Earl Warren: Number 178, Steamship Monrosa, petitioner versus Carbon Black Export Company. Mr. McGowan.
Joseph T. McGowan: Mr. Chief Justice, if the Court please. In this case, an Italian ship owner issued 27 bills of lading at United States ports of loading Houston, Texas and New Orleans, Louisiana. These bills of lading were issued with the purpose of covering a shipment of some 30,000 bags of carbon black from those ports to various ports in Italy. Prior to the execution and the issuance of those bills of lading, the Italian ship owner inserted a clause in that bill of lading which is substance provided that in the event that any dispute arose under the bill of lading that that dispute must be litigated in the courts of Genoa -- Genoa, Italy exclusively. The assertion of that bill of lading or that clause in the bill of lading gives rise to the two questions now before the Court. The first question is, is that clause valid and enforceable against an American citizen? And the second is whether the prohibition of a legal action against the captain or ship owner or their agents includes an action in rem or an action against the carrying vessel itself. Sense the issuance of the bill of lading and that document is a very important feature in this case. I think perhaps we take -- we should take a minute or two to discuss briefly the background of a shipment going from the United States to foreign port. Usually there are three parties involved. You have the American producer, the manufacturer of the goods. You have the far consumer and you have the intermediary ocean carrier. Usually the procedure and the consumer get together and arrange for the delivery of certain specified amount of cargo to be delivered at a certain specified date in a foreign port. Thereupon the American producer, even through its own traffic department or through its agents, usually a freight forwarder contacts various steamship companies who have or which have vessels going to the port of destination. These steamship companies are not very hard to contact because they have their own solicitors, their own salesman who are constantly contacting shippers of cargo. The ship owner who has a ship available, who will meet the date agreed upon by the producer and the consumer is chosen. And arrangements are made for the shipment of the cargo to arrive at the port of loading in time to meet the vessel so that the vessel concerned can arrive in time at the foreign port. When the cargo arrives at the ports of loading in the United States, they are received for by the carrier. And when they are loaded on board the carrier's vessel, thereupon a bill of lading has issued. Now what is a bill of lading? A bill of lading is loosely called a contract. But is it -- it is an important commercial document because it is an acknowledgement by the ocean carrier that it has received the certain amount of cargo and of course it enables the consumer to obtain delivery of that cargo when the cargo arrives at following port. Now oftentimes a shipment never sees a bill of lading until it is signed by the carrier or its agents at the port of loading. It is not a contract in the usual sense. That is, two people do not sit down over a table and discuss the terms of carriage. This bill of lading has been printed and used by the carrier for a number of years in its business, and everytime there is a favorable decision for the carrier issued by the court, you can be sure that that clause or it's concern which is going to give the carrier that benefit, is inserted in this bill of lading. Now this bill of lading is about legal size cap and I can demonstrate. And this one, one of these bills of lading which issued in this case contains besides the usual acknowledgement of receipt of a cargo, 39 printed clauses. You cannot read these clauses unless you want to strain your eyes without a magnifying glass. Now the courts of our country have called a bill of lading a contract of adhesion. That is, a shipper of the cargo has no alternative but to accept the bill of lading and to adhere to its terms. It is not a contract issued at the negotiation. Now applying to those facts to this case --
Felix Frankfurter: Was all bills of lading regulated by any kind of governmental oversight?
Joseph T. McGowan: No sir. The only thing that I would say is the Carriage of Goods by Sea Act provides that when you have a bill of lading issued in this country, covering cargo being shipped out that the terms and conditions of the Carriage of Goods by Sea Act must be inserted in that clause. Now of course there are some others like the Pomerene Act also that covers the issuance of the bill of lading.
Hugo L. Black: Well those carry the goods -- carry the goods by sea allow the carrier to put anything he pleases into a bill of lading? You said the restrictions in Carriage of Goods Act itself aren't they?
Joseph T. McGowan: Well let me put it this way. They have this in the Carriage of Goods by Sea Act clause Section 3 subdivision 8 which provides that if a carrier attempts to insert any bill of lading, any clause which number one, relieves enough liability or attempts to lessen its liability, then that clause is null and void. And that's also becomes important in this case sir.
Hugo L. Black: So presumably if anything else put in the bill of lading not in conflict with the Carriage of Goods Act is deemed to be a voluntary act of the contractor or the party unless a matter of public policy if the court tracks it down as against public policy, is that right?
Joseph T. McGowan: Well no sir, because I don't think that it's a voluntary act to the party because I don't think a bill of lading can be termed in the same classification as the ordinary contract.
Felix Frankfurter: I made a qualification.
Joseph T. McGowan: I'm sorry sir.
Felix Frankfurter: Unless there are terms in it which are judicially declared to be against public policy.
Joseph T. McGowan: That's right sir.
Felix Frankfurter: All right and then takes care of it, doesn't it?
Joseph T. McGowan: Well not declared against public policy, there could -- I think sir, it comes now to the point that you have to recognize the fact that a shipper is in a no bargaining position. I mean --
Felix Frankfurter: Well I don't recognize the fact if a shipper has a choice of carrier.
Joseph T. McGowan: Well there is no issue here sir, perhaps he has a choice of carrier, so a load of this are mentioned in this case (Inaudible) does have vessels calling at the ports of Genoa. There is no allegation in this case that those vessels could have met the delivery dates, shows somebody a different consumer of the cargo.
Felix Frankfurter: Are you suggesting that we must start this case with the assumption that every bill of lading which a shipper signed is over reaching by the carrier?
Joseph T. McGowan: Certainly --
Felix Frankfurter: Other than that then there's no case.
Joseph T. McGowan: Sorry, shipper never signs a bill of lading. A shipper never signs a bill of lading
Felix Frankfurter: But I thought he signed authority?
Joseph T. McGowan: No sir.
Felix Frankfurter: Who signed it?
Joseph T. McGowan: The steamship carrier.
Felix Frankfurter: Well goodness.
Joseph T. McGowan: Well I think --
Felix Frankfurter: The goods are delivered to the steam ship?
Joseph T. McGowan: That's right sir.
Felix Frankfurter: Between whom is this contract of adhesion as you call it?
Joseph T. McGowan: It's between the shipper of the cargo and the ship owner. But the shipper of the cargo never signs this contract nor does anybody else on its behalf.
Justice Whitaker: Mr. McGowan, this is not a (Inaudible)
Joseph T. McGowan: No sir, I don't say that. What I say sir when you would consider the covenants in the bill of lading, you must consider whether or not they are permitted by the Carriage of Goods by Sea Act or are they prohibited by the Carriage of Goods by Sea Act. And I also -- and I also say such, when -- when you have an exception which is put in the -- in the bill of lading for the carrier's own benefit, the execution of that bill of lading must be looked to. I mean you must look to the manner which the bill of lading is executed.
Speaker: I suppose it would.
Speaker: (Inaudible)
Joseph T. McGowan: That's right sir, the unilateral.
Speaker: And therefore on right for lack of ideology.
Joseph T. McGowan: No sir. I don't say that word for lack of ideology sir. I say you have to certain terms of conditions in the bill of lading.
Speaker: Is that the propositions that this is a subject offered in the contract or (Inaudible) it does violate Carriage of Goods by Sea Act?
Joseph T. McGowan: That's right sir.
Speaker: And under the contract (Inaudible) and would normally void insofar as it violates some positive use law or public policy.
Joseph T. McGowan: That's right sir. I don't say it's bilateral. I say it's unilateral.
Speaker: Well -- What does that mean? Because you know it had a (Inaudible)
Joseph T. McGowan: If they don't file it, they'll violate any terms and conditions of the public policy or any existing rules of law and they are accepted by the shipper, yes, so I think they're enforceable.
Speaker: Do you think the public policy as the secondary suggestion you're your answer to the problem of whether this term lack the coverage in this lading executing (Inaudible) you think is not violating public policy, are they bilaterally binding?
Joseph T. McGowan: Yes sir.
Speaker: Then you are arguing that this coverage is not enforceable because it violates public policy, is that it?
Joseph T. McGowan: That's right sir.
