Writ of Certiorari Denied November 25, 1940. See 61 S.Ct. 175, 85 L.Ed. ___.
CLARK, Circuit Judge.
This appeal raises the question of liability of a forwarding steamship carrier, under a through bill of lading, for damage by reason of rain and spray to a cargo of wool, owned by libelant and stowed on deck of the steamer. The district court exonerated the carrier on the ground that such on-deck stowage had been agreed to by representatives of the shipper and owner of the goods and was proper under the circumstances. Libelant denies that it as owner ever consented, and rests its basic claim of error in the decision on the ground that a "clean" bill of lading negotiated to innocent purchasers does not permit of such a change from the terms of the original contract of carriage.
In December, 1936, and January, 1937, libelant, a New York importing concern, had purchased 321 bales of wool from one Zariffa, in Cairo, Egypt, by cable exchanges. Terms were C. & F., and libelant, immediately on contracting for the purchase, opened a letter of credit in favor of Zariffa at London banks through American
At Alexandria, Egypt, Zariffa, between January 26 and February 19, 1937, delivered the wool to D. C. Pitellos & Co. in five lots for shipment, notifying libelant by telegraph as each delivery was made. Pitellos & Co. issued five similar negotiable bills of lading stating that varying numbers of bales of wool had been shipped in apparent good order at Alexandria for delivery in New York and Philadelphia to libelant's bankers or their assigns as consignees. Each bill provided for transshipment of the goods at Port Said by a named vessel "or other suitable steamer." On the face of the bills, after designation of the number of bales of wool and their weight, and the directions for their transshipment at Port Said, there appeared printed in small capitals the words "Subject to All the Terms and Conditions Contained in the Bills of Lading at Present in Use By: Messrs. ____." The blank following the word "Messrs." was on four of the bills completed with the typewritten words "The oncarrying line of steamers"; in the fifth case a specific name had been typed in, only to be crossed out and the same phrase as in the other bills added by pen and ink. The bills also contained some twenty-seven numbered and three unnumbered conditions and reservations printed in small type, among which were separate provisions exonerating Pitellos & Co. and the carrier from all liability for delay in forwarding, and other provisions that goods forwarded were subject to the conditions and exceptions of the forwarding or carrying conveyance. The bills did not, however, contain permission for on-deck carriage.
The goods were freighted below decks from Alexandria to Port Said. At Port Said, in some manner not disclosed by the record, the wool came under the control of Wm. Stapledon & Son, whose letterhead shows them to be agents for several steamship lines, but not including any concern participating in the transaction now before us. Stapledon & Son experienced considerable difficulty in finding a suitable ship for on-carriage to the United States. At length, toward the end of February, Stapledon & Son arranged with the Port Said & Suez Coal Co., agents for the charterers of the Idefjord, to carry the wool on the Idefjord, above deck, at shipper's risk across the Mediterranean, with restowage in the hold at Casablanca. Libelant asserts a complete lack of proof as to whether or not Stapledon & Son were authorized by the shipper, Zariffa, to contract for on-deck carriage; but in the view we take of the case, Zariffa could not give such authority, had he tried to do so, unless he noted that fact on the original bills of lading before presenting them.
The wool was placed on the Idefjord's deck, and nonnegotiable bills of lading were prepared on February 27, 1937, by the Port Said & Suez Coal Co., stating the terms of carriage and expressly providing for stowage "on deck at shippers' risk till Casablanca only where goods must be restowed in hold." It does not appear that these bills were ever issued to the shipper, though the previous correspondence and the master's receipts were to a similar effect. Before the Idefjord sailed, its captain was presented with, and he accepted, the "captain's copy" of each of the five original Alexandria bills of lading. By that time four of these original bills, together with sight drafts and other documents of sale and transfer, had been presented by Zariffa to the London banks, and Zariffa's drafts had been honored. And, pursuant to the instructions given earlier, the last bill was so honored on March 2, 1937.
