Supreme Court of the United States


146 U.S. 483

December 12, 1892

[146 U.S. 484] James Parker, for appellant.

G. W. Wingate, for appellee.

Mr. Justice BLATCHFORD delivered the opinion of the court.

This is a libel in personam, in admiralty, filed in the district court of the United States for the southern district of New York by La Compania Bilbaina de Navegacion, de Bilbao, a corporation of Spain, as owner of the Spanish steamship Marzo, against the Spanish-American Light & Power Company, Consolidated, a corporation of the state of New York, claiming to recover $5,520.97, with interest from August 4, 1886; $1,800, with interest from May 21, 1886; $3,300, with interest from June 21, 1886; and $8.14. The case is fully stated in the findings of fact hereinafter set forth.

The claim is made on a charter party, a copy of which is annexed to the libel. It is dated December 14, 1885, at the city of New York, and purports to be made by the agent of the owner of the steamship and by the Spanish-American Company, and to let the steamship to that company for 12 months. The important clauses in it are those numbered 11, 12, and 18, which are as follows: '(11) That the charterers shall have the option of continuing the charter for a further period of twelve months, on giving notice thereof to owners thirty days previous to first-named term, and to have the liberty of subleting the steamer, if required by them. (12) That in the event of loss of time from deficiency of men or stores, breakdown of machinery, or damage preventing the working of the vessel for more than twenty-four working hours, the payment of hire shall cease until she be again in an efficient state to resume her service; and should she, in consequence, put into any other port other than that to which she is bound, the port charges and pilotages at such port shall be borne by the steamer's owners; but should the vessel be driven into port or to anchorage by stress of weather, or from any accident to the cargo, such detention or loss of time shall be at the charterers' risk and expense.' '( 18) Should steamer be employed [146 U.S. 485] in tropical waters during the term of said charter party, steamer is to be docked, and bottom cleaned and painted, if charterers think necessary, at least once in every six months, and payment of the hire to be suspended until she is again in a proper state for the service; charterers to have the privilege of shipping petroleum in bulk in water-ballast tanks, which are to be fitted for the purpose at owners' expense, satisfactory to charterers, and have permission to appoint a supercargo at their expense, who shall accompany steamer, and be furnished free of charge with first- class accommodations, and see that voyages are made with utmost dispatch.'

The respondent appeared in the action, and put in its answer, denying that the libelant was entitled to recover any part of the $5,520.97, admitting the payment of $1,500 and $3,300, and denying that it owed anything to the libelant. It alleged that the libelant never fitted up the center water-ballast tank to carry oil in bulk, its use being consequently lost to the respondent; that the capacity of that tank was about 50,000 gallons, and its loss reduced the value of the vessel to the respondent $1, 100 a month from May 15, 1886, making a damage of $10,084; that from February 21, 1886, to August 27, 1886, the date of the bringing of the suit, was 188 days; that during that period the respondent was deprived of the use of the vessel 42 days, leaving only 146 days for which hire was due; that such hire, at the rate of 675 a month, amounted to $16,060; that on account of such hire the respondent had paid altogether $15,137; that it was entitled to deduct from the moneys due on the charter party $2, 390 for the expense to which it was put in procuring barrels so to transport the oil, and for the charges connected therewith, and the further sum of $10,084 for the damages which it would sustain by reason of the refusal of the libelant to fit up the center tank to carry oil in bulk; and that it had filed a cross libel to recover from the libelant so much thereof as exceeded the hire of the vessel claimed in the libel.

The case was heard in the district court by Judge Brown, and a decree was entered by that court on June 21, 1887, for the recovery by the libelant of $1,800, being the balance of [146 U.S. 486] hire unpaid for the vessel for the month beginning May 21, 1886, and for $ 117, interest thereon from May 21, 1886, and $95.73, costs; the whole amounting to $2,012.73.

