Where the stipulated compensation in a salvage contract is
dependent upon success, it may be made for a larger compensation
than a
quantum meruit, and much more so when such success
is to be achieved within a limited time, and such contract, after
execution, will not be set aside simply because the compensation is
excessive unless shown to have been corruptly entered into or made
under fraudulent representations, a clear mistake or suppression of
important facts, in immediate danger to the
Page 172 U. S. 187
ship, or under other circumstances amounting to compulsion, or
when its enforcement would be contrary to equity and good
conscience.
Many leading cases in this country and some in England, where
salvage contracts have been set aside and compensation awarded in
proportion to the merits of the services, examined and shown to
establish (1) that the courts of both countries are in entire
accord in holding that a contract of salvage which the master has
been corruptly or recklessly induced to sign will be wholly
disregarded; (2) that some of the American courts have also laid
down the rule that all salvage contracts are within the discretion
of the court, and will be set aside in all cases where, after the
service is performed, the stipulated compensation appears to be
unreasonable, to which this Court is unable to give its assent; (3)
that while in England there has been some slight fluctuation of
opinion, by the great weight of authority, and particularly of the
more recent cases, it is held that if the contract has been fairly
entered into, with eyes open to all the facts, and no fraud or
compulsion exists, the mere fact that it is a hard bargain, or that
the service was attended with greater or less difficulty than was
anticipated will not justify setting it aside.
Where no circumstances exist which amount to a moral compulsion,
such a contract should not be held bad simply because the price
agreed to be paid turned out to be much greater than the services
were actually worth.
On the continent of Europe, the courts appear to exercise a
wider discretion and to treat such contracts as of no effect if
made when the vessel is in danger, but this Court cannot accept
this as expressing the true rule on the subject.
The facts relating to the making of the contract which is in
dispute in this case, as detailed in the opinion of the Court, show
that few cases are presented showing a contract entered into with
more care and prudence than this, and the Court is clear in its
opinion that it should be sustained.
This was a libel
in rem by the firm of Charles Clarke
& Co., of Galveston, Texas, against the British steamship
Elfrida to recover the sum of $22,000, with interest and
costs, claimed to be due them for services rendered in the
performance of a salvage contract with the master to release the
Elfrida, then stranded near the mouth of the Brazos
River.
The principal averments of the answer were in substance that the
agreement was signed by the master under a mutual mistake of fact,
or by mistake on his part, which libelants took advantage of, as to
the danger in which the vessel was, and that it was improvidently
made, for an excessive compensation,
Page 172 U. S. 188
without a proper understanding by him of the vessel's alleged
freedom from danger; that the master had been prevented from
carrying out his instructions to accept a tender made, if lower,
impossible by information of the cable being conveyed to the
salvors before the master saw it; that the parties were not upon an
equal footing; that libelants made an unreasonable bargain with the
master because of the stress of the situation and that of his
vessel, and acted collusively with other salvors in obtaining from
him the agreement.
On Friday, October 5, 1894, the
Elfrida, a steel
steamship of 1,454 tons register, 290 feet long, 38 feet in width,
and drawing 11 feet 10 inches, bound for the port of Velasco,
Texas, in ballast, grounded on the bar between the jetties which
extend from either bank of the river, about a mile into the Gulf,
the outer end of these jetties for a distance of a thousand feet or
more being submerged. The heel of the ship touched, there being but
five inches between the bottom and the bar, and an easterly wind
swung her bow against the west jetty. The captain ran out a kedge
from the starboard bow, hove taut with the windlass, put the engine
full speed astern, but could not move the ship. The wind and sea
increased during the afternoon and evening, while the ship was
straining and bumping heavily. The weather moderated somewhat on
the following day, and the same efforts were continued
unsuccessfully until the evening, when the sea rose, carrying her
over the submerged outer end of the jetty, and some distance
further shoreward on the beach. She brought up that night about a
cable's length to the west of the west jetty. That part of the
jetty which was above high water projected seaward beyond her stern
and sheltered her from easterly winds. She lay parallel with the
jetty, about four hundred or five hundred feet from the beach, head
on, and about one thousand feet from water of sufficient depth to
float her. The shore at this point is very flat, the bottom
consisting of a layer of quicksand about ten feet deep. The steamer
settled in the quicksand to her normal draft, rocking and moving in
it whenever there was a high
Page 172 U. S. 189
sea. She lay in nine feet of water at high tide. The weather
continued generally favorable from the 7th to the 17th, with
occasional gales and high seas. The ship drifted somewhat further
on the beach, but efforts to relieve her by her own resources seem
to have been practically abandoned.
