W. R. Grace & Co. v. Hansen

HUNT, Circuit Judge (after stating the facts as above). [1] It is argued by appellant that the subjects of deck and under-deck cargoes are found in separate paragraphs, and that appellant’s initial obligation extended no further than the furnishing of an under-deck cargo; that by the use of the term “full cargo” in the first paragraph a full cargo under deck was meant, and that under the second paragraph the master — 491 — is given an exclusive option to load or not to load a cargo on deck; and that as a matter of law such option relieved Grace & Co. from the duty of providing a deck cargo before the master exercised the privilege of carrying one. Our construction of the provisions of the charter party is that the charterers were allowed 10 working days within which to furnish the full cargo at the average rate of 150,000 feet per day. If the lay-day period commenced at 1 o’clock of August 28th, and holidays and Sundays are excluded from the lay-day period, the 10 lay days allowed the charterers for loading expired at noon on September 8th. From that time on, days of demurrage would run continuously without deduction, so that, when the last cargo was put upon the ship at noon of October 8th, there had been a detention for 30 days. There arose, then, an obligation on the part of the charterers to pay such demurrage, unless they were excused on account of some exceptive clauses to be found in the charter party. Charterers say that there is such an exceptive clause in that which pertains to strikes, lockouts, or stoppage, partial or otherwise, or any other hindrances or delays, of whatever nature, connected with the working, delivery, or shipment of the cargues, or any part thereof, beyond the charterers’ or agent’s control. The provision of the charter party whereby the owner covenanted and agreed to the freighting and chartering of the “whole of said vessel,” and also the provision that the charterers did “engage to furnish the said vessel for the voyage aforesaid a full cargo of sawn lumber,” measure the obligation. Although the shipowner never directly notified the charterers of any “option” to carry a deck load, the great weight of the evidence is that all concerned acted upon the assumption that the ship would carry a deck load. The charter was in the main in the usual form used by Grace & Co. with respect to Pacific Coast lumber charters. The ship was a motorboat, but there does not appear to have been anything unusual about the type which would affect her capacity to carry lumber, or her loading capacity generally. There was uncertainty in the minds of the charterers as to the amount of the deck load which the ship would carry, ánd what the height of her deck load might be; but it was the usual custom for ships in the lumber carrying trade to take deck loads, and we think that the evidence is that when the ship was chartered it was understood that she would carry a deck load. The stipulation in the charter party whereby the ship was to have the privilege of loading a deck load not endangering the safety of her cargo was not based upon a doubt as to the capability of the ship to carry a deck load, but upon how much deck load she would carry without endangering the safety of her cargo. Naturally the ship would carry as much of a deck load as was safe, and the charterers, for their own protection, insisted that the vessel should not carry a deck load so great as to endanger the safety of her cargo. As further evidence that the charterers were concerned as to the safety of the cargo, there is the provision wherein the vessel is required to furnish a certificate from a marine surveyor of the San Francisco Board of Underwriters that the ship was in proper condition for her voyage and that she was properly loaded. The obligation — 492 — of the charterers being to furnish the ship a full cargo, notification by the owner to the charterers that a full and complete cargo would require not less than 1,500,000 feet fixed the obligation on the charterers to furnish such cargo. The stowage of the cargo being under the supervision of the owner, it was immaterial to Grace & Co. where the 1,500,000 feet should be stowed, provided, always, the stowage was such as not to endanger the safety of the cargo. The testimony of Mr. Thompson, of the Douglas Fir Company, was that the charter required full and complete cargo, and that it made no difference how much the vessel would take, and Robinson seems also to have understood the charter party as imposing upon the charterer the obligation to furnish a full and complete cargo. Appellant’s claim for 6 days’ demurrage in loading the under-deck cargo rests upon the hypothesis that the obligation of the charterers to furnish a full and complete cargo was of a twofold nature: primarily, to furnish an under-deck cargo; and, secondarily, to furnish a deck cargo — the iatter part of tire obligation, however, not arising until the owner had exercised his option to carry such deck load. But, as we