Case ID: us-ct-cl_5/html/0166-01.html
Source: Caselaw Access Project
Author: {"author": "Casey, Ob. J., Boring-, J., Nott, J.,", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

SPEAR & LANG’S CASE, (1st.) Charles Spear et. al. v. The United States.
    
      On the Proofs.
    
    
      The owners of the steamer Maple Leaf execute a charter-party to the government; the compensation $250 a clay; the war rislc to he home hy the defendants, the marine rislc hy the owners. The charter appraises the value of the vessel at $50,000, and provides that should, she he retained in the service so long that the money paid (deducting the expense of running and repairs, and a qirofit of 33 peí' cent, per annum on the appraised value) “ shall he equal to said appraised value, theu the vessel shall become the property of the United States.” Also, that if at any time during the continuance of the charter the United States shall elect to purchase said vessel, they shall have the right to ialce her at the appraised value, and all moneys paid or due on account of the charter, deducting the running expenses, the repairs, and 33 per cent, per annum on the stipulated value, “ shall apply on account of said purchase.” The vessel continues in the service about nine months, when she is destroyed hy running on a torpedo in the St. John’s River, Florida.
    
    Under a charter-party to the defendants, (wherein they assume the war risk,) which fixes an appraised value for the vessel, and provides that, should she he retained in the service so long that the money paid, less her expenses, repairs, and an agreed pirofit, “ shall he equal to said appraised value, then the said vessel shall become the property of the United States;” if the vessel is destroyed hy a war risk before the excess equals the appraised value, the defendants are liable only for the balance of the appraised value.
    
      Messrs. Chipman & Hosmer for the claimants :
    The claim in this case is for the value of the steamboat Majde Leaf, which was chartered to the United States on the 19 th day of August, 1863. She was destroyed by the explosion of a rebel torpedo in the St. John’s Biver, Florida, on the 1st day of April, 1864, while in sendee under charter.
    The facts in the case, which we think will not be disputed, are briefly as follows: The Maple Leaf was one of a fleet of transports ordered up the St. John’s Biver on a very hazardous military expedition. While returning in the night, she ran upon a torpedo planted by the enemy in the river, and was totally destroyed. The charter-party declares, “the said vessel is valued and appraised at the sum of $50,000.” The Quarter-mater’s Department and the accounting officers of the Treasury subsequently assumed $50,000 to be the value of the vessel, and made a partial payment xrpon that basis, admitting that the loss was by war risk, which, tinder the charter, was assumed by the government.
    The question to be determined by the court is a somewhat novel and interesting one.
    The language of the charter is not happy, and is, to some extent, vague and uncertain. The first paragraph, which we have quoted, appears to declare that the vessel, under the conditions named, shall become the property of the United States at the moment her earnings (after deducting the cost of running, repairs, and 33 per cent, per annum as profit on the aj>-praised value) shall be equal to the appraised value.
    The second paragraph, however, seems to state more clearly the object of the charter to be that the government may become the purchaser, at its own discretion, upon the conditions which we have stated, for this clause distinctly states: “If, at any time during the continuance of this charter, the United States shall elect to purchase the said vessel,” &c., after which follows, substantially, the conditions named in the preceding paragraph.
    We think the charter-party will bear no such construction as that given it by the departments, for the following, among other reasons:
    First. The owners under this charter assumed the marine risk, and we think there is no doubt that if the vessel had been destroyed by a marine risk at the period she was destroyed, the loss would have fallen upon the owners. If this be true, then she was not the property of the government at that time under the accruing clause; for certainly it cannot be that the owners of this vessel were to assume the risk of property that did not belong to them.
    Second. We insist that upon the total loss of the vessel the charter ceased, except as an agreement between the parties by which the final settlement for services rendered and loss was to be made; but the right to purchase according to the terms of the charter-party existed only “ during the continuance” of the charter. If the charter continued after the destruction for any other purposes than those we have named, to wit: as a memoranda for the settlement of the accounts between the contractors and the government, then all its provisions must be enforced, and these partiesmust be paid for services which they never rendered with, a vessel that was no longer in existence. The charter-party was completed, finished, at the destruction of the vessel, so also the life insurance policy at the death of the insured.
    Third. This right of purchase was at the election of the United States; and we say this election must have been made during the life-time of the charter, and while the thing itself chartered was in existence.
    Fourth. The court will readily discern many of the reasons which might operate to control this right to purchase on the part of the government, and which help to elucidate the theory of this form of charter-party.
    Evidently, the intention was to give the government the election to purchase when it might be to its advantage, and when circumstances would seem to require this, and when this was not true, to allow the vessel to be used, the owner assuming-marine risks meanwhile, as under the ordinary form of charter.
    Again, we think it may be claimed also that if the government had the right to purchase a vessel that had no existence, that indirectly the government might be benefited at the expense of the owner, then the government had the same right also to purchase this same vessel, having no existence, at a time when it would be to the detriment of the government.
    Again, this pretended purchase involves still further absurdities. There must be title deeds giving possession, delivery, either manual or symbolical; but all this proceeds upon the theory that there is something to deliver, a piece of property to describe in the deed, a real, not a pretended, value to be mentioned.
    But we are not inclined to pursue the question further. Our claim briefly stated is this: The vessel earned, during her whole term of service, $66,125. To this we add the value, $50,000, which makes the sum of $116,125. We were paid for the whole amount of service $66,125, and the further sum of $19,887 93; making $86,012 93. This deducted from the former sum gives $30,112 07, the amount we claim.
    
      Mr. Alexander Johnston (with whom was the Assistant Attorney General) for the defendants:
    I. By the express terms of the charter-party, the government bad tbe right to take tbe A’essel at any time during tbe continuance of tbe charter. Tbe term u during tbe continuance of tbe charter ” simply means before tbe vessel is discharged.
    In this case tbe government bad an undoubted right to purchase, according to tbe terms of tbe charter, a moment before tbe vessel sank. How could tbe explosion of a rebel torpedo put an end to this right ?
    II. Tbe claimants voluntarily settled their claim under this provision of tbe charter. They made up and presented their case, with a view to having it settled exactly as it was settled. They furnished tbe department with testimony as to “the actual cost of running and keeping in repair tbe said vessel during tbe said time,” which testimony cordd have no possible application to tbe case, except to facilitate such a settlement as was made.
    III. Tbe adjudication of tbe case by tbe Third Auditor was final. It arose under tbe Act March. 3,1849, (Stat. L., vol. 9, p. 414,) (as amended,) and tbe act itself fixes tbe manner of set-tbng all claims arising under it. Tbe authority conferred by tbe act upon tbe Third Auditor was exactly similar to that conferred upon tbe Solicitor of tbe Treasury by act of 2d July, 1836, to “ settle and adjust ” tbe claims of William B. Stokes and others; and tbe settlement made in that case was held by tbe Supreme Court, in tbe case of Kendall v. The United, States, (12 Peters, p. 611,) to be conclusive upon the rights of tbe parties.
    IY. If tbe court should find tbe law to be with tbe claimants, there is no testimony upon which tbe damages could be assessed. Tbe valuation fixed in tbe charter was simply for tbe purpose contemplated by tbe charterj tbe purchase of tbe vessel by tbe government upon terms specified. It is not evidence in this court that tbe vessel was worth $50,000.
   Casey, Ob. J.,

opinion:

On tbe 22d day of June, 1863, tbe claimants were tbe owners of tbe steamboat Maple Leaf. On that day she entered tbe service of tbe United States, upon tbe terms and stipulations contained in a charter-party executed on tbe 19th day of August following. By its terms tbe vessel was to be kept tight, stanch, and strong, and well and sufficiently manned, victualed, appareled, tackled, ballasted, and furnished in every respect fit for merchant service, at the cost of her owners, pilotages and port charges to be paid by the United States, “ the war risk to be borne by the United States, the marine risk to be borne by the owners.”

The vessel was to be paid at the rate of $250 per day for everyday employed; and the charter-party contained also the following clauses, and upon the construction of which this controversy hinges:

“ The said vessel is valued and appraised at the sum of $50,000, and should she be retained so long in the service of the United States that the money paid and due on account of said charter (deducting therefrom the actual cost of running and keeping in repair the said vessel during the said time, together with a net profit of 33 per cent, per annum on said appraised value) shall be equal to said appraised value, then the said vessel sh all become the property of the United States without further payment,, except such sum as may then be due on account of the services of the said vessel, rendered under the said charter.

“And further, if at any time during the continuance of this charter the United States shall elect to purchase the said vessel, then they shall have the right to take her at the appraised value at the date of charter, and all money then already paid and due on account of said charter (deducting therefrom the actual cost of running and keeping in repair the said vessel during the said time, together with a net profit of 33 per cent, per annum on the original appraised value) shall apply on account of the said pinchase.”

The vessel continued in the service of the United States until the first day of April, 1864. On that day she was destroyed in the St. John’s River, Florida, by a torpedo placed there by the insurgents, and became a total loss. The owners then applied to the Third Auditor for her value, under the act of March 3, 1849, and its supplement, for the value of the boat.

The Auditor stated the account as follows:

The appraised value of the vessel is. $50,000 00

33 per cent, profit on this amount for 9 months, 8 days, and 16 hours. 12,759 40

Running expenses, per bills and affidavit, during the above period, including 6 days and 8 hours for return of crew to Boston, as per charter-party . 20,681 50

Repairs, per bills and affidavit, during tlie above period, including 6 days and 8 hours for return of crew to Boston, as per charter-party. $2,572 03

86,012 93

Less payments for services during the above period. 66,125 00

Giving, as the balance due owners for the loss of their vessel, the sum of. 19,887 93-

He then decided that, under the accruing clauses in the charter-party, the vessel had become the property of the United States to the extent of all money paid on account of her service over and above the actual cost of running her and keeping her in repair, together with a net profit of 33 per cent, per annum on her appraised value. The amount of these accounts' for expenses and repairs, furnished by the claimants themselves, amounted to $23,253 53. And these the Auditor adopted as right and reasonable in his statement. He then added 33 per cent, per annum for profits on the appraised value, amounting to $12,759 40; and the aggregate of these two sums he deducted from the gross earning of the boat, $66,125, leaving the sum of $30,112 07 as the amount or value-of the appraised interest in the vessel at the time of her loss. And the balance of $19,887 93 he awarded to the claimants. His award was confirmed by the Comptroller. The balance found due by this award was paid by the United States, and received by the claimants, so far as the evidence shows, without objection or protest, and without any other or further demand upon the United States in respect of it, until the bringing of this suit, in December, 1868, more than four years afterward.

At the time of the loss of this vessel the United States, under the accruing clauses in the charter-party above quoted, had acquired an interest in the vessel, to the extent of money paid for compensation beyond the amount of the running expenses and repairs, and 33 per centum per annum on the amount of the valuation stipulated in the charter. And to the extent of such excess of payments they had become the equitaable owners of the vessel itself. Under the other clause quoted above they might at any moment have become the sole OAvners by paying to the other party the difference between that excess of compensation and the valuation stipulated in the charter-party. And this shows that it was intended to be an actual and not a mere potential payment of so much of the price of the vessel. The contract was, in effect, that for the services of the vessel the owner should receive only the running expenses of the boat, all the cost' of her repairs, and 33 per centum per an-num on the valuation of the vessel. Whatever amount of the stipulated compensation should be above that was to be regarded as a payment of so much of the price on the contract of sale. The marine risk was to be borne by the claimants.

Had she perished from a peril covered by such a policy, it might be a question whether the United States would not have been entitled to share in the insurance to the extent of their equitable ownership; or, if the owners had neglected to take out such a policy, they would not themselves have been liable to the United States to the same extent. This conditional sale under this accruing clause was a marine contract, and doubtless attached to, and might have been enforced against, the vessel itself by proceedings in rem, as well as in in personam, against the owners. And while that right existed the owners could do no act which would destroy or defeat the interest thus acquired. And I know of no law authorizing any officer or agent of the United States to release or relinquish that right without receiving in return some adequate consideration therefor.

The idea and argument of claimant’s counsel, that the accruing clause can have no effect or operation until the excess of payments, over expenses, repairs, and profits, shall amount to or exceed the valuation of the boat, we think cannot be sustained $ for it is expressly coupled with the purchasing clause, and provides that at any period during the life-time of the charter-party, the United States may elect to purchase the boat, and that the excess then paid under the accruing clause shall be, ipso facto, a payment of so much of the juice, and “ shall apply on account of said purchase.” The rule claimed might operate most inequitably and unjustly upon the interests of the United States. For example, a vessel valued like this at $50,000 might have been in the service so long that the surplus due under this accruing clause should amount to $49,500. A couple of days more, and she would become the absolute property of the United States. But at this juncture a quartermaster discharges her, and gives her over into the possession of the original owner; and thus this whole claim and right, according to the theory and argument so earnestly pressed upon us, is divested and relinquished. But not only so; if, instead of the vessel having* been discharged at this juncture, she perished as this one did, by a war peril, then the United States not only loses the whole amount they have paid upon the vessel, but they must pay to the owners the full amount of the valuation, although, according to the contract, they had already paid the price of the vessel, lacking only $500. The unreasonableness, injustice, and im-policy of the supposed rule, are the best and strongest arguments against its existence. The rule of interpretation we adopt, commends itself by its justice, fairness, and equity, and is in strict accordance with the plain and manifest intention of the parties, as expressed in the words and terms of their own contract.

So the claimants evidently regarded the matter themselves, at the time of the settlement of the claim by the Third Auditor and Comptroller. They received the amount awarded them without a single word of objection or protest, gave a receipt in full of it, and then slept more than four years upon their rights before they renewed any demand in respect of it in this court. We think the matter has been fairly, justly, and equitably closed, and it would be wrong to disturb it now.

The judgment of the court is that the petition be dismissed, and that the defendants go thereof without day.

Boring-, J.,

concurring:

The vessel, in this case, was certainly not purchased before she was blown up; and after that she could not be, for she was not then available for transportation, and the Quartermaster General could purchase only for transportation. On the evidence it is simply a case of the destruction of the vessel by a war risk, for which the United States were liable; and the construction of the charter-party in such case is important, because, it may come up in many future cases. And I think the valuation in the charter-party is not applicable to the war risk assumed by the United States, but only to the acquisition by the United States of the vessel under the accruing clauses, (as they have been termed,) in which the valuation is placed in the context.

As to the purchase of the vessel, the United States had an. election, and thejr could at any time, during the charter-party, take her or not at their option, and as might be for their advantage in her then condition. And 1 think this optional right cannot be turned into an absolute obligation in them to pay her valuation when chartered, for her destruction at any future time, whatever her actual condition might then be, and however much she might be deteriorated in value by wear and tear, or causes of deterioration for which the United States were not to be liable.

In the law of insurance the reason of a valued policy is that the insurer takes the risks of the perils that may reduce the value of the vessel, and therefore, when she is injured by these, her value at the date of the policy is the measure of his liability. Here the United States took only the war risks, and 1 think the measure of their liability was the actual value of the vessel when she was blown up, and that the owner was entitled to that, for otherwise the insurance would not cover his loss.

Had the United States discharged the vessel the owner would have had his contract price for her use and his vessel as she then was. And when she was destroyed by a peril assumed by the United States, I think the owner was entitled to his contract price for her use, of which the United States had had the benefit, and to an equivalent for his vessel as she then was, i. e., her actual value when destroyed by a peril the United States had insured against.

But in this case the parties concurred in a mode of settlement which was fairly carried out between them •, and the claimant took such benefit as that gave him, and kept it five years without objection. And I think he cannot repudiate that mode of settlement here; he is estopped by his own acts, for an assent acted upon cannot be revoked.

For these reasons I think the United States are entitled to judgment. ■

Nott, J.,

concurring:

The petition in this case should be dismissed, I think, for the following reasons:

First. Two constructions may be given to the contract. By the one the claimants would be entitled to recover only the balance of the price of the vessel which they themselves agreed, on the election of the defendants, to take; by the other, they would be entitled to recover from the defendants for the capture or destruction of their vessel by the public enemy in time of war, $60,000, though there might be due from the defendants for her purchase and sale, under the accruing clauses of the charter-party, but a single dollar. Such a construction would inure too much to the benefit of the public enemy, and should be held to be against public policy. As between private parties, I doubt whether courts of admiralty would uphold a maritime contract so fraught with reward for bad faith and treasonable collusion; as between these claimants and defendants, I feel assured that no inferior agent of the government was ever authorized, or supposed to be authorized, to bind the government to an agreement so adverse to its own interests and so prejudicial to the vigorous prosecution of the war.

Second. The contract embraces two distinct agreements : the one a charter-party; the other a policy of insurance. The primary valuation of the vessel, $50,000, is not named, as was argued, in the assurance clause; but is named in a distinct part of the instrument for a distinct purpose, and is immediately modified by what are called “the«accruing clauses” of the charter-party. The value of the vessel, as agreed thereby, was $50,000, only at the moment of entering the service, and diminished ever after. A “valued policy of insurance” assumes that a vessel will remain of the same value during the voyage, and looks toward no diminution. This contract assumed that the value of the vessel, as between the parties, would steadily decrease until at length the owner’s interest in her would become nothing. Therefore the insurance clause could not have been intended as a “ valued policy,” but simply as assurance against actual loss arising from war risks. This actual loss must be measured by the price which the claimants, under their agreement of sale, were entitled to receive at the time of the disaster.

Milligan, J., agreed with the opinion read by the Chief Justice.

Pecic, J., dissented.