On Tuesday, October 9, the master sent the following letter to
the libelants:
"Velasco, Oct. 9, 1894"
"Capt. Chas. Clarke, re S.S.
Elfrida"
"Dear Sir: Please tender for to float and place in a place of
safety, say Galveston, where her bottom can be examined, furnishing
diver and his apparatus. Also to furnish all material and labor in
floating said steamship
Elfrida; also time required. Reply
at your earliest convenience, under seal, to Jas. Sorley, Lloyd's
agent, or myself. No cure, no pay."
"Yours, truly"
"By B. Burgess,
Master"
"P.S. -- A convenient time to be laid to get the ship off, and
if at the expiration of the time, the vessel is still aground, all
claim on this contract to cease and to be null and void."
"B. Burgess,
Master"
In reply to this, libelants submitted a tender, offering to
perform the service for the sum of $22,000, which was accepted by
the advice of Lloyd's agent, who was on board the vessel at the
time, and with the consent of Pynam, Bell & Co., of
Newcastle-on-Tyne, owners of the
Elfrida.
The following contract, which forms the basis of the present
suit, was thereupon entered into:
"The State of Texas"
"County of Brazoria"
"This agreement, made and entered into this 15th day of October,
1894, between the steamship
Elfrida and the owners
thereof, represented herein by B. Burgess, master of said
steamship, as party of the first part, and Charles Clarke &
Co., of Galveston, Texas, as party of the second part:"
"Witnesseth, that for and in consideration of the covenants
Page 172 U. S. 190
and agreements herein contained on the part of the said party of
the first part, to be kept and performed, the said party of the
second part hereby agrees and binds himself, his administrators and
assigns, to float and place in a safe anchorage, Quintana or
Galveston, as directed, the S.S.
Elfrida, which is now
stranded west of and near to the west jetty at the mouth of the
Brazos River in said county and state; to furnish all labor and
material at the cost of said party of the second part, and to
furnish diver and necessary apparatus to survey or examine the
bottom of said steamship, and to complete the same within
twenty-one (21) days from date hereof."
"The said party of the first part agrees to pay to the said
party of the second part for such service,
i.e. when he
shall have successfully floated said ship, as above set forth, the
sum of twenty-two thousand dollars ($22,000), the said party of the
first part, however, reserving the right hereby to abandon the ship
to and in favor of the said second party in lieu of the amount of
$22,000 agreed to be paid as aforesaid."
"It is further understood and agreed by and between the parties
hereto that a failure to float and place in a position of safety,
as above stated, said steamship, within the time hereinbefore
specified, to-wit, twenty-one days from date hereof, that said
party of the second part shall receive no compensation whatever
from said first party for work performed, labor, tools, or
appliances furnished."
"Anything that may be discharged to enable vessel to float shall
be replaced when she is in a position of safety. It is also agreed
and understood that the use of crew and engine shall be at the use
and disposal of said party."
"Witness the hand of B. Burgess, master of the steamship
Elfrida, for himself, said ship, and the owners, party of
the first part, and the hand of Charles Clarke & Co., party of
the second part, this 15th day of October, 1894."
"Benj. Burgess"
"Chas. Clarke & Co."
"Witnesses:"
"M. P. Morrissey."
"J. H. Durkie"
"
Master S.S. Lizzie, of Whitby"
Page 172 U. S. 191
The day before the contract was signed, the libelants, having
learned that their tender for the work had been accepted, hired the
schooner
Louis Dolsen, of fifteen tons, for which they
paid $100, to take their plant to Galveston in tow of their tug
Josephine. They also hired a large force of men, procured
nearly a month's supplies, cables, chains, anchors, two tugboats,
two lighters, and two schooners, fully manned and equipped. Some of
this plant belonged to them, but the schooners and lighters and
their equipments were hired. For one of the lighters they agreed to
pay $6,500 if she should be lost. Their entire outfit was worth
from $30,000 to $50,000. On arriving at Velasco on the same or
following day, they engaged a derrick lighter for use in laying the
anchors, and on the two following days, the 16th and 17th, the
salvors were at work planting the anchors and connecting cables
from them to the winches of the ship. This work was completed
during the afternoon of the 17th, the water ballast pumped out,
when the
Elfrida's engines, winches, and windlass were
started by her own steam, and in less than half an hour she began
to move herself off. She went slowly for the distance of about a
thousand feet, when she floated clear, but was carried by the
current against the west jetty. The libelants' tug then for the
first time took hold of her, and towed her away from the jetty, and
at 7:40 p.m., four hours after the work of hauling her off was
begun, she was free and clear of everything, and put to sea under
control of the pilot. Subsequent examination of her bottom, in the
dry dock at Newport News, showed that she was wholly uninjured
except for a slight indentation about a foot long in the bilge,
which was probably caused by contact with the jetty. At the time
she was stranded she was insured for the sum of �18,000,
subsequently reduced to �16,000.
