United States v. Wessel, Duval & Co.

• Decision Date: 29 September 1953
• Citation: 115 F. Supp. 678
• Parties: UNITED STATES v. WESSEL, DUVAL & CO., Inc. WESSEL, DUVAL & CO., Inc. v. UNITED STATES.
• Court: U.S. District Court — Southern District of New York

115 F. Supp. 678

UNITED STATES v. WESSEL, DUVAL & CO., Inc.

WESSEL, DUVAL & CO., Inc. v. UNITED STATES.

United States District Court S. D. New York.

September 29, 1953.

COPYRIGHT MATERIAL OMITTED

J. Edward Lumbard, U. S. Atty., New York City, Ruth Kearney, Atty., Dept. of Justice, New York City, of counsel, for libelant.

Stanley W. Schaefer, New York City, William M. Kimball, New York City, of counsel, for Wessel, Duval & Co., Inc.

DIMOCK, District Judge.

The United States of America, time charterer of S. S. Edward Rutledge, by its libel seeks recovery from Wessel, Duval & Co., Inc., the bareboat charterer, alleging breach of contract by the bareboat charterer resulting in the stranding of the ship on Hogsty Reef, Bahama Islands. In the first cause of action, libelant seeks the value of libelant's sugar jettisoned, the cost of salvage services, the loss and expense incurred in preserving and protecting libelant's cargo and the loss of use of the ship suffered by libelant. In the second cause of action libelant seeks general average contribution.

By what are denominated set-offs and counterclaims in the answer and by a cross-libel Wessel Duval makes a crossclaim for charter hire unpaid under the time charter, damages for failure to return the vessel in good order as provided in the charter and the United States' share of general average obligation resulting from an earlier stranding of the vessel at Cardenas, Cuba.

There are, in effect, two motions before the court. Wessel Duval moves to dismiss the libel as time barred and the United States excepts to Wessel Duval's cross-claim as time barred.

The Motion To Dismiss The Libel As Time Barred.

The cargo, except the part which was jettisoned, was discharged at its destination on June 10, 1948. This libel was not filed until September 4, 1951. Wessel Duval moves to dismiss the libel as barred by the one-year limitation in section 3(6) of the Carriage of Goods by Sea Act, 46 U.S.C. § 1303(6). No claim is made that the libel is barred by lapse of time unless this one-year limitation applies.

Wessel Duval now concedes that the limitation in the Carriage of Goods by Sea Act applies only to loss of and damage to cargo and that consequently the point is not well taken as to any of the other items of damage.

The United States argues that this requires a denial of the motion. I do not agree. Under the prayer for further and different relief I shall treat the motion as bringing on a hearing on an exception to the allegations of the libel claiming cargo loss or damage.

It is conceded that, since the cargo was being carried from one foreign port in Cuba to another foreign port in Germany, the Carriage of Goods by Sea Act does not apply of its own vigor. Wessel Duval contends, however, that it has been made applicable here by incorporation in the charter party.

At the outset I must determine whether parties to a charter party for private carriage between ports outside of the United States may, by their contract, make applicable to their relations the Carriage of Goods by Sea Act, which would otherwise be inapplicable to a charter party or to a voyage between foreign ports.

That Act provides, 46 U.S.C. § 1312, that it "shall apply to all contracts for carriage of goods by sea to or from ports of the United States in foreign trade" and that "nothing in this chapter * * * shall be held to apply to contracts for carriage of goods by sea between any port of the United States or its possessions, and any other port of the United States or its possessions: Provided, however, That any bill of lading or similar document of title which is evidence of a contract for the carriage of goods by sea between such ports, containing an express statement that it shall be subject to the provisions of this chapter * * *, shall be subjected hereto as fully as if subject hereto by the express provisions of this chapter * * *." Another section, 46 U.S.C. § 1305, expressly states that the provisions of the Act "shall not be applicable to charter parties". It will thus be observed that the Act disclaims application to carriage other than between United States and foreign ports and disclaims application to charter parties and permits shippers and carriers to make it applicable to carriage between United States ports but contains no such permission to make it applicable to charter parties or carriage between foreign ports such as we are concerned with here.

I do not think that the expression of permission to adopt the law in one case excludes permission to adopt it in others except perhaps in one respect. That is the permission to adopt it as law so that it is effective of its own vigor rather than as mere agreement of the parties.

