Court Opinion

ID: 5433167
Source: CourtListenerOpinion
Date Created: 2022-01-08 17:49:10.157445+00
Date Added: 2024-06-11T08:31:42.666937
License: Public Domain

The opinion of the Court was delivered by Mr. Justice Heydenfeldt.
Mr. Justice Terry concurred.
The question in this record turns upon the point, whether advanced freight can be recovered back by the charterer in case of the loss of the ship, or non-performance of the voyage otherwise than by the fault of the master.
In the case of Reina v. Cross, at the January term, 1856, we decided that freight paid in advance could be recovered back in case of the loss of the ship, and relied upon the cases of Griggs v. Austin, 3 Pick.; and Watson v. Duyckinck, 3 Johns. It is not disputed that this is the American and continental European doctrine; but it is insisted that the contrary is the rule in England, and that as the contract was made in that kingdom, the law which prevails there must govern this case. Upon an examination of the English cases, I do not find sufficient authority to warrant the conclusion that the rule there would be different from that of the rest of the world. Indeed, as was remarked by Chief J. Kent, in Watson v. Duyckinck, “the English books are almost silent on the subject, and afford little or no information.”
The principal cases (if not all) which have been decided in England, are stated and reviewed in Abbot on Shipping, 405 et seq. It appears in nearly all of them, the decision against the recovery of the freight advanced rests upon the peculiar language of the contract, which is construed to be a stipulation to the effect that the advance was to be paid at all events, and in some of the cases it is treated as something differing from freight money. The only case which seems without qualification to decide against the recovery, is a case in 2 Shower, 283; but that is an anonymous case, and Judge Kent, in Watson v. Duyckinck, calls it “a dictum of Mr. Chief Justice Saunders,” and adds, “ but I do not place reliance upon that very imperfect report.” There seems to be a contradiction between the cases of De Silvale v. Kendal, 4 M. & S., and that of Mansfield v. Maitland, 4 B. & A. But in the latter case, Lord Tenterden remarked of the former, that it “ turned upon the particular words of the instrument, which was studiously framed so as to make the freighter lose the money advanced by him, unless the owner reaped the benefit by the ship's coming home safe.” It is true, that afterwards, in the case of Saunders v. Drew, 3 B. and Ad., 445, the same Judge cites the case in 2 Shower, and says, “ this is the ground of the doctrine which was acted upon in De Silvale v. Kendal.” But in looking into the case of Saunders v. Drew, it will be seen that this remark was mere obiter dictum, and entirely inapplicable *371to the facts of that case, because there was a most explicit stipulation for the non-return of the advanced payments.
When, therefore, this careless and unnecessary dictum is weighed against what his lordship said in Mansfield v. Maitland, it will be readily seen that the latter is alone entitled to be considered as authority, and fully sustains the rule which everywhere else prevails.
The best reason is also on this side of the question, and places it in complete analogy to the general principles of law which govern in cases of contract. In Griggs v. Austin, Chief Justice Parker says : “It is certainly a clear principle of the common law, that when money is paid, or a promise made by one party, in contemplation of some act to be done by the other, which is the sole consideration of the payment or promise, and the thing stipulated to be- done is not performed, the money may be recovered back, or the promise founded on such consideration may be avoided between the parties to the contract. Exceptions may be made by a stipulation of the parties, but without such exceptions the rule seems to be universal.”
I will only add, that I can see no reason why a rule should be applied to contracts of affreightment differing from the one that governs all other contracts which involve mutual obligations, responsibilities and duties, and therefore I feel full confidence that the conclusion I have attained forms a correct exposition of the common law. Considering it as such, I must hold it to be the rule which prevails in England, and it must consequently control the decision of this case.
It follows that as the advanced freight can be recovered by the freighter in case of the loss of the ship, the ship-owner was the party for whose benefit the freight was insured; and that having been compelled to pay the insurance premium twice on account of the default of the charterer, he is entitled to recover back one of the payments. There might be a question whether he should have brought this form of action; whether in fact his action should not have been rather for so much freight unpaid; but as this question was not raised by the parties, and is not presented by the record, and as the recovery here will do full justice to the plaintiff, and hereafter protect the defendant, it is not a proper matter for our consideration.
Judgment affirmed.
Mr. Chief Justice Murray.
This was an action in the Court below to recover, among other things, the amount of premium upon insurance of freight paid by the plaintiffs. The defendant was the charterer of a vessel for a voyage from Cardiff to San Francisco. By the terms of the charter party, it was stipulated that “ the freight should be paid in good and approved bills on London at six months date from date of sailing, less cost of insurance to be effected by the charterer at ship’s expense, or, etc.” After the vessel had sailed, the plaintiffs, owners of the vessel, effected an insurance upon the advanced freight, and now seek to recover the amount paid, from the defendant, on the ground that it was his duty to have insured, and by neglecting to do *372so until some time after the vessel had sailed and the risk had commenced, they were forced by such negligence to protect themselves.
This controversy is much simplified by the fact that the insurance was effected upon the advanced freight paid by defendant to the plaintiff, as appears from .the plaintiffs’ “ Policy of Insurance.”
This being admitted, the question naturally suggests itself, whether the stipulation in the charter party was for the benefit of the plaintiffs under that agreement.
The general rule of law on this subject, both in the United States and among commercial nations, is that freight paid in advance may be recovered back if the voyage is not completed. It is put upon the ground, that the carriage of the goods, which was the consideration of the payment, has failed.
In England, however, where the contract under consideration was executed, a different rule has been established, and it is held that freight pre-paid cannot be recovered unless the parties expressly stipulated to that effect. 3 Kent, 287; Sanders v. Drew, 3 Barnwell & Adolphus, 446.
Regarding this as the well settled rule of the English Courts upon this question, it follows that the stipulation in the charter party was intended for the defendant’s benefit, and not for the benefit of the plaintiffs or owners. The charterer of a ship, who has advanced money under the terms of the charter party, in part payment of the freight, has an insurable interest in the money so advanced; for as such money could not, in ease of the loss of the ship, be recovered back by the charterer from the owners, the loss of the ship would involve the loss of- the money advanced. 1 Arnould on insurance, 266, and the cases there cited.
From this it is apparent that the -plaintiffs had no insurable interest in the advanced freight, but that the charterer alone could insure the same to cover his risk of loss or damage to the vessel.
The parties are supposed to have contracted with full knowledge of the law upon this subject, and I can come to no other conclusion from an examination of the charter party as well as the policy of insurance afterwards effected by the plaintiffs, that the payment of freight in advance, was the consideration upon the part of the ship-owners for the amount of the insurance which they contracted should be at the ship’s expense, and that the clause was inserted for the sole benefit of the charterer, and that plaintiffs could not charge him in this manner.
Some preliminary objections have been urged as to the right of an appeal in this ease. The stipulation to refer this case upon examinaation cannot be considered as a submission to an arbitration, but a reference under the statute, neither will the objection prevail that two distinct causes, pending in different Courts are submitted. Inasmuch as the stipulation is a distinct and separate submission of each case respectively and not of both jointly to be tried as one case. The error complained of is patent upon the report of the referee, and a new trial should be granted.
*373Ou the first argi&nent 1 prepared this opinion, which I see no good reason to recede from, believing it to he correct on the authorities, and therefore give it as my dissenting opinion.