Yone Suzuki v. Central Argentine Ry.

• Citation: 27 F.2d 795
• Decision Date: 20 August 1928
• Docket Number: No. 253.,253.
• Parties: YONE SUZUKI et al. v. CENTRAL ARGENTINE RY., Limited, et al.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

27 F.2d 795 (1928)

YONE SUZUKI et al. v. CENTRAL ARGENTINE RY., Limited, et al.

No. 253.

Circuit Court of Appeals, Second Circuit.

August 20, 1928.

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Kirlin, Woolsey, Campbell, Hickox & Keating, of New York City (John M. Woolsey, Edwin S. Murphy, and James H. Herbert, all of New York City, of counsel), for appellant.

Hunt, Hill & Betts, of New York City (George C. Sprague, of New York City, of counsel), for Suzuki & Co.

Burlingham, Veeder, Masten & Fearey, of New York City (John L. Galey, of New York City, of counsel), for Holland-American Line and Green Star S. S. Co.

Carter & Phillips, of New York City (Robert Phillips, of New York City, of counsel), for Luckenbach S. S. Co.

Before MANTON, SWAN, and AUGUSTUS N. HAND, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge (after stating the facts as above).

The libelants are met at the threshold by the contention of the railway that the cesser clause of the charter parties, which were incorporated in the bills of lading, relieved it from liability. They say the Argentine law governs the liability, and that that law is evidenced by the decision of an Argentine Court of Appeal in the case of The Moncalieri, which was a vessel chartered by Gano Moore under circumstances similar to those here. In that case the Argentine Railway was sued for demurrage by the owner of the Moncalieri, and the court held that the cesser clause implied an agreement to exclude all personal action against the charterer, or his assignees, and discharged the railway from liability.

The District Judge found in the present case that in Argentine the "Constitution and Codes constitute its laws, and that the decisions of its courts do not constitute any part of its law, and are not binding as precedents." He accordingly refused to follow the Moncalieri decision. It was in general said by the witnesses as to Argentine law that, in the absence of a cesser clause, the railway, as indorsee of the bill of lading, would have been liable for demurrage. Yet there was some discussion as to whether, even in that event, there was a lien which could be enforced at the port of Buenos Aires in the common-law sense by withholding delivery of cargo, and libelant's witness Dr. Edye said that there was not. But, if that was so, there was still a right of the shipowner or master under article 958 of the Commercial Code to embargo the goods after 30 days from the date of discharge, and under article 1083 to apply for a deposit of the goods by order of court subject to the right of the shipowner over them. The relinquishment of the cargo to the railway was ample consideration for an assumption of liability on its part (Crossman v. Burrill, 179 U. S. 100, 21 S. Ct. 38, 45 L. Ed. 106), aside from the fact that article 166 of the Commercial Code determined the matter in any event by the provision that: "The assignee, indorser or bearer of the bill of lading is subrogated to all the obligations and rights of the consignor."

But the railway relies on the cesser clause and says it discharged the charterer and therefore discharged it. There is a difficulty with this at the outset, which was apparently never considered, or even realized, by the Argentine court in the Moncalieri Case, for the charterer here was only discharged by the cesser clause as charterer, and was not discharged as consignor and owner of the goods, unless and until he parted with his title. A consignor, who was owner of the goods and holder of a bill of lading incorporating the conditions of the charter party, was held in Gullischen v. Stewart Bros., 13 Q. B. D. 317, to obtain no exemption from liability by reason of the cesser clause. The court there consisted of Coleridge, C. J., Brett, M. R., and Bowen, L. J. Brett, M. R., said:

"The contract by a bill of lading is different from a contract by a charter party, and the defendants are sued upon the contract contained in the bill of lading. It would be absurd to suppose that their liability upon the bills of lading would cease upon the loading of the cargo. What is their liability upon the bills of lading? It is to pay freight and other conditions `as per charter party.' Upon the terms of the charter party the consignees were to pay demurrage at a certain rate; that is a condition which is incorporated in the bill of lading. But the clause as to the cesser of the charterers' liability is not incorporated."

Lord Bowen said:

"The bill of lading by its words incorporates the terms of the charter party; but these words must receive a reasonable construction. The result is that the bill of lading incorporates certain provisions of the charter party, but not the clause as to cesser of liability. The argument for the defendants would render the bill of lading a nullity; it would be a useless form except as an acknowledgment that the goods had been put on board."