Speaker: In violating other policies, you have (Inaudible)
Joseph T. McGowan: No sir, I say it's an unreasonable exception also.
Speaker: What does that make?
Joseph T. McGowan: It violates, I say -- excuse me sir?
Speaker: Or we have only validly made them unreasonable contracts?
Joseph T. McGowan: I mean based like on unreasonable contract?
Speaker: Yes, (Inaudible) upon the contract which both of the (Inaudible)
Joseph T. McGowan: As long as it doesn't violate existing laws and public policy, I guess so. Yes sir.
Speaker: Well I'm having difficulty understanding just what (Inaudible) that the contract is void (Inaudible). It is what is accepted by the shipper or what you can say was and therefore we can say if it's violating the promise.
Joseph T. McGowan: I say so that this clause is invalid. One, because it violates public policy, two because it's unreasonable because the contract itself was not made at arm's length and three, it's a violation of the Carriage of Goods by Sea Act.
Speaker: Can I find it often really intimidating that it wasn't made on arms length?
Joseph T. McGowan: Yes sir because there is no -- no -- no place here that the shipper signed the contract or anybody else.
Speaker: But they have no contract? How can you -- how can you enforce right under this as there's no contract to one purpose and to another purpose, I don't understand.
Joseph T. McGowan: Because the Carriage of Goods by Sea Act says well that a bill of lading must be issued. When a cargo is loaded on board a vessel and the terms and conditions of the bill of lading --
Speaker: The purpose of that in the Carriage of Goods Act except that that it's a commercial document which indicates the nature of transaction, the dealership and the carrier. That's the only preference of putting that into the Carriage of Goods Act isn't it?
Joseph T. McGowan: That's right sir.
Speaker: That has been for century the way shippers ship and carries itself --
Joseph T. McGowan: That's right sir.
Speaker: -- in the bills of lading?
Joseph T. McGowan: That's right sir.
Speaker: The Carriage of Goods Act will specify what must be in, what must not be in and what must be out.
Joseph T. McGowan: It doesn't say what must be out sir, except on this one clause Section 3 subdivision 8 which prohibits the insertion of a clause which -- by which the carrier attempts to relieve itself from liability or less than its liability.
Speaker: That's what I mean by being up.
Joseph T. McGowan: That's right, that's right sir.
Speaker: The carrier, a bill of lading didn't start with the Carriage Goods Act. The bill of lading has been enforced I suppose in the 17th Century.
Joseph T. McGowan: That's right sir.
Hugo L. Black: Well Mr. McGowan as you have mentioned that as you started this discussion that this was in fine print. Are you suggesting that there's an issue before us whether is a matter of public policy? The covenant should not be given -- affect the course it's been signed here?
Joseph T. McGowan: No sir.
Hugo L. Black: Well what does this mean?
Joseph T. McGowan: It goes to the so called unreasonable set of contracts sir, the way it's negotiated, the way the bill of lading -- how the bill of lading is issued.
Hugo L. Black: Well if it were in a larger print, if it were capitalized, would that argument fail?
Joseph T. McGowan: I still say sir that this cause is against public policy. Maybe it might go to tend to defeat my arguments sir but I certainly still with the court itself, it could be against public policy.
William J. Brennan, Jr.: Are you suggesting by your fine print observation that the shipper was not aware of this provision?
Joseph T. McGowan: It could very well be sir because many times the shippers never see a bill of lading before it's actually executed.
Speaker: Well --
William J. Brennan, Jr.: But I -- is there anything in this record to indicate that the shipper was not aware of this provision?
Joseph T. McGowan: No sir. There is nothing in this record to indicate one way or the other sir.
Felix Frankfurter: Did you come here and tell us the freight charges to being unreasonable?
Joseph T. McGowan: In this instance sir, no sir.
Felix Frankfurter: Why not? Why are you bound by the bill of lading?
Joseph T. McGowan: Because the parties agreed on the freight charge.
Felix Frankfurter: But I thought there was no agreement between parties?
Joseph T. McGowan: I did --
Felix Frankfurter: That there was no mutuality of agreement.
Joseph T. McGowan: Sir I didn't say there was no mutuality of agreement. I say when you get down and consider this exception in the bill of lading, you must consider how the bill of lading itself was issued.
Felix Frankfurter: I understand that argument. What I don't understand the basis of the being that there's been no contract between the parties.
Joseph T. McGowan: I didn't say there was no contract against the different parties.
Felix Frankfurter: But then there were parties?
Joseph T. McGowan: Yes sir. I say it's a contract but it's not the usual -- it's not the contract in the usual sense when two parties sit down and negotiate the terms of conditions of the contract.
William J. Brennan, Jr.: What you're saying and the fact is because the bill of lading is signed only by the carrier, we ought to take judicial notice that shipper's in fact on the matter never take a look at the bill of lading, is this your argument?
Joseph T. McGowan: Well, it's something along that line sir.
William J. Brennan, Jr.: Is there anything more than that?
Joseph T. McGowan: No sir. I know that's as far as I want to go.
Speaker: Well (Inaudible)
Joseph T. McGowan: I say sir they're not bound by unreasonable exceptions placed in there.
Felix Frankfurter: But not because it's a bill of lading, but because it's contents of is substitute of affected from doctrine of law to a statutory or judgment.
Joseph T. McGowan: That's right sir.
Felix Frankfurter: All right, I understand that. But that's all there is to it, isn't?
Joseph T. McGowan: That's right sir.
Felix Frankfurter: So in fact the deciding point is this a clause that ought to be stricken down against public policy?
Joseph T. McGowan: That's right sir. Well for some other reason.
Earl Warren: I assume that you -- I'm assuming in the argument that that it's against public policy, against the policy and associated by the constitution (Inaudible)
Joseph T. McGowan: That's right sir.
Felix Frankfurter: You mean no matter how much at arm's length they are and how (Inaudible) and how prominent and how well known and how fair the rates, the parties there make such an agreement?
Joseph T. McGowan: I would like to ask the court of jurisdiction sir, yes sir, that's my position.
Felix Frankfurter: What about in arbitration?
Joseph T. McGowan: Sir I don't think -- we had that yesterday sir. I don't think -- I think it's in the holdings of our Courts where you have an arbitration agreement. The court says that an arbitration agreement itself does not answer the courts of jurisdiction. What it does is, an arbitration agreement, two parties get together and they have agreed that they're going to -- they are going to settle their dispute very quickly and in an economic fashion. But the courts do retain jurisdiction over -- over the arbitration because I can come back If I lose in an arbitration, I can come back into court and I can offset that arbitration agreement if -- if -- let's say -- if the arbitrators have been prejudiced or biased or some of the other various grounds set forth in arbitration to laws.
Felix Frankfurter: Well of course you can do it.
Joseph T. McGowan: So I say that --
Felix Frankfurter: But the thing it takes to the extreme the arbitration agreement.
Joseph T. McGowan: So I say the --
Felix Frankfurter: If you call (Inaudible) on the arbitrator, he can be guilty of murder. But the question is whether they've agreed to take a controversy out of the court by arbitration is not constitutional as this court has held it to us.
Joseph T. McGowan: That's right. It is constitutional sir but I also say that the court has said that the agreements to arbitrate are not -- not placed in the same category as agreements which oust the courts of jurisdiction in town.
Felix Frankfurter: But I'm suggesting to you that when there's an arbitration agreement and you bring this to court and the defense is made that there's an arbitration clause, that litigation and that court ceases. And subsequently the arbitrators commit fraud or decide that there is not enough pride, then you can say this arbitration has no findings. But that doesn't uphold this largely fact that the shipper and a carrier may constitutionally decide not to go to court. That's what this court is held, as you well know in 264 U.S. And the government is subject that that oust the court of jurisdiction. Because, they can make an agreement not to go court, that's all right with regard to the (Inaudible) clause of constitution is concerned, is that true?
Joseph T. McGowan: I only recall a case here you're referring to Your Honor. I was not --
Felix Frankfurter: (Inaudible) I'm surprised you say that.
Joseph T. McGowan: But as if it's just --
Felix Frankfurter: (Inaudible)
Joseph T. McGowan: That's right sir.
Felix Frankfurter: The thing is (Inaudible)
Earl Warren: You remember where that was under statute?
Joseph T. McGowan: I don't recall sir. I don't recall that case. It's not in my brief. I don't recall it.
Felix Frankfurter: The question there was whether the New York statute requiring an arbitration agreement to be enforced and taking the case out of the jurisdiction of the court violated Article 3 and the holding was, that it wasn't.
Joseph T. McGowan: Yes. I know sir.
Earl Warren: You don't have to meet that here. Yes -- does Congress authorize this to be done?
Joseph T. McGowan: This has Congress authorized the parties to litigate abroad.
Earl Warren: I agreed to take -- ask the court of the jurisdiction which in fact is otherwise given?
Joseph T. McGowan: No sir.
Earl Warren: You don't have to face that?
Joseph T. McGowan: I don't have to face that.
Felix Frankfurter: Are you starting that the proposition has no agreement by which parties can voluntarily agree not to go to court is unconstitutional?
Joseph T. McGowan: Yes.
Felix Frankfurter: If you start with that of course you'll end with that.
Joseph T. McGowan: Well I say so, the parties -- an agreement whereby parties stipulate not to litigate any of their claims and sold just like that has been held void.
Felix Frankfurter: I didn't say void because they're against public policy. Let's not mix up things in a very different --
Joseph T. McGowan: All right sir.
Felix Frankfurter: It's something unconstitutional, nothing can remedy it. If it's constitutional, then the question is whether it can be done either by legislation or by agreement. They're very different things. But if we start with the proposition that people can't agree not to go to court because that deprives the court of jurisdiction under Article 3, that's a different story.
William J. Brennan, Jr.: You don't have to get to the constitution (Inaudible), because Congress hasn't authorized it.
Joseph T. McGowan: That's right sir.
Felix Frankfurter: Well Congress didn't authorize that the New York State legislator to pass the statute saying, you don't have to go. Indeed, if he'll agree not to go you can't go to court.
William J. Brennan, Jr.: New York (Inaudible)
Joseph T. McGowan: An arbitration statute sir?
Earl Warren: Yes.
Joseph T. McGowan: Yes, it passed an arbitration statute.
Felix Frankfurter: But there's no limit, whether this court held and that's only the question. Whether they have anything in the constitution that precludes not going into court in admiralty cases. The answer was, no.
Earl Warren: You're not raising that question here are you? You are stating some constitution.
Joseph T. McGowan: No sir.
Earl Warren: You don't have to meet that because there's a no statute to talk about this, I understand. You're saying is, if Congress has given the court jurisdiction, they can't oust themselves and the more than they could make an agreement that corporation is going to a state.
Joseph T. McGowan: That's what I say sir. You cannot have a contract which completely ousts the courts of jurisdiction.
William J. Brennan, Jr.: Well you -- are you going to argue -- are you going to argue at some point your contention that this clause violates the Carriage Goods Act?
Joseph T. McGowan: Yes sir.
William J. Brennan, Jr.: I'd like to hear that myself.
Joseph T. McGowan: I'll go into that now sir. One of the arguments advanced by the petitioners which says that the -- this clause 27 is valid, is that Congress and the Carriage of Goods by Sea Act did not state any particular form of forms in which an agreed cargo owner could insert -- could litigate its claim. Now the Carriage of Goods by Sea Act contains a clause, Section 3 subdivision 8, which reads, “Any clause covenant or agreement in a contract of carriage where leaving the carrier or the ship from liability or loss or damage to or in connection with the goods arising from the negligence fault or failing of duties and obligations provided in this section or lessening such liability otherwise then is provided in this act shall be null and void and of no effect.” Now I say that that clause states in substance that the carrier has only those benefits which are provided for in the Carriage of Goods by Sea Act. That holding was set forth in the United States against (Inaudible) Sugar Company which is affirmed by this Court. But I am referring to the opinion in the Court of Appeals for the Second Circuit. I say this clause, clause 27 which gives a carrier an additional benefit not provided for in the Carriage Goods by Sea Act is null and void and of no effect as so provided by Section 3, subdivision 8. Now while I am on a point, I would like to go -- I like to tell the court this. I don't think that Congress could really set forth a sufficient number of forms in the Carriage of Goods by Sea Act to provide for all possible litigation under this Act. Now there are a number of what we call one-ship operators. That is a ship owner which is incorporated to operate one ship only. Now they are both United States and they are foreign. So if you have this one ship, call it the Port of Houston as to this case and pick up the cargo and carry it to Genoa 50 and a cargo was discharged in a damaged condition because of the negligence of the carrier, and if there would -- should be certain provisions in the Carriage of Goods by Sea Act which would say that litigation could only be brought in a form or a jurisdiction where the ship or the consignee has it's place of business or the ship owner has its place of business, or the place in which the cargo was shipped or delivered. And the ship returns to the United States and is calling up one port only and that should be the Port of San Francisco, then we would be prohibited by the Carriage of Goods by Sea Act starting an action in San Francisco. That is a universal rule of -- in Admiralty Law that a lifebelt who has a maritime lead against the vessel has the right to sue the vessel in a jurisdiction where the vessel can be found. I quote -- I stole that language from the case in the Fifth Circuit, it's called -- it's the (Inaudible) case. So I say that the Carriage of Goods by Sea Act, not having provided for any special form or not having given any particular court jurisdiction over any particular claim does not disturb that universal rule in admiralty law and gives us the right to start and -- and act in any jurisdiction where the vessel can be found and then we get back to Section 3, subdivision 8 and I say that the clause herein is limiting our forms especially as far as in rem causes of action is concerned and is invalid.
William J. Brennan, Jr.: Do you agree that the substantive law which the court in Genoa, Italy would apply would be identical to the law which the United States District Court and Texas would apply?
Joseph T. McGowan: I cannot agree to that sir because there is absolutely nothing and approved that the -- at time, courts would apply the Carriage of Goods by Sea Act. Although I will admit that the bill of lading here incorporates the Carriage of Goods by Sea Act. There is no guarantee that we would -- pardon me sir?
William J. Brennan, Jr.: Excuse me but I -- I just wanted to make sure that I understand you. That the bill of lading incorporates the Carriage of Goods by Sea Act by saying that the law applicable and the amount of damage to freight shall be as provided in the Carriage Goods by Sea Act?
Joseph T. McGowan: But we have no guarantee that the courts in Italy would so enforce the Carriage Goods by Sea Act.
William J. Brennan, Jr.: I assume they wouldn't but some of the country with that public policy.
Joseph T. McGowan: That's right sir.
Felix Frankfurter: Can we take judicial notice of the fact that Italy had adopted the Russian convention?
Joseph T. McGowan: I think they have. There was some question whether or not they were going to, so I'm not quite positive on that one myself.
Felix Frankfurter: Is that the difference to your answer? Of course we can assume any nation is not going to be as judicial minded as this country. All it did was to make that assumption I suppose, that foreign countries are barbarians.
Joseph T. McGowan: I don't make that assumption sir. That that was not the question presented to me. I have no guarantee that that --
Felix Frankfurter: Except it had no guarantee.
Joseph T. McGowan: That's right sir.
Felix Frankfurter: And it's not a guaranty. How many courts in this country will decide on that question.
Joseph T. McGowan: No sir.
Felix Frankfurter: (Inaudible)
Joseph T. McGowan: No sir.
Felix Frankfurter: So why do you expect guarantee from Italy except that it's a party from international convention. And it has constitution, it has a court, like this Court is sanctioned on the Congress of this Court.
Joseph T. McGowan: Well I know sir that they were not assured of the same limitations in Italy as we would be in this country if there were laws and if it were applied.
Felix Frankfurter: That's the difficulty of having international trade. We can -- we can have times of war which we put ourselves in.
Earl Warren: But you have to assume that there's anything wrong whenever they make the statement as you do not know what they will hold public policy be it connected in any particular time.
