Mr. Wm. H. Hayden, of Tacoma, Wash., Mr. Wm. H. Hayden, of Tacoma, Wash., for petitioners.
Mr. Erskine Wood, of Portland, Or., for respondent.[ Osaka Shosen Kaisha v. Pacific Export Lumber Co. 260 U.S. 490 (1923) ]
Mr. Justice McREYNOLDS delivered the opinion of the Court.
March 19, 1917, through its agent at Tacoma, Wash., Osaka Shosen Kaisha, incorporated under the laws of Japan and owner of the Japanese steamer Saigon Maru, then at Singapore, chartered the whole of that vessel, including her deck, to respondent Lumber Company to carry a full cargo of lumber from the Columbia or Willamette river to Bombay. In May, 1917, the vessel began to load at Portland, Or. Having taken on a full under-deck cargo and 241,559 feet upon the deck, the captain refused to accept more. After insisting that the vessel was not loaded to capacity and ineffectively demanding that she receive an additional 508,441 feet, respondent libeled her, setting up the charter party and the captain's refusal, and claimed substantial damages. The owner gave bond; the vessel departed and safely delivered her cargo.
The Lumber Company maintains that it suffered material loss by the ship's refusal to accept a full load; that [260 U.S. 490, 495] she is liable therefor under the general admiralty law and also under the Oregon statute (Olson's Laws of Oregon, 10281), which declares every vessel navigating the waters of the state shall be subject to a lien for the damages resulting from nonperformance of affreightment contracts.
Petitioner excepted to the libel upon the ground that the facts alleged showed no lien or right to proceed in rem. The trial court ruled otherwise and awarded damages upon the evidence. The Saigon Maru (D. C.) 267 Fed. 881. The Circuit Court of Appeals approved this action. 272 Fed. 799.
Little need be written of the claim under the state statute. The rights and liabilities of the parties depend upon general rules of maritime law not subject to material alterations by state enactments. The Roanoke, 189 U.S. 185 , 23 Sup. Ct. 491; Southern Pacific Co. v. Jensen, 244 U.S. 205 , 37 Sup. Ct. 524, L. R. A. 1918C, 451, Ann. Cas. 1917E, 900; Union Fish Co. v. Erickson, 248 U.S. 308 , 39 Sup. Ct. 112.
Both courts below acted upon the view that while the ship is not liable in rem for breaches of an affreightment contract so long as it remains wholly executory, she becomes liable therefor whenever she partly executes it, as by taking on board some part of the cargo. In support of this view, it is said: Early decisions of our circuit and district courts held that under maritime law the ship is liable in rem for any breach of a contract of affreightment with owner or master. That The Freeman (1856) 18 How. 182, 188, and The Yankee Blade (1857) 19 How. 82, 89, 90, 91, modified this doctrine by denying such liability where the contract remains purely executory, but left it in full force where the vessel has partly performed the agreement, as by accepting part of the indicated cargo. The Hermitage, 12 Fed. Cas. 27, No. 6,410; The Williams, 29 Fed. Cas. 1342, No. 17,710; The Ira Chaffee (C. C.) 2 Fed. 401; The Director (D. C.) 26 Fed. 708; The Starlight (C. C.) 42 Fed. 167; The Oscoda (D. C.) 66 Fed. 347; The Helios (D. C.) 108 Fed. 279; The Oceano (D. C.) 148 Fed. 131; Wilson v. Peninsula Bark & Lumber Co., 188 Fed. 52, 110 C. C. A. 190, were cited. [260 U.S. 490, 496] We think the argument is unsound.
Prior to The Freeman and The Yankee Blade, this court had expressed no opinion on the subject; but, so far as the reports show, the lower courts had generally asserted liability of the ship for breaches of affreightment contracts. 'It is grounded upon the authority of the master to contract for the employment of the vessel, and upon the general doctrine of the maritime law, that the vessel is bodily answerable for such contracts of the master made for her benefit.' The Flash, 1 Abbott, 67, 70, Fed. Cas. No. 4,857; The Rebecca, 1 Ware, 188, Fed. Cas. No. 11, 619; The Ira Chaffee, supra. Since 1857, some of the lower courts have said that the ship becomes liable for breaches of affreightment contracts with her owner or master whenever partly executed by her; but it is forcibly maintained that in none of the cases was the point directly involved. The Hermitage, The Williams, The Ira Chaffee, The Director, The Starlight, The Oscoda, The Helios, The Oceano, and Wilson v. Peninsula Bark & Lumber Co., supra.
The Freeman and The Yankee Blade distinctly rejected the theory of the earlier opinions. They are inconsistent with the doctrine that partial performance may create a privilege or lien upon the vessel. And in so far as the lower courts express approval of this doctrine in their more recent opinions, they fail properly to interpret what has been said here.
While, perhaps, not essential to the decision, this court, through Mr. Justice Curtis, said in The Freeman:
In The Yankee Blade, Mr. Justice Grier, speaking for the court, declared:- [260 U.S. 490, 497] 'The maritime 'privilege' or lien is adopted from the civil law, and imports a tacit hypothecation of the subject of it. It is a 'jus in re,' without actual possession or any right of possession. It accompanies the property into the hands of a bona fide purchaser. It can be executed and divested only by a proceeding in rem. This sort of proceeding against personal property is unknown to the common law, and is peculiar to the process of courts of admiralty. The foreign and other attachments of property in the state courts, though by analogy loosely termed proceedings in rem, are evidently not within the category. But this privilege or lien, though adhering to the vessel, is a secret one; it may operate to the prejudice of general creditors and purchasers without notice; it is therefore 'stricti juris,' and cannot be extended by construction, analogy, or inference. 'Analogy,' says Pardessus (Droit Civ. vol. 3, 597), 'cannot afford a decisive argument, because privileges are of strict right. They are an exception to the rule by which all creditors have equal rights in the property of their debtor, and an exception should be declared and described in express words; we cannot arrive at it by reasoning from one case to another.' ...
In Bulkley, Claimant of the Barque Edwin v. Naumkeag Steam Cotton Co., 24 How, 386, 393 (16 L. Ed. 599), the barque was libeled to recover damages for not delivering part of the cotton-707 bales-which the master had agreed to carry from Mobile to Boston. With most of the cargo on board the vessel was towed below the bar, there to receive the remainder from lighters. A lighter carrying 100 bales sank, and the cotton was lost or damaged. The barque delivered 607 bales at Boston in good condition. The owner of the vessel claimed exemption for her upon the ground that she never received the 100 bales. This court said:
Later opinions approve the same general rule.
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 Yankee Blade, supra. The contract of affreightment itself creates no lien, and this court has consistently declared that the obligation between ship and cargo is mutual and reciprocal and does not attach until the cargo is on board or in [260 U.S. 490, 500] the master's custody. We think the lien created by the law must be mutual and reciprocal; the lien of the cargo owner upon the ship is limited by the corresponding and reciprocal rights of the shipowner upon the cargo. See The Thomas P. Sheldon (D. C.) 113 Fed. 779, 782, 783.
The theory that partial acceptance of the designated cargo under a contract of affreightment creates a privilege of lien upon the ship for damages resulting from failure to take all, is inconsistent with the opinions of this court and, we think, without support of adequate authority. In The S. L. Watson, 118 Fed. 945, 952, 55 C. C. A. 439, 446, the court well said: