Source: https://supreme.justia.com/cases/federal/us/225/32/
Timestamp: 2019-04-23 02:47:16+00:00

Document:
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.
"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:"
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."
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."
"Upon the facts above set forth, the questions of law concerning which this Court desires the instruction of the Supreme Court are:"
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. "
MR. JUSTICE PITNEY, after stating the case as above, delivered the opinion of the Court.
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.
"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."
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.
"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.
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.
"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 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."
"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.
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.
"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.
* The docket title of the case is Actieselskabet Jason v. John Arbuckle et al.
"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."

References: § 3
 v. 
 v. 
 v. 
 v. 
 v.