Hongkong & Shanghai Banking Corp. v. United States

Whitakee, Judge, delivered the opinion of the court: This case is before us on exceptions to the report of the Commissioner and for final decision. Plaintiff, a corporation of Hongkong, China, sues for the value of 794 boxes of “waste-waste tin plate” which it alleges defendant requisitioned from it some time shortly after December 4,1941. The tinplate was a part of the cargo of the American Leader which sailed from Baltimore for points in the Far — 755 — East, including Manila, Philippine Islands, and Hongkong, China. It was consigned to plaintiff in Hongkong. The vessel stopped en route to the Far East at San Pedro, California, on November 4, 1941. Since war with Japan was .then impending, the Navy ordered the vessel to proceed to Honolulu, and there await further orders. The ship’s agents in Plonolulu later directed it to proceed in convoy to Manila. It arrived in Manila on December 4. After its arrival, the Port Director, a naval officer, acting under orders of the United States Navy, refused to clear any ships for Chinese ports, war with Japan then being imminent. In this situation the ship’s agent at Manila gave orders to the captain of the vessel to discharge its cargo at Manila. This he had a right to do under paragraph 4 of the bill of lading, which provides in part: In any situation whatsoever and wheresoever occurring * * *, which in the judgment of the carrier or master might give rise to risk of capture, seizure, detention, damage, delay or disadvantage to or loss of the ship or any part of her cargo, or to make it unsafe, imprudent, or unlawful for any reason to * * * proceed on or continue the voyage or to enter or discharge the goods at the port of discharge, * * * the carrier or master, * * * may discharge the goods into depot, lazaretto, craft or other place; or the ship may proceed or return, directly or indirectly, to or stop at any such port or place whatsoever as the master or the carrier may consider safe or advisable under the circumstances, and discharge the goods, or any part thereof, at any such port or place; * * *. Whether the ship’s agent gave these instructions pursuant to orders of the United States Army or Navy is in dispute, ahd there is no direct evidence by which we can resolve this dispute. However, certain circumstances shed some light on what may have happened. The tinplate had some military value, and the Chief Quartermaster at Manila had instructions to seize that part of the cargo of each vessel which had military value, and had posted guards on the piers and at the Customs House for this purpose. Therefore, it is to be presumed that he would have instructed the American Leader to discharge any part of its cargo which he thought had sufficient military value, — 756 — under the circumstances, to justify it. But, on the other hand, the vessel undertook to discharge its entire cargo, and it is unlikely that the Chief Quartermaster would have ordered it to do this, since there was considerable congestion on the piers and the port authorities were undertaking to avoid further congestion, so as to leave room for the receipt of military supplies which were expected. Hence, it is uncertain whether or not the vessel was discharging its cargo, including the tinplate, at the orders of the Chief Quartermaster. As stated, the “waste-waste tin plate” did have a military value; that is to say, it could have been used to make tin cans in which to store gasoline, or food supplies, or it could have been put to other uses of military value, but whether or not it was of sufficient military value for the Quartermaster to order the vessel to discharge it, we do not know. Hence, we cannot be certain that he actually ordered it to be discharged, and then took possession of it. The fact that this tinplate which was discharged was at the bottom of certain holds in the vessel does not show the Quartermaster ordered its discharge, because the vessel was undertaking to discharge its entire cargo, much of which had no military value. That it was undertaking to discharge its entire cargo is evidenced by the fact that when it was ordered to leave the port the master asked permission to remain a little longer, in order that he might discharge the balance of its cargo. The fact that the master wanted to discharge all of its cargo before leaving indicates that he would have discharged the tinplate whether he had been ordered to do so or not. After 794 boxes of the tinplate had been unloaded, the Port Director, on December 11, 1941, notified all vessels in the harbor that they could either leave that night and try to reach a safe port, or face the alternative of remaining in the port of Manila indefinitely. It was then that the master of the American Leader asked permission to remain until after its cargo was fully discharged; but this permission was denied, and the vessel proceeded to Australia, where it discharged the balance of the tinplate. — 757 — The fact that the vessel was ordered to leave port before all the tinplate had been discharged does not show the port authorities did not want the tinplate, because they may have been more interested in getting the vessel out of the port than they were in getting possession of the tinplate. Therefore, we cannot determine from the evidence whether or not the Quartermaster ordered the tinplate to be