United States v. Shea/Opinion of the Court

This case turns upon the construction to be given to the contract of May 28, 1886, taken in connection with the action of the parties thereunder. Was this a contract of hiring or for service? In Reed v. U.S., 11 Wall. 591, 600, it was said by Mr. Justice Clifford, speaking for the court:

'Affreightment contracts are of two kinds, and they differ from each other very widely, in their nature, as well as in their terms and legal effect.

'Charterers or freighters may become the owners for the voyage without any sale or purchase of the ship, as in cases where they hire the ship and have, by the terms of the contract, and assume, in fact, the exclusive possession, command, and navigation of the vessel for the stipulated voyage. But where the general owner retains the possession, command, and navigation of the ship, and contracts for a specified voyage, as, for example, to carry a cargo from one port to another, the arrangement, in contemplation of law, is a mere affreightment, sounding in contract, and not a demise of the vessel, and the charterer or freighter is not clothed with the character or legal responsibility of ownership. * *  * Courts of justice are not inclined to regard the contract as a demise of the ship if the end in view can conveniently be accomplished without the transfer of the vessel to the charterer, but where the vessel herself is demised or let to hire, and the general owner parts with the possession, command, and navigation of the ship, the hirer becomes the owner during the term of the contract, and, if need be, he may appoint the master and ship the mariners, and he becomes responsible for their acts.'

And subsequently, in Leary v. U.S., 14 Wall. 607, 610, Mr. Justice Field thus discussed the question:

'If the charter party let the entire vessel to the charterer, with a transfer to him of its command and possession, and subsequent control over its navigation, he will generally be considered as owner for the voyage or service stipulated. But, on the other hand, if the charter party let only the use of the vessel, the owner at the same time retaining its command and possession, and control over its navigation, the charterer is regarded as a mere contractor for a designated service, and the duties and responsibilities of the owner are not changed. In the first case the charter party is a contract for the lease of the vessel; in the other, it is a contract for a special service to be rendered by the owner of the vessel. * *  * All the cases agree that entire command and possession of the vessel, and consequent control over its navigation, must be surrendered to the charterer before he can be held as special owner for the voyage or other service mentioned. The retention by the general owner of such command, possession, and control is incompatible with the existence at the same time of such special ownership in the charterer.'

See, also, Hooe v. Groverman, 1 Cranch, 214, in which these words in the charter party, 'doth grant and to freight let * *  * the whole tonnage of the vessel,' were held the operative words, and indicating, in connection with other language, a contract for service rather than a demise of the vessel. Marcardier v. Insurance Co., 8 Cranch, 39, in which Mr. Justice Story, speaking for the court, said: 'A person may be owner for the voyage who, by a contract with the general owner, hires the ship for the voyage, and has the exclusive possession, command, and navigation of the ship. Such is understood to have been the case of Vallejo v. Wheeler, Cowp. 143. But where the general owner retains the possession, command, and navigation of the ship, and contracts to carry a cargo on freight for the voyage, the charter party is considered as a mere affreightment, sounding in covenant and the freighter is not clothed with the character or legal responsibility of ownership.' Gracie v. Palmer, 8 Wheat. 605; McIntyre v. Bowne, 1 Johns. 229; Hallet v. Insurance Co., 8 Johns. 272; Clarkson v. Edes, 4 Cow. 470; 1 Pars. Mar. Law, p. 232, c. 8, § 2.

These authorities, although not all touching the question of rent, bring out clearly the essential differences between the two kinds of affreightment contracts-the one, in which there is a demise of the vessel, a parting with all possession and control; and the other, in which the owner, retaining the possession and control, contracts simply for service, it may be the entire service, of the vessel.

If the contract is one of the former kind, then rent is payable until the end of the stipulated term and the return of the vessel. In Havelock v. Geddes, 10 East, 555, there was a demise of a vessel for a term of 12 months, and longer if the defendant should think fit to keep the same. There was a stipulation that the plaintiff, the owner of the vessel, should keep it tight, staunch, etc., and a reduction was sought of rent for the time occupied by defendants in making repairs during the term of the demise. Lord Ellenborough held that no such reduction could be allowed, saying: 'The question then is, whether, because the plaintiff has undertaken to keep the vessel tight, etc., the defendants have a right to deduct anything out of the freight they are to pay, in respect of the time which may be taken up in making good such defects as may occur during the period for which the vessel is hired. And we are of opinion they are not. From the accidents to which ships are liable, it was in the ordinary course of things to expect that this ship might want repairs in the course of her voyage; and when the defendants were making their bargain, they should have stipulated to deduct for the time which might be exhausted in making those repairs, if they meant to make that deduction. Without such a stipulation, we think the true construction of the charter party is that, while those repairs are going on, the ship is to be considered as in the defendants' service, and the defendants liable to continue their payments.'

