Case Name: DAVIS et al. v. SMOKELESS FUEL CO.
Court: United States Court of Appeals for the Second Circuit
Jurisdiction: United States
Decision Date: 1912-04-08
Citations: 196 F. 753
Docket Number: No. 192
Parties: DAVIS et al. v. SMOKELESS FUEL CO.
Judges: Before LACOMBE, WARD, and NOYES, Circuit Judges."
Reporter: Federal Reporter
Volume: 196
Pages: 753–758

Head Matter:
DAVIS et al. v. SMOKELESS FUEL CO.
(Circuit Court of Appeals, Second Circuit.
April 8, 1912.)
No. 192.
1. Shipping (§ 171 ) — Demurrage—Liability of Charterer.
A charterer is not exempted from the payment of demurrage for which he is made liable by the terms of the charter party because of a provision of the bill of lading giving a lien on the cargo for freight and demur-rage, which exists by the maritime law, without express contract therefor.
[Ed. Note. — For other cases, see Shipping, Cent. Dig. § 568; Dee. Dig. § 171
Demurrage, see notes to Harrison v. Smith, 14 C. C. A. 657; Randall v. Sprague, 21 C. C. A. 337; Ilagerman v.'Norton, 40 C. O. A. 4.J
2. Shipping (§ 184' ) — Suit for Demurrage-Limitation.
Limitation does not begin to run against, a suit for demurrage for delay in discharging until the lay days have expired, when it begins to run against the right to recover for each day.
[Ed. Note. — For other cases, see Shipping, Gent. Dig. § 596; Dec. Dig. § 184. ]
3. Courts (§ 375 ) — Laches—Following State Statutes of Limitations.
While under Rev. St. § 721 (U. S. Comp. St. 1901, p. 581), a state statute of limitations is binding on the federal courts only in actions at law, courts of admiralty proceed upon the analogy of the statute in considering whether claims are stale, and a suit will be held barred at the ex? piration of the statutory period if the respondent has at all times been subject to suit in the state and no sufficient reason for the delay is given.
[Ed. Note. — For other cases, see Courts, Cent. Dig. § 983; Dec. Dig. § 375'. ]
4. Coubts (§ 366 ) — Admiealty—Following State Decisions — Limitation. The ruling of the Court of Appeals of New York that a foreign corporation cannot plead the state statute of limitations will not be followed by a court of admiralty as applied to a corporation which has been continuously subject to service of process within the state.
[Ed. Note. — Eor. other cases, see Courts, Cent. Dig. §§ 954-957, 960-968; Dec. Dig. § 366. ] '
Noyes, Circuit Judge, dissenting.
Appeal from' the District Court of the United States for the Southern District of New York.
Suit in admiralty by Cornelius A. Davis and others against the Smokeless Fuel Company. Decree for libelants, from which they appeal.
Affirmed.
For opinion below, see 182 Fed. 1004.
■Charles C. Burlingham, for appellants.
Louis Sturcke, for appellee.
Before LACOMBE, WARD, and NOYES, Circuit Judges."
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & RepT Indexes
For other cases see same topic & § number in Dec. & Am. Digs. 1907 to date, & Rep’r Indexes

Opinion:
' WARD, Circuit Judge.
The respondent chartered the schooner "Governor Ames" to carry a cargo of coal which it had sold to the Garfield & Proctor Coal Company, from Newport News, Va., to Boston, Mass., and there deliver the same to that company. The charter party contained the following provision:
"Discharging per National Association bill of lading, and that for each and every day's detention by default of the party of the second part, or agent, demurrage per N. A. B. — lading dollars per day, day by day, shall be paid by said party of the second part (the charterer), or agent, to said party of the first part or agent."
The National Association bill of lading contained the following clause:
"And 24 hours after the arrival at the above-named port, and notice thereof to the consignees named there shall be allowed for receiving said cargo at the rate of one day, Sundays and legal holidays excepted, for every one. hundred and fifty tons thereof; after which the cargo, consignee, or assignee, shall pay demurrage at the rate of six cents per ton a day, Sundays and legal holidays not excepted, upon the full amount of cargo, as per this bill of lading, for each and every day's detention, and pro rata for parts and portions of a day, beyond the days above specified, until the cargo is fully discharged; which freight and demurrage shall constitute-a lien upon said cargo. After arrival and notice to the consignee as aforesaid, and the expiration of said 24 hours, said vessel shall have precedence in discharging oyer all vessels arriving or giving notice after her arrival; and for any violation of this provision she shall be compensated in demurrage as if while delayed by such violation her discharge had proceeded at the rate of three hundred tons per day. This bill of lading.is subject to terms and conditions of charter party."
It will be seen that the number of lay days for discharging (Sundays and legal holidays being excepted) is to be ascertained by dividing cargo, 2,797 tons, by 150 tons, Hie amount to be discharged per clay, giving 18 clays 6% horn's. Thereafter demurrage is to be paid at the rate of 6 cents a ton per day, that is, $167.82, Sundays and legal holidays not excepted.
The effect of giving a vessel subsequently arriving preference in discharging was ,to make the rate of discharge during the period of such preference 300 instead of 150 tons per day. In other words, to reduce the number of lay days and advance the time when demurrage would begin to run.
The respondent contends that it is under no liability for demur-rage at all because the National Association bill of lading provides that:
"The cargo: Consignee or assignee shall pay demurrage which freight and demurrage shall constitute a lien upon said cargo."
And so confers by implication a cesser of liability upon the respondent as charterer and shipper. Such a construction is quite inadmissible in the face of the express provision of the charter party that:
"Demurrage shall be paid by said party of the second part (respondent) or agent to said party of the first part (libelant) or agent."
The clause giving a lien for freight and demurrage adds nothing because that lien exists by the maritime law of this country without any stipulation.
The trial court dismissed the libel on the ground that the claim was barred as stale, in analogy to the New York statute of limitations. The respondent argues that the time began to run against libelant's claim March 21, 1903, when a vessel arriving after the schooner was given precedence over her in discharging. This fact alone gave the libelant no cause of action. It only shortened the laying time. Non constat that any liability for demurrage would be caused thereby. For instance, the respondent in this case liad 18 lay days and some hours in which to discharge, and the schooner was actually discharged in 4 days. Therefore it might have given 7 days' preference to another vessel and yet have discharged ihe schooner without incurring any demur-rage at all. No liability for demurrage could be incurred until after the lay days had expired. Then it was incurred and payable de die in diem, Sundays and legal holidays included. Time began to run against the right to recover for each day. Ordinarily, of course, a libelant would await suit until the full amount of demurrage had been ascertained, but if he chooses to let years run - by, he should be careful to see that he does bring suit within six years from the first demurrage day.
The New York statute of limitations is binding under section 721, U.-S. Rev. St. (U. S. Comp. St. 1901, p. 581), upon the courts of the United States only in the trial of actions at law. Still courts in admiralty proceed upon the analogy of the statute in considering whether claims are stale. Nesbit v. The Amboy (D. C.) 36 Fed. 925. If because of the absence of the respondent or any of its property from the jurisdiction of the court the libelant had not been able to bring suit within six years, the court might not treat his claim as barred. The reason given for the delay in this case is entirely insufficient, namely, that the libelant was awaiting the result of a similar case to which he was not a party, pending- in a court in another jurisdiction. During the whole of this period of six years, less, at best, one day, the respondent, though a' foreign corporation, had an office for the transaction of business and officers and managing agents and property here. For this reason we think that we should follow the analogy of the New York statute of limitations in this case.
The libelant says- that by the law of the state of New York, as construed by the Court of Appeals, a foreign corporation cannot plead the statute of limitations. This seems to be so, subject to the exception of a corporation which has designated a person upon whom summons may be served under sections 401 and 432, sub. 2, of the Code of Civil Procedure (Wehrenberg v. New York, New Haven & Hartford R. R. Co., 124 App. Div. 205, 108 N. Y. Supp. 704), in which the authorities are discussed. It is said! we ought to follow the state law so construed in this.respect also. The Supreme Court of the United States, in Tioga R. R. Co. v. Blossburg R. R. Co., 20 Wall. 137, 143, 22 L. Ed. 331, held that this construction was binding upon the Circuit Court in the trial of an action at law; Mr. Justice Bradley saying:
"These decisions upon the construction of the statute are binding upon us, whatever we may think of their soundness on general principles."
Mr. Justice Miller, with whom Mr. Justice Strong concurred, was a little more forcible in his dissenting opinion:
"Nor do I believe that the courts of any state of the Union, except New York, have ever held that a person doing business within the state and liable at all times to be sued and served personally with process, cannot avail himself of the statute of limitations, if the time prescribed by it to bar such action has elapsed before it was commenced. The liability to suit where process cannot at all times be served must, in the nature of things, be the test of the running of the statute."
We think this construction, when applied to corporations continuously subject to service of process within the state, is arbitrary and unreasonable, and therefore will not follow it.
The Commissioner has found that demurrage began March 26, 1903, and ran to April 3d at 3:30 p. m., being due for 8y2 hours on the last day. Suit was begun April 3, 1909. Under the New York statutory construction law the claim would have been barred at the time suit was brought, as held by the District Judge. Aultman & Taylor Co. v. Symes, 163 N. Y. 54, 57 N. F. 168, 79 Am. St. Rep. 565. Section 20, c. 22, of the Consolidated Laws was no doubt in consequence of that decision, amendled over a year after the action was brought so as to read:
"The day from which any specified period of time is reckoned shall be excluded in making the reckoning."
But it does not apply by its express provisions to pending cases.
Therefore, following the analogy of the New York statute of limitations, the decree is affirmed, with costs.