discharged. If he did not, the defendant did not take it, unless it was requisitioned after it had been unloaded. Late in December of 1941, after the American forces had withdrawn from Manila, the warehouses and piers in the port were thrown open, with permission to the civilian population to remove anything in them they wanted. An attempt was made to destroy the remainder, to prevent it from falling into the hands of the enemy. It is impossible to determine from the evidence whether or not the Army ever appropriated to its own use the tinplate in question, or whether it was removed by civilians, destroyed, or fell into enemy hands. Whether or not the Army did appropriate it, is pure conjecture. If it did not do so, of course the plaintiff is not entitled to recover. If it was destroyed, was removed by civilians,' or fell into enemy hands, then plaintiff lost its property through the fortunes of war. Of course the Army is not liable if it destroyed it to prevent it from falling into the hands of the enemy. Caltex (Philippines), Inc., et al. v. United States, 120 C. Cls. 518; 344 U. S. 149. Nor is it liable for permitting the civilian population to remove it, to prevent it from falling into enemy hands. Anderson, Clayton & Company, Inc., v. United States, 129 C. Cls. 347. If it fell into enemy hands, of course defendant is not liable, unless the defendant had previously appropriated it. The burden is on the plaintiff to show that the Army did appropriate it to its own use, and the difficulty of carrying that burden is another one of the fortunes of war. We cannot hold the Government liable on the theory of probabilities. We must have some proof either direct or circumstantial to show, not what the Army probably did, but what it actually did. — 758 — Plaintiff’s case fails for lack of proof. Its petition is dismissed. Laramokb, Judge; Madden, Judge; Littleton, Judge; and Jones, Chief Judge, concur. FINDINGS OF FACT The court, having considered the evidence, the report of Commissioner C. Murray Bernhardt, and the briefs and argument of counsel, makes findings of fact as follows: 1. Plaintiff is, and at all times hereinafter mentioned was, a corporation organized and doing business under the laws of the Crown Colony of Hongkong, and registered to do business in the State of New York by its New York Agency, with its principal New York office and place of business in New York City. 2. The laws of the Crown Colony of Hongkong permit citizens of the United States to bring suit there against the Crown Colony. 3. a. Under date of October 3,1941, Bethlehem Steel Export Corporation issued two invoices, each covering 1,120 boxes of “waste-waste tin plate” (hereafter referred to as “tinplate”), described in the invoices as “107# and lighter-10 x 10 and larger”. Each invoice was in the amount of $12,320, with inland freight paid to Sparrows Point, Maryland, and each stated that the material was sold to Alex Boss & Co. (China) Ltd., Hongkong, under confirmed irrevocable letter of credit in New York. Bethlehem Steel Export Corporation also prepaid ocean freight and marine and war risk insurance at a cost of $2,310.95 for each lot, making a total c. i. f. price for each lot of $14,630.95. 5. The confirmed irrevocable letter of credit in the amount of $29,600 was issued under date of August 29,1941, by plaintiff to Bethlehem Steel Export Corporation for the benefit of Alex Boss & Co. (China) Ltd., to cover “Metallurgical Products F. O. B. Mill including inland freight to Atlantic or Gulf Ports”, and was to remain in force until December 31, 1941. Pursuant to this letter of credit, plaintiff purchased sight drafts of Bethlehem Steel Export Corporation on Alex Boss & Co. (China) Ltd., in the amount of $29,261.90. — 759 — 4. Under date of October 10,1941, the United States Lines Company issued its bills of lading Nos. 1 and 2, drawn to plaintiff’s order, reciting its receipt of the tinplate in apparent good order and condition for carriage on its SS. American Leader from Baltimore to Hongkong, consigned to plaintiff. The tinplate was loaded on the vessel at Baltimore, and was stowed in the bottoms of holds 4 and 5. 5. From Baltimore the American Leader proceeded to Philadelphia, New York and Newport News, and then to San Pedro, California, arriving there November 4, 1941. While at San Pedro, the United States Navy assigned two naval personnel to the vessel to act as radio operator and signalman, respectively. Prior to sailing from San Pedro, the vessel received orders from the Navy to proceed to New Guinea, but these were later changed to Honolulu, where it was to await further orders. At Honolulu, the vessel was ordered by the ship’s agents to proceed in convoy and did proceed a week later in convoy to Manila. The convoying vessel was the U. S. Navy’s heavy cruiser Boise and the convoy was subject to the orders of her commander. 6. The American Leader arrived at Manila on December 4,1941, with the cargo of tinplate on board. 7. The agent for the carrier at Manila was informed by the Port Director acting under orders from the United States Navy on or about December 4, 1941, that no ships would be cleared for ports in China. The agent relayed this order to the master of the American Leader. 