When the wool was damaged en route, libelant filed this libel against the Idefjord. The district court held that Stapledon & Son had possessed apparent authority to bind all parties interested in the wool to a contract for stowage on deck at shipper's risk. It also ruled that the damage to the wool had been caused solely as a result of its shipment on deck, and that the Idefjord had not been negligent in its stowage or in departing from Port Said loaded slightly above its summer marks. The Idefjord, D. C. S. D. N. Y., 31 F.Supp. 667.
We see no reason to disturb the finding that the damage was due solely to the on-deck carriage, and accept the lower court's conclusion that the Idefjord and its crew were otherwise free from negligence. The only substantial issue remaining in the case, as we view it, concerns the privilege of the Idefjord to agree with Stapledon & Son for on-deck carriage, in view of the outstanding Alexandria bills of lading.
1. The Idefjord contends that its liability must be measured by its own contract
The Alexandria through bills of lading were negotiable, and upon their presentation with drafts to the London banks the seller received his money. This was by no means an unusual or an unreasonable course of business.
Cases which have been cited to us as containing language supporting the opposite view, such as Reid v. Fargo, 241 U.S. 544, 36 S.Ct. 712, 60 L.Ed. 1156; The Cayo Mambi, supra; Miller v. Harvey, 221 N.Y. 54, 57, 116 N.E. 781, L.R.A.1917F, 559; and Briggs v. Boston & L. R. Co., 6 Allen, Mass., 246, 83 Am.Dec. 626 — to which may be added Aberdeen Grit Co. v. Ellerman's Wilson Line, (Court of Session)  Sess.Cas. 9 — are not opposed in fact. Many of these did not involve variation of the terms of negotiable through bills of lading, and in none of them does it appear that the on-carrying conveyance had notice of the terms of the original through agreement. We read The Cayo Mambi, supra, for example, as sustaining our position. Certain language in The St. Hubert, 3 Cir., 107 F. 727, 732, and in Crossan v. New York & N. E. R. Co., 149 Mass. 196, 198, 21 N.E. 367, 3 L.R.A. 766, 14 Am.St.Rep. 408, taken from its context does lend more support to claimant's position. Limited to their facts, however, both these holdings are not pertinent to the present aspect of the case. In The St. Hubert, supra, it did not clearly appear whether or not the through bills were negotiable; in any event, certain clauses of the through bills were construed as authorizing the variations later made — a circumstance we refer to at length below. In the Crossan case, again no problem of negotiability was involved, and the on-carrier ran the risk of a lawsuit by the plaintiff if it were to refuse, as a common carrier, to carry the shipment.
2. The Idefjord next contends that the variation it inserted in the contract of carriage was expressly authorized by the terms of the original Alexandria bills. It was within the contemplation of all parties that the cargo would be transshipped at Port Said, and on-carried to New York by another steamship line. The provision
Each of the original bills also contained as a part of Clause 7 the provision that "Goods transhipped, overcarried or destined for ports where the ship does not call will be forwarded at ship's expense but subject to the conditions and exceptions of the forwarding conveyance," which was substantially repeated at the end of the bill, as follows: "This Bill of Lading shall be construed and governed by English Law, and shall apply from the time the goods are received for shipment until delivery, but always subject to the conditions and exceptions of the carrying conveyance." (Italics added.) This provision must be construed in the light of the earlier provision referring to the regular bills or the bills "at present in use" by the on-carrier. The earlier provision, being filled out for the occasion by typing or handwriting, would be preferred if there were any inconsistency between them. Pacific Rice Mills v. Westfeldt Bros., 5 Cir., 31 F.2d 979; Deutschle v. Wilson, 8 Cir., 39 F.2d 406; Thomas v. Taggart, 209 U.S. 385, 389, 28 S.Ct. 519, 52 L.Ed. 845, affirming In re Jacob Berry & Co., 2 Cir., 149 F. 176. In any event, this added provision did not mean that the second carrier might propose, and the initial carrier might agree to, any sort of harsh, arbitrary conditions of carriage. We may assume it did mean that on-carriage need not accord strictly with the terms of the original bills. Aberdeen Grit Co. v. Ellerman's Wilson Line, supra. But the most this clause can mean is that by the express provisions of the Alexandria documents, the initial carrier or its representative and the Idefjord might arrange reasonable terms for carriage of the goods, in line with the latter's ordinary forms of contract and not fundamentally inconsistent with the original bills.
