Sanday v. United States Shipping Board Emergency Fleet Corp. , 1 F.2d 390 ( 1924 )

WARD, Circuit Judge.

The parties have stipulated that there was an oral charter between Sanday & Co., the libelants, and the United States Shipping Board Emergency Fleet Corporation for a steamer to carry a cargo of wheat from Galveston to Rio de Janeiro, which necessarily implies that their minds met on all the essentials of the charter.

November 6, 1920, the respondent declared the steamer Afel under the charter party “November 15 canceling,” which, in view of all the facts, clearly meant that the charterers were to have the option of canceling if the Afel did not arrive at Galveston, the loading port, on or before November 15. In point of fact she arrived on the afternoon of November 18. The libelants canceled the charter and brought this suit to recover their damages.

The question of law is whether, beside the right of cancellation, the libelants have a right to recover damages for breach of the charter party. It is singular that no authority on this point has been discovered.

The respondent takes the position that, if the shipowner covenants that his ship shall be at the loading port on or before a certain date, and also gives the charterer the option of canceling if she do not, then tho charterer may cancel by virtue of the option, and also recover damages for breach of charter. On the other hand, if the charter simply gives the charterer the right of cancellation, then that expresses his entire right, and he cannot recover damages, because the owner has not agreed that the ship shall be at the loading port on or before the date fixed, and has therefore not breached the charter party.

The libelants, on the other hand, contend that a promise by the shipowner to have the ship at the loading port on or before the cancellation date is to be implied from the option of cancellation.

In Hasler v. West India S. S. Co., 212 Fed. 862, 129 C. C. A. 382, the owner brought suit against the charterer for failure to load. Rogers, J., said:

“It is our understanding that under a charter party if the ship is not at the loading port, its duty is to proceed there with reasonable diligence, and if she fails to arrive by the designated time the charterer may refuse to load her and may also have his action for damages, unless the delay was occasioned by excepted' perils. But in the case under consideration the action for damages is not brought by the charterer,, although the ship made no attempt to reach the designated port. Here the action is brought by the shipowners, and as they did not comply with the terms of their contract and do not claim that they did the circumstances must be somewhat unusual if they can maintain the suit.”

This was obiter, because the charterer was making no claim, but is quite consistent with the court’s having in mind a charter party containing, in addition to the option, a covenant that the ship shall be at the loading port on or before the cancellation date.

In Bucknall v. Tatem & Co., 83 Law Times Reports, 121, the charterers asked for an injunction restraining the shipowner from nsing the ship, except under the charter party, which the court denied, on the ground that, if the owner wrongfully failed to send the vessel to the loading port on or before the cancellation date, the charterer would have an adequate remedy at law for damages — an obviously correct conclusion.

In Smith v. Dart, 5 Asp. Mar. Law Cases, 360, the shipowners brought suit against the charterer for refusal to load because the vessel was not ready to load on or before the loading date. The right of the charterer to recover damages was not involved, but Judge Mathew said in reference to the cancellation clause:

“The clause in question, however, is a clause which imposes on the shipowner no obligation, the enforcement of which could be made the subject of an action, and is therefore distinguishable from another class of clauses, by which a shipowner undertakes to do something which if he fails to do he will he liable to an action i'or breaking Ms contract.” .

And Judge Smith, also referring to the cancellation clause, said:

“The sMpowner agrees, and enters into a contract, that it shall be so. He does not, indeed, contract to be there in any event, so as to be liable for damages if he fails to he there; but he does contract that, if he is not there, the charterer is to have the option of canceling the charter party.”

It is true that both these observations were obiter, but they were made by very learned and experienced judges.

The shipowner* is bound to send his ship to the loading port, even if it is obvious that she cannot arrive there before the cancellation date, and the charterer cannot be compelled to say how he will exercise Ms option until that date arrives. The Progresso (D. C.) 42 Fed. 229; Id., 50 Fed. 835, 2 C. C. A. 45; Karran v. Peabody, 145 Fed. 166, 76 C. C. A. 136.

If the vessel does not proceed to the loading port, that fact will make no difference to the charterer, if he exercises Ms option to cancel; if, on the contrary, he exercises Ms option to load, he will have a right of action for damages against the sMpowner for broach of the obligation to carry.

Being quite clear that no covenant on the part of the respondent to have the vessel at Galveston on or before November 15, 1920, can bo implied from the cancellation clause, I think the charterers’ only right was to cancel.

Libel dismissed.