These are proceedings in rem against the Isla de Panay to recover for damage to merchandise brought by her from Cadiz, Spain. They present the same issues and were heard on the same proof. It will suffice to refer to the facts disclosed in number 199.
December 21, 1917, in the United States District Court, Southern District of New York, Austin Nichols & Company, a corporation, filed a libel and complaint against the respondent steamship.
It alleged: Ownership of the damaged merchandise. Presence of the vessel within the court's jurisdiction. That "On October 27, 1917, Rowlett y Pyman shipped and placed on board the steamship Isla de Panay, then lying at the port of Cadiz, Spain, two hundred and twenty-seven (227) packages of olives in good order and condition, to be carried by the said steamship Isla de Panay as a common carrier from the port of Cadiz to the port of New York and there to be delivered in like good order and condition as when shipped to your libellant, in accordance with the terms of bills of lading then and there issued for the said shipment and in consideration of an agreed freight. Thereafter the said steamship Isla de Panay sailed from the port of Cadiz and arrived at the port of New York in the month of November, 1917, and there discharged her cargo, not in like good order and condition as when shipped, but badly damaged."
It prayed: For process according to the course and practice in causes of admiralty and maritime jurisdiction to issue against the steamship, her engines, boilers, etc. That a decree be granted for the damage sustained and the steamer condemned and sold to satisfy the same.
The Compania Trasatlantica claimed the vessel as sole owner, obtained her release and answered, denying liability. It admitted receipt of the goods and alleged their carriage and delivery as required by the bills of lading. It specifically admitted and alleged: "That on or about the 6th day of November, 1917, there were shipped on board the steamship Isla de Panay, then at the port of Cadiz, Spain, and bound for the port of New York, 227 casks said to contain olives, the weight and contents of said casks and their quality, however, being stated to be unknown to the claimant, which expressly declined to be responsible therefor. . . . That it was agreed that the merchandise should be transported for a stipulated freight to the port of New York and there be delivered to the order of the libellant, subject to the conditions and exceptions from liability contained in the bills of lading issued for said merchandise at Seville, Spain, from which port said merchandise was shipped in the first instance. .. . That thereafter the steamship Isla de Panay sailed from the port of Cadiz, Spain, and arrived in due course at the port of New York in the month of November, 1917, and that it thereafter delivered at the port of New York all of the above mentioned merchandise which it received on board the ship at Cadiz in pursuance of and in compliance with the terms and conditions of the bills of lading hereinabove referred to." That the bills of lading expressly exempted the vessel from responsibility for damage resulting from breakage of the articles and fragile containers; the ship was in all respects seaworthy,
Upon the indicated issues evidence was taken and the cause went to hearing.
The agent of the owner of the Isla de Panay stationed at Seville, Spain, there accepted the casks of olives (each of them weighed 1500 pounds or more) and delivered to the consignors bills of lading. These recited: "M. Rowlett and Pyman has shipped on board the Spanish steamer Isla de Panay, its captain M----, with destination to New York and consigned to Austin Nichols, the effects declared on back on the following conditions. . . . ignoring weight and contents." They said nothing concerning order or condition of the merchandise and contained exemption clauses as stated in the answer.
The casks were carried down the River Guadalquivir seventy-five miles to Cadiz, on a small steamer belonging to the owner of the Isla de Panay, and were there delivered to her. They were loaded, stored, transported and landed at New York without negligence or default by the vessel; but the casks broke and the olives were damaged. That the casks were old, weak and quite liable to break was observed by the owner's agent at Seville, and because of this he declined to accept them until the shippers gave the following agreement to secure against loss —
Compania Trasatlantica, Sevilla.
My dear Sirs: With reference to the shipment of 227 casks of olives that we are making by the steamer Isla de Panay to New York, we understand that that company considers the containers insufficient and that it does not
The captain of the Isla de Panay did not see the bills, nor did he know of the letter of guaranty until after the voyage had been completed. He observed the bad condition of the casks before accepting them at Cadiz, and their imperfection was noted on the accompanying shipping orders.
It appears that Austin Nichols & Company had directed their bankers at Seville to pay the agreed purchase price for the olives upon presentation of clean bills of lading. The bankers accepted the bills presently under consideration and paid the stipulated price to the consignors. There is nothing to show that the ship or her owner knew of the particular arrangement between buyer and seller.
Libellants now insist that a trade usage prevailed at Seville under which bills without notation were regarded as receipts for merchandise in apparent good order and condition, and to establish this usage they rely upon an answer in the testimony of the vessel's captain. When asked by respondents' counsel, "Why are these letters of guarantee given in Seville?" he replied —
"If the bills of lading are issued with a note on them the insurance companies or the bankers in Spain will not accept that bill of lading on account of the condition in which the goods are, but if they have no clause on it they will pass it to a banking house and the insurance company that they have been shipped by the shipper in apparent good order and condition, although they have issued a letter of guarantee relieving the company of any responsibility whatsoever for the condition of the packages."
Eduardo Benjumea, the owner's agent at Seville who issued the bills, testified —
The District Court dismissed the libel. It said —
"The great weight of evidence is to the effect that the chestnut casks containing the olives were old and insufficient at the time the merchandise left Seville for transshipment to claimant's vessel at Cadiz . . . The libelants paid drafts accompanying the bills of lading without knowledge that the containers were old and insufficient. If there is any liability here for damages it is upon the theory that by failing to note in the bills of lading any insufficiency in the containers, the steamship misled the libelants to their injury and is now estopped under the doctrine of Higgins v. Anglo-Algerian Steamship Co., 248 Fed. 386, to claim that the containers were insufficient. In that case, however, there was in the bill of lading an express representation that the merchandise itself was in apparent good order and condition, when it was known to be injured by rain water. Here the parties believed doubtless that the olives would go through, but the ship's agents were not willing to take the risk of any liability which might arise from old casks. No case has gone so far as to hold that a bill of lading containing no words representing the condition of the containers would give rise to an estoppel. The Harter Act expressly provides that the vessel shall not be liable for any `insufficiency of package.'"