construe the charter, Grace & Co. being obliged to furnish a full and complete cargo of not less than 1,500,000 feet for loading within the lay days provided in the contract, the rate at which the under-deck cargo was loaded became immaterial. The rate at which the loading would be carried on would not necessarily detain or delay the loading of the ship. The fact is undisputed that tíre charterers did not furnish a full cargo of 1,500,000 feet, so that the whole of the cargo could have been loaded on board the ship within the period of the lay days provided for in the charter party. Alexander Sons v. Aktieselskabet, 25 Com. Cus. 21. The demurrage clause of the charter party contains a provision for payment of demurrage for each and every day’s detention by the fault of the charterers, which means ultimate detention in the vessel’s loading beyond the 10 days allowed by the charter for loading. That such is the true construction is confirmed by that clause of the charter party which provides that time used in moving from one loading mill to anothér should count as lay days. It could hardly be that there was an obligation to load the full 150,000 feet each day, and yet that the time used by the ship in moving from one mill to another should count as lay days. [2] Nor can we agree with the appellant that the duty of loading the cargo at the charter party rate fell upon the appellee. The,language used “allowed” the charterers a prescribed time for loading. The fact proved was that the work of loading was done by stevedores, and not by employes of the loading mills or the crew of the ship. The stowage was under the master’s supervision and direction, but the loading was not. It was expressly provided in the charter party that the cargo was to be stowed under the master’s supervision and direction, “charterers’ stevedore to be employed at current rates.” The evidence is that the charterers’ stevedores loaded the cargo of lumber here involved as directed by the lumber inspectors of the charterers. The argument that the stevedores were at fault in loading with only one gang, and that the progress in loading was not satisfactory, does not — 493 — help the charterers, inasmuch as it was their duty to have provided additional stevedores, or otherwise to have made provision for the expedition of the work of loading. It is also established by the evidence that the work of loading, when first undertaken at the St. Paul and Defiance mills, could not have hastened the final loading of the ship, because the ship and the stevedores were idle and waiting for cargo for some 12 or 13 days after the first cargo had been loaded on the ship. There does not appear to have been any act of the master in respect to the stowage of the hold that caused the delay in the loading of the ship beyond the 10 lay days. The real' reason, as we read the evidence, why the ship did not complete her loading and stowage within the lay day period was the failure of the charterers to furnish the full cargo' within the lay day period. The first quantity loaded, approximately 343,000 feet, was loaded in less than 4 days, and the ship shifted to the Defiance mill with 6 lay days remaining. But upon reaching the Defiance mill there were less than 600,000 feet of lumber for the ship. It was then that Capt. Ross was told by the people at the 'Defiance mill that no further lumber had been ordered for the Hansen. It appears, too, that it was at that time that the agent of the captain of the ship realized that there would be an unreasonable detention. The charterers ought to have had approximately 1,200,000 feet to complete the cargo, whereas they had less than 600,000 feet. Thus a condition arose which made it quite apparent that the ship would be idle for some time. All the cargo on board at the Defiance mill, and also all cargo cut while the vessel was lying at the Defiance mill, was loaded and stowed by September 15th. Under no circumstances could there have been a delay of the ship by failure to load at the rate of 150,000 per day, for the ship was detained until September 24th, and it appears that she could not have been loaded prior to that date. A surveyor employed by Grace & Co., who was on the ship when she loaded the latter part of her cargo, testified that the effect of a failure to load the initial cargo at the rate of 150,000 feet per day would be to give appellant that much more time to have placed their order for the balance of the cargo and get it out that much sooner. Jenneson, Taylor Co. v. Secretary of State for India, 86 L. J. K. B. 283, [1916] 2 K. B. 702, 22 Com. Cus. 1. Wc conclude that compliance with the charter provision to load within 10 days was impossible by reason of the failure of Grace & Co. to furnish the cargo for loading within that period of time, and that there is no substantial merit in the contention that there should be a separation of lay days for loading as between under-deck and on-deck cargo. [3] We come, now, to the claim of Grace’& Co. that it was prevented from furnishing full cargo to the ship by reason of strike conditions existing at the loading mills. Again we find the argument of the appellant advancing the contention that there was the initial obligation to furnish the full under-deck cargo, and that, if the owner elected to carry an on-deck cargo, then it became the duty of the charterers to furnish such on-deck cargo. Proceeding along these lines, the charterers urge that they complied with the initial obligation to fur — 494 — nish an under-deck cargo, which was ready at the time the vessel went on berth, but that the ship or master did not elect to carry on-deck cargo until after the entire under-deck cargo had been completely loaded, at which time the loading mills were involved in strikes, and that when the master exercised the “option” to carry on-deck cargo he knew of such strike conditions, and.knew that delay would ensue, and that therefore he exercised the option with the liability for all risk of detention of the ship in her loading in connection with the furnishing of the on-deck cargo. But, going back to the provision of the contract under which the charterers obligated themselves to furnish the vessel a complete cargo, and tó our view of the charter party, the covenant to furnish full cargo is not divisible; hence delay in furnishing cargo would not be excused, except upon some ground expressed in the provisions of-the contract. The question then arises: Were the charterers prevented from furnishing the cargo as called for by the charter party solely by reason of causes beyond their control and within the exceptive clauses of the charter party ? It is shown that there were labor troubles at the Defiance mill and at the St. Paul mill; that a number of other mills closed down; that conferences were had between the officers of the Defiance Company and the men; and that because of coercion by outside influences many men quit work. On the other hand, before the Hansen went on berth in August, 1917, it was given out by the officers of the West Coast Lumbermen’s Association, of which the St. Paul mill was a member, that the mill had resumed work, and by September 6th, while the Hansen was still on berth, Allen, secretary and manager of the association, stated to the press representatives that the St. Paul mill was operating with a full crew. There was a reduction in operation, but written mill reports disclosed that there was a total cut of 600.000 feet for the week ending August 18th, that rail orders were accepted for that week for 11 cars, that local orders were accepted for 50.000 feet, and that in filling local orders 45,000 feet were shipped; that for the week ending August 26th 600,000 feet of lumber were cut; that there were rail and local orders aggregating very large quantities, and 75,000 were shipped; that for the week ending September 1st 600,000 feet were cut, rail orders were accepted for 125 10 cars shipped, 81,000 feet shipped locally; that for the week ending September 8th the mill cut 600,000 feet, for the week ending September 15th, 897.000 feet, and for the week ending September 22d, 1,900,000 feet. At the Defiance mill reports showed that for the week ending August 25th there was a cut of 681,937 feet, and that for the time between August 27th to September 1st the Defiance mill cut 614,511 feet, and from September 1st to September 12th cut 840,399 feet, and from September 12th to 21st cut 766,896 feet. These figures, together with others which need not be given, are strong evidence that when the ship went on berth August 28th strike conditions did not impede operations sufficiently to prevent the mills from furnishing the Hansen the cargo called for hy the charter party. [4] Furthermore the strike conditions were confined to the mill employés, or those who were exclusively working in the manufacture of — 495 — the lumber, and who did not in any way engage in transporting the lumber to the loading port, or did actual work in loading the lumber. There can be no extension of the scope of the exemption clause, so as to include the labor of manufacturing the cargo, Construction in accordance with the general rule would be that, when the charterer makes a contract for the use of a ship, the presumption is that he has a cargo in existence with relation to which the contract is made, ft is not a part of the contract that the provisions shall pertain ^^procurement of the cargo. Carver on Carriage by the Sea, §§ 252-257a; Scrutton on Charter Parties, art. 42; Tons of Nitrate v. McLeod, 61 Fed. 849, 10 C. C. A. 115. See, also, Grant v. Coverdale, L. R. 9 App. Cas. 470; The India, 49 Fed. 76, 1 C. C. A. 174; McLeod’s Case, supra; Gardinier v. McFarlane, 20 Sess. Cas. 414; Sorenson v. Keyser, 52 Fed. 163, 2 C. C. A. 650; Arden S. S. Co. v. Weir, 10 App, M. C. (N. S.) 135. One of the leading cases cited by the appellant is Dampstibsselskalut Danmark v. Paulsen, [1913] Sess. Cas., supra, where the exemption clause of the charter party is much like that under consideration. While