It is hard for me to appreciate the negative argument. All that the parties purport to do is to refer to the terms of a statute for their contract instead of recasting them into contractual language and setting them forth at large in the charter party. Judge Learned Hand in The Westmoreland, 2 Cir., 86 F.2d 96, 97, treated the Harter Act, 46 U.S.C.A. § 190 et seq., which, like the Carriage of Goods by Sea Act, does not in terms apply to contracts of private carriage, as effectively incorporated by reference into a time charter for private carriage. Judge Leibell in United States v. The South Star, D.C.S.D.N.Y., March 24, 1953, held that incorporation of the Carriage of Goods by Sea Act was effective even though the instrument in question was a charter party for private carriage and the cargo was to be transported from Newfoundland to Greece. Judge Coxe, in Mente Co. v. Isthmian S. S. Co., D.C.S.D.N.Y., 36 F.Supp. 278, 285, made a similar holding. See also, as to a charter party, Standard Oil Co. of California v. United States, D.C.S.D.Cal. C.D., 59 F.Supp. 100, affirmed, 9 Cir., 156 F.2d 312; The Temple Bar, D.C.D. Md., 45 F.Supp. 608, and, on appeal, 4 Cir., 137 F.2d 293. On the other hand Petition of United States, D.C.S.D.N.Y., 105 F.Supp. 353, 371, refused to give effect to the incorporation of the Act into a bill of lading for shipment between foreign ports. In accordance with what seems to me the weight of authority and the more persuasive reason, I hold that the parties here might effectively incorporate the Carriage of Goods by Sea Act into the charter party for voyages between foreign ports.

It remains to be seen whether they did so. Article 17 of the charter party is headed "Harter Act and Clause Paramount" and, after providing that it is subject to the Harter Act, continues "It is further subject to the following clause, which is to be included in all bills of lading issued hereunder:

"U. S. A. Clause Paramount

"This bill of lading shall have effect subject to the provisions of the Carriage of Goods by Sea Act of the United States, approved April 16, 1936, which shall be deemed to be incorporated herein, and nothing herein contained shall be deemed a surrender by the carrier of any of its rights or immunities or an increase of any of its responsibilities or liabilities under said Act. If any term of this bill of lading be repugnant to said Act to any extent, such term shall be void to that extent, but no further."

The United States contends that, under this form of words, the one-year limitation of the Carriage of Goods by Sea Act applies only where the shipment is covered by a bill of lading as distinguished from the mere receipt which Wessel Duval is required to issue by Article 11. Wessel Duval, on the other hand, says that the language makes the charter party subject to the U. S. A. Clause Paramount as well as requiring that that clause be included in bills of lading. The argument must necessarily be that the charter party can be thus subject to the U. S. A. Clause Paramount only if such changes are made in that clause by implication as are necessary to make it appropriate, i. e. the words "bill of lading" changed to "charter party" wherever they appear.

The position of the United States is that Article 17 must be read literally and that the sense in which the charter party is "subject" to the U. S. A. Clause Paramount is that the relations of the parties will differ if, and to the extent that, bills of lading, as distinguished from receipts, are issued for the cargo.

This seems to me to be a strained, rather than literal, reading of Article 17. That article does not say that the charter party is subject to variation by the issuance of bills of lading containing the U. S. A. Clause Paramount. It says that it is subject to the U. S. A. Clause Paramount and that all bills of lading shall contain it.

I think that a consideration of all of the terms of the charter party in the light of the circumstances will show that Wessel Duval's construction of Article 17, though not a literal one, is correct.

Article 4 of the charter party provides that the "vessel shall be used in transporting for Charterer's account cargo owned or controlled by the U. S. Government". Article 11 directs in subdivision (a) that the "Master shall sign a manifest or receipt acknowledging receipt of the cargo in apparent good order and condition, or noting specific exceptions thereto." It goes on in subdivision (b) to say that "any receipt signed by or on behalf of the Master or Agent shall be without prejudice to the terms, conditions and exceptions of this charter and subject to all of them."

In referring to the document to be issued to the charterer as a "receipt or manifest" rather than a "bill of lading" the charter party recognizes the nature of the instrument at the stage of issuance.

As the expression is generally used, a bill of lading is a document which serves both as a receipt and a contract, The Delaware, 14 Wall. 579, 596, 20 L.Ed. 779, but where the shipper is also the charterer, the contractual element does not arise until the document is transferred. As Judge Wallace said in The Fri, 2 Cir., 154 F. 333, 336, quoting Carver, Carriage by Sea:

"The...