A general average agreement inserted in bills of lading,
providing that, if the owner of the ship shall have exercised due
diligence to make the ship in all respects seaworthy and properly
manned, equipped, and supplied, the cargo shall contribute in
general average with the shipowner even if the loss resulted from
negligence in the navigation of the ship, is valid under the Harter
Act, and entitles the shipowner to collect a general average
contribution from the cargo owners in respect to sacrifices made
and extraordinary expenditures incurred by him for the common
benefit and safety of ship, cargo, and freight subsequent to a
negligent stranding.
Under § 3 of the Harter Act, the cargo owners under the
same circumstances have a right of contribution from the shipowner
for sacrifices of cargo made subsequent to the stranding for the
common benefit and safety of ship, cargo and freight.
Under the same circumstances the cargo owners cannot recover
contribution from the shipowner in respect of general average
sacrifices of cargo, without contributing to the general average
sacrifices and expenditures of the shipowners made for the same
purpose.
The essence of general average contribution is that
extraordinary sacrifices made and expenses incurred for the common
benefit are to be borne proportionately by all who are
interested.
The Irrawaddy, 171 U. S. 187,
distinguished.
Questions certified in case reported in 162 F. 56 and 178 F. 414
answered.
Cross-libels were filed in the United States District Court for
the Southern District of New York between the owner of the
steamship
Jason and the firm of Arbuckle Brothers, owners,
and the Insurance Company of North
Page 225 U. S. 33
America, insurers of part of that vessel's cargo, to recover
general average contributions. The district court dismissed both
libels. 162 F. 56. Upon appeal, the circuit court of appeals at
first filed an opinion for affirmance (178 F. 414), but afterwards
granted a rehearing, as a result of which the questions of law at
issue were certified to this Court as follows:
"
Statement of Facts"
"The facts upon which the questions arise are these:"
"On July 30, 1904, the Norwegian Steamship
Jason, while
bound on a voyage from Cienfuegos, Cuba, to New York, with general
cargo, including 12,000 bags of sugar, consigned to Arbuckle
Brothers, and insured with the Insurance Company of North America,
stranded off the south coast of Cuba through the negligence of her
navigators. The steamship was seaworthy and was properly manned,
equipped, and supplied."
"The vessel was relieved from the strand on August 9 as the
result of sacrifices by jettison of 2,042 bags of sugar (1,657 bags
being the property of Arbuckle Brothers), of sacrifices and
extraordinary expenditures voluntarily made or incurred by the
shipowner through the master, and of the services of salvors
specially employed. Said sacrifices and expenditures were necessary
to relieve ship, cargo, and freight from common peril. She then
completed her voyage, and made delivery of the remainder of her
cargo to the several consignees at New York on their executing an
average bond for the payment of losses and expenses which should
appear to be due from them, provided they were stated and
apportioned by the adjusters 'in accordance with established usages
and laws in similar cases.'"
"The bills of lading for all of the
Jason's cargo
contained the following provision:"
" General average payable according to York-Antwerp
Page 225 U. S. 34
rules, and as to matters not therein provided for, according to
usages of port of New York."
" If the owner of the ship shall have exercised due diligence to
make said ship in all respects seaworthy and properly manned,
equipped, and supplied, it is hereby agreed that, in case of
danger, damage, or disaster resulting from fault or negligence of
the pilot, master, or crew, in the navigation or management of the
ship, or from latent or other defects, or unseaworthiness of the
ship, whether existing at time of shipment or at beginning of the
voyage, but not discoverable by due diligence, the consignees or
owners of the cargo shall not be exempted from liability for
contribution in general average, or for any special charges
incurred, but, with the shipowner, shall contribute in general
average, and shall pay such special charges, as if such danger,
damage, or disaster had not resulted from such fault, negligence,
latent or other defect or unseaworthiness."
"Both parties pleaded the bills of lading as constituting the
contract of carriage."
"A general average adjustment was afterwards made in New York by
Johnson & Higgins, adjusters appointed in the average bond.
Both parties presented their claims to the adjusters for sacrifices
made by them respectively for the common benefit and safety of the
adventure. The adjusters allowed in the general average account the
compensation of the salvors, the sacrifices of cargo, and the
sacrifices and extraordinary expenditures of the shipowner, and
each of the interests was credited with such amounts as had been
paid by it for the common benefit."
"The adjustment was prepared in accordance with York-Antwerp
rules, as provided for in the bill of lading, and otherwise in
accordance with established usages and laws."