Joseph T. McGowan: No sir. I don't have to assume that there will be anything. Well I'm on a public policy question. The petitioners make the further argument in this case and that clause 27 should be enforced because it would have to be so that American ship owners -- shippers of cargo will in the future use American ships solely. I think that argument is very unique because here we have an Italian ship owner pleading before the United Supreme Court that this clause should be enforced -- enforced with that sole purpose only. With the only result could mean that the Italian ship owner would suffer a severe economic loss because it ships and they have ten of them would be returning from the United States to Italy with empty hauls. I also say that the court cannot say that American ships, shippers of cargo should use American ships only, because as I think Judge Whittaker raised a question yesterday, “What would happen if American ships were not available to call at foreign ports within a certain specified period. What would happen if the American ships do not port at certain ports at all? I don't think that this court would place American manufacturers or shippers of cargo in a position where they could be sued upon contracts for breaches of contracts and failing to make late deliveries or suffer an economic loss because we don't have American ships falling at certain ports. I say, if an Italian ship owner or a foreign ship owner is doing businesses in our country and is soliciting our trade, the least it might be bound is by the rules of our courts and they should submit themselves to the jurisdictions of our courts of courts. They should not be granted any special immunity whereby they could escape the practices of our court or for litigating in our court. They should not be given a special privilege whereby they can deprive an American citizen of a substantial right of selecting the form in which to litigate his action.
William J. Brennan, Jr.: Would it be wrong in your view that American shippers couldn't touch a clause in this contract?
Joseph T. McGowan: The ship owner?
William J. Brennan, Jr.: The ship owner.
Joseph T. McGowan: I think it's against our public policy, yes sir, it would. I think it's just as invalid as a clause which would say that if American ship owner is saying the clause if we can only -- we can only litigate in a city where he has his own place of business is made at a place of business like New York City only.
Speaker: (Inaudible) grounds sir that it is to oust the (Inaudible)
Joseph T. McGowan: This? This clause sir is invalid, as against public policy because of the outside force of jurisdiction, yes sir.
Felix Frankfurter: They did to protect the courts or to protect business, I mean who does it protect?
Joseph T. McGowan: The American citizen.
Felix Frankfurter: But the carrier decides for himself what is good for him, but not also as civil liberty.
Joseph T. McGowan: Well I think so we have our court's to protect the rights of American citizens.
Felix Frankfurter: What he prefers to have a speedier and a more economical and from this point of view a more desirable way of settling controversy than the proctology of the court room.
Joseph T. McGowan: Well I think that --
Tom C. Clark: I presume you're arguing to some extent that contracts are not omnipotent as laws.
Joseph T. McGowan: That's right sir.
Speaker: I wonder if it does oust the jurisdiction of the court.
Joseph T. McGowan: Yes sir.
Speaker: The conflict for bodily harm agrees upon a particular venue in a court.
Joseph T. McGowan: I would like to read you the clause itself sir. It says also that no legal proceedings may be brought against the captain or ship owners or their agents. In respect to any laws of or damage to any coherence specified except in Genoa. It being understood and agreed that every other tribunal in a place or places where the goods were shipped or landed is incompetent. I understand by that sir that this clause or the Italian ship owner says that the District Court in Houston, Texas where the cargo was loaded is without jurisdiction. Because by definition, a competent court means one which has lawful jurisdiction and an incompetent court means one can only mean that one is without jurisdiction.
Felix Frankfurter: Now the case well maybe in New York between a ship and the carrier is on agreement that the international court has to go to arbitration, does it say the same thing? What decide one day -- one decides whether only Congress can make admiralty law, I suppose we make most of the admiralty law and put that to one side.
Joseph T. McGowan: If this was the contract so made between the shipping or the shipper --
Felix Frankfurter: Maybe it's between New York where they have arbitration agreement.
Joseph T. McGowan: Yes, would I say --
Felix Frankfurter: The bill of lading says that you be go to arbitration and not go to the court of New York. That would be ousting the court of jurisdiction.
Joseph T. McGowan: I'd say no sir. That clause is -- that that is not -- that is not ousting the courts of jurisdiction entirely.
Felix Frankfurter: Well entirely it means if the arbitration is brought even if we proceeded again, you can have a separate clause of action for fraud.
Joseph T. McGowan: Well sir --
Felix Frankfurter: Under some federal proceedings there are always fraudulent.
Joseph T. McGowan: Sir I can start -- I can start my action in your situation sir in the courts of New York. And I admit that the carrier can come in and state my proceeding state it sir, not dismiss it just state it and send me to arbitration. And then if I win, I can come back to my court and enter it and I get a full judgment. I don't think that the courts have surrendered the entire ligation. I have not complete ousting the courts of jurisdiction.
Felix Frankfurter: Just where do I find this sanction doctrine that you can't make an arrangement not to go to court? Just where do I find it? What books can I find it and accept the court originating from the day when the courts were making their salary would arrive from the fee that litigants pay. That's the argument of this doctrine. That noble doctrine that court is paid by litigants, that's the source of this doctrine. Where do I find it elsewhere in that historical fact? That you can oust for jurisdiction?
Joseph T. McGowan: Insurance Company against Morse.
Felix Frankfurter: What?
Joseph T. McGowan: Insurance Company against Morse decided by this court in 1874, it's going in my brain.
Felix Frankfurter: I know they've used it but where do I find it when the phrase is challenged by the agreement of the party? I find it contrary, all that would be lawyers have written on this subject. I think it's a mumbo jumbo phrase.
Joseph T. McGowan: Well I don't know sir. This court in Insurance Company versus Morse adopted the language and started against Avery which says that there was no doubt of the general principles that parties cannot fight time to oust the ordinary courts of their jurisdiction. That --
Felix Frankfurter: Even the great story said that. I'm suggesting to you that that's a repetition of a historic phrase deriving from the days when courts would be paid by the litigants.
Joseph T. McGowan: Well, so all I made my point --
Hugo L. Black: In an act of Congress that use the jurisdiction of the court that provides the court shall be paid by the litigants?
Joseph T. McGowan: No sir.
Hugo L. Black: Doesn't it somewhat depend on where you start to where you get. It's whether your start on the basis if the court has jurisdiction and that Congress has the right to give you jurisdiction if it wants to but it can't taken away from you.
Joseph T. McGowan: That's right sir. The (Inaudible) case which is also a quarter of my brief says that the fact that you have the public policy is the important thing. You already have that.
Felix Frankfurter: Where do you get to the public policy (Inaudible)
Joseph T. McGowan: When you start from the --
Felix Frankfurter: From the start?
Joseph T. McGowan: Excuse me sir.
Felix Frankfurter: Where did you get it from?
Joseph T. McGowan: Oh it's been held down through the year's sir.
Felix Frankfurter: Just the agency used that in 264 the opposite was essentially held with a footnote that indicates with Justice Brandeis thought of that doctrine. Or he just talks (Inaudible) opinion in the record of Starline Case. I'm suggesting to you that that doctrine like other doctrines which I have a history must be examined to see whether the history still has validity in our day.
Joseph T. McGowan: Sir I refer to it -- it's been an accepted rule of law in the courts of our country. It's been accepted not only by this court but it's been accepted in 20 states, separate state jurisdictions which are also referred to in my brief. And to unanimous --
Felix Frankfurter: We tipped that in (Inaudible) rail road for nearly 90 years.
Joseph T. McGowan: So all I can argue with you is what the accepted rule of the (Voice overlap)
Felix Frankfurter: But I am just asking you when you say public policy, that isn't just a phrase that's thrown in all court in analysis. I'm suggesting that you -- it is necessary to state what considerations that should now prevail bars two people who agree at arm's length where there are no considerations of prohibition or overreaching from making an agreement. Isn't that a fair question? You just say, “Well they've been saying this.” And I say to that, they've been saying it because they've been repeating a bit of history which is very offensive to me at least, namely, a history that derives from the fact that judges were being seen by litigants.
Joseph T. McGowan: I can't argue with you sir, accept -- it refer to what is the unanimous rule in this country and throughout.
Hugo L. Black: And you think the general idea that the courts states have acted on for a long time. Public utilities and carriers have great power with those who deal with them and therefore must be regulated. It springs from any idea of judges getting fees.