there is language in the opinion to uphold appellant’s contention, the decision itself was upon the ground that the charterer failed to place timely and binding orders for his cargo to be delivered to the chartered ship within the loading period and provided in the charter party, and that therefore the charterer could not fall back on the exemption clause to defend against the shipowner’s claim for demurrage. The court did not reverse the decision in the Gardinier Case, supra, where it had been held that an exemption clause quite like that before us only goes to cover causes which conduce to the failure of the charterer’s obligations under the contract and do not cover causes which delay the procuring of the cargo. In the present instance the use of the word “working” in the exceptive clause, which often appears in colliery charter parties, may call for broader application than if there were no such word; still we do not believe that it means the producing and manufacturing of the cargo, and unless the language makes it plain that the parties intended that the shipowner would assume the risk of delay in the supplying of logs to the mills and the manufacturing of logs into lumber, no such construction should he adopted. Carver on Carriage by Sea, 258a; Grant v. Coverdale, supra. There is some evidence that appellant failed to exercise due caution in placing binding orders under which the loading mills would have been obliged to furnish the cargo for loading the Hansen within the lay-day period. The testimony shows that there was some expectation of danger of a shutdown, and that if certain orders for lumber had been placed 30 days before the labor troubles occurred orders could have been completely filled. There was an actual shutdown of the St. Paul mill from July 26th to August 13th, at which time the mill reopened with a small force and gradually, increased its efficiency. A shutdown at the Defiance mill was from July 26th to August 20th, when operations were resumed and approximately 75 per cent, efficiency — 496 — was attained. It is not necessary to enter into “a detailed statement of the number of feet cut for export lumber out of the total cuts, but we gather from the statements in evidence that there was a lack of due diligence on the part of the appellant to secure lumber for the Hansen after the ship went on berth up to the time her lay days expired, and that there was also lack of due diligence used to furnish the ship with lumber after the expiration of the lay days when- the ship was on demurrage. [5] As to the extent and scope of the demurrage provision of the charter party, our opinion is that all detention beyond the time set for loading and not excused .under the provision of the contract should be paid for at the rate agreed upon between the parties. The word “demurrage” is not to be construed as having been used in its strict legal sense, where, as here, the parties intended to agree that the voyage must be begun at the end of the time required to load the ship, and for each and every subsequent detention day the sum of $500 was fixed, subject to exceptions in the contract. This seems to have been the construction put upon the contract by the parties themselves, for both claim $500 demurrage per diem for failure in initiating the voyage after the vessel was completely loaded. The owner is asking for $1,000 for the 2 days between October 17th and 19th, while the charterers claim $7,000 for 14 days between October 8th and 23d. It would seem as if the parties had understood that, if time common to both were used without sufficient excuse by one, compensation must be awarded to -the other. Inverkip S. S. Co. v. Bung, 22 Com. Cas. 200. [6] The contention of the appellee is that the award to the owner of demurrage for the two days (October 17th to 19th) was caused by the refusal of the charterers either to pay the owner’s claim for demurrage or to issue bills of lading with notations thereon that the owner claimed demurrage during such period. The detention of the ship does not appear to have been justified upon the ground that the master had a right to detain the ship in order to effect the payment of a demurrage claim. He could have promptly exercised a lien against the cargo, and such course would have been followed, doubtless, by the immediate release of attachment by the giving of a bond, and, had such course .been pursued on October 9th, the voyage could have been commenced after the ship’s repairs were made. But it appears that when the loading was completed, and on October 9th, Grace & Co., presented to the master bills of lading which the master, as already said, refused to sign. In these bills of lading there was a provision that “negligence clause and all other conditions as per charter party dated Seattle, June 12, 1917.” The proper construction of the lien and cesser clause of the charter is shown by the decision of this court in Elvers v. Grace & Co., 244 Fed. 705, 157 C. C. A. 153. There the lien and cesser