Opinion ID: 369237
Heading Depth: 1
Heading Rank: 2

Heading: Interpretation of the Charter

Text: 15 The conclusion of the district court that the lien provision in the charter extended to all cargo carried during all voyages for demurrage charges owed on prior cargo was premised on its conclusion that the contractual provision was ambiguous as a matter of law. With this initial conclusion we must differ. 16 The contract signed by the parties was a voyage charter, modified to run for a particular time period. The court nevertheless concluded that they thereby created an ambiguity in the unaltered lien clause requiring it to be interpreted as if the contract were a standard time charter and thus divined, from the usages of the trade and the parties' practices after the contract was signed, their putative intent to embrace all cargo in the grasp of a lien. We do not perceive either patent or latent tenebrosity in the lien clause and we, therefore, conclude that the court erred in looking beyond the contract. 17 Good Hope and Atlantic Richfield were not novices in the maritime shipping industry. They were aware that the vessel could be chartered pursuant to a standard time charter, but chose instead to execute the consecutive voyage charter before us. A typical voyage charter establishes rights and obligations on the part of owner and charterer quite different from those created by a time charter. See, for example, W. Poor, American Law of Charter Parties and Ocean Bills of Lading (5th ed. 1968); separate chapters are devoted to Time Charters and Voyage Charters. See also the other authorities cited Infra. 18 The voyage charter usually requires the shipowner to defray all operating expenses of the journey, including port charges, bunkers, loading and discharging, agency fees, commission, brokerage, fuel, ballast, dunnage, and claims. The charterer pays the owner freight dependent upon the cargo actually loaded, or upon the vessel's deadweight capacity. See generally J. Bes, Chartering and Shipping Terms 76-77 (10th ed. 1977); C. Cufley, Ocean Freights and Chartering 76-77 (1970); W. Poor, Supra, §§ 21 Et seq. 19 In a typical time charter, the vessel is hired for a stated period and the quantity of cargo carried by the charterer is usually irrelevant to the compensation (or hire) received by the owner. Hire is ordinarily payable in advance by the month or half-month, and may be a lump sum or a certain amount per ton capacity of the vessel. As in the voyage charter, the shipowner pays the wages of the officers and crew, insurance, general maintenance and upkeep of the vessel. The charterer generally assumes the burden of fuel costs, port charges, pilotage, ballast, dock dues, towage, bunkers, and cargo handling charges. See generally J. Bes, Supra, at 69-70; C. Cufley, Supra, at 77-78; A. Parks, Law of Tug, Tow and Pilotage 439, 569-77 (1971); W. Poor, Supra, §§ 1 Et seq. 20 A simple voyage charter can be extended to provide for a number of consecutive trips, and this is not uncommon in the transportation of liquid cargoes. See N. Healy & D. Sharpe, Cases and Materials on Admiralty 406 (1974). It is no more inconsistent with the nature of such a charter to cause it to run until a termination date. This is evidently what the parties here deliberately sought. The terms of the charter they signed are, with only minor variations, those of a standard voyage charter. 21 The printed form, captioned Tanker Voyage Charter Party, code word Exxonvoy 1969, was found adequate but for the addition of 10 special provisions dealing with such subjects as loading and discharging ports, cargo, backhaul, ballast, war risk, certificate of financial responsibility, and, of course, duration of the contract. Apart from this last clause, none of the special provisions are different from those that might be included in a simple voyage charter. 22 Had the parties wished to alter the other printed clauses of the voyage charter, including the lien clause, they were evidently capable of doing so. We must therefore interpret the clause they accepted without modification, for application to consecutive voyages. 23 The lien clause in the charter reads as follows: 24 The Owner shall have an absolute lien on the cargo for all . . . demurrage . . ., which lien shall continue after delivery of the cargo into the possession of the Charterer, or of the holders of any Bills of Lading covering the same or of any storageman. 25 On its face, the clause deals with a single cargo, presumably that on which demurrage charges were incurred. In contrast, the clause employed in the standard time charter grants the owner a lien upon all cargoes, and all sub-freights for any amounts due under this Charter. W. Poor, Supra, at 303. 26 If we look beyond the terms of the contract for latent ambiguities, we find none. The billing practices of the parties treated demurrage charges for each cargo discretely. Each statement sent Good Hope by Atlantic Richfield dealt with a separate distinct voyage rather than a calendar period. There was never any attempt to assert a lien on subsequent cargoes for prior charges. The fact that demurrage was not computed until after the cargo was fully unloaded and the vessel had departed does not affirmatively demonstrate an intention to rely upon a lien on future cargoes; it is equally consistent with reliance on Good Hope's credit. 