Mallory SS Co. v. Garfield

• Decision Date: 01 March 1926
• Docket Number: No. 228.,228.
• Parties: MALLORY S. S. CO. v. GARFIELD.
• Court: U.S. Court of Appeals — Second Circuit

10 F.2d 664 (1926)

MALLORY S. S. CO. v. GARFIELD.

No. 228.

Circuit Court of Appeals, Second Circuit.

March 1, 1926.

Burlingham, Veeder, Masten & Fearey, of New York City (John L. Galey, of New York City, of counsel), for plaintiff in error.

Carson & Conrad, of New York City (W. Davis Conrad, John Hunter, and Carl B. Carlton, all of New York City, of counsel), for defendant in error.

Before HOUGH, MANTON, and HAND, Circuit Judges.

MANTON, Circuit Judge.

The original plaintiff in this action sought to recover damages for delay in the transportation of cotton shipped by rail at Stamford, Tex., for carriage to Natick, R. I. It was consigned to it. Four defendants were sued: The United States Shipping Board Emergency Fleet Corporation, the Clyde Steamship Company, the Mallory Steamship Company, and the New York, New Haven & Hartford Railroad Company. The action was removed from the Supreme Court of the County of New York. The complaint alleged that the shipment was made on March 19, 1920, the initial carrier being the Wichita Valley Railway Company; that the cotton was delivered by the railway company to "the defendant Mallory Steamship Company and/or Clyde Steamship Company as agents for the United States Shipping Board Emergency Fleet Corporation, which at all times herein mentioned was the owner and/or manager and operator of the steamship Conotton, * * * upon which said 92 bales of cotton were transported from Galveston to Boston, Massachusetts, en route to Natick, Rhode Island." It is alleged that the cotton was not delivered to the defendant in error until February 14, 1921, but arrived in Boston about July 26, 1920. The delay in the delivery of the cotton resulted in depreciation in its value to the defendant in error and consequent damage.

The answer admitted delivery of the cotton to the railway company and subsequent delivery to "the Mallory Steamship Company and/or Clyde Steamship Company as agents of the Steamship Conotton," as well as its transportation to Boston on that steamship, operated by the Mallory Steamship Company or the Clyde Steamship Company as agents of the United States of America. There is a paragraph of the complaint which alleges "negligent, careless, and unlawful conduct in permitting the cotton to remain undelivered, and a failure to forward or deliver the same to its place of destination with reasonable dispatch." The allegations of negligence are denied. After the commencement of the action, a receiver was appointed for B. B. & R. Knight, Inc., and he was substituted as plaintiff.

The important facts have been stipulated, and are that the Conotton was a merchant ship engaged in merchant service between Galveston, Tex., and Boston, Mass.; that it was operated by the Clyde Steamship Company and/or the Mallory Steamship Company under an agreement with the Shipping Board, known as M. O. 3 form. The delivery of the cotton to the railroad and its transportation to Boston, arriving July 29, 1920, is stipulated, and its failure to go forward until February 10, 1921, when it was delivered to the New York, New Haven & Hartford Railroad Company for shipment to Natick, R. I., where it arrived on February 14, 1921.

Form M. O. 3, referred to, was offered in evidence by the defendant in error, and is an agreement between the United States Shipping Board Emergency Fleet Corporation and the Mallory Steamship Company, managing agent, "herein called the agent." It provides: "The Corporation appoints the agent as its agent for the management and operation and conduct of the business of such vessels as it has assigned or may assign to the agent for such purposes." It is conceded that the Conotton was one of the vessels assigned to the agent.

By the terms of the agreement, the agent agrees to do the work of manning, equipping, and supplying the vessels, and seeing that they are kept in repair, at least as far as ordinary repairs are concerned. The agent neither pays nor advances any of the expenses out of its own money. It is paid by the agent out of the deposit of funds maintained in a national bank in the name of the United States Shipping Board Emergency Fleet Corporation, and all moneys collected by the agent are required to be deposited and are the property of the Fleet Corporation, and subject to check by the treasurer of the corporation, as well as by the agent. The agent is required not to mingle such moneys with its own, and to render a complete account of all moneys received, and to keep separate books of account in manner prescribed and approved by the corporation. The books of the agent respecting the business of the agency must at all times be open to the Fleet Corporation, which may even take possession of them, whenever it deems it necessary for safety or protection.

The corporation reserves the right to prescribe the form of freight contracts and bills of lading, and, if such are issued, they are apparently required to be issued in the name of the Fleet Corporation, for it is expressly provided that, even when the corporation has not prescribed the form of bill of lading, it shall reserve to the Fleet Corporation a lien adequate for its protection. All salvage is for the benefit of the Fleet Corporation. The agent is required to give a bond for the faithful performance of its duty. The agreement may be terminated at will, and then the Fleet Corporation takes control of all the vessels, and collects directly freight moneys and other charges remaining unpaid. Compensation is paid to the agent at the rate of $200 per ship per month; 10 cents per dead weight ton per month of all ships under 5,000 pounds (maximum $450 per ship per month), and smaller amounts for dead weight ton on ships of larger tonnage; and a commission of 10 per cent. of all net profits on an amount up to 50 cents per dead weight ton per month, with larger percentages of the net profit in excess of this amount. The terms of this agreement establish an agency. It clearly appears that the relation existing between the Fleet Corporation and the Mallory Steamship Company was that of agency, with duties and authority fully expressed.

At the trial, it was stated by counsel for the defendant in error that all parties were made defendants in the amended complaint served, because it was desired to take advantage of section 213 of the Civil Practice Act of the state of New York which provides: "Where the plaintiff is in doubt as to the person from whom he is entitled to redress, he may join two or more defendants, to the intent that the questions as to which, if any, of the defendants is liable, and to what extent, may be determined as between the parties."

At the close of the entire case, counsel for the plaintiff was requested to elect as to which of the defendants he desired to hold responsible, and thereupon he elected to hold the plaintiff in error, "because it had been proved that said defendant, acting as principal or as agent for an undisclosed principal, had accepted the shipment as intermediate carrier from the Wichita Valley Railway Company, the initial carrier, and had transported the same to Boston, and on its arrival there had failed to deliver shipment to the next connecting carrier during the period from July 29, 1920, to February 10, 1921." By this election, the Clyde Steamship Company was eliminated.

It is argued that there is evidence in the record indicating that the Clyde Steamship Company operated, maintained, and controlled the Boston pier, and did so as agent of the Mallory Steamship Company. The defendant in error seems to have been aware of the relationship between the Fleet Corporation and the plaintiff in error, for it pleaded the relationship of that agency in the complaint. The learned District Judge submitted the case to the jury upon the theory that liability might be imposed as against the plaintiff in error for tort, and this theory is based upon the failure to forward the cotton with reasonable dispatch. An authorized agent is not liable for breach of a contract which it makes on behalf of the principal, except where the agency is concealed, or where it is contracting as ostensible principal. Aldridge v. Muirhead, 101 U. S. 397, 25 L. Ed. 1013; The Jungshoved (C. C. A.) 290 F. 733; Walker v. Cross, 160 F. 372, 87 C. C. A. 324.

There was no allegation of the complaint which would support the theory of an undisclosed principal. The allegation sets forth the agency of the plaintiff in error, and the contractual relationship of its principal is pleaded and is admitted in the answer. While there are allegations in the complaint advancing claims of negligence, and therefore obligation in tort, still the proof upon which liability is sought to be imposed rests entirely upon the alleged inaction on the part of the plaintiff in error to forward the goods with dispatch from the Boston pier, or, in other words, the delay at the Boston pier is claimed to be an act of negligence. The only contractual relationship existing between the litigants results from the contract of carriage with the initial carrier. It contracted to convey the cotton from the point of delivery by the shipper to the port of destination. It was the duty of the initial carrier and each succeeding carrier to use reasonable diligence to deliver the goods to the succeeding carrier, or at least to make a tender of delivery. The first carrier is the forwarding agent of the owner. It and each succeeding carrier becomes the agent of the owner of the goods to make delivery to the next carrier, and it is incumbent on it, not only to do so to relieve itself from further obligation, but it is a duty which it owes to the owner, and which it has assumed with the acceptance of the goods.

The railroad bill of lading contained nothing to indicate that the Mallory Steamship Company held itself out to the railroad company or to the shipper as principal. It was issued on March 19th, three months before the goods were delivered to the...