Upon a full hearing upon pleadings and proofs, the district
court entered a final decree in favor of the libelants for the
stipulated sum of $22,000, with interest and costs. Claimants
appealed to the circuit court of appeals, which reversed the decree
of the district court, one judge dissenting,
Page 172 U. S. 192
and remanded the case, with instructions to enter a decree in
favor of libelants for the sum of $10,000, with interest at six
percent. 77 F. 754. A petition for rehearing having been denied,
libelants applied to this Court for a writ of certiorari, which was
granted.
MR. JUSTICE BROWN, after stating the facts in the foregoing
language, delivered the opinion of the Court.
But a single question is presented by the record in this case:
was the contract with the libelants of such a character, or made
under such circumstances, as required the court to relieve the
Elfrida against the payment of the stipulated
compensation?
We are all of opinion that this question must be answered in the
negative. Salvage services are either (1) voluntary, wherein the
compensation is dependent upon success; (2) rendered under a
contract for a
per diem or
per horam wage,
payable at all events; or (3) under a contract for a compensation
payable only in case of success.
The first and most ancient class comprises cases of pure
salvage. The second is the most common upon the Great Lakes. The
third includes the one under consideration. Obviously where the
stipulated compensation is dependent upon success, and particularly
of success within a limited time, it may be very much larger than a
mere
quantum meruit. Indeed, such contracts will not be
set aside unless corruptly entered into or made under fraudulent
representations, a clear mistake or suppression of important facts,
in immediate danger to the ship, or under other circumstances
amounting to compulsion, or when their enforcement would be
contrary to equity and good conscience. Before adverting
Page 172 U. S. 193
to the facts of this particular case, it may be well to examine
some of the leading authorities where salvage contracts have been
set aside and compensation awarded in proportion to the merit of
the services.
In the case of
The North
Carolina, 15 Pet. 40, the master of a vessel which
had struck upon one of the Florida reefs was improperly, if not
corruptly, induced to refer the amount of salvage to the
arbitrament of two men, who awarded thirty-five percent of the
vessel and cargo. The Court found that, under the circumstances,
the master had no authority to bind his owners by the settlement;
that the settlement was fraudulently made, and that the salvors, by
their contract, had forfeited all claims to compensation even for
services actually rendered.
In
The Tornado, 109 U. S. 110, the
owners of three steam tugs which had pumping machinery were
employed by the master and agent of a ship sunk at a wharf in New
Orleans, with a cargo on board, to pump out the ship for a
compensation of $50 per hour for each boat, "to be continued until
the boats were discharged." When the boats were about to begin
pumping, the United States marshal seized the ship and cargo upon a
warrant on a libel for salvage. After the seizure, the marshal took
possession of the ship and displaced the authority of the master,
but permitted the tugs to pump out the ship. After they had pumped
for about eighteen hours, the ship was raised and placed in a
position of safety. The tugs remained by the ship, ready to assist
her in case of need, for twelve days, but their attendance was
unnecessary, and not required by any peril of ship or cargo. In
libels of intervention, in the suit for salvage, the owners of the
tugs claimed each $50 per hour for the whole time, including the
twelve days, as salvage. The Court held that, as the contract was
to pump out the ship for an hourly compensation, the right of the
steam tugs to compensation must be regarded as having terminated
when the ship and cargo were raised, and that, as the marshal
seized the ship as the tugs began to pump her out, the authority of
the master was displaced, and the boats must be regarded as having
been discharged under any fair
Page 172 U. S. 194
interpretation of the contract. Standing by for a period of
twelve days was found to have been unnecessary, and not required by
any peril to the
Tornado or her cargo. The case was not
one where the contract was set aside as inequitable, though found
to be so, but where it had been completed by pumping out the ship
and the supersession of the master.
See
also Bondies v.
Sherwood, 22 How. 214, where the Court overruled an
attempt on the part of the salvors to repudiate their contract as
unprofitable and recover on a
quantum meruit.
These are the only cases in our reports in which the question of
nullifying a salvage contract was squarely presented, although
there is in the case of
Post v. Jones,
19 How. 150,
60 U. S. 160,
an expression of the Court to the effect that
"courts of admiralty will enforce contracts made for salvage
service and salvage compensation, where the salvor has not taken
advantage of his power to make an unreasonable bargain, but they
will not tolerate the doctrine that a salvor can take the advantage
of his situation and avail himself of the calamities of others to
drive a bargain; nor will they permit the performance of a public
duty to be turned into a traffic of profit."
Indeed it may be said in this connection that the American and
English courts are in entire accord in holding that a contract
which the master has been corruptly or recklessly induced to sign
will be wholly disregarded.
The Theodore, Swabey 351;
The Crus V, Lush. 583;
The Generous, L.R. 2 Ad.
57, 60.
The intimations of this Court have been followed except in very
rare instances by the subordinate courts. Thus, in the case of
The Agnes I. Grace, 49 F. 662, 51 F. 958, a schooner bound
for Port Royal, S.C., put into Tybee Roads under stress of weather.
She came upon the sands in an exceedingly perilous condition. The
ground was treacherous and dangerous, and while lying there, she
was exposed to the full force of the sea and winds. A towboat
company offered its services, and a contract was entered into to
pay the sum of $5,000 as salvage. A portion of the cargo, amounting
to $7,000, was saved, as well as the
Page 172 U. S. 195
schooner, which was sold for $5,030, probably about one-half her
value. The contract was sustained. The court put its decision upon
the ground that the case could not be considered as belonging to
that class
"where the master, being upon the high seas or an uninhabited
coast at a distance from all other aid, is absolutely helpless and
without power to procure assistance other than that offered, and is
compelled in consequence to make a hard and inequitable contract.
He was within easy reach of Savannah, where, had he desired to
assume the risk for his owners, he could have procured lighters and
other tugs to render the service."
The cases in these courts are too numerous for citation, but it
is believed that in nearly all of them the distinction is preserved
between such contracts as are entered into corruptly, fraudulently,
compulsorily, or under a clear mistake of facts, and such as merely
involve a bad bargain, or are accompanied with a greater or less
amount of labor, difficulty, or danger than was originally
expected.
In the earliest of these -- (1799)
Cowell v. The
Brothers, Bee's Ad. 136 -- the libelant very properly
relinquished his written agreement and applied to the court for
such compensation as his services appeared to deserve, although the
court expressed the opinion that the contract would have been held
void as having been made under circumstances of great distress. To
the same effect is
Schutz v. The Nancy, Bee's Ad. 139.
In the case most frequently cited,
The Emulous, 1 Sumn.
207, the parties treated the contract at an end on account of
unexpected difficulties; but Mr. Justice Story expressed the
opinion that salvage contracts were within control of the court,
and that the salvor could not avail himself of the calamities of
others to force upon them a contract unjust, oppressive, or
exorbitant. In the subsequent case of
Bearse v. Pigs of
Copper, 1 Story 314, Justice Story found that no fixed or
definite contract for the services existed, although he had
previously remarked that it was
"one of the few and excepted cases in which there may be a
private contract fixing the rate of salvage, which will be, and
ought to be, obligatory between
Page 172 U. S. 196
the parties."
We do not think that a salvage contract should be sustained as
an exception to the general rule, but rather that it should,
prima facie, be enforced, and that it belongs to the
defendant to establish the exception.
The A.D. Patchin, 1
Blatch. 414;
Harley v. 467 Bars Iron, 1 Sawyer 1;
The
R. D. Bibber, 33 F. 55;
The Wellington, 48 F. 475;
The Sir William Armstrong, 53 F. 145;
The Alert,
56 F. 721;
The Silver Spray's Boilers, Brown's Ad.
349.
In
The H. D. Bacon, Newberry's Ad. 274, certain
salvors, by the use of their machinery and diving bell worth
$20,000, raised a badly sunken steamboat in the Mississippi, valued
$20,000, in twelve hours. It was held that the contracted price of
$4,000 was just and reasonable.
In
The J. G. Paint, 1 Ben. 545, an agreement to pay a
steamboat $5,000 for towing a vessel worth $8,000, with a cargo of
sugar, for twenty-seven hours, was sustained by Judge, subsequently
Mr. Justice, Blatchford.
In most of the cases where the contract was held void, the facts
showed that advantage was taken of an apparently helpless condition
to impose upon the master an unconscionable bargain.
Brooks v.
