Source: http://supreme.nolo.com/us/248/139/case.html
Timestamp: 2019-04-24 04:11:12+00:00

Document:
"any latent defect in hull. . . . or by unseaworthiness of the ship, even existing at the time of shipment or sailing on the voyage, but not discoverable by the exercise of due diligence by the ship owner or manager. . . ."
ship and pending freight, and that the balance should be paid by the Insular Line. 235 F. 388. Both the owners and the Insular Line appealed to the circuit court of appeals. That court modified the decree so as to award that payment of the full amount be made to the shipper primarily by the steamer and the owners, and that the charterer should be called upon to make payment only of the deficiency, if any. 235 F. 388. The case comes here on writ of certiorari granted on the petition of the owners. 242 U.S. 638.
It is urged, on three grounds, that the decision of the circuit court of appeals should be reversed and that the district court should be directed either to dismiss the libel or to limit the owners' liability to the value of the ship and pending freight.
First. The owners contend that both lower courts erred in holding that the steamer was unseaworthy at the commencement of her voyage, and that due diligence to make her seaworthy had not been exercised. The issue involved is one of fact, and no reason appears why the general rule should not apply that concurrent decisions of the two lower courts on an issue of fact will be accepted by this Court unless shown to be clearly erroneous. The Wilderoft, 201 U. S. 378, 201 U. S. 387; The Carib Prince, 170 U. S. 655, 170 U. S. 658.
Second. The owners (and also the charterer) contend that the libel should be dismissed because the shipper had already been compensated for the loss by insurance which it effected, and that the carrier is entitled to the full benefit of this insurance.
full benefit of any insurance that may have been effected upon or on account of said goods."
"Warranted by the assured free from any liability for merchandise in the possession of any carrier or other bailee who may be liable for any loss or damage thereto and for merchandise shipped under a bill of lading containing a stipulation that the carrier may have the benefit of any insurance thereon."
"New York, Aug. 15, 1912"
"Received from the Federal Insurance Company. twenty-three hundred four and 16/100 dollars, as a loan and repayable only to the extent of any net recovery we may make from any carrier, bailee or others on account of loss to our property (described below) due to damage on S/S Julia Luckenbach from Porto Rico/Philadelphia, on or about _____ _____, 19__, or from any insurance effected by any carrier, bailee or others on said property, and, as security for such repayment, we hereby pledge to the said Federal Insurance Company, the said recovery and deliver to them duly endorsed the bills of lading for said property and we agree to enter and prosecute suit against said railroad, carrier, bailee, or others on said claim with all due diligence at the expense and under the exclusive direction and control of the said Federal Insurance Company."
"The W. J. McCahan Sugar Refining Co."
the loss, and this libel was filed in the name of the shipper, but for the sole benefit of the insurers, through their proctors and counsel, and wholly at their expense. If, and to the extent (less expenses) that recovery is had, the insurers will receive payment or be reimbursed for their so-called loans to the shipper. If nothing is recovered from the carrier, the shipper will retain the money received by it without being under obligation to make any repayment of the amounts advanced. In other words, if there is no recovery here, the amounts advanced will operate as absolute payment under the policies.
salvage, are elements which enter into the calculations of actuaries in fixing insurance rates, and, at least in the mutual companies, the insured gets some benefit from amounts realized therefrom. It is essential to the performance of the insurer's service that the insured be promptly put in funds, so that his business may be continued without embarrassment. Unless this is provided for, credits which are commonly issued against drafts or notes with bills of lading attached would not be granted. Whether the transfer of money or other thing shall operate as a payment is ordinarily a matter which is determined by the intention of the parties to the transaction. Compare 70 U. S. 3 Wall. 37, 70 U. S. 44. The insurer could not have been obliged to pay until the condition of their liability -- i.e., nonliability of the carrier -- had been established. The shipper could not have been obliged to surrender to the insurers the conduct of the litigation against the carrier until the insurers had paid. In consideration of securing then the right to conduct the litigation, the insurers made the advances. It is creditable to the ingenuity of businessmen that an arrangement should have been devised which is consonant both with the needs of commerce and the demands of justice.
Third. The owners contend that, under § 4283 of the Revised Statutes and § 18 of the Act of June 26, 1884, c. 121, 23 Stat. 57, their liability should have been limited to the value of the ship and her pending freight, because the district court found that her unseaworthiness was without their privity or knowledge, and this finding was not disturbed by the circuit court of appeals. But the liability of the owners sought to be enforced here is one resting upon their personal contract, and to such liabilities the limitations acts do not apply. Pendleton v. Benner Line, 246 U. S. 353.
exhausted upon delivery of the ship to the charterers, and that the maintenance clause relied upon does not import a warranty of seaworthiness at the commencement of each voyage under a time charter, but merely an obligation to pay the expense of keeping her hull and machinery in repair throughout the service. Neither the language of the clause nor the character of time charters affords support for this contention. The charter of the vessel states clearly that, the vessel "being, on her delivery, tight, staunch [and] strong," the owners will "maintain her in a thoroughly efficient state in hull and machinery for and during the service" -- not pay the expense of maintaining her. This duty to maintain the vessel in an efficient state is imposed by the contract, because a time charter, like a charter for a single voyage, is not a demise of the ship. In both, the charterer is without control over her repair and maintenance. In operations under each, the charterer becomes liable to shippers without limitation for losses due to unseaworthiness discoverable by the exercise of due diligence on the part of the owners, and, in each case, he requires for his protection a warranty, without limitation, of seaworthiness at the commencement of every voyage. Compare The Burma, 187 F. 94; Whipple v. Mississippi & Yazoo Packet Co., 34 F. 54; McIver & Co., Ltd. v. Tate Steamers, Ltd.,  1 K.B. 362; Park v. Duncan & Sons, 35 Scottish Law Rep., 378. If Giertsen v. Turnbull & Co., 45 Scottish Law Rep. 916, strongly relied upon by the owners, is inconsistent with this view, it should be disregarded.
per Edgar F. Luckenbach, Trustee," but it was admitted by all the petitioners that Edgar F. Luckenbach, Trustee, in so signing the charter party, acted for all the owners and intended to bind all. The decree in the district court declares that libelant was entitled to recovery "from the respondents Edgar F. Luckenbach et al., her owners." The decree in the circuit court of appeals adjudged (presumably through inadvertence) that the payment should be made by "the estate of Luckenbach." The right to recover against all the owners for the full amount in case any of them was so liable was not controverted.

References: § 4283
 § 18
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