposit the goods upon a fit wharf, but to segregate the consignee's goods from the general cargo and to give the consignee notice of their arrival. (See e. g., The Titania, 2 Cir. 1904, 131 F. 229.) There is, then, strong support for the existence of a "common law" or maritime rule requiring delivery to a wharf unless the bill of lading specified elsewhere. Appellant's assertion that this rule was not urged by appellee and was not briefed is patently incorrect.² See Calderon v. Atlas S. S. Co., 1898, 170 U.S. 272, 18 S.Ct. 588, 42 L.Ed. 1033, and The Delaware, 1896, 161 U.S. 459, 16 S.Ct. 516, 522-523, 40 L.Ed. 771.

In giving effect to the provisions of a bill of lading, the conditions and circumstances which the evidence proves were known to the parties and contemplated by them in making it, are to be taken into consideration. Pacific Coast Co. v. Yukon Independent Transp. Co., 9 Cir. 1907, 155 F. 29; W. R. Grace & Co. v. Frank Waterhouse & Co., Inc., 9 Cir. 1920, 264 F. 422. We believe that here the parties understood that the obligation created between them required delivery to the wharf. No receipt was asked for nor obtained by the carrier from the lighterman. But when the goods left the lighters for customs, a receipt was then obtained by the carrier. Again, when the lighter sank, it was the carrier who was notified of the loss. (Answer, Interrog. 18(a) (1).) An inspection of the lighter was made, for the respondent, both prior to and immediately following the loading of the lighter, and after the breaking loose and first discharge "onto Quay 58." (Ans. to Interrog. 16.)

Admittedly every carrier is responsible for the discharge of cargo from the vessel to a safe place. The Tangier, 1859, 23 How. 28, 64 U.S. 28, 16 L.Ed. 412. The basic freight rate includes the cost of unloading. Under the facts of this case, in Alexandria, the carrier hired a contractor to do the unloading. That contractor in this case also operated the lighters. Its duty was to deliver to Egyptian Petroleum Storage Company as agent for the Egyptian customs authorities. The carrier paid for the stevedoring which put the cargo onto the lighters. The consignee was notified by the carrier, prior to arrival at Alexandria:

"In view of the congestion existing at present on the petroleum quays, it is materially impossible to deliver your cargo 48 hours after discharge. We would, therefore appreciate it if you could arrange to have your own lighter ready upon vessel\'s arrival to take delivery of this consignment. * * * Failing to make arrangements as above, we would be obliged to charge you with the hire of the lighters after 48 hours of ship\'s discharge." (Emphasis added.) (Exhibits E and F.)

No such lighterage was provided by the consignee. The bill of lading provided (in paragraph 15):

"If the carrier elects to lighter goods in or with lighters or craft operated or controlled by it, the carrier shall have the benefit of all the terms of this bill of lading with respect to such lighterage, and may collect the cost thereof from shipper or consignee." (Emphasis added.)

Thus the carrier contracted under the assumption that there could be lighters used to effect delivery which would be operated or controlled by the carrier prior to delivery. In fact, no charge was made to the consignee until forty-eight hours after deposit by the ship's tackle onto the lighters. Any such charge was "swallowed" in the freight rate charged by the carrier for delivery at Alexandria.

Appellant urges that the forty-eight hour "no charge" is part of the tariff — Exhibit 6, and we accept that statement. The only part of Exhibit 6 printed in the transcript of record on appeal (p. 13) relates to carriage of goods from one quay "where the steamer has effected her discharge," to other quays. That provision is not here applicable.

On the petition for rehearing appellant places great reliance on a case which (with many others) does not appear in its opening brief: W. R. Grace & Co. v. Frank Waterhouse & Co., Inc., supra. That involved the delivery of goods consigned to San Francisco, California, at Seattle, Washington, where they were delayed by a stevedore's strike and damaged. The parties knew there had to be such a transshipment, because San Francisco was not a port of call for the vessel. Alexandria, Egypt, unlike San Francisco, was not "beyond a port of call." Here there was no transshipment, no on-carriage — contemplated on required — beyond the port of call. The port of call here was Alexandria, to which, and no farther, carriage was contemplated by both parties to the contract.

Appellant cites some authority which suggests that the carrier was not invariably required to deliver to a wharf. Thus it is stated in The Tangier (Richardson v. Goddard), 1859, 23 How. 28, 64 U.S. 28, 16 L.Ed. 412, that the carrier "is not bound to deliver at the warehouse of the consignee; it is the duty of the consignee to receive the goods out of the ship or on the wharf." (Id. p. 39.) This dictum, however, does not tell us when, where or how the consignee may be required to "receive goods out of the ship." Indeed the phrase may mean merely that the consignee might in some instances be required to take delivery directly off the ship when it has docked at a wharf. There is nothing in that opinion to indicate that a carrier under the general maritime law and in the absence of a special agreement could terminate his obligation by...