Steamer Adirondack, 2 F. 387;
The Young America, 20
F. 926;
The Don Carlos, 47 F. 746.
It must be admitted that some of these courts have exercised a
wide discretion in setting aside these contracts, and have laid
down the rule that they are to be closely scrutinized, and will not
be upheld when it appears that the price agreed upon by the master
is unreasonable or exorbitant. We do not undertake to say that
these cases were improperly decided upon their peculiar facts, but
we are unable to assent to the general proposition laid down in
some of them that salvage contracts are within the discretion of
the court, and will be set aside in all cases where, after the
service is performed, the stipulated compensation appears to be
unreasonable. If such were the law, contracts for salvage services
would be of no practical value, and salvors would be forced to rely
upon the liberality of the courts.
Nor is such a contract objectionable, when prudently entered
Page 172 U. S. 197
into, upon the ground that it may result more or less favorably
to the parties interested than was anticipated when the contract
was made. A person may lawfully contract against contingencies; in
fact, the whole law of insurance is based upon the principle that,
by the payment of a small sum of money, the insured may indemnify
himself against the possibility of a greater loss, or, by the
expenditure of a trifling amount today in the way of premium, his
family may receive a much larger sum in case of his subsequent
death. If there were ever any doubt with respect to the validity of
such contracts, it was long since removed by the universal
concurrence of the courts, and an enormous business has grown up
all over the world upon the faith of their validity. Indeed nearly
every contract for a special undertaking or
job is subject
to the contingencies of a rise or fall in the price of labor or
materials, to the possibility of strikes, fires, storms, floods,
etc., which may render it unexpectedly profitable to one party or
the other.
We do not say that to impugn a salvage contract, such duress
must be shown as would require a court of law to set aside an
ordinary contract; but where no such circumstances exist as amount
to a moral compulsion, the contract should not be held bad simply
because the price agreed to be paid turned out to be much greater
than the services were actually worth. The presumptions are in
favor of the validity of the contract,
The Helen and
George, Swabey 368;
The Medina, 2 P.D. 5, although in
passing upon the question of compulsion, the fact that the contract
was made at sea, or under circumstances demanding immediate action,
is an important consideration. If when the contract is made, the
price agreed to be paid appears to be just and reasonable in view
of the value of the property at stake, the danger from which it is
to be rescued, the risk to the salvors, and the salving property,
the time and labor probably necessary to effect the salvage, and
the contingency of losing all in case of failure, this sum ought
not to be reduced by an unexpected success in accomplishing the
work unless the compensation for the work actually done be grossly
exorbitant.
Page 172 U. S. 198
While in England there has been some slight fluctuation of
opinion, by the great weight of authority, and particularly of the
more recent cases, it is held that if the contract has been fairly
entered into with eyes open to all the facts, and no fraud or
compulsion exists, the mere fact that it is a hard bargain, or that
the service was attended with greater or less difficulty than was
anticipated, will not justify setting it aside.
The
Mulgrave, 2 Hagg.Ad. 77;
The True Blue, 2 W.Rob. 176;
The Henry, 15 Jur. 183, 2 Eng.Law & Eq. 564;
The
Prinz Heinrich, 13 P.D. 13;
The Strathgarry (1895),
P.D. 264.
In
The Kingalock, 1 Spinks 263, an agreement was set
aside upon the ground that when the vessel was taken in tow, the
master concealed the facts that she had been compelled to slip an
anchor and cable and that her foresail was split. Dr. Lushington
thought that whether the omission to state those facts would
vitiate the agreement depended upon whether they could, with any
reasonable probability, affect the services about to be performed.
He found that the weather was very tempestuous, and the task was
made much more difficult for the want of ground tackle, and hence
that the agreement was null and void.
Per contra, in the
case of
The Canova, L.R. 1 Ad. 54, he held that as no
danger to property was proved, the agreement would not be set aside
by reason of the fact that a great part of the crew of the vessel
was disabled by illness.
In
The Phantom, L.R. 1 Ad. 58, an agreement for eight
shillings six pence, as an award for salvage services, was set
aside as futile where it appeared that there was real danger to the
salvors in rendering the services. The value of the
Phantom was about seven hundred pounds. The case was
certainly a very hard one upon the salvors, who appeared to have
been ignorant beachmen. But it is somewhat difficult to reconcile
that with the prior case of
The Firefly, Swabey 240, where
the court distinctly held that it would not set aside a salvage
agreement because it seemed to be a hard bargain or that of
The
Helen and George, Swabey 368, unless proved to be grossly
exorbitant or to have been obtained
Page 172 U. S. 199
by compulsion or fraud. It was also held in
The
Waverley, L.R. 3 Ad. 369, that a steamer which contracts to
render salvage services for a fixed sum will be held strictly to
her agreement, and that it is no ground for extra salvage
remuneration that the service was prolonged or became more
difficult.