8. The American Leader discharged cargo on Pier 5 at the Manila Port Terminal Area day and night until December 8, 1941, at 5 a. m., when all work was stopped upon orders of the Port Authority due to the outbreak of war between the United States and Japan. The evidence is conflicting as to whether any cargo consigned to Hongkong or Shanghai had been unloaded prior to the outbreak of war, or whether only Manila cargo had been unloaded up to that time. Discharge of cargo was resumed at 8 a. m., that day. Thereafter the ship was blacked out at nights on orders of the Port Authority, and no cargo was discharged during blackouts. On December 10 the discharge of cargo was interrupted by an air raid. Included in the cargo discharged at Manila were 794 boxes of the tinplate consigned to plaintiff. — 760 — 9. Shortly after December 8, 1941, orders were issued to the commanding officer of the Quartermaster Depot at Manila to take charge of all supplies of any military value in the Manila Port Terminal Area where the cargo from the American Leader was being unloaded. The Army established its control over the Port Terminal Area, including the piers, by posting guards on the piers, and occupying the customs house opposite Pier 5 as a control center for the area. Nothing could leave the piers without Army permission, although the Army authorities were anxious to keep the piers as clear as possible to allow room for incoming military cargoes that were anticipated, and urged all local Philippine consignees to remove all property consigned to them for which the Army had no military use. Incoming merchant vessels whose manifests revealed the presence in their cargoes of property of military use were required to discharge on the piers that part of their cargoes which was of military use. If a cargo selected for requisition was at the bottom of a ship, such as was the waste tinplate, all cargo above it was removed when necessary to extricate the desired cargo and deposited in open storage in the Port Terminal Area. 10. a. The material part of paragraph 4 of the directions on the bills of lading applying to the shipments in this case in December 1941, provided as follows: In any situation whatsoever and wheresoever occurring * * *, which in the judgment of the carrier or master might give rise to risk of capture, seizure, detention, damage, delay or disadvantage to or loss of the ship or any part of her cargo, or to make it unsafe, imprudent, or unlawful for any reason to * * * proceed on or continue the voyage or to enter or discharge the goods at the port of discharge, * * * the carrier or master, * * * may discharge the goods into depot, lazaretto, craft or other place; or the ship may proceed or return, directly or indirectly, to or stop at any such port or place whatsoever as the master or the carrier may consider safe or advisable under the circumstances, and discharge the goods, or any part thereof, at any such port or place; * * *. (b) The cargo of the American Leader consigned to Hongkong was unloaded at Manila, presumably pursuant to orders of the ship’s agent. Whether or not the United — 761 — States Army or Navy instructed the ship’s agent to give those orders cannot be determined from the evidence. 11. On December 11, 1941, the Port Director, an officer of the United States Navy, issued instructions applicable to the American Leader and to all vessels in Manila Harbor that, because the Navy could no longer offer protection for them, all such vessels having sufficient fuel and stores could either leave that night and try to make for safe ports elsewhere or face the alternative of remaining in port indefinitely. The instructions limited to the night of December 11 the permission to depart and specified that departing vessels would not be accompanied by escorts except for guidance through the mine fields in the harbor area. A request by the master of the American Leader for permission to leave after her cargo was fully discharged was denied, so the master decided to proceed to Australia at his own risk. The vessel accordingly sailed from Manila for Australia on the evening of December 11,1941. 12. Of the 2,240 boxes of tinplate referred to in Finding 3, 1,446 boxes were still on the vessel when it arrived in Australia on December 19,1941, and were unloaded there. 13. “Waste-waste tin plate” is a trade name signifying hot-dipped or electrolytic tin-coated steel sheets, or steel sheets coated with terne metal, which has been rejected during processing by the producer because of imperfections which disqualify such sheets from sales as primes or seconds. The types of imperfections referred to are scratches and pincer marks which mar the shiny surface. Except where surface appearance is important, this grade of tinplate can be used for the same purposes as prime tinplate, including the manufacture of canisters, seafood cans, pill and ointment boxes, food tins, household appliances, furnace pipe, fittings and duct work. It is not classified as scrap, but is a secondary tin mill product with a regular commercial use. Although the shipping documents refer to the sizes of the tinplate shipped on the American Leader as “10 x 10 and larger”, it is reasonable to conclude that each sheet averaged at least 18" x 24", and that it was of standard gauge, suitable for the manufacture of five-gallon cans, among other things. 