clause was the same as in the case before us; and the ruling of the court was, as applied to the case under consideration, that when the Hansen was loaded the owner, because it was at least doubtful whether his' lien on the cargo was preserved against the consignee, had a right of action in personam against Grace & Co. for the loading demurrage, and such right was enforceable without the need — 497 — of detention of the vessel. The master of the Iiansen, therefore, had a remedy, and we do not think that detention was justifiable after the ship was fully loaded and ready to sail on October 17th. [7] The master malees no claim for the 8 days used in making repairs to the wildcat. Appellant contends that this detention was for the purpose of making the ship seaworthy for the voyage, and that therefore such detention was not caused by the charterers. The contract required that the ship “shall be kept tight, staunch, strong, and every way fitted for such voyage.” The breaking of the wildcat obviously made the ship unfit for the voyage, and, as such condition existed before the voyage was commenced, it would seem that for detention by the master the agreed demurrage should be paid to the charterers. Carver on Carriage by Sea, p. 834. The importance of having the windlass in fit condition is emphasized by the witnesses and the evidence that the underwriters would not have allowed the ship to proceed on the voyage with a broken windlass. The 10 days allowed for repairing the windlass is apart from the demurrage clause, and is in the warranty that the vessel, having been declared fit and a certificate of fitness having been issued, shall be kept fit. The breaking of the windlass was not an accident of navigation, but was apparently due to a defect for which claim was' made against the company which built the ship. Bowring v. Thebaud, 56 Fed. 520, 5 C. C. A. 640; The Maumee (D. C.) 260 Fed. 862; Carver on Carriage by the Sea, §§ 21, 144; S. S. Wellesley Co. v. Hooper, 185 Fed. 733, 108 C. C. A. 71; Gilchrist’Transportation Co. v. Boston Insurance Co., 223 Fed. 716, 139 C. C. A. 246. [8] Appellant’s point that the notice of readiness to load given by the ship was not sufficient is without substantial merit. It appears that on August 25th direct notice was given of the readiness of the ship, that the ship arrived on August 23d, that thereafter instructions were awaited from the charterers, and that subsequently loading commenced by the delivery of lumber at the ship’s tackle on August 28th. [9] Appellant asks a deduction for a half day on September 11th, because of a breakdown of the donkey engine of the ship. According to the log, no loading was done in the forenoon of Tuesday, the 11th “on account of damaged donkey boiler; 12:30 p. m. began loading again and took in 39,122 feet.” The breakdown did not occur during the lay days, but it is quite evident that the reason that there was no loading in the forenoon of that day was because of the damaged donkey boiler, and under the contract we think there should be a deduction of $250 for that half day. [10] Appellant also contends that there should be a deduction for the failure of the ship to load on September 25th. The evidence is that the ship reached the Defiance mill at 3 p. m. September 24th. On the 25th the stevedore decided that there was not enough lumber on hand to start to load and that it would be better to avoid the expense of bringing his men down from the city and wait until he got at least a half day’s work to start in on. Inasmuch as the fault appears to have been on the part of the charterers’ stevedores, we do not think the allowance should be made. — 498 — [11] As already stated, the ship was fully loaded on October 8th, but did not commence her agreed voyage until October 23d. From the 8th to the 17th, repairs necessary to prepare the ship for the voyage, as we have shown, were the cause of detention, but for those 8 days no claim is made by the appellee. We have also held that appellee should not be allowed demurrage for the 2 days from October 17th to 19th. Nor should the appellee be allowed, for detention of the ship from the 19th to the 23d (3 days); the detention seems to have been unnecessary. The demurrage controversy was for the time being disposed of on the 19th by tire filing of a libel and the furnishing of a release bond; for detention after that date the master cannot claim. Our conclusion is that the decree of the District Court should be modified, so as to allow in favor of appellant, not only the deductions made by the District Court, but in addition thereto $1,000, or $500 per day for the 2 days from October 17th to 19th, and also $500 per day for the 3 days from October 19th to 23d, and $250 for the half day as heretofore indicated. This would reduce the amount allowed to libelant to the sum of $9,250, which sum should bear interest from October 8, 1917, and costs should be taxed as per stipulation on file, dated November 22, 1919. As so modified, the decree will bé affirmed.