See also The Jonge Andries, Swabey 303.
In
The Cargo ex Woosung, 1 P.D. 260, it appeared that
the ship was wrecked on a reef in the Red Sea, and was in a
position of imminent peril, and subsequently went to pieces. A
government vessel was sent to her relief from Aden, and the master
of the
Woosung, "under circumstances of enormous
pressure," agreed to pay half of the proceeds of the cargo saved.
The agreement was upheld by the admiralty court (Sir Robert
Phillimore), but was set aside by the Court of Appeal upon the
ground that the officers of government ships, while entitled to
salvage, could not impose terms upon the persons whose property
they saved and refuse to render assistance unless these terms were
accepted. The circumstances showed a clear case of compulsion. So
too, in
The Medina, 1 P.D. 272, 2 P.D. 5, where the master
of a vessel found passengers of another steamer (550 pilgrims)
wrecked on a rock in the Red Sea in fine weather, and refused to
carry them to Jeddah for a less sum than �4,000, and the
master of the wrecked vessel was by such refusal compelled to sign
an agreement for that sum, and the service was performed without
difficulty and danger, the agreement was held inequitable and set
aside. The compulsion in this case was even clearer than in the
last.
In
The Silesia, 5 P.D. 177, a vessel which, with her
cargo and freight, was valued at �108,000, on a voyage from
New York to Hamburg, became disabled about 340 miles from
Queenstown. The weather was fine and the sea smooth, but, after
tossing about for four or five days, she hoisted signals of
distress. Another steamer bore down upon her bound from Antwerp to
Philadelphia, and demanded �20,000 to take her to
Queenstown. The master of the
Silesia offered
�5,000, and finally agreed to pay �15,000 under
threat of the other steamer to leave him. The service occupied
three days.
Page 172 U. S. 200
The court set aside the agreement as exorbitant, and awarded
�7,000. Evidently advantage was taken of the helpless
condition of the
Silesia, and the agreement was signed
under compulsion.
In
The Prinz Heinrich, 13 P.D. 31, the master of the
Prinz Heinrich, which was in a position of serious danger
and ashore upon a barbarous and thinly inhabited coast, entered
into a written agreement with the master of the salving steamer
whereby he agreed to pay �200 a day for every day the latter
stood by and assisted by towing to get the
Prinz Heinrich
off, and, in the event of her being got off or coming off the rocks
during the continuance of the agreement, to pay �2,000 in
addition. The
Prinz Heinrich came off the same day, either
owing to the jettison of her cargo or to the towing of the salving
steamer. The court held the agreement to be reasonable, and that
the salvors were entitled to recover the full �2,200,
although the
Heinrich was so much damaged that she was
subsequently sold for �3,500. The cargo was valued at
�14,000. This is a strong case in favor of sustaining the
agreement.
In
The Mark Lane, 15 P.D. 135, a steamer becoming
disabled in the Atlantic Ocean in fine weather, about 350 miles
from Halifax, agreed to pay another steamer �5,000 to tow
her to Halifax, and, in case of failing in the attempt to reach
there, to pay her for the services rendered. The value of the
property saved was somewhat less than �30,000. The contract
was set aside, apparently because of the stipulation in the
agreement to pay for the services rendered even if they were
unsuccessful. The court found the contract to have been signed
under compulsion and threat of the salvage steamer to leave her if
the master refused.
In
The Rialto, 16 P.D. 175, a steamer in the Atlantic
fell in with another which had broken her main shaft. Her master
thereupon entered into an agreement that the owner should pay
�6,000 for being towed to the nearest port, believing that,
unless he consented to such terms, the salvors would not assist.
The distance towed was about 450 miles, and the value of the saved
property �38,000. The weather was fine
Page 172 U. S. 201
when the contract was made. There was no serious risk to the
salvors or their vessel. The court found the contract to be
inequitable, that the parties stood on unequal terms, and reduced
the amount to �3,000.
