JOHN R. BROWN, Circuit Judge.
While the case ostensibly presents the question whether a common carrier by water may ever estop itself by inequitable conduct from exacting the full measure of the shipper's obligation to pay tariff charges, the true nature shows it to be something quite different. What it really is, is a contest of equities, not between the carrier and a shipper, but between a subrogee of a carrier and that shipper. Without quite putting the case in these terms, the trial Court in two consolidated admiralty libels held in favor of the Shipper. Doing so, the Court denied recovery of freight charges claimed in the name of the Carrier, but actually sought by a berth agent (in the Carrier's name) to reimburse itself for freight uncollected from a Freight Forwarder and made good to the Carrier pursuant to the credit guarantee in the agency agreement. We affirm.
If there ever were a case in which fact findings of the trial Judge should be accorded the great respect required by the clearly erroneous concept of the Civil Rules, now incrusted on the hull of maritime jurisprudence, O/Y Finlayson-Forssa A/B v. Pan Atlantic S. S. Corp., 5 Cir., 1958, 259 F.2d 11, 13, 1958 A.M.C. 2070; Myles v. Quinn Menhaden Fisheries, Inc., 5 Cir., 1962, 302 F.2d 146, this it is. A reading of this record is convincing that impressions were annealed, and irrevocably so, "through the hammering, heating process of vigorous, running advocacy"
At the outset, this is not the case of the Shipper
For many months the Agent treated this as a liability of the Freight Forwarder alone. The Agent did not even advise the Shipper of nonpayment of freight until the very eve of its own payment to the Carrier under its credit guarantee (note 8, supra). By that time, the Freight Forwarder was defunct, at least financially so. In remitting the full amount of the freight charges to the Carrier under its guarantee, the Agent made no reservation of rights. It was not until a month later that the Agent, through correspondence with the Carrier, attemped to give this remittance the character of an "advance" rather than a payment.
Of course it makes a lot of difference whether this is really a suit by the Carrier. If it is a suit by the Carrier, we can assume that by virtue of its filed tariffs expressly incorporating its bill of lading contract, conduct by the Carrier — no matter how inequitable —
The force of the District Court's findings, and for that matter the uncontradicted evidence, shows that the one seeking recovery is not the Carrier. The libel, to be sure, is brought in its name, but the real party in interest is the Agent. Both under accepted admiralty practice and that required under F.R. Civ.P. 17(a), 28 U.S.C.A., the libellant ought to have been the Agent as the real party in interest. 2 Benedict, Admiralty §§ 230, 245, at 43, 82-85; Czaplicki v. S. S. Hoegh Silvercloud, 1956, 351 U.S. 525, 529, 76 S.Ct. 946, 100 L.Ed. 1387, 1956 A.M.C. 1465; United States v. Aetna Casualty and Surety Co., 1949, 338 U.S. 366, 70 S.Ct. 207, 94 L.Ed. 171. But the inquiry does not end here. With all of its vaunted flexibility, admiralty would certainly provide some method by which the one paying (the Agent) — and hence the real party in interest — could have a judicial determination of the liability of the other (the Shipper) to him. The trial Court was correct therefore in concluding that the Agent, who paid the entire amount due to the Carrier, as a sort of guarantor, indemnitor or quasi-surety, had the right to seek subrogation to the rights of the Carrier (as creditor) against the Shipper (as debtor or principal).
But to seek subrogation and to attain it are two quite different things. Once subrogation is recognized, it carries with it all of the rights which the subrogor had. 50 Am.Jur. Subrogation, §§ 110-112. That would include the extraordinary preferred status of a carrier asserting contractual "statutory" tariff rights (see note 12, supra). But it is the investiture of the subrogee with such sweeping vicarious rights which is itself a factor in determining whether subrogation is to be allowed.
In view of these equitable principles it is important to consider just what this case is. On the one hand is the Agent who is in the business of lending credit
Certainly on the facts found and necessarily implied, the Shipper must be considered innocent. The only mistake the Shipper made was to trust the Freight Forwarder. Otherwise its conduct was irreproachable. The Shipper knew it was required to prepay the freight charges. It divested itself of funds for all such freight charges. It chose a means — use of a freight forwarder — and of that group it selected one presumably considered by the shipping
There is nothing in this record to charge the Shipper with knowledge that credit would be extended by the Agent (or the Carrier) to the Freight Forwarder to whom it had already furnished funds for the payment in cash of these charges. Nothing the Shipper did indicated that it either expected, or desired, the extension of credit. But it was this unknown extension of credit by the Agent to the Freight Forwarder that brought on the whole brief. Until that occurred, there was no risk to anyone. The Carrier thought the Agent retained the signed ocean bills of lading. The bills of lading would not be released until freight was paid. Funds for the payment of that freight had been put in the Freight Forwarder's hands. Hence, even if it is assumed that the Shipper mistrusted the Freight Forwarder, that misplaced faith caused no loss. The loss was occasioned wholly and solely by the voluntary act of the Agent in gratuitously extending credit to the Freight Forwarder and releasing bills of lading contrary to the provisions of the Carrier's tariff, the bills of lading themselves, and, more important, the imperative demands of the law.