The case therefore turns on whether or not a contract for on-deck carriage at shippers' risk was such a reasonable one under the circumstances. We do not think it was. The very essence of the C. & F. contract was payment on presentation of a clean bill of lading. As stated above, the Idefjord was chargeable not only with notice of the existence of outstanding clean negotiable bills, but also with knowledge that such bills might be transferred to innocent parties in the regular course of trade. It is settled beyond dispute that a clean bill of lading negatives on-deck carriage of goods such as wool. The Delaware, 14 Wall. 579, 604, 20 L.Ed. 779; St. Johns N. F. Shipping Corp. v. S. A. Companhia Geral Commercial, 263 U.S. 119, 124, 44 S.Ct. 30, 68 L.Ed. 201, affirming The St. Johns N. F., 2 Cir., 280 F. 553; The Gran Canaria, D. C. S. D. N. Y., 16 F. 868, 872. It has even been held that a captain cannot issue a clean bill if the goods are stowed above deck. The Kirkhill, 4 Cir., 99 F. 575, 578. Had the on-deck provision been noted on the original bills, they might in all probability never have been honored by the London banks. By carrying the goods above deck, knowing that fact was not marked on the original bills, the Idefjord allowed a fraud to be worked upon any one who might innocently pay value for the bills. The Kirkhill, supra. The contract for on-deck stowage, therefore, cannot be deemed consistent with the original bills, or reasonably within the contemplation of the parties. It may have been true that the alternative of allowing the goods to remain in Port Said until below-deck stowage became available was fraught with danger to the value of the cargo; but such a course was authorized by the provisions in the original bills waiving liability for delay in transshipment. On-deck carriage was not.
The view we have taken does not conflict with The St. Hubert, supra, Reid v. Fargo, supra, or cases like Crossan v. New York & N. E. R. Co., supra, and
3. We find necessary only brief comment on the other contentions advanced. The supposed proof that the buyer ratified the arrangement for on-deck stowage is not convincing. Knowledge was not brought home to the libelant before the ship sailed; only the shipper knew, and he appears to have done nothing except to write libelant a letter delivered in America long after the damage was done. But after all, he had stepped out of the picture and was perhaps well advised in so doing. That libelant affected insurance when it received the shipper's letter on March 17, 1937, and did not seek to disaffirm its purchase, can have no bearing here; the bills had already been presented, and libelant's responsibility to the holders fixed. Cf. Hansson v. Hamel & Horley,  2 A. C. 36, 46; Harper v. Hochstim, 2 Cir., 278 F. 102, 103, 20 A.L.R. 1232. And though it is claimed that the ship's liability in a suit in rem is measured by the contract of her master, and not by an antecedent agreement with third persons, not the agents of the ship, yet the Idefjord, by accepting the cargo for carriage with knowledge of the clean through bills, made the issuer of those bills its agent. It could not then accept the goods under its own conditions, and it was bound in rem for right delivery. The Sprott, D. C. S. D. N. Y., 70 F. 327; The Poznan, D. C. S. D. N. Y., 276 F. 418.
The decree is reversed, with directions to the district court to enter a decree in favor of libelant, and to proceed to assess the damages, by reference or otherwise as it shall determine.
Before he resigned Judge PATTERSON heard the argument of this appeal, and voted at the conference to reverse the judgment. Since his resignation he has read this opinion and authorizes us to say that it accords with his views.