The most recent case in the English courts is that of
The
Strathgarry (1895), P.D. 264. In this case, a master of a
vessel whose cylinders were disabled entered into an agreement with
a passing steamship to pay �500 for half an hour's towage in
order to get his engines to work. The hawser broke immediately
after the completion of the agreed time, and the steamship refused
to continue the towage. It was held that although no benefit had
resulted from the service, the agreement had been duly carried out,
and that it was not, under the circumstances, manifestly unfair and
unjust, and therefore the stipulated sum must be paid. The case was
certainly a hard one, but the court held that notwithstanding the
services lasted but thirty minutes, the whole �500 should be
paid.
In none of these cases, except perhaps that of
The
Phantom, was the agreement set aside except upon proof of
corruption, suppression of facts, or circumstances amounting to a
compulsion. In the case of
The Phantom, the circumstances
were peculiar. The salvors were seven ignorant longshoremen who
agreed for a consideration which amounted to but little more than a
shilling apiece, to undertake the salving of a vessel worth
�700. The salvors labored for two hours at great risk of
their lives, and the court naturally held the consideration to be
merely nominal.
Under the continental system, the courts appear to exercise a
wider discretion, and to treat contracts as of no effect when made
while the vessel is in danger. Some intimations go so far as to say
that they will be disregarded whenever made before the services are
rendered. The doctrine of these courts seems to have arisen from
the following extract from the fourth article of the Rules of
Oleron:
"And yf it were so, that the mayster and the marchauntes have
promised to folke, that should helpe them to save the shyp and the
said goodes, the thyrde parte or half of the said goodes which
should be saved for the peryll that they be in
Page 172 U. S. 202
the justyce of the country ought well to regarde what payne and
what labour they have done in saving them, and after that payne,
notwithstanding that promise which the said mayster and the
marchauntes shall have made, rewarde them. This is the
judgement."
By the German Commercial Code, art. 743, it is enacted that
"when during the danger an agreement has been made as to the
amount of salvage or payment for assistance, such agreement may
nevertheless be disputed on the plea that the amount agreed upon
was excessive, and the reduction of the same to an amount more in
accordance to the circumstances of the case may be demanded."
Under the Scandinavian Code, art. 27, the master may, within two
months, bring the question of contract before the court, which can
refuse the amount if considerably in excess of a reasonable payment
for the services performed. Even if it be agreed that the amount be
settled by arbitration, the person liable to pay may repudiate the
agreement if he does so within 14 days.
By the Commercial Code of Holland, art. 568, every agreement or
transaction regarding the price of assistance or of salvage may be
modified or annulled by the judge if it has been made in the open
sea or at the time of stranding. Nevertheless, when the danger is
passed, it shall be lawful for both to make regulations or
agreements as to the price of assistance or salvage.
By the Commercial Code of Portugal, art. 1608, and by that of
the Argentine Republic, sec. 1469, every agreement for salvage made
upon the high seas, or at the time of stranding, with the captain
or other officer, shall be null, both with respect to the vessel
and to the cargo; but after the risk has terminated, the price may
be agreed upon, although it will not be binding upon the owners,
consignees, or underwriters who have not consented to it.
The French, Belgian, Italian, Spanish, and Brazilian Codes have
no special provisions upon the subject, and the question of
sustaining or annulling them is rather a question of fact than of
law.
Page 172 U. S. 203
We have examined the cases cited by counsel in the Revue
Internationale de Droit Maritime, and find that they are more
favorable to the respondent than the English and American
authorities. In short, they appear to pay much less regard to the
sanctity of contracts than obtains under our system, and we are
loath to accept them as expressing the true rule upon the subject.
Indeed, we have had frequent occasion to hold that the maritime
usages of foreign countries are not obligatory upon us, and will
not be respected as authority except so far as they are consonant
with the well settled principles of English and American
jurisprudence.
The John G. Stevens, 170 U.
S. 113,
170 U. S. 126,
and cases cited.
