Ellamar Mining Co. v. Alaska S. S. Co. ( 1925 )

ROSS, Circuit Judge

(after stating the facts as above). An unusually large number of decisions are cited on behalf of both parties to the controversy, to review which would be quite impossible in an opinion of any reasonable length; nor do we think it at all necessary to do so, being of the opinion that the correctness of the ruling of the court below, to the effect that the contract between the parties was terminated by the taking over of the ships of the defendant company under the requisition by. the government, is sufficiently shown by these declarations of the Supreme Court in the case of Texas Co. v. Hogarth Shipping Co., 256 U. S. 619, 629, 630, 631, 41 S. Ct. 612, 614 (65 L. Ed. 1123):

“It long has been settled in the English courts, and in those of this country, federal and state, that where parties enter into a contract on the assumption that some particular thing essential to its performance will continue to exist and be available for the purpose, and neither agrees to be responsible for its continued existence and availability, the contract must be regarded as subject to an implied condition that, if before the time for performance and without the’ default of either party the particular thing ceases to exist or be available for the purpose, the contract shall be dissolved and the parties excused from performing it. Taylor v. Caldwell, 3 Best & Smith, 826, 839; In re Shipton, Anderson & Co., [1915] 3 K. B. 676; Horlock v. Beal, [1916] 1 A. C. 486, 494, 496, 512; Bank Line, Ltd., v. Arthur Capel & Co., [1919] A. C. 435, 445; The Tornado, 108 U. S. 342, 349-351; Chicago, Milwaukee & St. Paul Ry. Co. v. Hoyt, 149 U. S. 1, 14, 15; Wells v. Calnan, 107 Mass. 514; Butterfield v. Byron, 153 Mass. 517; Dexter v. Norton, 47 N. Y. 62; Clarksville Land Co. v. Harriman, 68 N. H. 374; Emerich Co. v. Siegel, Cooper & Co., 237 Ill. 610. The principle underlying the rule is widely recognized and applied to various classes of contracts. The Kronprinzessin Cecilie, 244 U. S. 12, 22-24. But, of course, it does not apply where the risk is fully covered by a term of the contract, nor where performance is not practically cut off, but only rendered more difficult or costly. Columbus Railway, Power & Light Co. v. Columbus, 249 U. S. 399, 410 et seq. Perhaps the oldest and most familiar application of the principle is to contracts for personal service, where performance is prevented by death or illness. Robinson v. Davison (1871) L. R. 6 Exch. 269; Spalding v. Ross, 71 N. Y. 40.

“Another application widely recognized is where a ship chartered for a voyage, after the date of the charter party and before the time for the voyage, is accidentally destroyed by fire, lost at sea, or injured in such degree as not to be available for the service. The Tornado, supra, was a suit on a contract of affreightment, where the ship, before beginning the voyage, was accidentally burned and thereby prevented from undertaking it. This court held that the contract was dissolved, saying (page 349): ‘We are of opinion that, by the disaster which occurred before the ship had broken ground or commenced to earn freight, the circumstances with reference to which the contract of af-freightment was entered into were so altered by the supervening of occurrences which it cannot be intended were within the contemplation of the parties in entering into the contract, that the shipper and the underwriters were absolved from all liability under the contract of affreightment. The contract had reference to a particular ship, to be in existence as a seaworthy vessel and capable of carrying cargo and earning freight and of entering on the voyage. All the fundamental conditions forming part of the contract of the shipowner were wanting at the time when the earning of freight could commence.’

“Here the ship, although still in existence and entirely seaworthy, was rendered unavailable for the performance of the charter party by the requisition. By that supervening act she was impressed into the war service of the British government for a period likely to extend — and which as it turned out did extend — long beyond the time for the charter voyage. In’ other words, compliance with the charter party was made impossible by an act of state, the charterer was prevented from having the service of the ship and the owner from earning the stipulated freight. The event apparently was not anticipated and there was no provision casting the risk on either party. Both assumed that the ship would remain available, and that was the basis of their mutual engagements. These, we think, must be regarded as entered into on an implied condition that, if before the time for the voyage the ship was rendered unavailable by such a supervening act as the requisition, the contract should be at an end and the parties absolved from liability under it.

■ “That the charter party was entered into in this country is not material. The important consideration is that it became impossible of performance through a supervening act of state, which operated directly on the ship and the parties could not avoid.”

The contract between the parties was,therefore, terminated upon the taking over of the ships under their requisition by the government.

It is insisted, however, on the part of the plaintiff in error steamship company, that the contract was rendered absolutely void by the provisions of the Shipping Act of September 7, 1916. The conclusive answer to the argument made in that behalf is that the steamship company neither alleged nor proved that the contract, which admit.tedly was in existence at the time of the passage of that act, was disapproved by the Shipping Board. In its section 15, the Act of September 7, 1916 (39 Stat. 734 [Comp. St. § 8146h]), expressly declares: “Agreements existing at the time of the organization of the board shall be lawful until disapproved by the board. It shall be unlawful to carry out any agreement or any portion thereof disapproved by the board.”

It is contended that section 15 refers only to such agreements as are by the statute required to be filed with the board, and that the statute contains no requirement that any contract between a carrier and a shipper be so filed, this being the reasoning of counsel:

“We think the court overlooked the fact that section 15 of the act relied upon by plaintiff requires the filing with the Shipping Board of copies of contracts between ‘every common carrier by water, or other person subject to this act,’ and ‘any other such carrier or other person subject to this act.’ The act expressly defines who are persons subject to the act, and these do not include shippers. Therefore there is no requirement that a contract between a carrier and a shipper should be filed with the Shipping Board. It seems to us clear that this entire section refers solely to agreements required to be filed, and we fail.to understand how the act can be construed as making contracts valid until disapproved by the Shipping Board when such contracts are not required, nor even permitted, to be filed with that board. How could the board approve or disapprove a contract of which it knew nothing? If a carrier, when accused of discrimination in violation of the other provisions of the Shipping Act, could completely exonerate itself by showing that it had an undisclosed existing contract which had never been filed with, known to, or disapproved by the Shipping Board, certainly the entire purpose of the act would be defeated.”

We are unable to see any merit in that reasoning. There is, in our opinion, no mistaking the meaning of the language of the statute, expressly declaring that “agreements existing at the time of the organization of the board shall be lawful until disapproved by the board.” To hold that shippers through carriers by water are “not subject ’to the act” is wholly inadmissible. The record shows that on the trial evidence was given tending to show that the plaintiff mining company could and would have mined and shipped from its mine during the year 1916 ore up to the average of 5,000 tons per month for the entire year, but for the irregularity and infrequency of the calling of the defendant’s ships at Ellamar, contrary to the requirements of the contract, in consequence of which the plaintiff company was prevented from shipping the maximum tonnage during 1916 provided for by the contract, which it could and would have done at a profit, but for the steamship company’s-default, and which ore subsequently became ‘ unprofitable to ship, and therefore to mine. Such evidence was the basis of the verdict that was returned in the plaintiff’s favor, and we are unable to hold that it was insufficient.

The judgment is affirmed; neither party to recover costs of this court.