Joseph T. McGowan: No sir. What I --
Felix Frankfurter: You are not arguing that this case are you, you're not arguing if you have an uncertain that in this case you'll rest on the proposition that in fact the shipper was not dealing at arm's length.
Joseph T. McGowan: I said that sir several times in this -- in this point that the shipper is not dealing at arm's length. Now, if I may quote you from -- from United States Sugar against Bar Company and a holding in that court which was affirmed in this court --
Felix Frankfurter: We should hold it from the record in this case.
Joseph T. McGowan: I am sir.
Felix Frankfurter: This shipper under these circumstances was not dealing at arm's length.
Joseph T. McGowan: Sir, as an accepted rule, a principle that shippers of cargo do not deal at arm's length with carriers. And may I quote sir from this case, as found on page 25 in a footnote and It says, “Obviously the individual shipper has no opportunity to repudiate the document agreed upon by the trade even if he has actually examined it at all of its 28 lengthy paragraphs of which this clause is number nine. This lack of equality of bargaining power has long been recognized in our law. And the stipulations for unreasonable exception of the carrier have not been allowed to stand.” I think it's a well recognized rule accepted by our courts that shippers of cargo do not have equal bargaining power with ship owners.
Hugo L. Black: Mr. McGowan do you happen to know what the practice is if there is a practice in this country among shippers so far as a -- not shippers but the carriers so far as a clause like this is concerned in their Bills of Lading?
Joseph T. McGowan: The only thing sir is no, I do not. I only know that an American ship owners not -- do not insert such a clause. Probably based on a foundation that such clauses are against our public policy and contrary to Carriage of Goods by Sea Act.
Speaker: What bearing if any do you think the circumstance has that Italy would not recognize such a clause asserted in the bill of lading with American ship owners?
Joseph T. McGowan: Sir, I'd say it's a great bearing because there will be no reciprocity. And I say why send an American citizen to Italy if Italy wouldn't send an Italian citizen to America?
Speaker: I presume it should have some weight if we were to act as law makers and it is adamant to see as I am suggesting and determine the policy. But it have some effect -- it should have some effects on that shouldn't it?
Joseph T. McGowan: Yes sir, I think so. That's what I cited my brief sir. So I'd like to deal if I may, I think we've covered the public policy and I would like to deal with the substantial right of American citizens to sue on this court. I referred this court to the case of Ford against the Grand Trunk Railway Company. Now I admit that that case involved a Federal Employer's Liability Act and that that Act provided that an injured employee may sue in a place where he resides, the place where the court of action arose or in any place where the defendant carrier was doing business. The defendants in the -- I'm sorry. The railroad employee was injured, and the railroad company made certain payments for -- necessary to the employee. When these payments were made, the railroad company had the employee sign a receipt which stipulated that in the event that the employee's case could not be settled and it was forced to go to litigation. That he would bring in -- his action in one, the place, the jurisdiction where he resided or two, the place where the course of action arose that is where he was injured.
Hugo L. Black: To what case are you referring to?
Joseph T. McGowan: Floyd Case sir. It's found on page 21 of my brief. The railroad employee sues, and instead of suing in the two places specified in the agreement, he sued in that very jurisdiction. The railroad company thereupon moved to dismiss the action. And this court, the case found its way up to this court and this court says that the agreement to the railroad company and the employee violated Section 5 of the Federal Employers' Liability Act. In that, by the agreement the railroad companies sought to exempt themselves from liability. I say in this case, clause 27 should be raised with Section 1303 (a) or Section 3 subdivision (a) of the Carriage of Goods by Sea Act and we must come to the same inevitable conclusion. Now the ruling in the Floyd case, I say was enlarged by the ruling in Wilko against Swan which involved an interpretation of the Securities Act. In that case, a broker and a customer was doing business. The cause of false representation by the broker, the customer ports certain stocks which instead of going up, went down and he sued the broker to recover for his loss. There was an agreement between the broker and -- and the -- and the customer which provided that there was any disputes between the two, the agreements would be arbitrated. Now in the course of its discussion, this Court said that citizens have a substantial right in which to select the form in which they are to litigate these claims. It also said that any agreement made in the advance of controversy, which is the agreement here. Is good or a different footing from those made in agreements made after the controversy has arisen and it infer and I think it really helped that agreements made in the advance of controversy which seek to oust the courts of jurisdiction are invalid. The petitioners in trying to enforce this clause as being reasonable rely on three cases, commonly referred to as the Muller case, the Kearsarge case and a (Inaudible) case, all of which were decided in the Second Circuit. I call the court's attentions to this fact, that in those three cases, it is recognized that the courts, by contract cannot oust that the parties, I'm sorry, by contract cannot oust the courts of jurisdiction. What those cases -- or the courts did on those cases was to consider the facts and each one of those cases. And then find out whether or not the form selected by the libeler was convenient for the file of issues. Now in the Oklahoma or the Muller case, the cargo was loaded on board the Oklahoma at Dockenberg (Inaudible) suite. During the voyage from the United States -- from Sweden to the United States, the Oklahoma sunk. It never reached the United States. One crew members was saved or returned to Sweden. In the Kearsarge case, the cargo was loaded on board the vessel in Peru and the cargo was discharged at European courts. That vessel on that voyage never called at any port in the United States. No part of the contract of carriage was performed in the United States, so too in the (Inaudible) The cargo in that case was loaded on board the vessel and headed for Belgium and discharged at the (Inaudible) No part of the contract of carriage was performed in the United States the vessel did not call on the United States either. So on every single major issue in all three cases that is, the condition of the cargo, the storage of the cargo, the seaworthiness of the vessel, the issuance of the bill of lading and the loss while all -- all of the testimony on all issues was available in foreign courts only. In this case, I repeat, the cargo originated in the United States. It was delivered to the ocean carrier in the United States. It was loaded on board the vessel in the United States. The voyage commenced in the United States and the Bills of Lading were issued in the United States. Thus, on all important issues, testimony is available right here in the United States. Now I'd like to get back to this question of the origin -- where the voyage originates. All of the case law is that the vessel must be in a seaworthy condition where the cargo was taken on board the vessel. In this case, the vessel must have been seaworthy on loading of the cargo at Houston and New Orleans, not in Genoa of Italy. Now, I like to call the Court's attention to this fact. The bill of lading is printed in English. The Court of Appeals for the Fifth Circuit said, that that was indication on a part of the parties that I dispute arising under the bill of lading would be decided by an English court. The bill of lading also incorporates the Carriage of Goods by Sea Act. And this Court has held in the Gulf Case, which is referred on -- on page 32 and 33 of my brief, that there is an appropriateness to, in having the trial of a diversity case and a form that is at (Inaudible) with the state law that must govern the case rather than having a court in some other form untangle problems and conflicts of law and in law foreign to itself. Thus I say, this Court has recognized the fact that where the Carriage of Goods by Sea Act or some other American law is involved and if there are sufficient reasons to keep the case in the United States that that case should be kept in the United States. Now, I like to deal with my course of action in rem. It is conceded in this case that we have two courses of action. One, in personam and that is against the ocean carrier. And the second one, in rem, that is against the carrying vessel. Law 27 states that no legal proceedings against the captain or ship owner or their agents may be brought in any jurisdiction other than the courts in general already. It does not speak of an action in rem.
William J. Brennan, Jr.: But the -- where an agent include the ship?
Joseph T. McGowan: No sir.
William J. Brennan, Jr.: Ship owner's agent?
Joseph T. McGowan: It's the ship owner's agent sir.
William J. Brennan, Jr.: Ship? You don't like the ship to be included.
Joseph T. McGowan: Well, I think sir you can -- I don't think it's to the -- I don't think that the ship can be qualified as an agent for the ship owner, no sir.
William J. Brennan, Jr.: That's a question. It's not considered in either brief but it occurred to me that that language might include the ship.
Joseph T. McGowan: Well I think -- I didn't think of it Your Honor. Except that I think that the word agents qualifies captain or ship owners only.
William J. Brennan, Jr.: Admirably as we all know, it gives personality to the ship.
Joseph T. McGowan: That's right sir.
