The Sarnia

Decision Date14 December 1921
Docket Number44.
Citation278 F. 459
PartiesTHE SARNIA. [a1]
CourtU.S. Court of Appeals — Second Circuit

The libelant is a citizen of the republic of Portugal and a resident of the city of Lisbon therein. The libel was filed against the steamship Sarnia, which is a general ship engaged as a common carrier of merchandise for hire between the port of Lisbon, in Portugal, and the port of New York.

The libel alleges that on November 4, 1915, the libelant purchased from the King Motor Company, one eight-cylinder five passenger King touring car, one eight-cylinder King chassis, and one case of advertising matter to be forwarded to the libelant at Lisbon; that on December 21, 1915, the King Motor Car Company by their agents shipped and placed on board the steamship aforesaid, then lying at the port of New York and bound for the port of Lisbon, the aforesaid automobiles and advertising matter in good order and condition to be carried by the said ship under deck to Lisbon, and there to be delivered in as good order and condition as when shipped to the libelant or his assigns in consideration of the payment of the freight and in accordance with the valid terms of the bill of lading; that on December 23, 1915, the ship sailed, having on board the freight above referred to, but that it was not stowed under deck, but was wrongfully and improperly loaded on the deck of the steamer that on January 19, 1916, the steamer arrived at Lisbon and made delivery of the shipment above described, but not in like good order and condition as when shipped, but was seriously damaged by water, and through the fault and negligence of the ship, her owners and charterers in respect of the loading, stowage, custody, and care of the shipment as a result of which the property became a total loss. The libelant alleged that he had been consequently damaged in the sum of $2,700, and that no part thereof had been paid although the same had been duly demanded.

The Sarnia Steamship Corporation, claimant of the ship, put in an answer in which it admitted and alleged that the freight above described was received and loaded on the vessel in apparent good order and condition to be transported and delivered to libelant in accordance with the terms of a certain bill of lading issued to the shipper, which had been previously signed by the master acting in behalf of the charterer, and that the shipper agreed with the charterer that the cases containing the touring car and chassis should be transported on the deck. It admits that the two cases above mentioned were stowed on the deck as agreed with the shippers, and that the cases containing the advertising matter was stowed under deck, and that all this was in accordance with a specific agreement therefor. It admits that at the time of delivery the two cases carried above deck were in a damaged condition, because of heavy seas which boarded the steamship in the course of a heavy storm and broke the cases and did much damage to the vessel itself. The answer, as a further defense, relied on the terms of the bill of lading hereinafter referred to in the opinion.

The court below has found as a fact that it was not proven that the bill of lading was issued before the receipt of the goods on the dock. He also held that such a bill of lading as was issued conclusively imported under-deck stowage, and that the contract was breached by putting the machines on deck. He also held that this breach did not avoid the valuation clause, contained in the bill of lading, which reads as follows: '1. It is also mutually agreed that the value of each package receipt for as above does not exceed the sum of one hundred dollars ($100) unless otherwise stated herein on which basis the rate of freight is adjusted.'

The libelant obtained a decree in the court below in the sum of $200, with costs amounting to $66.35.

Harrington, Bigham & Englar, of New York City (Oscar R. Houston, of New York City, of counsel), for appellant.

Hunt, Hill & Betts, of New York City (John W. Crandall and H. Victor Crawford, both of New York City, of counsel), for appellee.

Before ROGERS, MAYER, and MACK, Circuit Judges.

ROGERS Circuit Judge (after stating the facts as above).

This suit is brought on the part of the shipper to recover damages for injury to the goods shipped, arising from their wrongful stowage above deck, whereas they should have been carried under deck.

Where goods are shipped under a clean bill of lading the obligation is that they are to be put under deck, unless there is an express written agreement to the contrary or a custom to the contrary is proven. The Water Witch, 1 Black, 494, 17 L.Ed. 155; The Kirkhill, 99 F. 575, 39 C.C.A. 658; The New Orleans (C.C.) 26 F. 44; The Gran Canaria (D.C.) 16 F. 868; Two Hundred and Sixty Hogsheads of Molasses, 24 Fed.Cas. 445, No. 14,296; Vernard v. Hudson, 28 Fed.Cas. 1162, No. 16,921.