The opinion of Judge Brown is reported in 31 Fed. Rep. 492. He took the view that the charter party signed by the broker of the libelant did not constitute a legal contract, binding upon either of the parties, because such broker, in signing it, exceeded his authority; that that fact was communicated at the time to the broker of the respondent; that it was agreed between the brokers of the two parties that, if the clause relating to the extension of time for 12 months, and the clause requiring the vessel to fit up the oil tanks at the expense of the owner, were objected to by the latter, the matter should be settled by negotiation; that the respondent from the first refused the charter unless the vessel should fit up the tanks at the expense of her owner; that that fact was stated to libelant's broker at the time; that the owner of the vessel subsequently refused to confirm these two clauses in the charter; that notice of such refusal was given to the respondent, and it never consented to waive those two clauses; that no agreement as to those two clauses was ever arrived at; that the subsequent conduct of each party showed that neither intended to recede from its position; that, when the vessel arrived at Philadelphia, ready for the first voyage, neither party made any inquiry as to the disputed clauses; that both parties assented to the use of the vessel on the first voyage, without any definite agreement on the disputed points, and without any settlement by negotiation; that the respondent did not object, because it was not ready to use the tanks; that, when it was ready to use them, and required that they should be fitted up by the libelant in pursuance of the terms of the charter party, the libelant refused to do so; that the cargo was then taken in barrels, under a stipulation that that might be done without prejudicing the rights of either party, the respondent claiming damages for the extra expense; and that subsequently the libelant fitted up the tanks, claiming that the expense would be at the charge of the respondent, while the latter notified the libelant that it would not pay for any such expense. [146 U.S. 487] The district court also held that, although the charter party as a whole never became a contract binding upon either of the parties, it might be referred to as fixing the rights of each, in so far as it might be presumed to have been adopted by both parties in their subsequent acts; that the respondent was apprised of the verbal refusal of the owner to agree to the two disputed clauses of the charter party; that, nevertheless, the vessel came to the respondent, and was tendered to it by the owner, without any attempt to settle the disputed points; that both parties consented to the first voyage without any settlement of those differences; that as soon, however, as any question was made between the master and the respondent, after the first voyage, the original refusal of the owner was made known to the respondent, and neither party ever agreed to the demands of the other party on the subject; and that the vessel was employed without either side yielding anything to the other as to the charter party.

The court further held that, under that state of things, the terms of the charter party constituted the implied agreement of the parties in the actual use made of the vessel, in everything except as to the disputed clauses; that neither party could found any claim against the other upon the clauses which the other always refused to accept, because, in the face of such refusal, no agreement to those clauses could be implied; that the libelant, therefore, could recover nothing for its expenditure in fitting up the tanks to carry oil in bulk, nor could the respondent by its cross libel recover any damages, because the tanks were not fitted up earlier; that for the same reason the libelant could not recover for any time of the vessel lost while it was fitting up the tanks; that it lost nothing by that disallowance, because it did not appear that any more time was required to fit up the tanks, when the work was actually done, than would have been required when the vessel was brought over to the respondent; that the evidence showed that, after the employment of the vessel had begun, neither party was desirous of insisting on its legal right to discontinue all further service by reason of the failure of the parties to come to an agreement upon the disputed clauses; that the rights and liabilities of the parties [146 U.S. 488] were founded, not at all upon the written charter party, but wholly upon their subsequent conduct in the actual use of the vessel; that the charter party was applied by implication to those acts, so far as it presumptively indicated the intention of both parties, and no further; that there could be no implied promise or obligation in contradiction of the expressed refusal of either party; that the result was that neither had any claim upon the other for the damages set forth by them, respectively; and that the libel and the cross libel must be dismissed, except as respected the hire, if any, unpaid for the time of the actual use of the vessel by the respondent.

Both parties appealed to the circuit court. That court, held by Judge Lacombe, dismissed the cross libel of the respondent, without costs of the circuit court to either party, and decreed that the libelant recover from the respondent the amount of damages and costs decreed by the district court, viz., $2,012.73, and $185.27 interest thereon, being a total of $2,198.

Judge Lacombe, in his opinion, said that there was nothing to add to the opinion of the district judge; that the findings made by the circuit court sufficiently showed upon what theory the decision of Judge Brown was affirmed; and that, as both sides had appealed, no costs of the circuit court were allowed to either party.

The circuit court filed original findings of fact and conclusions of law on October 15, 1888, and on January 14, 1889, it filed supplemental findings of fact. The original and supplemental findings of fact are as follows, the latter being inclosed in brackets:

W. W. Hurlbut.' W. W. Hurlbut.' That on January 9, 1886, said Walker, Donald & Tay- [146 U.S. 492] lor transmitted a copy of said letter to Hurlbut at New York, and the latter, on January 18th, inclosed copy to Booth, the broker for charterers.] [Signed] "R. A. C. Smith, Sec'y. The conclusions of law accompanying the original findings of the circuit court were as follows: There were no further conclusions of law accompanying the supplemental findings of fact.

The libelant has appealed to this court, but the respondent [146 U.S. 496] has not appealed. The libelant contends in this court that it ought to recover all the items claimed in its libel, and not merely the $1,800, with interest from May 21, 1886.

It is quite clear that the libelant could not, in any event, recover from the respondent any part of the expense of fitting up the tanks in the vessel to carry petroleum in bulk. There was nothing in the acts of the parties to throw on the respondent any obligation to fit up the tanks, or to pay the expense thereof, if the work should be done. The respondent never promised to make or to pay for any such alteration. On the contrary, it always refused to recognize any such liability on its part, and insisted it was the duty exclusively of the libelant to apy the duty exclusively of the libelant to pay tanks, that was a voluntary act on its part in regard to work upon its own property, for which it has no remedy against the respondent.