William J. Brennan, Jr.: And the ship is the agent in that respect, possibly, arguably is it not of the owner?
Joseph T. McGowan: No sir. I think that -- I don't think so sir. I think the human admiralty -- we recognize the fact that the -- the vessel was just as liable as a -- as the owner. In other words I can go directly against the -- directly against the ship as a person. I tried to --
William J. Brennan, Jr.: I understand that.
Joseph T. McGowan: As an individual, it's a really -- it comes out to as a separate individual.
William J. Brennan, Jr.: That's separate personnel.
Joseph T. McGowan: That's right sir.
William J. Brennan, Jr.: Although of course you wouldn't contend that there can be two separate coverages on this case?
Joseph T. McGowan: No sir I do not. I say if -- I say if we have an action in rem against -- and in personam, I say if this should be there would be a judgment against one or apply against both.
William J. Brennan, Jr.: Well I don't want to pursue the point of that thought that occurred at this point.
Joseph T. McGowan: Now -- I think you've asked me that one question you've taken about five minutes of my time. I mean when I was going to speak.
William J. Brennan, Jr.: Sorry.
Joseph T. McGowan: No, no, I mean I'm thankful for it. The petitioners say at least in their brief -- the argument is not made and they reply to it. That in the Muller, the Kearsarge and the (Inaudible) Cases, the courts in the Second Circuit did not make a dis -- did not distinguish between in personam and in rem actions. I think my statement of the facts in those cases really answers the problem. That this vital point was not before the courts in those cases for the simple reason, in the Muller case, the carrying vessel, the SS Oklahoma sunk. In the Kearsarge case, the Kearsarge was not named as a respondent, and if it was named a respondent, jurisdiction was never obtained over the vessel. And in the (Inaudible) case, I will admit that the (Inaudible) was named as a respondent. But jurisdiction was never obtained over the vessel. In other words, process was never issued against them. It was really not a respondent. Just naming a vessel as a respondent in a libel does not necessarily give the court jurisdiction over the vessel. The carrier, the petitioners also refer to three cases which they substantiate the proposition that you cannot divorce an in rem action from an in personam action. Those cases are the Smith, the Bennett, and the Samuels Cases. And each of those three cases, the court found that a longshoreman employed by a ship owner and loading or unloading the ship owner's vessel was injured. The longshoreman's right against the ship owner or his employer are governed by the longshoreman and Harbor Worker's Act. That act provides that the longshoreman can recover in certain instances and sort of regulates the amount. The longshoreman was not satisfied with this procedure and went against the vessel. The Courts of Appeal I think for the Second and Third and the Fifth Circuit said, “That Congress, when it enacted the longshoreman on the Harbor Worker's Act intended that they ensure -- longshoreman's right should be exclusively adjudicated by the provisions of that act. The holding in those cases is clearly expressed in a case of Central Railroad Company of New Jersey against Burns Brothers which is referred to on page 43 of our brief. In that case, the Court of Appeals for the Second Circuit stated that Smith against (Inaudible) McDowell and Samuels against Monsoon Steamship Company on which the Central Railroad relies are irrelevant. They decided no more than that in a longshoremans and Harbor Worker's Compensation Act, Congress meant to make exclusive the liabilities that it (Inaudible) opposed. And that same proposition can be applied to the Consumers Products Case or Imports Case which is referred to in the petitioner's reply brief -- I think it's in this last point.
William J. Brennan, Jr.: One thing that puzzles me on the argument that you are making based on the Second Circuit case, is you seemed to be on a head-on collision with your opponent as to where the convenience, balance of convenience lies. You say all the witnesses in New York this is all the witness are related. Are you as far apart as that?
Joseph T. McGowan: I say no sir. I'd say in this case, I'd like to say, I'd like to go -- I'll attack his points one by one. He says that the more convenient to try the issue here or reasonable to try the issue here because one, the s -- Monrosa -- the Genoa vessel, the crew members are residents of Italy the third one is that the seaworthiness of the vessel becomes important because a lot of testimonies in Italy in general average has been declared the cargo was discharged to the port of Genoa. The market value is available. The testimony in Genoa and the seventh argument is that American shippers of cargo should use American ships. Now I say, the fact that the vessel is Genoese has absolutely no bearing on the merits of this case and can be excluded. The fact that the crew members and the offices are residents of Italian -- of Italy is very important in this case because when this action was commenced, we thought the responded, Carbon Black Export Inc. sought to take the testimony of those witnesses in Houston, Texas at the same time the vessel was on port. Now the vessel has also returned to the United States on a number of occasions but the respondent, the petitioners here never sought to take their testimony. Thus, all of those issues, all of those issues could have been resolved if they had submitted the crew members and -- and the offices to the jurisdiction of the District Court in Texas because we could have taken their testimony and we were willing to pay for all those expenses. So I say on that point, we can discount that point because that really shows the unreasonable attitude of the petitioners where we expect that the seaworthiness of a vessel, I say that most of that testimony is available here in Houston and -- and New Orleans. Because in a number of five polls together with the Carbon Black, there was stone, a number of iron clumps of chemicals. The iron drums broke loose, crashed against the plates of the vessel and one of the plates being wasted, cracked and allowed to the entry of sea water into the hole. So the storage of the cargo becomes very important and that's only available at the ports of Houston and Texas. The market value and the amount of cargo damage can practically be stipulated. And the fact that a general average has been declared has no bearing on this case because if the loss in fact was occurred because the vessel was un-seaworthy on leaving the ports of Houston and Texas and the general average resulted there from, the general average is invalid. So I say as against that, we have all of the testimony on condition of cargo, storage of cargo, seaworthiness of vessel and the commencement of the voyage, the issuance of the bill of lading and other -- all other important issues available right here in the United States. So I say there is a great convenience but a trial of this action here in the United States and not general rhythm.
Speaker: District Court, another one?
Joseph T. McGowan: Well, they said if there was -- the Court of Appeals for the Fifth Circuit went to every single fact involved in this case. It wrote a seven or eight page decision and it analyzed all the facts. The District Court, all it said was the clause was not unreasonable and dismissed my libel. It didn't even discuss my action in rem. I think it was an abuse of discretion. Of course it's reviewable -- it's reviewable and appealable since my libel was in fact dismissed. I say in conclusion that this clause should be held invalid because is it against -- it is against public policy. I also say that my in rem action should be restored. I also say it is more convenient to try the case here for the reasons that I have given. There is not one single reported case in any book whereby a clause similar to the one involved in this litigation has been declared enforceable or whereby any court has review, has declined to take jurisdiction of the action where the cargo originated in the Untied States. The contract, at least the part was performed in the United States. The bills of lading were issued in the United States. The American -- the dockers are American citizen and an in rem cause of action has been perfected. Thank you.
Earl Warren: Mr. E. D. Vickery.