But as silence in a bill of lading as to stowage is not an express contract to carry under deck the shipowner may prove an agreement to carry on deck where a claim for loss is made. The Delaware v. Oregon Iron Co., 14 Wall. 579, 20 L.Ed. 779. It was attempted in the court below to prove that there was an agreement that the shipment might be carried above deck, but the proof offered of such an agreement was not sufficient, and the court found, and we have no disposition to reverse the finding, that no such agreement was made.

This court, therefore, is confronted in this case with a question of law, which is both interesting and important. The question is this: When a shipowner issues a bill of lading which calls for a shipment under deck, and then carries the goods on deck, is his breach of the contract of shipment such as to deprive the shipowner of the benefit of the valuation clause? In the court below the view was taken that there was a plain breach of contract, in that the goods had been stowed above deck, but that this deviation did not vitiate the valuation clause, by which the parties had agreed that the motor cars for purposes of shipment were to be deemed worth $100 apiece on which basis the rate was adjusted. The general rule undoubtedly is that, if the shipowner commits a breach of the contract of affreightment which goes to the essence of the contract, he is not entitled after such breach to invoke the provisions of the contract which are in his favor. We are to inquire whether the valuation clause constitutes an exception to the general rule.

But it is urged that the question can hardly be regarded as an open one in this court, in view of the decision in Calderon v. Atlas Steamship Co., 170 U.S. 272, 18 Sup.Ct. 588, 42 L.Ed. 1033. In that case goods were shipped from New York to Savinilla on the steamer Ailsa. The goods were not delivered when the ship arrived at destination, but were carried back to New York and then reshipped by the carrier on the steamer Alvo, which was lost at sea in a hurricane. The bill of lading contained a clause designed to limit the liability of the carrier to $100 per package. It was urged that the final loss of the goods was due to hurricane, an extraordinary sea peril, and that there was no liability as the bill of lading exempted from liability from perils of the sea; and it was further contended that, if a liability existed, it could not exceed $100 per package because of stipulations in the bill of lading, as a value in excess of $100 per package had not been disclosed, nor any agreement made at the time of shipment for the payment of freight at an extra rate. The case arose in the Southern district of New York and was heard before District Judge Addison Brown. He held that the case involved the principle of deviation, and that in marine transportation deviation made the carrier liable as an insurer, both because of the carrier's violation of the contract and because the deviation avoided the shipper's insurance and he had no opportunity to secure further insurance. The court sustained the validity of the clause as to value and limited the recovery of the cargo owner to the agreed valuation per package, allowing a recovery of $2,900, instead of $5,600, the full value. 64 F. 874.

The case was brought on appeal to this court, which affirmed the decision below. This court, in the opinions rendered, considered at length the question of the validity of the valuation stipulation and sustained its validity, but said nothing as to the phase of the subject now being considered. 69 F. 574, 16 C.C.A. 332. The case was then carried to the Supreme Court, on a writ of certiorari. That court held that the carrier was liable, to that extent agreeing with the courts below; but it reversed the decree, and held the valuation clause invalid, because it stipulated against any liability whatsoever on the part of the carrier where the goods were worth over $100 per package.

The exact question presented in the case now to be decided was not discussed--was not so much as referred to-- in the opinion of the District Court, or in those delivered in this court, or in that of the Supreme Court. In the absence of any allusion to the subject in any of the opinions in the case, and especially in view of the fact that the opinion of this court was reversed, we feel that this court is free to consider the question now as res integra.

In the present case there is no doubt that the valuation clause inserted in the bill of lading was valid at the time it was made. It did not stipulate against any liability whatever if the value of each package exceeded $100, but simply provided that the value of each package did not exceed $100. The leading case in the federal courts as to the validity of such a valuation clause is that of Hart v. Pennsylvania Railroad Co., 112 U.S. 331, 5 Sup.Ct. 151, 28 L.Ed....

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