To the same effect was the decision of Judge Putnam in The Eliza Lines (C. C.) 61 F. at pages 325, 326, who cites Carver, MacLachlan, and Abbott as reaching the same conclusion. Scrutton on Charter Parties, art. 19, at page 67, 11th Ed., says: "But the cesser clause * * * will not be incorporated in the bill of lading." And Carver (6th Ed.) at page 227, says: "A cesser clause in the charter is not brought into the bill of lading, that being inconsistent with it." To the same effect is the dictum in Repetto v. Millar's Karriet, 1901 2 K. B. at page 313.

Now, when the Argentine court based its decision as to the cesser clause on the ground that it "implies an agreement to exclude all personal action against the charterer or his assignees with equal rights to those of the assignor," and there was no consideration of the fact that the consignors, Gano Moore Company, to whose rights alone the railway succeeded under the statutory provisions of article 166 of the Commercial Code, were never exempt from liability until after they had parted with title by indorsement of the bill of lading to the Boston bank as the railway's agent, how can it be said that the decision is of any weight? The decree in the Moncalieri Case stands alone in contradiction to the settled maritime law elsewhere. It is not a decision of a court whose opinions express in any controlling way the law of Argentine, for there are a number of divisional courts there of equal weight, all of which administer the civil law, and none of which is in any sense bound by judicial precedent. The mere fact that they naturally may be influenced by former decisions and may finally accept them, when their logic becomes persuasive, is not a reason for regarding a single decision that goes counter to universal maritime law as authoritative as to the law of Argentine, or as binding on other courts. No Circuit Court of Appeals in this country of precedents would feel obliged to follow another circuit in similar circumstances, or to follow the decision of a state court that was not supreme in interpreting state law.

Judge Putnam discussed the origin of the cesser clause in The Eliza Lines, supra, and said that it was first introduced to relieve agents who appeared as such in charter parties and was afterwards extended to charterers who were in fact agents, whether they appeared so or not. The cesser clause is in terms for the benefit of the charterer, and only affects him, and it is settled in this country and in England that an indorsee of a bill of lading incorporating the charter provisions, who receives the goods, is liable for demurrage and for other sums which may become due under the provisions in the charter party. The liability of the consignee is said to be based on an implied promise arising from his acceptance of the goods under a bill of lading that embraces the provisions. Union Pacific R. R. Co. v. American Smelting & Refining Co. (C. C. A.) 202 F. 720. The American decisions as to the liability of the consignee are collected in Yone Sukuzi v. Central Argentine Ry. Co. (D. C.) 275 F. 54, and some of the English decisions are referred to in Gullischen v. Stewart Bros., 11 Q. B. D. 186, affirmed 13 Q. B. D. 317. The Eliza Lines, supra, also involved the liability of the consignee, irrespective of the cesser clause.

The interesting essay by Mr. Leopold Dor in Revue de Droit Maritime Compare, vol. 9, pp. 172-178, indicates that the maritime law of other countries is in accord with that of the United States and England in limiting the effect of the cesser clause to a personal exemption of the charterer, and in not incorporating it by reference in the bill of lading.

But it is quite certain that the Argentine law does not apply to the case. The charter parties were all executed in this country, the bills of lading were issued here, naming Gano Moore Company as shipper and consigning the coal to order or assigns, the goods were loaded in the United States, paid for in New York by a Boston bank, with which the railway had opened a letter of credit, the bills of lading were indorsed over and delivered in New York to the bank as the railway's agent shortly after the ship sailed, and the title to the merchandise then became vested in the railway company. The charter parties were on the standard Washington coal form, and provided that the freighting was subject to the terms and exemptions of the Harter Act (46 USCA §§ 190-195), and that general average was to be settled according to the New Antwerp Rules of 1890, "and as to matters not therein provided for according to the law and usage of New York." Neither the charters nor bills of lading contain any reference to Argentine law. Such contracts were American contracts. Liverpool & G. W. Steam Co. v. Phenix Ins. Co., 129 U. S. 397, 9 S. Ct. 469, 32 L. Ed. 788; The Majestic (C. C. A.) 60 F. 624, 23 L. R. A. 746; Fish v. D., L. & W. R. R. Co., 211 N. Y. 375, 105 N. E. 661; Fonseca v. Cunard S. S. Co., 153 Mass. 533, 27 N. E. 665, 12 L. R. A. 340, 25 Am. St. Rep....