14. It is reasonable to conclude that the Army Quarter — 762 — master representatives had access at the time to the cargo storage plan of the American Leader, which described the shipment in question as “1120 bxs tinplate.” However, there is no direct testimony to establish that the Army personnel actually examined the ship cargo storage plan, or that they ordered the ship to discharge its cargo. The ship’s manifest was not in evidence and is presumed lost, so that the description there employed of the merchandise cannot be determined. A means could have been found for military use of the tinplate in question in the Philippines in December 1941, either in the construction of revetments for defense purposes or in the manufacture of receptacles for water, food and liquids. It is not known whether, after unloading of the tinplate onto the pier at the Manila Port Terminal Area, it was so crated or marked as to permit it to be readily identified on rapid inspection by port or Army personnel. The confusion attending the discharge, sorting and selection of cargo possessing military utility was so great because of the haste and imminence of enemy entry that in general the Army authorities removed from the Port Terminal Area all material which might have had a potential military value, within the limits of available transportation. There was no time for the exercise of extreme selectivity in choosing cargoes to requisition, and the operation was distinguished by its haphazard nature. Although the Army had instructed its persomiel to give receipts for such property as it requisitioned or confiscated from the Port Terminal Area, it is not known whether the tinplate was actually removed or, if it was removed, whether receipts were given for it. Such receipts as may have been given for property that was taken are no longer available, having been destroyed in the course of the evacuation of Manila by the United States Army or in the course of enemy occupation of the area. 15. After the evacuation of the American Forces from Manila to Bataan in late December 1941, and just prior to the entry into Manila by the Japanese troops on or about January 2, 1942, the warehouses and piers in the Port Terminal Area were thrown open and the civilian population was permitted to remove everything it wished that remained. Efforts were made to destroy what was left to prevent it — 763 — from falling into enemy hands. It is not known whether the tinplate discharged from the American Leader was included in that property which was so removed by the civilian population or destroyed. 16. The only evidence in the record with respect to the value of the 794 boxes of tinplate discharged at Manila is (1) its invoice price in the United States of $8,734, at $11 per box, and (2) its c. i. f. (cost-insurance-freight) price at Manila of $10,372.31, at about $13.063 per box. 17. The 1,446 boxes of tinplate discharged from the American Leader at Sydney, Australia, were immediately requisitioned by the Australian Government, which paid plaintiff the sum of $18,889.59, stated to be the c. i. f. value thereof computed at about $13.063 per box. The Australian Government disposed of the tinplate to canister makers. In 1944 the United States Government, acting through the Foreign Economic Administration, admitted the tinplate to lend-lease accounting as a “defense article” under the Lease-Lend Act of 1941, and reimbursed the Australian Government for the full c. i. f. price paid previously by the latter. This was accomplished by means of an intergovernmental agreement entered into in December 1944, between duly authorized agencies of the Governments of the United States and Australia pursuant to authorization in the Lease-Lend Act, Under the terms of the said agreement the criteria for determining whether a particular article was a defense article and lend-leasable were those existing at the time of unloading in Australia, and the initial determination was made by Australian officials subject to later confirmation of proper classification by United States officials. The classification of the tinplate discharged by the American Leader in Australia as a defense article was later duly confirmed by the appropriate United States officials. Further, under the terms of the said agreement the amount to be paid by the United States to the Australian Government for “defense articles” so requisitioned under the lend-lease program was “that shown by invoices and other relevant documents reflecting the total cost, insurance and freight to contemplated point of discharge.” 18. Plaintiff has received payment from its insurance carrier, the Transportation Mutual Insurance Company, in the — 764 — amount of the c. i. f. value of the waste tinplate discharged at Manila, under- a contract of insurance whereby the insurance company is subrogated to plaintiff’s rights in pursuing its claim, and the receipt executed by plaintiff to the insurance company authorizes the latter to sue in plaintiff’s name as subrogee. A supplemental agreement contemporaneously executed with the receipt characterized the payment as an “advance” and provided that the amount paid plaintiff’ by the insurance carrier would be refunded if it later developed that the property was not lost as a result of perils insured against under the policy. CONCLUSION OP LAW Upon the foregoing findings of fact, which are made a part of the judgment herein, ,the court concludes that as a matter of law the plaintiff is not entitled to recover and its petition is therefore dismissed.