Hugg v. Baltimore & Cuba Smelting & Mining Co. , 35 Md. 414 ( 1872 )

Bartol, C. J.,

delivered the opinion of the Court.

This suit was instituted to recover a sum claimed to be due the appellant’s intestate, for contribution in general average, under a contract of affreightment.

The original shipment by charter-party, was of a cargo of copper ore, six hundred and seventy-nine tons, on board the Maggie V. Hugg, a vessel belonging to the appellant’s intestate, from Taltal, in Chili, to the port of Baltimore, at a freight of ¿£3. 10s. per ton. The contract contained the usual exception of the dangers and accidents of the seas. After encountering rough weather, it was discovered that the ship was leaking badly, and the master made for the Falkland Islands. There upon consultation with the crew, it was determined to proceed to Bio de Janeiro, and the vessel entered that port on the 24th day of December, 1864. There the captain noted a protest, and solicited a board of survey; who after an inspection of the vessel, in their report recommended “that she be lightened, say four hundred or five hundred tons, and that the same be shipped to port of destination to avoid heavy cost of landing, warehousing and attendant expenses upon the same.

Pursuant to this recommendation a ship called the Adelaide was chartered, and three hundred tons of ore were transshipped, and sent by her to Baltimore; the freight to be paid thereon at the rate of thirty shillings per ton. Both vessels then proceeded to Baltimore and delivered their cargoes, and the appellee paid freight on all the ore delivered, at the rate of ¿£3. 10s. per ton, the freight originally agreed on.

Captain Hugg then submitted the expenses incurred by the Maggie V. Hugg, during her voyage, to Thomas H. Norris, an average adjuster in Baltimore, who made out a statement by which $8,039.76 was charged as the amount to be paid, in general average by the cargo — $2,746.27 of that sum being made up by bringing into the general average account the freight paid the Adelaide.

The appellee not being satisfied with this statement, submitted it to Bird & Wilson, average adjusters in New York, who prepared an amended statement, by which it appeared that the cargo was liable for $5,143.70 in general average; this sum was accordingly paid.

By the agreement of counsel in the Court below and in this Court, all other questions in dispute have been adjusted, and it is conceded that the payments made by the appellee to the appellant’s intestate, covered all that was due, if the freight paid the Adelaide be not taken into the general average; otherwise there is duo the further sum of $2,746.27.

The only question presented by this appeal is thus succinctly stated in the appellee’s brief:

“When a vessel puts into a port of distress, and there trans-ships a portion of her cargo, is the freight paid the substituted bottom, an expense or loss to be contributed for in general average?”

In the argument, the appellant’s counsel stated as an alternative proposition, that if the freight of The Adelaide was not the subject of' general average contribution, then the owner of the cargo is responsible for it all. ' But we find no authority which supports the position that in case of trans-shipment of cargo from a port of necessity, the shipper is chargeable with the freight in the substituted bottom, in addition to that originally contracted to be paid. In contracts of affreightment the general rule as stated by Chancellor Kent is “ that the delivery of the goods at the place of destination, according to the charter-party, is necessary to entitle the owner of the vessel to freight. The conveyance and delivery of the cargo form a condition precedent, and must be fulfilled.” 3 Kent’s Com., 219, m.

If the ship be disabled from completing the voyage the freight may be earned by forwarding the cargo by another vessel. 1 Parson’s S. & A., 233, 234; Luke vs. Lyde, 2 Burr., 882, 887; Shipton vs. Thornton, 9 Ad. & E., 314.

In such case, the captain may stipulate for the payment to the substituted vessel, of a higher freight than that originally contracted for, and the cargo will be answerable for such increased freight. For it is held that in such case the captain acts from necessity as agent for all concerned; and as such may bind the owner of the cargo by his contract of trans-shipment. In Rossette vs. Gurney, 11 C. B., (73 E. C. L., 176,) Jervis, C. J., said: “'It may happen that a new bottom can only be obtained at a freight higher than the original rate of freight. It does not seem to have been settled whether the ship owner may charge the cargo with the additional freight.”

But the rule, as we have stated it, is well settled in this country. It is laid down by Chancellor Kent, 3 Com., 212, m., and recognized by the Supreme Court in Hugg vs. Augusta and Banking Ins Co., 7 How., 609, and by numerous decisions of State Courts, which will be found collected in the notes to 1 Parson’s S. & A., 236, 237.