E. D. Vickery: May it please the court. The onset I would like to say, if the petitioners -- because they attempted to get their respondent to live up to the provision of the contract, they wouldn't take testimony in this case until they got a decision of the District Court on that question. If that makes us unreasonable in connection with this litigation, then we have taken an unreasonable attitude with respect to it. Now on the depositions of the crew in Houston, this libel was filed two days before those depositions were noticed. They saw them on two grounds, discovery and De bene esse under the admiralty statutes. We objected to the depositions because our first knowledge of this case in any damage came when the libel was filed. We had no information whatsoever from Italy. We had no opportunity to get any information to prepare for the deposition. This matter was submitted to the United States District Court and he held in both instances that the respondent was not legally entitled to take the deposition. Either De bene esse or as discovery. No further attempts were made to get these depositions. We received one phone call in the summer of 1956 indicating that they thought the ship would be back in September and they might want to take the depositions then. At that time the motion was pending before the United States District Court and no effort was made to proceed with the deposition. I think that really is a collateral matter. It's true. have we not had the jurisdictional question involved in this case, this case would have long ago been tried and disposed off before the United States District Court down in Houston. But that doesn't have anything to do with the convenience of the forum for a trial of the issues. Now I want to allude just very briefly to the Muller Case of the Second Circuit. I think that in the Muller Case, you have just as much evidence needed in the Muller Case and the United States as you have in this case. That cargo was destined for Philadelphia. The market value of the cargo did not reach Philadelphia would have to be proved and obviously would have to be approved by the best available evidence that would be available in Philadelphia. All of the other evidence was foreign. And I think the record amply reflects that in this particular case, substantially all of the evidence is obtainable only in Italy. Now I recognize that Mr. McGowan and I don't agree on this particular point. What I'm saying to this court, I only wish that my duty in representing the petitioner in this case to show due diligence to make the vessel sea worthy attached in Houston and New Orleans. Boy that would be easy and I submit to this Court, I would be delighted if that was the extent of my burden in this case. But the Carriage of Goods by Sea Act says, “You have to prove due diligence to make the vessel seaworthy before and after commencement of the voyage.” We can't just stop by proving the condition of the vessel. At Houston, we've got to show that we have used due diligence all along the line. We don't have to show that the vessel in fact was seaworthy at the time it left Houston. We only have to show that diligence was used. It may have been un-seaworthy when it left Italy because of a latent defect. But we don't have to prove it was seaworthy, we have to show our diligence and we have to show our diligence starting not in Houston and New Orleans but we have to start in Italy. And in all probability to make out a case, we're going to have to start with the last annual inspection of this vessel. Just when this was, I don't know. It may have been as long as eight or nine months prior to the time that the vessel broke down in Italy. So it's not a simple matter of offering a few witnesses in Houston or a few witnesses in New Orleans and the petitioners discharging their burden show that they used due diligence to make this vessel seaworthy. Our burden is substantially greater than this and I submit to this Court on the fact the amount of evidence required in this country, in the Muller case and in this case they are almost identical. Now if I may, I should like to elude you some questions previously asked by some members of the Court, particularly Mr. Justice Frankfurter made an inquiry early in the argument with respect to whether or not the shipper actually signed the bill of lading. It's true the shipper does not actually sign the bill of lading, but the shippers own broker, the shippers agent in Houston prepares the bill of lading and submits it to the vessel owner for his signature and the vessel owner issues it if it is in proper form. Now admittedly, the broker normally gets a printed form of the particular line on which he is shipping. That is the type of bill of lading that the ship owner wants and normally requires but it --
Speaker: These changes of vision --
E. D. Vickery: I cannot say that with respect to an agreement such as this, I have ever had a case and --
William J. Brennan, Jr.: That printed form which Mr. McGowan and held up to us is that the --
E. D. Vickery: That is the -- that is the petitioner's printed (Inaudible) form.
William J. Brennan, Jr.: That's a form of looking document.
E. D. Vickery: Yes, sir. I never saw a bill of lading that wasn't formidable and I never saw a bill of lading that you didn't need a magnifying -- a magnifying glass to read.
William J. Brennan, Jr.: Well this is a practice of shippers to -- to delete anything or add anything and --?
E. D. Vickery: We are -- we are consulted frequently in our practice both by American and by foreign ship owners with respect to the advisability of either deleting or adding additional policies to the bills of lading. I cannot state to the Court in my tenure experience that we have ever had a request for a deletion of this type of clause or whether or not, it would be granted. I -- I have not had any experience on that. We're consulted frequently with respect to clauses either deleting certain portions of clauses or adding additional clauses on the front of the bill of lading to specify the particular requirements. This often is necessary in connection with the financial arrangements that have been made and so far as the cargo is concern.
Felix Frankfurter: The -- the freight charges, do they derive -- did they derive from tariffs or they may have a reference of particular shipments?
E. D. Vickery: There -- there is a -- a conference which -- a conference of things you've covered in both foreign and American which sets the rate, yes.
Felix Frankfurter: The items in that conference, did they cover all kinds of bulk or less than bulk cargos that are presented?
E. D. Vickery: Yes sir. I think they --
Felix Frankfurter: Very particular.
E. D. Vickery: Yes sir. I think they make distinctions between tumblers and glasses. I mean they go that far.
Felix Frankfurter: ICC carrier.
E. D. Vickery: It's not an ICC carrier.
Felix Frankfurter: No, no as a like in particularity.
E. D. Vickery: Yes sir. I think possibly even more in detail than the -- the normal ICC carriers.
Speaker: There's nothing to constitute or deny (Inaudible) adapt the standard form of the bill of lading (Inaudible)
E. D. Vickery: No sir. And -- and I believe Mr. Justice Frankfurter had one other question with respect to whether or not Italy had adapted the Brussels Convention. It did so in 1939 that it's cited in our brief but if they had adapted the convention in 1939.
Felix Frankfurter: (Inaudible)
E. D. Vickery: 39 was the date which I had. Now they mention -- I believe Mr. Justice Harlan had a question with respect to the Carriage of Goods by Sea and the possible lessening of liability under the Carriage of Goods by Sea Act of by this particular agreement. Counsel touched on that very briefly, but I think if you will look -- if you will read the Muller case which undoubtedly, you will do, you will see the real basis for their argument that -- that it lessens liability. It is nothing more than it would probably be cheaper for them to try the case as they would add some extra expenses if they went to Italy or they argue in their brief that if you send them to Italy then they're going to have to forego any $1,000 claim they have because it's not economically feasible to submit a thousand dollar claim in a foreign form. Those are -- those are just great stretches of the imagination to try to bring this agreement within the limiting liability clause. And of course in both instances you have to assume that the foreign tribunal is not going to correctly apply the law or that they're going to ignore the provision in the contract with the Carriage of Goods by Sea Act apply before you can in fact have any lessening of liability and I don't think that -- that this court or any court should take judicial notice of the fact that a foreign tribunal will not apply the contract in the terms as written.
Speaker: Well you don't have to make that assumption and answer to the -- to the second case. The -- the point that for thousand dollars, it just wouldn't be worth it to go to Genoa -- Genoa, Italy. That -- that has nothing to do with distrusting the courts of Italy. It's simply an economic matter. Is that right?
E. D. Vickery: I think that's right, yes sir.
Earl Warren: What do you say with the argument there's no mutuality between Italian law and recognition of this as a valid clause?
E. D. Vickery: Are you referring to the Italian statute which prohibits an agreement such as this?
Earl Warren: Yes.
E. D. Vickery: All I can say to that is that the legislature of Italy or whatever the legislative body there is has judicially or has legislatively declared the public policy of Italy to make this clauses void and my position on that simply is that that is something it is within the realm of the Congress with respect to these clauses and it was aware of such clauses at the time it passed the Carriage of Goods by Sea Act across Canada and Australia. Both had such clauses as that in them that you have to sue in Australia and you have to sue in Canada, and Congress did not include any such clause in the Carriage of Goods by Sea Act of United States.
Felix Frankfurter: What kind of things did they prohibit?
E. D. Vickery: Nothing with respect to agreements as to the place of forum.
Felix Frankfurter: I don't mean as to -- as to the particular problem but what kind of -- the argument you make is that this question was before Congress. They chose not to outlaw it; therefore, it's not outlawed, that ensures with your argument?
E. D. Vickery: Yes sir.
Felix Frankfurter: I'm asking what kind of things did they outlaw to indicate that when Congress wants to outlaw things, protective of their shipper, they took appropriate measures and say so?
E. D. Vickery: They specifically provided with respect to the duty of diligence required, with respect to what exemptions would be allowed to carrier and the burden is placed on the carrier to show that if the cargo is damaged that it counts within one of the exceptions for the purpose of -- of creating a uniformity with respect to a carrier's liability for the shippers.
Felix Frankfurter: Did they outlaw anything that is there before or is legal under general administrative law, as you recall.
E. D. Vickery: I couldn't answer that question specifically.
Speaker: Or this -- this specific outlaw reads declaratory of what was -- if I may use a rule -- a common rule -- a common law admiralty.
E. D. Vickery: I think that was some of both, I think it was some of both. I think it's fair to say that, some of both rather than simply a codification of existing law, I think it was some of both.
Hugo L. Black: You state this -- I -- I don't quite understand. You stated this was the fourth Congress and they rejected it?