It is contended, however, that, as the respondent refused to retain or use the vessel unless the tanks were fitted up by the libelant, as provided in the charter party, an implied contract arose; and that, as the libelant did such fitting up, the respondent must bear the expense. But it is found, in effect, that the respondent always and constantly refused to assume the expense, and insisted, as the ground for the making of the alterations, that under the charter party it was the duty of the libelant to make them. No duress by the respondent is allleged in the libel, or shown.

The position of the libelant is that, although the charter party is a binding instrument on the respondent, so far as relates to the hire of the vessel, it has no effect against the libelant as to the provision contained in clause 18, as to the fitting up of the waterballast clause 18, as to the fitting up of the water-ballast in order to have petroleum shipped in bulk. If the libelant seeks to enforce any part of the charter party, it must rely on the instrument as a whole; and it cannot affirm the charter party for one purpose and repadiate it for another. The respondent refused at all times to enter into an express contract that it would pay for fitting up the tanks, and the charter party as executed indicated the respondent's inten- [146 U.S. 497] tion not to do so. On the facts as found, no such contract can be implied. The charter party never became a binding contract.

The contention of the libelant is that the instrument became binding on the parties, with the exception of the particular clauses referred to, if the libelant should dissent from those clauses. Thus the same effect is claimed as if the charter party had been returned to the persons who had signed it, and the clauses referred to had been erased by mutual consent. But if there is any part of it in regard to which the minds of the parties have not met, the entire instrument is a nullity as to all its clauses. Eliason v. Henshaw, 4 Wheat. 225; Insurance Company v. Young's Adm'r, 23 Wall. 85; Tilley v. County of Cook, 103 U.S. 155; Minneapolis & St. L. Ry. Co. v. Columbus Rolling-Mill Co., 119 U.S. 149, 151, 7 S. Sup. Ct. Rep. 168.

Nor did the delivery of the vessel to the respondent, and her acceptance by the latter, constitute a hiring of her under the charter party as it would stand with the disputed clauses omitted. The proposition of Hurlbut to the respondent on December 19, 1885, was that if the libelant did not agree to the two disputed clauses, those clauses should 'be arranged or compromised by mutual consent, by cable.' The libelant was apprised of that proposition prior to December 31, 1885, as on that day the London brokers of the libelant, Walker, Donald & Taylor, wrote to Hurlbut, the agent of the libelant, the letter of that date. On January 4, 1886, the libelant wrote to Walker, Donald & Taylor the letter of that date, and the latter, on January 9, 1886, sent a copy of that letter to Hurlbut at New York, and he, on January 18, 1886, inclosed a copy of it to Booth, the broker for the respondent. Without any direct communication with the respondent, and without receiving any communication from it, the vessel was dispatched to Philadelphia, and tendered to the respondent on February 18, 1886, not a word being said at the time to the respondent as to the disputed clauses. On these facts, the respondent had a right to conclude that the dissent of the libelant from the two disputed clauses was not insisted upon

It was important to the respondent to know promptly if the [146 U.S. 498] charter party which had been signed was binding, and it was the duty of the libelant, before delivering the vessel to the respondent to have the latter understand distinctly that the libelant did not deliver her under the charter party which had been signed. It is expressly found, in the tenth original finding of fact, that the respondent, at the time the vessel was delivered to it, supposed that the libelant was delivering her in accordance with the terms of the charter party which the respondent had signed. Under these circumstances, the delivery of the vessel to the respondent by her master was, in legal effect, the adoption by the libelant of the existing charter party, and not an acceptance of the vessel by the respondent with the omission from the charter party of the two clauses in question. Drakely v. Gregg, 8 Wall. 242, 267.

The legal effect of the transaction was that the libelant thus waived its former objections to the charter party, whether it intended to do so or not. It follows that the libelant cannot claim rent for the use of the vessel during the time she was undergoing alterations. As the libelant was bound to pay the cost of fitting up the tanks, if it did the work, it cannot recover the rent for the time during which such work was being done. The loss of the use of the vessel by the respondent during the time the alterations were being made was a part of the expense of fitting up the tanks, the eighteenth clause of the charter party meaning that the tanks were to be fitted at the expense of the libelant before the delivery of the vessel under the charter party. No interpretation of the charter party can be allowed which would permit the libelant to take its own time to fit up the tanks, and yet collect full rent from the respondent during the time that work was being done, and while the respondent was necessarily deprived of the use of the vessel.

Moreover, the respondent, insisting that the libelant should fit up at its own expense the water-ballast tanks, delivered the vessel back to the libelant, which accepted her for that purpose, and kept her for a month. This necessarily stopped the running of the rent under the charter party. The respondent [146 U.S. 499] can be liable to pay rent for the use of the vessel only while she was in its service. The libelant recovered all that it was entitled to recover.

Decree affirmed, but without interest, and with costs.