The facts in this case are somewhat peculiar, and, in entering
into the contract, unusual precautions were taken. On October 5th,
the
Elfrida, in entering the river, grounded by the stern
about midchannel, her bow drifting over towards the west jetty. Her
crew were unable to get her off either upon that or the following
day, when, owing to the sea rising, she was carried over the jetty
and a very considerable distance further onto the beach (about 600
feet), where she remained in seven or eight feet of water,
gradually working inward and making a bed for herself in the sand,
which had a tendency to bank up about her bows. She appears to have
been at no time in imminent peril, but her situation could have
been hardly without serious danger, unless she were released before
a heavy storm came on, which might have broken her up or driven her
so far ashore that her rescue would have been impossible. It was
shown that in previous years, a number of vessels had gone ashore
in this neighborhood, several of which were lost by bad weather
coming on. In other cases, the difficulty of getting them off had
been very largely increased by similar causes. The testimony shows
that while the
Elfrida lay there, the wind was at times
blowing a gale with a rough sea, in which the ship strained and
bumped heavily. On Saturday, the 6th, the day of her final
stranding, the master, having given up his idea of getting her off
with her own anchors, telegraphed his owners and also Lloyd's agent
at Galveston, who appear to have sent Mr. Clarke, one of the
libelants,
Page 172 U. S. 204
down on Sunday evening. He offered to undertake the relief of
the ship for what the court would allow him. This offer the master
declined. About the same time, Mr. Sorley, Loyd's agent, came down
to the vessel, saw her situation, remained there two days, and
advised the master to invite bids for her relief. He obtained two
bids, one for $24,000 and one made by the libelants for $22,000,
and on the advice of Sorley and of his owners, Pynam, Bell &
Co., of Newcastle-on-Tyne, with whom he kept in constant
communication by cable, he accepted libelants' bid, and a contract
was entered into whereby they agreed to float the
Elfrida
and place her in a safe anchorage, and to complete the job within
twenty-one days from date. The master agreed to pay therefor the
sum of $22,000, but reserved the right to abandon the ship in lieu
of this amount. At the request of the owners, he also inserted a
further stipulation that if the libelants should fail to float the
ship and place her in a position of safety within twenty-one days,
they should receive no compensation whatever for the work performed
or the labor, tools, or appliances furnished. This contract was
made at Velasco on October 15. Clarke proceeded at once to get
ready a wrecking outfit, consisting of a tugboat and schooner, with
fifteen or sixteen men, went to the wreck, and spent about two days
planting anchors and connecting cables from them to the winches of
the ship. The tugboat took no part in the actual relief of the
vessel, which was effected by the aid of the anchors and the
steamer's engines, although after the
Elfrida was afloat
she drifted against the west jetty, and the tug hauled her off.
For the work actually done, the stipulated compensation was
undoubtedly very large, and, if the validity of the contract
depended alone upon this consideration, we should have no
hesitation in affirming the decree of the circuit court of appeals;
but the circumstances under which the contract was made put the
case in a very different light. In the first place, the libelants
offered to get the vessel off for such salvage as the court should
award, but the master declined the proposition, and, acting under
the advice of Lloyd's agent and of Moller & Co., the owners'
agents at Galveston, invited bids
Page 172 U. S. 205
for the service. This certainly was a very proper step upon his
part, and there is no evidence showing any collusion between the
bidders to charge an exorbitant sum. The conditions imposed upon
the libelants were unusual and somewhat severe. Their ability to
get her off must have depended largely upon the continuance of good
weather. Their ability to get her off within the time limited was
even more doubtful, and yet under their contract they were to
receive nothing -- not even a
quantum meruit -- unless
they released her and put her in a place of safety within
twenty-one days. Further than this, if in getting her off, or after
she had been gotten off, she proved to be so much damaged that she
was not worth the stipulated compensation, the master reserved the
right to abandon her.
We give no weight to the advice of Pynam, Bell & Co., her
owners, to enter into the contract, since, in the nature of things,
they could have no personal knowledge of her situation or of the
possibility of relieving her, but it shows that her master, though
a young man and making his first voyage as master, acted with
commendable prudence. He took no step without the advice of his
owners and that of the underwriters' agent at Galveston, Mr.
Sorley, who was a man over seventy years of age, perfectly honest,
and of large experience in these matters. Sorley visited the
vessel, saw her situation, and advised an acceptance of the bid.
The value of the ship is variously estimated at from $70,000 to
$110,000, but the sum for which she was insured, �18, 000,
or $90,000, may be taken as her approximate value. Under the
stringent circumstances of this contract, we do not think it could
be said that an agreement to pay one-quarter of her value if
released could be considered unconscionable, or even exorbitant,
and, unless the fact that it proved to be exceedingly profitable
for the libelants is decisive that it was unreasonable, it ought to
be sustained. For the reasons above stated, we think that the
disproportion of the compensation to the work done is not the sole
criterion. Very few cases are presented showing a contract entered
into with more care and prudence than this, and we are clear in our
opinion that it should be sustained.
Page 172 U. S. 206
Had the agreement been made with less deliberation or pending a
peril more imminent, our conclusion might have been different.
The decree of the circuit court of appeals must therefore be
reversed, and the case remanded to the District Court for the
Eastern District of Texas with directions to execute its original
decree.