E. D. Vickery: I'm -- I'm not saying that there's anything in the legislative history in which a specific clause such as this was considered by the Congress. All the legislative history indicates to us, Mr. Justice Black, is that Congress was aware of acts in Canada and acts in Australia that had such clauses in them as well as the acts of various other countries. They were very careful in enacting this legislation to ensure that they had a uniform act. They were trying to come as close as they possibly could to the acts of other countries. And the legislative history even indicates that they have -- they corrected some -- some clerical errors in the acts of Great Britain for the sake of uniformity. I say therefore from that and the fact that they re -- repeatedly refer in the legislative history to the acts of Canada and to the acts of Australia that they had those two acts before they amended -- if they read the acts, they saw such a clause as this but as far as actually --
Hugo L. Black: But do you think it indicated they did?
E. D. Vickery: No sir. There's nothing actually in the -- in the legislative history that indicates that such a clause was proposed or that it was argued on neither the floor of the House of the Senate.
Hugo L. Black: Why do you say that Congress had the right to assume that such a clause would be upheld here?
E. D. Vickery: I -- I did not -- I did not --
Hugo L. Black: Well, the Muller case, itself decided in 1955 called attention to the fact that the rule has long been otherwise in this country and that such a provision were not good. I've just had it before me in which it (Inaudible)
E. D. Vickery: Yes sir.
Hugo L. Black: But they declined to follow it because of the restatement feud.
E. D. Vickery: Yes sir.
Hugo L. Black: Why do you say then in Congress, that it was on Congress who try to appeal over-- or to try to -- somehow you can find that Congress wanted this clause to be valid enough so that they did not act on it. Why should they have acted on it if the law was as stated in the Muller case up to now?
E. D. Vickery: I just have to go with the Court of Appeals for the Second Circuit and say to the Court, why would they do it by implication rather than doing it frontally by including a -- a provision in the act prohibiting such agreements.
Hugo L. Black: But -- but the few seems to me to be on the other foot. If the law is existing as the Muller case said was up to that time before the new look had been taking at it to see that they had origin from which it came, if the law was otherwise so that up to then these clauses were invalid. Why was the duty on Congress to prohibit it that which it always had been held invalid?
E. D. Vickery: Well I think simply because of Congress' attempt to specifically spell out those things that it wanted to apply to ocean shipments and those that it did not.
Hugo L. Black: Or why should it reaffirm the law which according to the Muller case had been the settled law in this country for a long time.
E. D. Vickery: At least insofar as internal cases were concerned not with respect to Admiralty and Maritime Law, there were no such cases, Mr. Justice Black, and the reason I say that I believe Congress should have acted on this is simply because Congress was aware or should have been aware from the legislative history that most of the countries did not permit such -- did not have such clauses in their bill of lading, but two, had prohibited such agreements which would indicate the Congress at least that some of the other countries dealing with this problem felt it necessary to have a specific agreement in the Act and as Congress was trying to eliminate as many controversies as possible between shipper and ship owner, that it would have -- it seems to me Congress would have specifically cover this particular problem.
Hugo L. Black: Did anybody ask Congress to cover it, one way or the other?
E. D. Vickery: Not that I can find in the legislative history.
Hugo L. Black: Do you agree with the Muller new rule that these conflicts are invalid if they are unreasonable and if so, what's the test of unreasonableness?
E. D. Vickery: Well, the Muller case as I understand it, says that these contracts are enforceable if reasonable and the question of reasonableness turns on the convenience of the forum.
Hugo L. Black: In other words, do you think that this match to declaration of -- of a new convenient -- convenient forum (Inaudible)
E. D. Vickery: I don't think -- I don't think it's new, I think not withstanding the -- not withstanding the agreement in the bill of lading under the decision of Mr. Justice Frankfurter and Swift & Company, that the Court's action can and should be sustained on the doctrine of forum non conveniens without regard to the agreement.
Felix Frankfurter: What was the occasion of the Australian and Canadian statutes being before Congress? What kind of things would reference to those statutes that they look to --?
E. D. Vickery: There -- there are no specific references in the -- in the legislative history on point.
Felix Frankfurter: Except that they -- they -- not as to this point
E. D. Vickery: Not as to this point.
Felix Frankfurter: The Canadian and Australian legislation were before Congress --
E. D. Vickery: They're just --
Felix Frankfurter: My question is as to what matters was it before Congress?
E. D. Vickery: They were mentioned several times in the legislative history. I do not recall at this time; however, what specific portions of the act were before. The legislative history is simply not too helpful in this particular case. Thank you very much!
Speaker: (Inaudible)
E. D. Vickery: Yes sir?
Speaker: I think (Inaudible) that -- that I've got. What is your answer to Mr. McGowan's suggestion that this clause 27 in any event does not include in the in rem action?
E. D. Vickery: My answer simply to that is simply this, that the obvious intention of the party was that it includes both in personam and in rem and if actually you don't have two causes of action, you have one cause of action as Mr. Justice Stewart has pointed out. The recovery in personam is res adjudicata and decision in rem and you have actually the in rem proceeding as a security device for the purpose of guaranteeing the payment of any damages to which they may be entitled.
Hugo L. Black: Is -- is a language have cost of 27 and if so which words in that clause embrace specifically in rem --?
E. D. Vickery: I think Mr. Justice Stewart has come up with the best answer made by in this case and that is the word “agent.”
Speaker: That is a question not an answer.
E. D. Vickery: I -- I know but quick to see on the answer the Court reported me. I think this is probably a case were a counsel couldn't see the forest or the trees. Normally, looking at this clause, I would not say that agent included the ship but normally looking at this clause, I would not have advised the client and I would not now advise the client that it did not also include in rem action because of the obvious intent of the parties. I don't believe Mr. McGowan would either.
Earl Warren: When -- when they were so meticulous as they were in this bill of lading, why wouldn't they in -- include the ship to think that they -- they really intended it to be included?
E. D. Vickery: Well of course all I can --
Earl Warren: Well let's say the owner, master, agents, and if they want to include the in rem proceedings, why wouldn't they say or the ship that they're rather meticulous in -- in their language, I would think?
E. D. Vickery: All I can say to the Court is, I agree it's rather inarticulately drawn and of course obviously I had -- I had been drawing it out. I have included the word “ship” and certainly will from now on. The word “ship” is -- the word -- the word “ship” is used further on down in the -- in the clause not withstanding the ship as represented there. There's no answer to Mr. Chief Justice's question other than the fact that the clause is inarticulately drawn and of course the contention would -- could never have been made if the word “ship” were used and it's just inarticulately drawn. Perhaps the language difficulty is responsible, the only answer to that I can think of.
John Paul Stevens: This wasn't in the English language --
E. D. Vickery: It's -- it's in the --
John Paul Stevens: It's in translation of Italian, isn't it?
E. D. Vickery: It's in the English language and it's one of those (Inaudible) if you don't would be an Italian, they wouldn't have understood it because they didn't have the chance to translate it.
John Paul Stevens: (Inaudible) this after all, you're relying on this being a conceptual arrangement of some kind and if the shipper can't read this as precluding an action in rem because of, you say, and article language employed, how can you really say this is an agreement by which the shipper is found? And he had no part as I understand; the drafting of this wouldn't be ordinary rule of the holding against the draftsmen. That -- that often doubts against the draftsmen.
E. D. Vickery: That -- that rule would ordinarily apply in this particular case as it does in all cases.
John Paul Stevens: Well when you suggest -- when you suggest that you have to have (Inaudible) Mr. Justice Stewart suggested the possibility that agents might be enough to cover this. I wonder if you don't give the case away and the question was --
E. D. Vickery: Perhaps I did, but I couldn't be less than frank with the Court. All I can say there is that the Court enforces that rule if I may. I know I'm indulging on the court's time. The court applies the rule that the contractors construed against the framer of the contract. But it does not do so, if to do so violate the obvious intent of the parties. That's my position. That's my position --
John Paul Stevens: My difficulty is that perhaps this is so ambiguous that we can't really say that the shipper would so understand it, that's my problem.
E. D. Vickery: There are certainly two sides to the coin. Thank you sir!