5 27 Without doubt Atlantic Richfield had a lien on each cargo carried by Good Hope for all demurrage charges incurred during the course of its carriage. Such a lien arises by force of law and is present unless expressly waived in the charter. See The Bird of Paradise, 1867, 72 U.S. (5 Wall.) 545, 554, 18 L.Ed. 662, 664; The Eddy, 1867, 72 U.S. (5 Wall.) 481, 493, 18 L.Ed. 486, 488; The Saturnus, 2 Cir. 1918, 250 F. 407, 409, Cert. denied, 247 U.S. 521, 38 S.Ct. 583, 62 L.Ed. 1247. The first part of the lien clause merely preserved this implicit right. 28 The latter part of the lien provision purports to make the lien on cargo survive its delivery. The effect of this clause is not clear. The lien for freight and demurrage is possessory in nature, and, therefore, it is ordinarily lost by unconditional delivery of the cargo. See, e. g., 4,885 Bags of Linseed, 1861, 66 U.S. (1 Black) 108, 113, 17 L.Ed. 35, 38; The Bird of Paradise, supra; In re 9,889 Bags of Malt, 1 Cir. 1919, 262 F. 946, 948. 29 The Exxon charter form provides not only that the lien continues after delivery but also stipulates that the bill of lading will refer to and incorporate the charter. This, presumably, is an effort to give notice of the lien to third persons and to make the lien enforceable against them even if delivery was not expressly conditional. Assuming the bills of lading were issued in the form prescribed in the charter incorporating the charter, including the lien clause, by reference all who received cargoes carried by Good Hope aboard the ATLANTIC COMMUNICATOR would be on notice that Atlantic Richfield retained a lien for demurrage, and, if Atlantic Richfield were able to trace any of these cargoes, it could assert its lien for demurrage on the voyage during which the cargo was carried. 30 We need not, for purposes of this case, plumb the bottom to determine whether these provisions operating together have this effect. See generally G. Gilmore and C. Black, The Law of Admiralty 632 n.103 (2d ed. 1975); W. Poor, Supra, §§ 25, 26 at 68 and 71. No attempt is made here to enforce the lien against delivered cargo. However, the very presence of these clauses indicates an intention to look to cargo to secure the lien for its carriage, not as security for debts of past voyages. 31 Atlantic Richfield argues that to impose upon it the obligation to assert a lien against each cargo for accrued demurrage on that voyage would work a commercial hardship upon both shipowner and charterer-shipper, and that the parties must therefore have intended that such charges be secured by a lien upon subsequent cargoes. Demurrage cannot be definitively quantified until the unloading process is complete; to assert a lien at this point would contribute to the laytime of the vessel and impair the parties' ability to utilize the vessel profitably. The existence of the problem is real, but its solution does not lie in judicial revision of the lien clause. The parties appear to have attempted its resolution in another fashion, by the lien continuation clause. If that clause did not, in combination with the bill of lading requirements, preserve the lien, conditional delivery was always an available remedy. 32 In any event, the commercial inconvenience to which Atlantic Richfield adverts is no more acute in the consecutive voyage context than after a single voyage. When a cargo reaches its destination, the shipowner always has the choice of asserting rights against the cargo by delivering it conditionally or attaching it or permitting unconditional delivery and losing the lien. See W. Poor, Supra, § 58. In the latter situation, the shipowner looks not to the cargo to secure demurrage costs, but to the personal credit of the charterer-shipper. Only because the personal credit of Good Hope has proved inadequate has Atlantic Richfield looked to more tangible sources of compensation. 33 The pressures of the enterprise put to Atlantic Richfield a difficult choice. Time has shown that the company made the wrong decision. We must, however, conclude that the parties never intended recourse against subsequent cargoes to be available. As the Supreme Court stated in Osaka Shosen Kaisha v. Pacific Export Lumber Co., 1923, 260 U.S. 490, 499, 43 S.Ct. 172, 174, 67 L.Ed. 364, 367, The maritime privilege or lien, though adhering to the vessel, is a secret one which may operate to the prejudice of general creditors and purchasers without notice and is therefore Stricti juris and cannot be extended by construction, analogy or inference. The expansive interpretation of this maritime lien clause adopted below would have consequences far beyond the situation where the cargo belonged to the charterer and was seized before it left the vessel. The lien for the debts of past voyages would extend to cargo owned by others, and might, if all the other terms of the entire clause were literally enforced, follow that cargo after delivery, even if all freights due for its carriage were paid. We decline to sanction reinterpretation of words apparently clear to permit this result. 34 The judgment is therefore REVERSED.