It will be found by examination of these cases that while it has been held that the increased freight may be charged to the cargo, the meaning is that the hire of another vessel may be so' chargeable, even though it exceeds the freight payable under the charter, not that the cargo can be held liable for both the new and the old freights combined. “ The rule,” says Parsons, “ as usually expressed is, that the master must trans-ship if he can, and may then charge the excess of the cost of trans-shipment over his freight to the owner of the goods.” 1 Parson’s S. & A., 235, 236.

The rule is stated in the same way by Chancellor Kent, in Searle & Adams vs. Scovett, 4 Johnson’s Ch. R., 218, a leading case on this subject. On page 226, the Chancellor says, “ I understand from the French books that the extra freight means the surplus beyond what the freight would have been by the original charter-party, if no necessity of hiring another ship had intervened. The owner of the goods is not responsible for the old and new freight united.” In this case there was no extra freight paid. It is very clear, both upon reason and authority, that the appellee having paid the whole freight originally contracted for under the charter-party, cannot be held answerable in addition, for the freight paid on the portion of the cargo forwarded from Rio to Baltimore by the Adelaide.

The question then recurs, can it be charged in general average as an extraordinary expenditure incurred for the benefit of all concerned ? This claim cannot, in our opinion, be supported on the ground that it was an expenditure for the benefit of all concerned, in substitution for a greater expenditure which the captain had a right to incur by landing the cargo and repairing at Rio.

This point was expressly decided in Wilson vs. Bank of Victoria, Law Rep., 2 Q. R., 203. In that case it was sought to charge in general average, certain extraordinary expenses incurred in buying coal; because, as it was argued, the money so expended “ was an expenditure to prevent the necessity of unshipping the cargo at Rio, and therefore ought to be charged against the same interests, and in the same proportions, as the expenditure which it prevented would have been charged.”

In answer to this, the Court, while they guard against expressing any opinion upon the question, whether under the circumstances of that case, the ship-owners could have charged the owners of the cargo with any part of the expenses of unshipping and warehousing the cargo, as a point which did not arise, go on to say: “ But passing this by; we think that the expenses actually incurred must be apportioned according to the facts that actually happened, and that there is no legal principle on which they can bo apportioned, according to what might have been the fact, if a different course had been pursued.”

"We think that proposition is unquestionably sound, and directly applicable to this case. The captain of the Hugg, having elected to trans-ship a portion of the cargo on another vessel, and not to repair; the rights of the parties must be governed by the principles applicable to the case of transshipment, and not to the case which might have arisen, if the cargo had been landed and the ship repaired at Rio.

Is it then, under the circumstances of the case, such an expenditure as constitutes a claim for general average contribution? ISTo case has been cited by counsel, nor have we found any, in which such an item has been estimated as a general average loss or expense. The absence of precedent in support of the appellant’s claim.is a strong argument against it, for many similar cases must have occurred. But in addition to this, the authorities, so far as they are applicable, appear to be against it; and it seems to us that upon principle, the claim ought to be disallowed, as not coming within the reasons upon which general average losses are ascertained: “Sacrifices voluntarily made in the course of the voyage, of part of the ship or cargo, to save the residue of the adventure from impending peril or extraordinary expenses incurred for the benefit of both ship and cargo, and which became necessary in consequence of a common peril, are usually regarded as the proper subjects of general average,” by Justice Clifford in McAndrews vs. Thatcher, 3 Wallace, 365. The learned Judge further remarks: “All losses which give a claim to general average contribution, says a standard writer upon the law of insurance, may be divided into two great classes:

“ 1. Those Avhich arise from sacrifices of part of the ship or part of the cargo, purposely made in order to save the whole adventure from perishing.

■ “ 2. Those which arise out of extraordinary expenses incurred, for the joint benefit of both ship and cargo,” and cites 2 Arnould on Insurance, 881.

The claim in this case if it exist at all, comes within the second class; and on this ground it is placed in the argument of the appellant, who contends that the freight paid The Adelaide, was “an -extraordinary expenditure for the joint benefit of both ship and cargo.”

It is perfectly well settled that if the ship is wrecked, or from perils of the sea becomes totally disabled, so that the voyage is broken up, the expense of sending the cargo forward by another vessel is not a general average charge.

