Republic of France v. French Overseas Corporation the Malcolm Baxter, Jr

• Citation: 48 S.Ct. 516,277 U.S. 323,72 L.Ed. 901
• Decision Date: 21 May 1928
• Docket Number: No. 459,459
• Parties: REPUBLIC OF FRANCE et al. v. FRENCH OVERSEAS CORPORATION. THE MALCOLM BAXTER, JR
• Court: United States Supreme Court

277 U.S. 323

48 S.Ct. 516

72 L.Ed. 901

REPUBLIC OF FRANCE et al.

v FRENCH OVERSEAS CORPORATION. THE MALCOLM BAXTER, JR.

No. 459.

Argued April 16, 1928.

Decided May 21, 1928.

Messrs. John M. Woolsey and Mark W. Maclay, both of New

York City, for petitioners.

Messrs. T. Catesby Jones and D. Roger Englar, both of New York City, for respondent.

[Argument of Counsel from page 328 intentionally omitted] Mr. Justice STONE delivered the opinion of the Court.

Petitioners, in July, 1917, shipped a cargo on the schooner Malcolm Baxter, owned by respondent, from New Orleans to Bordeaux, and prepaid the freight. The bill of lading stipulated:

'Prepaid freight is to be considered as earned in shipment of goods and is to be retained by vessel's owner, * * * if there be forced interruption or abandonment of the voyage, at a port of distress or elsewhere.'

In addition there was the usual clause exempting the vessel from 'restraints of princes, rulers, and peoples.' After departure from New Orleans the Baxter developed leaks due to unseaworthiness which caused her to put in at Key West, where she was surveyed. In order to effect the necessary repairs she was towed to Havana, where she was unladen and repaired, remaining there for that purpose until January 14, 1918. Before the completion of the repairs the United States Export Administrative Board put into effect its ruling of Novem- ber 18, 1917, that sailing vessels would not be permitted to clear for points beyond the war zone. This ruling remaining in force when the repairs were completed, the Baxter, being unable to secure a clearance for Bordeaux, took her cargo on board and proceeded to New York, where the petitioners libeled the vessel in the District Court for Southern New York to recover freight money, damages to cargo, and damages for failure to perform the contract voyage from New Orleans to Bordeaux.

Respondent as owner filed a petition for exoneration and limitation of liability and enjoined further proceedings on the libels. Petitioners filed claims in the limitation proceedings, claiming damages as in the original libels, setting up the deviation and the abandonment of the voyage, by reason of the ship's unseaworthiness on sailing.

The District Court denied the petition to limit liability, but allowed the claim for freight money and for damages sustained by petitioners, including damage to cargo. A special master, appointed to take proof of damage, found that the measure of damages was the excess cost of the substituted carriage and incidental expenses, and in the case of goods which could not be sent forward the damage was measured by the difference between the value of the goods at the time when and in the condition in which they should have arrived at destination, and their, value at the place where and in the condition in which they actually were received, less charges saved plus incidental expenses. Final decree was given to the petitioners for the damage as found.

The Circuit Court of Appeals for the Second Circuit upheld the ruling of the District Court denying exoneration and limitation of liability but reversed the judgment, holding there could be no recovery of the prepaid freight or excess cost of transportation over prepaid freight; that the recovery of damages must be limited to actual damages to cargo resulting from unseaworthiness, and the difference between the value of the cargo had it arrived in Bordeaux on a straight voyage on August 16, 1917, the date when the Baxter sailed, and on a voyage leaving Havana January 14, 1918, the date when the repairs were completed and the Baxter was ready for sea. The Malcolm Baxter, Jr., 20 F.(2d) 304.

Both courts below agreed that the Baxter was unseaworthy on sailing, and that respondent failed to exercise due diligence to ascertain her condition before sailing. This was sufficient ground for denying the petition for exoneration and limitation of liability under the Harter Act (Act Feb. 13, 1893, c. 105, 27 Stat. 445 (46 USCA §§ 190-195; Comp. St. §§ 8029-8033, 8035)), and acts permitting limitation of liability to the vessel and pending freight (R. S. §§ 4282-4289 (46 USCA §§ 175, 182-188; Comp. St. §§ 8020-8027)). The correctness of this determination is not raised on the petition here, Federal Trade Commission v. Pacific Paper Ass'n, 273 U. S. 52, 66, 47 S. Ct. 255, 71 L. Ed. 534; but petitioners urge that the Baxter's putting in first at Key West, and later at Havana, must be deemed a voluntary deviation, because due to the negligence of the owner in failing to discover the unseaworthiness and to make the vessel seaworthy before sailing.

Unseaworthiness alone, or deviation caused by it, displaces the contract of affreightment only in so far as damage is caused by the unseaworthiness. The Caledonia, 157 U. S. 124, 15 S. Ct. 537, 39 L. Ed. 644; The Europa, (1908) P. 84; Thorley v. Orchis S. S. Col, Limited, (1907) 1 K. B. 660; Kish v. Taylor, (1912) A. C. 604, 618. But if the deviation here is to be classed with voluntary deviations, respondent may not claim the benefit of the clauses of the bill of landing and is responsible for the cargo as insurer. The Willdomino, 272 U. S. 718, 47 S. Ct. 261, 71 L. Ed. 491; St. Johns Corp. v. Companhia Geral, etc., 263 U. S. 119, 44 S. Ct. 30, 68 L. Ed. 201; Mobile & Montgomery Ry. v. Jurey, 111 U. S. 584, 4 S. Ct. 566, 28 L. Ed. 527; Lawrence v. Minturn, 17 How. 111, 15 L. Ed. 58. And see The Indrapura (D. C.) 171 F. 929. In any case it is contended that respondent's negligent failure to discover the unsea- worthiness of the vessel resulted in the delay which brought her within the operation of the embargo, and that the shipowners are for that reason liable for damages for all the delay, including that immediately resulting from the embargo.

Respondents had purchased the vessel about one month before she sailed. At that time she was unseaworthy, due to a hog or camber in her keel, a structural weakness dangerous to the ship in heavy weather, which later caused the leak and made necessary the repairs at Havana. Following the purchase and before sailing from New Orleans a survey was made by the owner, which appears not to have disclosed her condition, but both courts below agree that the fact of her unseaworthiness could have been discovered by due diligence.

The evidence supports the finding of the court of appeals that the master of the Baxter 'did not leave New Orleans with knowledge that he would have to make port for repairs, and honestly thought he could make the trip in safety and tried unsuccessfully to do so.' The case is therefore not one where the master set sail with the knowledge that the deviation from the voyage, as described in the bill of lading, would ensue, and with the purpose and intent to deviate as in The Willdomino, supra. There the officers of the vessel, under direction of the owner, sailed from Ponta Delgada, bound for New York, all knowing that the supply of fuel was insufficient for the voyage, and intending to take the vessel to North...