"The adjustment and apportionment of general average, so made,
showed a balance due from Arbuckle
Page 225 U. S. 35
Brothers of $5,060.24, which the latter refused to pay. The
grounds of such refusal were that the stranding resulted from the
ship's negligence, and that the general average clause, above
quoted, contained in the bills of lading, is invalid."
"The original libel was filed by the owner of the
Jason
against Arbuckle Brothers and its guarantor, the Insurance Company
of North America, to recover this amount."
"Arbuckle Brothers and the Insurance Company of North America
filed a cross-libel to recover the sum of $3,506.50, which they
alleged would be due them on an adjustment of the general average
losses, if the shipowner's losses and sacrifices were excluded from
the general average account by reason of the fact that the
stranding was caused by negligence of the ship's navigators. They
claimed that the shipowner's sacrifices and extraordinary
expenditures, made for the common benefit and safety of the
adventure after the stranding, should not be allowed in the
adjustment. If said sacrifices and expenditures should be excluded
from the adjustment, and the value of the ship should be taken
account of as a contributory interest, the adjustment would show a
balance in favor of Arbuckle Brothers."
"The district court made a decree dismissing both libels, from
which decree both parties duly appealed to this Court."
"
Questions Certified"
"Upon the facts above set forth, the questions of law concerning
which this Court desires the instruction of the Supreme Court
are:"
"1. Whether the general average agreement above quoted from the
bills of lading is valid, and entitles the shipowner to collect a
general average contribution from the cargo owners, under the
circumstances above stated, in respect of sacrifices made and
extraordinary expenditures
Page 225 U. S. 36
incurred by it subsequent to the stranding, for the common
benefit and safety of ship, cargo, and freight."
"2. Whether, in view of the provisions of the third section of
the Harter Act, the cargo owners, under the circumstances above
stated, have a right to contribution from the shipowner for
sacrifices of cargo made subsequent to the stranding, for the
common benefit and safety of ship, cargo, and freight?"
"3. Whether the cargo owners, under the circumstances above
stated, can recover contribution from the shipowner in respect of
general average sacrifices of cargo without contributing to the
general average sacrifices and expenditures of the shipowner made
for the same purpose."
"In accordance with the provisions of Section 6 of the Act of
March 3, 1891, establishing courts of appeals, the foregoing
questions of law are by the Circuit Court of Appeals of the United
States for the Second Circuit, hereby certified to the Supreme
Court. "
Page 225 U. S. 48
MR. JUSTICE PITNEY, after stating the case as above, delivered
the opinion of the Court.
That the facts present a case of general average within the
meaning of the clause embodied in the bills of lading is entirely
clear. There was a common, imminent peril
Page 225 U. S. 49
involving ship and cargo, followed by a voluntary and
extraordinary sacrifice of property (including extraordinary
expenses), necessarily made to avert the peril, and a resulting
common benefit to the adventure.
McAndrews
v. Thatcher, 3 Wall. 347,
70 U. S. 365;
The Star of
Hope, 9 Wall. 203,
76 U. S. 228;
Ralli v. Troop, 157 U. S. 386,
157 U. S.
394.
The principal controversy is upon the question of the validity
of the agreement that, if the shipowner "shall have exercised due
diligence to make said ship in all respects seaworthy, and properly
manned, equipped, and supplied," then, in case of danger, damage,
or disaster resulting from (
inter alia) negligent
navigation, the cargo owners shall not be exempted from liability
for contribution in general average, but, with the shipowner, shall
contribute as if such danger, damage, or disaster had not resulted
from negligent navigation. The facts show that the shipowner had
fulfilled the condition imposed upon him by this clause -- that is,
he had "exercised due diligence to make said ship in all respects
seaworthy and properly manned, equipped, and supplied." The
question presented for solution turns upon the effect of the third
section of the Act of Congress approved February 13, 1893, c. 105,
27 Stat. 445, known as the Harter Act, and of the decision of this
Court in the case of
The Irrawaddy, 171 U.
S. 187.
Prior to the Harter Act, it was established that a common
carrier by sea could not, by any agreement in the bill of lading,
exempt himself from responding to the owner of cargo for damages
arising from the negligence of the master or crew of the vessel.
Liverpool & G. W. Steam Co. v. Phenix Ins. Co.,
129 U. S. 398,
129 U. S. 438,
following
New York C. Railroad Co. v.
Lockwood, 17 Wall. 357.
But, of course, the responsibilities of the carrier were subject
to modification by law, and, with respect to vessels transporting
merchandise from or between ports of the United States and foreign
ports, they were substantially
Page 225 U. S. 50
modified by the Harter Act. The first three sections of this
enactment are pertinent to the present discussion, and are set
forth in full in the margin.*
Section 1 deals with the shipowner's responsibility for the
proper loading, stowage, custody, care, and delivery of the cargo,
prohibits the insertion in any bill of lading of an agreement
relieving him from responsibility for negligence in respect of
these duties, and declares such agreements null and void. Section 2
prohibits the insertion in any bill of lading of an agreement
lessening or avoiding the obligation of the shipowner to "exercise
due diligence [to] properly equip, man, provision, and outfit said
vessel and to make said vessel seaworthy." etc. Section 3 proceeds
to limit the responsibility of a shipowner who shall have exercised
due diligence to make his vessel seaworthy and properly manned,
equipped, and supplied. Instead of merely sanctioning covenants and
agreements limiting his liability, Congress went further
Page 225 U. S. 51
and rendered such agreements unnecessary by repealing the
liability itself, declaring that, if the shipowner should exercise
due diligence to make the vessel in all respects seaworthy and
properly manned, equipped, and supplied, neither the vessel, her
owner or owners, etc., should be responsible for damage or loss
resulting from faults or errors in navigation or in the management
of the vessel, etc., etc. The antithesis is worth noting. Congress
says to the shipowner:
"In certain respects, you shall not be relieved from the
responsibilities incident to your public occupation as a common
carrier, although the cargo owners agree that you shall be
relieved; in certain other respects (provided you fulfill
conditions specified), you shall be relieved from responsibility
even without a stipulation from the owners of cargo."
In the case now before us, it is argued in behalf of the
shipowner that, since, by the third section of the Harter Act, he
is absolved from responsibility for the negligence
Page 225 U. S. 52
of his master and crew under the circumstances existing, there
is nothing in the policy of the law to debar him from bargaining
with the owners of cargo for a participation in the general average
contribution. In behalf of the cargo owners, it is insisted that
the construction placed upon the legislation in question by this
Court in
The Irrawaddy, supra, leaves the shipowner still
disabled from making an agreement with the cargo owners for a
participation with them in general average contributions resulting
from negligent navigation or management of the ship by its master
and crew.
The latter view was adopted by the district court in
New
York & C. Mail S.S. Co. v. Ansonia Clock Co., 139 F. 894,
where a clause identical with the one now under consideration was
held invalid. This decision was apparently followed, although not
cited, by the same court (162 F. 56) and by the circuit court of
appeals (178 F. 414, 416) in the case now under review. In reaching
this result, the courts below have, as we think, misconceived the
effect of the language used by Mr. Justice Shiras, speaking for
this Court in
The Irrawaddy, and have given to that
decision an import quite beyond its legitimate scope. In that case,
there was no agreement between shipowner and cargo owner respecting
general average, nor respecting the consequences of a stranding or
other peril that might result from the negligence of the master or
crew of the vessel. On familiar grounds, all of the expressions
employed in the opinion are to be construed in the light of the
facts of the case and the question actually presented for decision.
This was whether § 3 of the Harter Act,
proprio
vigore, gave to the shipowner, under the circumstances, a
right to general average contribution for sacrifices made by him
subsequent to the stranding of the vessel in successful efforts to
save her and her freight and cargo. It was pointed out in the
opinion that, previous to that enactment, in the
Page 225 U. S. 53
case of a loss arising from the ship's fault, the shipowner was
excluded from contribution by way of general average, and was also
legally responsible to the owner of the cargo for loss and damage
so occasioned, and that it was against the policy of the law to
allow stipulations that would relieve a carrier from such
liability. It was, however, recognized that it was "competent for
Congress to make a change in the standard of duty." It was remarked
that, by the first and second sections of the Harter Act,
shipowners were prohibited from inserting in their bills of lading
agreements limiting their liability in certain respects, and that
the third section, by its own terms, limited their liability in
other respects. The opinion, after stating that, as the law stood
before the passage of the act, the shipowner could not contract
against his liability and that of his vessel for loss occasioned by
negligence or fault in officers and crew, and that, in this
particular, the owners of American vessels were at a disadvantage
as compared with the owners of foreign vessels who might so
contract, proceeded to say that
"Congress thought fit to remove the disadvantage not by
declaring that it should be competent for the owners of vessels to
exempt themselves from liability for the faults of the master and
crew by stipulations to that effect contained in bills of lading,
but by enacting that, if the owners exercised due diligence in
making their ships seaworthy and in duly manning and equipping
them, there should be no liability for the navigation and
management of the ships, however faulty."
This language is laid hold of as indicating that the decision
proceeded upon the ground that Congress thought it improper to
permit owners of vessels to contract for exemption from liability.
What it really means, as will be observed, is that Congress went
further, and by its own enactment exempted them from liability,
under given conditions, for the consequences of faulty
navigation.
Page 225 U. S. 54
The point of the decision in
The Irrawaddy (and, as an
authority, the case goes no further) is, that, while the Harter Act
relieved the shipowner from liability for his servant's negligence,
it did not, of its own force, entitle him to share in a general
average rendered necessary by such negligence.
It is, however, further insisted in behalf of the cargo owners
that the agreement in question is contrary to public policy in
another respect -- namely, in that it attempts to relieve the
shipowner from one of the essential duties arising out of the
relation of carrier and shipper, and from which the Harter Act has
not relieved him. The argument is that, although that act exempts
him from the consequences of the negligent stranding, it leaves him
still under the duty and obligation of caring for and preserving
the cargo after the stranding; that, whenever the safety of the
property entrusted to the shipowner is menaced, whether the peril
be occasioned by
vis major or by fault, and whether such
fault be or be not of such character as to fall within the third
section of the Harter Act,
"the master is nevertheless bound to exert every effort to save
the property, and if he fail in his duty, his owners are liable to
the cargo for the resulting loss."
If by "every effort" is meant every reasonable effort, we see no
occasion to question the soundness of the reasoning. But it is
further insisted that the duty of the master to save the imperiled
property extends so far as to call for a sacrifice of a part of the
owner's property if necessary to save the cargo. In our opinion,
the master's duty as agent of the owner is not so extensive. If it
were, there would be an end at once of all contribution in general
average for ship's sacrifices, for such sacrifices could not be
deemed voluntary and extraordinary if made in performance of the
owner's general duty to his cargo.
The cases cited do not support the contention of counsel
Page 225 U. S. 55
for the cargo owners in this behalf.
The Niagara
v. Cordes, 21 How. 7,
62 U. S. 28, holds
that, although the vessel be stranded,
"the master is bound to the utmost exertions in his power to
save the goods from the impending peril, as it is no more than a
prudent man would do under like circumstances."
The Maggie
Hammond, 9 Wall. 435,
76 U. S. 458,
holds that, when the vessel is wrecked or otherwise disabled in the
course of the voyage and cannot be repaired without too great delay
and expense, it is the duty of the master to transship the goods
and send them forward, if another vessel can be had in the same or
a contiguous port or within a reasonable distance, and that, upon
so doing, he is entitled to charge the goods with the increased
freight arising from the hire of the vessel so procured. In
The Star of
Hope, 9 Wall. 203,
76 U. S. 230,
it is pointed out that the duty imposed upon the master, in case of
a peril arising to the common adventure, is
"to judge and determine at the time whether the circumstances of
danger in such a case are or are not so great and pressing as to
render a sacrifice of a portion of the associated interests
indispensable for the common safety of the remainder."
The duty to make a sacrifice of such portion of the associated
interests as, in the judgment of the master, will save the common
adventure is obviously inconsistent with the suggested duty to
first sacrifice the owner's property for the safety of the cargo.
The other cases cited upon this point require no mention.
In our opinion, so far as the Harter Act has relieved the
shipowner from responsibility for the negligence of his master and
crew, it is no longer against the policy of the law for him to
contract with the cargo owners for a participation in general
average contribution growing out of such negligence, and since the
clause contained in the bills of lading of the
Jason's
cargo admits the shipowner to share in the general average only
under circumstances where by the act he is relieved from
responsibility, the
Page 225 U. S. 56
provision in question is valid, and entitles him to contribution
under the circumstances stated.
The second question is whether, under the like circumstances,
the cargo owners can recover contribution from the shipowner for
sacrifices of cargo made subsequent to the stranding, for the
common benefit and safety of ship, cargo, and freight.
This question was dealt with in
The Strathdon, 94 F.
206, 101 F. 600; where, however, there seems to have been no
general average clause such as we have in the case before us, and
by the same courts in this case, 162 F. 56, 178 F. 414, where the
general average clause was dealt with as invalid, and therefore, of
course, was given no influence in the determination of the present
point. The circuit court of appeals expressed the view that, if the
cargo owner were allowed to obtain indirectly through a general
average adjustment, compensation for losses attributable to the
faulty navigation of the ship, and which therefore he could not
recover directly because of § 3 of the Harter Act, the result
would be a judicial repeal of that section, and that therefore the
cargo owner could not bring the shipowner as a contributing
interest into a general average adjustment that might result in a
claim which the Harter Act disallows. With this view we have no
present concern, because it seems to us that the response we are to
make to the second question certified must depend upon the
construction of the agreement between the parties. Having already
held that the general average clause contained in the bill of
lading is valid as against the cargo owner, it follows
ex
necessitate that it is valid in his favor; indeed, no ground
is suggested for disabling the shipowner from voluntarily
subjecting himself or his ship to liability to respond to the cargo
in an action or in a general average adjustment, for the
consequences of the negligence of his master or crew, even
Page 225 U. S. 57
though, by the Harter Act, he is relieved from responsibility
for such negligence. Therefore we have only to determine whether,
by the language of the general average clause, the cargo owners are
entitled to contribution from the ship for sacrifices of cargo made
subsequent to the stranding for the common benefit and safety. The
language is that, in the circumstances presented,
"the consignee or owners of the cargo shall not be exempted from
liability for contributions in general average, or for any special
charges incurred, but, with the shipowner, shall contribute in
general average, and shall pay such special charges, as if such
danger, damage, or disaster had not resulted from such default,
negligence,"
etc. This language clearly imports an agreement that the
shipowner shall contribute in general average. The opposite view
would render the clause inconsistent with the principles of equity
and reciprocity upon which the entire law of general average is
founded.
The foregoing considerations compel a negative answer to the
third question. In view of the valid stipulations contained in the
bill of lading, it would be a contradiction of terms to permit the
cargo owners to recover contribution from the ship in respect of
general average sacrifices of cargo, without on their part
contributing to the general average sacrifices and expenditures of
the shipowner made for the same purpose. This would not be general
average contribution, the essence of which is that extraordinary
sacrifices made and expenses incurred for the common benefit and
safety are to be borne proportionately be all who are
interested.
Our conclusion, accordingly, is that, of the questions certified
to us by the circuit court of appeals, the first question should be
answered in the affirmative, the second question should be answered
in the affirmative, and the third question should be answered in
the negative, and it is
So ordered
|225 U.S.
225 U. S.
32ast|
* The docket title of the case is
Actieselskabet Jason v.
John Arbuckle et al.
* The title and first three sections of the Harter Act are as
follows:
"An Act Relating to Navigation of Vessels, Bills of Lading, and
to Certain Obligations, Duties, and Rights in Connection with the
Carriage of Property."
"
Be it enacted, etc., that it shall not be lawful for
the manager, agent, master, or owner of any vessel transporting
merchandise or property from or between ports of the United States
and foreign ports to insert in any bill of lading or shipping
document any clause, covenant, or agreement whereby it, he, or they
shall be relieved from liability for loss or damage arising from
negligence, fault, or failure in proper loading, stowage, custody,
care, or proper delivery of any and all lawful merchandise or
property committed to its or their charge. Any and all words or
clauses of such import inserted in bills of lading or shipping
receipts shall be null and void and of no effect."
"SEC. 2. That it shall not be lawful for any vessel transporting
merchandise or property from or between ports of the United States
of America and foreign ports, her owner, master, agent, or manager
to insert in any bill of lading or shipping document any covenant
or agreement whereby the obligations of the owner or owners of said
vessel to exercise due diligence, properly equip, man, provision,
and outfit said vessel, and to make said vessel seaworthy and
capable of performing her intended voyage, or whereby the
obligations of the master, officers, agents, or servant to
carefully handle and stow her cargo, and to care for and properly
deliver same, shall in any wise be lessened, weakened, or
avoided."
"SEC. 3. That if the owner of any vessel transporting
merchandise or property to or from any port of the United States of
America shall exercise due diligence to make the said vessel in all
respects seaworthy and properly manned, equipped, and supplied,
neither the vessel, her owner or owners, agent, or charterers shall
become or be held responsible for damage or loss resulting from
faults or errors in navigation or in the management of said vessel,
nor shall the vessel, her owner or owners, charterers, agent, or
master be held liable for losses arising from dangers of the sea or
other navigable waters, acts of God, or public enemies, or the
inherent defect, quality, or vice of the thing carried, or from
insufficiency of package, or seizure under legal process, or for
loss resulting from any act or omission of the shipper or owner of
the goods, his agent or representative, or from saving or
attempting to save life or property at sea, or from any deviation
in rendering such service."
