THE WILDWOOD, 10070.

• Decision Date: 23 February 1943
• Docket Number: No. 10070.,10070.
• Parties: THE WILDWOOD. AMERICAN FOREIGN S. S. CORPORATION et al. v. AMTORG TRADING CORPORATION et al.
• Court: U.S. Court of Appeals — Ninth Circuit

133 F.2d 765 (1943)

THE WILDWOOD.

AMERICAN FOREIGN S. S. CORPORATION et al. v. AMTORG TRADING CORPORATION et al.

No. 10070.

Circuit Court of Appeals, Ninth Circuit.

February 23, 1943.

Lord, Day & Lord and George deForest Lord, all of New York City, Hayden, Merritt, Summers & Bucey, of Seattle, Wash., Gerald H. Bucey, of New Orleans, La., and Maurice Finkelstein, of New York City, for appellants.

Bogle, Bogle & Gates, Edward G. Dobrin, and Claude E. Wakefield, all of Seattle, Wash., and Charles Recht, of New York City, for appellees.

Before DENMAN, HANEY, and HEALY, Circuit Judges.

DENMAN, Circuit Judge.

This is an appeal in admiralty from a decree of the district court holding appellant, American Foreign Steamship Corporation, hereinafter called Carrier, liable to appellee, Amtorg Trading Corporation, hereinafter called Shipper, (1) for non-performance of Carrier's agreement to carry from the port of Jersey City, New Jersey, to the port of Petropavlovsk or the port of Vladivostok, Siberia, in Carrier's American Steamer Wildwood, miscellaneous cargo, largely copper bullion, delivered to the Carrier by the Shipper and stowed on the Wildwood by the Shipper, and (2) for damage to cargo while on the Wildwood.

(1) The bills of lading, issued on February 20, 1940, provided for a voyage from Jersey City to Vladivostok. The Wildwood had proceeded on that voyage to a point between Balboa, Panama, and Honolulu, Hawaii, when, on March 18th, the Carrier and Shipper, for an added consideration, made an agreement that the vessel should go to and discharge her cargo at Petropavlovsk or, at the Shipper's option, discharge part of the cargo there and proceed to Vladivostok to discharge the balance. The Shipper exercised its option in a letter to the Carrier of March 27th, stating the Wildwood was to "discharge part of the cargo at Petropavlovsk and will proceed to Vladivostok to discharge the balance." The agreement further provided that "all other items and conditions are in accordance with the original bookings and bills of lading."

The vessel arrived at and sailed from Honolulu. Later, on March 27th, the Carrier learned that the British were asserting for the first time in the northern waters of the Pacific Ocean their right of "contraband control" of war material cargoes in neutral vessels which they suspected ultimately might reach Germany. On March 15th British naval vessels had seized the neutral Russian steamer Mayakovsky, also with a cargo of copper bullion, on a voyage from San Francisco, also to Vladivostok via Petropavlovsk, while that steamer was in the North Pacific some 100 miles off Tsugaru Strait, and taken the vessel to Hong Kong some 1700 miles from Vladivostok.

In such a situation the Carrier is required to consider, for the protection of the Shipper's cargo and of his own vessel, the provisions of the bills of lading for abandoning or deviating from the agreed voyage. Clause 4 of the bill of lading provides,

"In any situation whatsoever or wheresoever occurring * * * which in the judgment of the carrier or master is likely to give rise to capture, seizure, detention, damage, delay or disadvantage to or loss of the ship or any part of her cargo, or to make it unsafe, imprudent, or unlawful for any reason to proceed on or continue the voyage or to enter or discharge the goods at the port of discharge, or to give rise to delay or difficulty in arriving, discharging at or leaving the port of discharge * * *" the master may "proceed or return, directly or indirectly, to or stop at such other port or place whatsoever as he or the carrier may consider safe or advisable under the circumstances * * *."

Carrier and Shipper properly agree that "such a clause must be given a reasonable interpretation, and the discretion conferred may not be exercised in an arbitrary or unreasonable manner, nor without substantial grounds, nor will good faith alone suffice."

On March 28, 1940, the Carrier radioed to the Wildwood's captain to bring the Wildwood to Seattle, Washington, and notified the Shipper of the abandonment of the voyage, as warranted by Clause 4 of the bill of lading. She proceeded to Tacoma, Washington, and there returned the cargo to the Shipper.

The testimony establishes that when the above right to deviate or abandon the voyage was created in the Carrier, Britain, being at war with Germany, though not with the United States or Russia, was exercising on the Atlantic and Mediterranean a war practice of "contraband control" over the vessels of the United States and other neutrals. Many such neutral vessels — over 100 American owned — had been seized in Atlantic and Mediterranean waters on the claim that they carried cargoes owned by Germany, and taken to British ports for final determination of their character. However, no contraband control of any kind had been claimed or exercised anywhere in Pacific Ocean waters, save on January 15, 1940, in the peculiar distinguishing incident, later discussed, of the seizure by the British of the Russian vessel, the Selenga, off Formosa in the South China Sea, on a voyage from Manila to Vladivostok, and her taking to the nearby port of Hong Kong.