It is harsh enough when, vis-a-vis Carrier and Shipper, it is the law that commands a shipper to pay twice if the carrier has not in fact received the money. It is shocking to say that equity would compel it. In the contest of relative equities, he who now seeks the Chancellor's grace has set the whole train of misfortune in motion. No longer having the "legal" standing of a carrier whose peremptory mace might compel a court of law to grant relief, the real libellant has naught but the gentle "wand of equity," United States v. Maryland Casualty Co., 5 Cir., 1956, 235 F.2d 50, 53, 1956 A.M.C. 1822.
These factors attain only added vitality when consideration is given to other conduct of the Agent. Under the due bills the Freight Forwarder promised to pay the freight or return the bills of lading within three days. Thus, within four days of the release of the bills of lading, the Agent knew that the Freight Forwarder was not honoring its promise to pay or return. Nothing, absolutely nothing, was done by the Agent except some unidentifiable weak-kneed requests made of the Freight Forwarder to do as it had promised. Not a word was breathed to the Shipper until May 9, 1955 — more than five months after the one recent shipment in November 1954 and practically ten months as to all others (see note 4, supra). The explanation for this action — which the trial Judge characterized as incredible — was not hard to find. The Agent did not really try very hard, nor, by the nature of things, could he either press too strongly for payment by the Freight Forwarder, or take the extraordinary step of notifying the Shipper that the Freight Forwarder had defaulted on his trust. This was because competitive forces in the shipping business are so severe in the solicitation and booking of outbound export traffic, that the Agent, dependent upon its generated traffic for its compensation (see note 6, supra) did not wish to incur the ill will of the Freight Forwarder as a source of added business from other shippers in the future. And where excessive pressure on the Freight Forwarder to pay its obligations might be thought untactful, it was completely out of the question, so the Agent made clear, for it to embarrass this potential source of future business by exposing his infidelity, incompetence, or down right dishonesty to the principal (the Shipper). To collect the freight from the Freight Forwarder was important. But one cannot read this record without the uncomfortable conviction that what was more important was preserving
The record is therefore uncontradicted that, with full knowledge that the Freight Forwarder had defaulted, and with complete indifference to whether the Shipper had, or had not, put the Freight Forwarder in funds, the Agent did nothing to advise the Shipper of this state of affairs.
The Chancellor is no longer fixed to the woolsack. He may stride the quarter-deck of maritime jurisprudence
Whatever equity the Agent could muster in its own behalf was not enough to tip the scales. The Court, with ample basis, thought that as between the two, the equities were overwhelmingly in favor of the Shipper, and to grant what the Agent sought would produce, not equity, but inequity. Subrogation as an equitable weapon may not thus be corrupted.
Shipped by Perez B/L Date Freight Charges 18 June 11, 1954 $1,506.52 16 June 23, 1954 1,577.15 6 July 2, 1954 1,011.70 4 August 6, 1954 822.19 40 November 26, 1954 2,961.09 Shipped by Tyler 7 July 9, 1954 1,521.04 27 July 30, 1954 2,322.51 29 August 6, 1954 764.33
As compensation for these services the Agent was to receive commission on outward cargo ranging from 5% to 2½%.
"It is agreed that any and all due bills that Isbrandtsen may issue for freight and charges in connection with any cargo shipped from any of the ports at which it serves * * * as Agent, will be the exclusive responsibility of Isbrandtsen * * *."
"Will you, for the record and for certain technicalities which our lawyer sees arising, confirm that the check was sent you covers these items and that in the event you receive such a check or checks dealing with these B/Ls that it will be turned over to us since the money will be a replacement to us of the funds we paid you in carrying out our contract with you as per clause therein."
The record is a complete blank concerning agreement to, or acquiescence in, these statements by the Carrier.
On the very same day the libel was filed against Tyler; the one against Perez was filed on June 4, 1955.
River Terminals Corp v. Southwestern Sugar & Molasses Co., 5 Cir., 1958, 253 F.2d 922, 1958 A.M.C. 1534, aff'd 360 U.S. 411, 79 S.Ct. 1210, 3 L.Ed.2d 1334, and on remand 5 Cir., 1960, 274 F.2d 36, 1960 A.M.C. 2064.
In doing so, we simply echo imperative decisions. Crancer v. Lowden, 1942, 315 U.S. 631, 62 S.Ct. 763, 86 L.Ed. 1077 ("* * * tariffs bind both carriers and shippers with the force of law"); Atchison, T. & S. F. Ry. Co. v. City of Chicago, 7 Cir., 240 F.2d 930, aff'd, 357 U.S. 77, 78 S.Ct. 1063, 2 L.Ed.2d 1174 ("A tariff under provision * * * requiring every common carrier to file * * * is to be treated the same as a statute."); and see also United States v. Kansas City So. Ry. Co., W.D.Mo., 1953, 116 F.Supp. 484.
Empire Petroleum Co. v. Sinclair Pipeline Co., 10 Cir., 1960, 282 F.2d 913, is a vivid application of these principles.