The Circuit Court of Appeals affirmed the decree of dismissal. Having pointed out that the proceedings were in rem against the vessel and not in personam against the owner; that the libel alleged the merchandise was placed on board "in good order and condition," and was not discharged "in like good order and condition"; that the bills were not signed by the captain; that the containers were weak when received, etc.; that court expressed inability
"In the instant cases the damage to the merchandise came within the exceptions of the bill of lading which declared that the shipowners were not responsible for breakage. That many of the casks were broken is undisputed. The burden of proof rested upon the libelants to establish negligence on the part of the claimant and this burden we have no hesitation in saying was not sustained. On the contrary it has been established by the overwhelming weight of evidence that whatever damage the merchandise suffered in the cases now before the court was due not to the negligence of the ship but to the old and insufficient containers in which the goods were shipped."
And it held that the ship was not estopped to set up the bad condition of the casks by anything done at Seville or under the Harter Act; and that Higgins v. Anglo-Algerian S.S. Co., 248 Fed. 386, was not controlling.
Counsel for petitioners maintain: That with corrupt purpose and as part of a scheme to defraud petitioners, the ship issued bills of lading designed to conceal the bad condition of the casks, knowing that the shippers intended to obtain money upon them according to the local usage. That under the Seville usage bills of lading without notations impliedly acknowledged receipt of the merchandise in apparent good order and condition, and the ship could not repudiate this representation. That, considering this local trade usage, it was the positive duty of the ship to disclose the bad condition of the casks. Failure therein made the fraud upon petitioners possible, and "Where one of two innocent parties must suffer he must bear the loss whose act put it into the power of the third party to commit the wrong." That Section 4 of the Harter Act imposed the positive duty to disclose the containers' bad condition. And, finally, that the doctrine approved in Higgins v. Anglo-Algerian S.S. Co., is applicable and controlling.
The courts below, correctly we think, have found that the overwhelming weight of evidence shows the casks were in bad condition when received at Cadiz but were loaded, carried and discharged without negligence or fault.
Petitioners did not allege fraud or any peculiar trade usage at Seville, and there is no sufficient evidence to establish either of these things. The mere statement by the ship's captain referred to above is not enough to show a peculiar trade usage at Seville, there commonly known and acted upon; and it does not apear that the bank which accepted the bills of lading lacked full information concerning the circumstances attending their issue. The argument of counsel proceeds mostly upon assumption not supported by the record. Bowling v. Harrison, 6 How. 248, 259; Adams v. Otterback, 15 How. 539, 545, 546; Oelricks v. Ford, 23 How. 49, 61, 62. And see Carver on Carriage of Goods by Sea, 6th Ed., Sec. 181 et seq.
The Harter Act provides —
"Sec. 4. It shall be the duty of the owner or owners, masters, or agent of any vessel transporting merchandise or property from or between ports of the United States and foreign ports to issue to shippers of any lawful merchandise a bill of lading, or shipping document, stating, among other things, the marks necessary for identification, number of packages, or quantity, stating whether
"Sec. 5. For a violation of any of the provisions of this act the agent, owner, or master of the vessel guilty of such violation, and who refuses to issue on demand the bill of lading herein provided for, shall be liable to a fine not exceeding two thousand dollars. . . ."
In the present case the bills of lading were issued as agreed by the parties — no demand was made for bills with different recitals. According to the long established rule, bills like those before us do not affirmatively represent good order and condition (Atchison, Topeka & S.F. Ry. v. Harold, 241 U.S. 371), and we find nothing in the Harter Act which requires that they be given a different effect, either through construction or by estoppel.
Higgins v. Anglo-Algerian S.S. Co., supra, is essentially different from the present cause. There the bill of lading expressly recited that the merchandise had been received in good order and condition; and the ship was seeking to escape liability by setting up its own wrongful action.
The decrees below must be
MR. JUSTICE SUTHERLAND, dissenting.
I am unable to agree with the opinion just delivered. It seems to be conceded, but in any event I think it must be conceded, that if the bills of lading had contained a recital that the merchandise was received in good condition the ship would have been estopped from asserting that in fact it was in bad condition. Higgins v. Anglo-Algerian S.S. Co., 248 Fed. 386. Here, I think, the circumstances are such as to make the omission of a recital
The shipment was accepted and the bills of lading issued by the ship's agent
Consignees had instructed their bankers in Spain to pay the purchase price of the goods only upon presentation of clean bills of lading, and there is evidence to the effect that if bills are issued with a notation of bad condition they will not be accepted by insurance companies or bankers in Spain, but if such note be omitted they will pass, upon the assumption that the goods have been shipped in apparent good order and condition. Upon this assumption, the bills were passed and payment made. Under these circumstances, the omission of the notation in respect of the condition of the goods was nothing short of a suppression of the truth in order to further the fraudulent designs of the shippers. Upon every principle of fair dealing it should be regarded as the equivalent of a false notation of good condition which the ship is estopped to deny as against the claims of the consignees who relied upon it. To hold otherwise is to permit the wrongdoer to take advantage of his own misconduct, which a court of admiralty cannot allow with due regard for those equitable principles by which it is governed.
I am authorized to say that the CHIEF JUSTICE and MR. JUSTICE VAN DEVANTER concur in this dissent.