Both the Carrier and the Shipper knew when Clause 4 was agreed upon that the New Jersey-Petropavlovsk-Vladivostok voyage was not as free of likelihood of seizure by a belligerent as in peace time. The parties are agreed that Clause 4 empowered the Carrier to abandon that voyage only if it was a reasonable inference from facts chargeable to the Carrier's knowledge when the voyage contract was made and the voyage later abandoned, that the hazard of such seizure had become substantially greater during the voyage than anticipated by the parties at its beginning.

This agreement as to the Carrier's discretion to abandon the voyage gives no more power of abandonment than exists in the absence of Clause 4. The right to exercise such discretion to abandon has long been established in American and British decisions.

In The Kronprinzessin Cecilie, 244 U.S. 12, 37 S.Ct. 490, 61 L.Ed. 960, that German vessel had sailed from New York bound to Plymouth, England. Because of grave apprehension of war between England and Germany, she turned back to New York before war was declared. In holding the right to abandon was properly exercised, the court declared, (page 24 of 244 U.S., page 492 of 37 S.Ct., 61 L.Ed. 960), "We are wholly unable to accept the argument that although a shipowner may give up his voyage to avoid capture after war is declared, he never is at liberty to anticipate war. In this case the anticipation was correct, and the master is not to be put in the wrong by nice calculations that if all went well he might have delivered the gold and escaped capture by the margin of a few hours."

The reasonableness of the carrier's or master's apprehension of the increased hazard is not determined by subsequent events. In The Styria v. Morgan, 186 U.S. 1, 22 S.Ct. 731, 46 L.Ed. 1027, the Styria's master, with the concurrence of the owner's agent, having just loaded a cargo of sulphur consigned to New York, discharged it at its Sicilian loading port on learning of the war between the United States and Spain and that sulphur was on the Spanish contraband list. The master was charged with knowledge of news reports to the effect that there were negotiations with Spain to permit the free carriage of sulphur. It later turned out that the reports were true and the negotiations successful. Not a single sulphur ship was seized by Spain during the entire war (page 7 of 186 U.S., page 736 of 22 S.Ct., 46 L. Ed. 1027.) Nevertheless, the court held proper the discharge of the sulphur and that the action taken could not be judged in the light of "knowledge gained after the event" or "knowledge of subsequent events" (pages 13, 22 of 186 U.S., pages 736, 739 of 22 S.Ct., 46 L.Ed. 1027), but that the court must put itself in the position of the actors in the transaction. So tested, the master's conduct was held to be "a reasonable exercise of judgment." What those concerned have a right to demand is "not an infallible, but a deliberate and considerate,

judgment," (pages 9, 10 of 186 U.S., page 734 of 22 S.Ct., 46 L.Ed. 1027).

Similarly in Nobel's Explosives Co. v. Jenkins, (1896) 2 Q.B. 326, 8 Aspinwall (N.S.) 818, the abandonment of the voyage was justified because the captain had a "reasonable and well founded belief" of a danger of capture. The carrier's right is excellently expressed in the recent case of The George J. Goulandris, D.C.Me.1941, 36 F. Supp. 827, 834, where a "reasonable apprehension" of seizure is described as arising when "the degree of danger gets beyond the category of rumored or fanciful danger and may be properly called actual and substantial."

In all of the following cases the abandonment of the voyage or turning back of the vessel, because of the increase of hazard over that existing at the time the agreement to carry was made, was held justified. Atlantic Fruit Co. v. Solari, D.C.S.D. N.Y.1916, 238 F. 217, 224; M. A. Quina Export Co. v. Seebold, 5 Cir., 1923, 287 F. 626; Israel v. Luckenbach S. S. Co., 2 Cir., 1925, 6 F.2d 996, 997, 998, 999, 1000; Compagnie de Trefileries v. F. & C. S. S. Co., Ltd., 1920, 192 App.Div. 709, 183 N.Y.S. 169, affirmed 233 N.Y. 596, 135 N.E. 932. Cf. Allanwilde Tr. Corp. v. Vacuum Oil Co., 248 U.S. 377, 39 S.Ct. 147, 63 L.Ed. 312, 3 A.L.R. 15.

The district court found that the British seizure of the Russian ship Mayakovsky, the first in North Pacific waters, disclosed to the Carrier no reasonable apprehension of increased hazard over that contemplated on March 18th, when the agreement was made relative to proceeding to Vladivostok via Petropavlovsk and discharging part of the cargo at the latter port. It found that the abandonment of the voyage was not warranted by the news of the seizure of the Mayakovsky.

While an admiralty appeal receives a trial de novo, we accord respect to the...