In Parson’s Sh. & A., 402 the law is thus correctly stated :

“ The master, if by wreck or other cause, he is unable to carry the goods to their destination in his own ship, always may, and by the weight of American authority, must, if he can, trans-ship the goods, or send them to their destination in another bottom. The expense incurred by doing this is not a general average loss, but falls on the cargo or on the ship, according to the circumstances of the case.” In support of this last proposition the author cites Heyliger vs. N. Y. Fireman’s Ins. Co., 11 Johnson, 85, and Lyon vs. Alvord, 18 Conn. 66. In the first of these cases, a ship bound for Yew York was stranded on the coast of Yew Jersey. In the effort to save the ship and cargo, lighters were procured. The ship was lost, but the cargo was saved, and sent to Yew York in the lighters. It was held that the cost of the lighters was chargeable in general average, it being an expense incurred for the eormnon benefitj. The Court say: “ The expense of convejmnce, in another vessel or boat, strictly so considered, ought to fall on the ship-owner, and not on the shipper of the goods. But this was not that case. The vessel was stranded and the cargo and vessel in jeopardy, and here was a joint effort and expense for the recovery of both, and the ship was lost and the cargo only saved. The expense of removing the cargo from the place of the shipwreck to the port of Yew York may have been a small item of itself, but it is not separated and stated in the case.”

In Phillips on Ins. vol. 2, see. 13, the author in treating of general average expenses says: “ The expense of forwarding a wrecked cargo by another conveyance to the port of destination is not included in the contribution ” — cites in the note Heyliger vs. N. Y. F. Ins. Co., 11 Johnson, and says: “The small expense of transporting the cargo from Shrewsbury to Yew York was included; but the Court seems to admit that it could not properly be included.”

The rules governing questions of this kind rest upon the law of agency. “The master charges the respective interests with contribution by some act which he is authorized to do in virtue of his position as agent for the parties concerned.”

When the ship is disabled from completing the voyage, and the cargo is sent on to the port of destination by another vessel at less cost than the original freight secured by the charter-party, the captain in sending it forward, obviously acts as the agent of the ship-owner, for thereby he is enabled to earn his full freight.

As was said by Jervis, O. J., in Rossette vs. Gurney, 11 Q. B., before cited: “ If the master trans-ships because the original ship is irreparably damaged, Avithout considering whether he is bound to trans-ship or merely at liberty to do so, it is clear that he trans-ships to earn his full freight, and so the delivery takes place upon the original contract.”

It folloAvs from this, that the trans-shipment being made under and in fulfilment of the original contract made by the ship owner, and for the purpose of earning full freight, that in the trans-shipment, the captain acts as his agent and for his benefit, and not as agent of the owner of the cargo; as Ave have seen he may do; under circumstances in Avhich the ship OAvner is not interested in the trans-shipment, because no freight can be earned for his benefit; by reason of the cost of trans-shipment exceeding the original freight payable under the charter-party. But where as in this case, the freight from the port of necessity to the port of destination, is less than the original freight stipulated for in the charter-party, the cost of trans-shipment falls upon the ship OAvner, and is designated in the insurance law not as a general average loss, but as a particular average on freight, or as a loss on freight for Avhich the underwriter is bound ; and so the laAV is stated by Phillips in his Avork on Insurance. In vol. 2, sec. 1438, the author says: “A particular average or partial loss oh freight is occasioned by the loss of the ship after a part of the voyage is performed, which makes it necessary to hire another ship to carry on the cargo to the port of destination in order to earn the freight.” And in sec. 1441: “ In case of goods being transported for a part of the voyage only by the ship, of which the freight is insured, and a freight pro rata itineris peracii is earned, the loss is computed by deducting from the gross freight the actual or estimated expense of forwarding the goods to the port of destination.”

(Decided 19th March, 1872.)

It follows from these authorities that if the Hugg had been altogether disabled from completing her voyage, and the whole cargo had been sent on by The Adelaida, at the freight of thirty shillings per ton, that this expenditure could not be charged in general average, but would have fallen upon the ship owner, and would be what is called in the books “ a particular average,” or loss on freight covered by his policy on freight.

It has been argued by the appellant, that the present case does not fall within the operation of this rule, because only a part of the cargo was trans-shipped by The Adelaide, and the Maggie V. Huyg was not wrecked or altogether disabled, but completed her voyage and carried a portion of the cargo to the port of destination in safety. But we can see no good reason for this distinction.

The test is, in what capacity does the captain act in incurring the expense, and for whose benefit? In trans-shipping by The Adelaide three hundred tons, at thirty shillings per ton, and thereby earning seventy shillings per ton on the whole cargo, the captain acted exclusively as the agent of the ship owner, and for his benefit, for the purpose of earning his full freight; and thus one essential element is wanting to bring it within the rules of general average. It is not an expenditure for the common benefit of both ship and cargo.”

The ruling of the Court below being in conformity with the views above stated; the judgment will be affirmed.

Judgment affirmed.