To like effect is the case of Ripley v. Scaife, 5 Barn. & C. 167, in which Abbott, C. J., said:

'There is in the charter party an express stipulation for the payment of freight from a certain day,-for six months certain, and so much longer as the vessel should be employed by the plaintiffs. There not being any other stipulation for the case of repairs, I think that the ship was in the employ of the plaintiffs while those repairs were going on, and that they were liable to pay freight during that period.'

See, also, Spafford v. Dodge, 14 Mass. 66, in which a vessel was hired to make a certain voyage 'at the rate of three dollars a ton per month, and so in proportion for a less time, as the said brig should be continued in the service of the defendants.' While making that voyage she was captured as a prize, and detained for several months, but was finally restored, and arrived at her port of destination. It was held that the owner was entitled to rent for the full term of the absence, without deduction for the time of the detention in consequence of the capture. And this is but an application of the same rule which controls in other cases of demise. If premises are rented for a term of years at a stipulated rent per year, and no provision for reduction in case of the destruction or injury of the buildings by fire be inserted in the lease, the rent is payable for the entire term, and until the premises are returned, and this though the buildings may be injured, or even destroyed, by fire. In short, a demise is not ended until the property is returned to the owner, and so long as that demise continues rent is payable at the stipulated price unless there be some provision for a reduction.

No technical words are necessary to create a demise. It is enough that the language used shows an intent to transfer the possession, command, and control. Now, by this contract it was stipulated that the petitioner should 'provide and furnish to' the government, whenever called upon during a specified year, 'such vessels of the descriptions hereinafter given as may be required to take the place of the vessels now performing service,' etc., and that, in case of his failure so to do, the government should have 'the power to hire vessels elsewhere in open market' as his 'sole expense and charge.' These are the operative words. The contract is for vessels, and not for any use of them. The vessels are to be furnished to the government. They are to take the place of other vessels, presumably belonging to the government, engaged in a certain service; and if petitioner fails to furnish the needed vessels, the government may go elsewhere and hire them. There is no stipulation which, in terms, or by implication, casts upon the petitioner the management or control of any vessel accepted by the government. That the time for which the vessels were to be employed might be limited by the wishes of the government does not affect the question as to whether, while so employed, they were to be under its exclusive control and management. A demise may be for a day as well as for a year, and may be terminable at the will of the lessor. The pay, by the fourth article, was to be 'for each vessel employed.'

Not only this, but the conduct of the parties in the execution of the contract removes all obscurity as to its scope and meaning. As the findings show, the vessel, the James Bowen, was furnished by petitioner, and was accepted and used by the defendants. During the time of its use it was under the exclusive management and control of the defendants. The very condition resulted which is the purpose and effect of a demise,-the transfer of the exclusive possession, management, and control. The vessel was not, when injured, returned to the petitioner, but, when the repairs were finished, 'resumed work.' It is insisted by the defendants that there was no demise, because, as claimed, the petitioner did not contract to furnish one vessel for any length of time, and could, if he wished, change vessels. It is doubtful whether that is a correct interpretation of the instrument, and whether it was in the power of the petitioner, after a vessel had been tendered and accepted by the government, to substitute another therefor. But even if it were so, the substituted vessel would pass into the exclusive possession of the government, the same as the vessel for which it was substituted.

We think little significance is to be attached to the provisions in reference to furnishing a crew or supplying fuel. They were matters of detail, affecting the price to be paid, but throwing no particular light on the question of hiring or control. If it be said that the clause requiring the government to furnish fuel was unnecessary in case there was a demise, it may also, in like manner, be said that the further clause as to the petitioner's furnishing a crew was unnecessary if he was to retain the management and control. Any possible inference from one clause may be set off against a different inference from the other, but neigher of them destroys the significance of the operative words of transfer, nor outweighs that of the action of the parties in the execution of the contract.

The claim, when presented to the department, was rejected on the ground that the 'boat was wholly under the control of the owner and his agents and employes.' But the findings of fact show that that alleged ground is a mistake,-that it was wholly under the management and control of the quartermaster's department. Nothing more need be said. While the question is not free from doubt, yet in view of the fact that the petitioner was to provide and furnish a vessel,-that this vessel, when tendered, was accepted, and was not only in the service, but under the exclusive management and control, of the quartermaster's department at the time of the accident,-we think that it must be adjudged that the case presented is one of a contract of hiring, and not for service, and that the government, during this possession of the vessel, was a special owner, and bound to pay rent for the vessel until returned to petitioner.

The judgment will be affirmed.

Mr. Chief Justice FULLER and Mr. Justice JACKSON dissent from this opinion and judgment.