Watts v. Camors Camors

This was a libel in admiralty by a citizen of London, in the kingdom of Great Britain, owner of the steam-ship Highbury, against two citizens of New Orleans, in the state of Louisiana, upon a charter-party, the terms of which were as follows:

'This charter-party, made and concluded upon in the city of New Orleans, La., the seventh day of August, 1879, between A. B. French & Co., agents for the owners of steam-ship Highbury, of the burden of 1,100 tons, or thereabouts, registered measurement, now due here between tenth and twentieth of September, of the first part, and J. B. Camors & Co., of the second part, witnesseth that the said party of the first part agrees in the freightening and chartering of the whole of the said vessel (with the exception of the cabin and necessary room for the crew and storage of provisions, sails, and cables) unto said party of the second part for a voyage from New Orleans to Havre, St. Nazaire, Antwerp, Bordeaux, or Bremen, orders on signing bills of lading, on the terms following: The said vessel shall be tight, staunch, strong, and in every way fitted for such a voyage, and receive on board during the aforesaid voyage the merchandise hereinafter mentioned. The said party of the second part doth engage to provide and furnish to the said vessel a full and complete cargo, say about 11,500 quarters of wheat in bulk, and pay to the said party of the first part, or agent, for the use of the said vessel during the voyage aforesaid, seven shillings and six pence per quarter of 480 pounds weight delivered in full, payable in cash on right delivery of the cargo. It is agreed that the lay days for loading and discharging shall be as follows, (if not sooner dispatched:) commencing from the time the vessel is ready to receive or discharge cargo, fifteen running days, (Sundays excepted) for loading and discharging, lay days to commence when the captain reports the vessel is ready for cargo; and that for each and every day's detention by default of said party of the second part, or agent, fifty pounds sterling per day, day by day, shall be paid by said party of the second part, or agent, to the said party of the first part, or agent. The cargo or cargoes to be received and delivered within the fifteen days above specified, the dangers of the sea and navigation of every nature and kind always mutually excepted.

'To the true and faithful performance of all and every of the foregoing agreements we, the said parties, do hereby bind ourselves, our heirs, executors, administrators, and assings; and also the said vessel, freight, tackle, and appurtenances, and the merchandise to be laden on board, each to the other, in the penal sum of estimated amount of freight.'

The district court dismissed the libel, and the libelant appealed to the circuit court, which found the following facts: The charter-party was executed at New Orleans on August 7, 1879, by the libelant, through his agents, A. B. French & Co., and by the respondents. The libelant complied in all things with his contract. The Highbury arrived at the port of New Orleans on or before September 11th. On that day, she being in that port and ready to receive cargo, her master, notified that fact to the respondents, tendered her to them, and demanded of them a full cargo of wheat in bulk, according to the terms of the charter-party. On the next day, the respondents in writing refused to accept the ship or to furnish the cargo, for the reason that her tonnage was greater than that expressed in the charter-party. Thereafter, during the lay days, various negotiations were pending between the parties, until September 30th, when the master caused public protest to be made before a notary and witnesses of the respondents' refusal. On October 19th the master obtained at the same port a full cargo of cotton and oil-cake, the freight of which exceeded in value by $532.10 that of the cargo of wheat which the respondents had contracted to furnish. The actual tonnage of the Highbury was 1,203 tons, registered measurement. Her actual carrying capacity for grain was about 11,500 quarters of wheat, depending upon the length of voyage between coaling stations. The estimated amount of freight, the penalty stipulated in the charter-party, was $20,872.50. At the date of the charter-party the Highbury was a new ship, and neither of the contracting parties in New Orleans knew her exact registered measurement or tonnage or carrying capacity. All the negotiations between them preliminary to the contract were with reference to her carrying capacity, which, under the custom among merchants and shippers of grain, might run not exceeding 10 per cent. over or under the cargo stipulated for. By reason of the respondents' failure to accept the ship, furnish a cargo, and comply with their contract, the libelant suffered damages to the amount of $5,693.15, (consisting of $611.15 for expenses incurred in fitting up the Highbury to receive a cargo of wheat; and $5,082 for the delay, after the expiration of the 15 lay days, of 21 days, at the rate of 50 a day, in obtaining and loading another cargo,) with interest from the date of the libel. The circuit court stated, as conclusions of law, that the libel should be maintained, and that the libelant recover from the respondents the sum of $5,693.15, with interest and costs, and entered a decree accordingly; and each party appealed to this court. The opinion of the circuit court upon the merits is reported in 10 Fed. Rep. 145.

J. R. Beckwith, for Watts.

J. Ward Gurley, for Camors and another.

[Argument of Counsel from pages 357-359 intentionally omitted]

GRAY, J.

In this case, as brought before us by the appeal and the cross-appeal, three questions have been argued which may naturally and conveniently be considered in the following order: (1) Is the statement of the registered tonnage of the Highbury in the charter-party a warranty or condition precedent? (2) If it is not, is the owner of the ship entitled to recover the estimated amount of freight; that is to say, the sum of $20,872.50, as liquidated damages? (3) If both these questions are answered in the negative, have the charterers shown any error in law in the amount of damages for which a decree was rendered against them in the circuit court?

1. In the charter-party the ship is described as the 'steam-ship Highbury, of the burden of 1,100 tons, or thereabouts, registered measurement;' and the owner agrees to receive on board, and the charterer engages to provide, 'a full and complete cargo, say about 11,500 quarters of wheat in bulk.' In fact, her registered tonnage was 1,203 tons, a little more than 9 per cent. above that stated in the charter; but this was not known to either party at the time of entering into the contract, and her actual carrying capacity corresponded to the cargo which the charterers engaged to furnish, and the owner agreed to receive on board. The statement in the charter-party concerning the registered tonnage of the ship clearly does not constitute a warranty or condition precedent that she is of 1,100 tons registered measurement. The intention and the agreement of the parties, as apparent upon the face of their written contract, were that the steam-ship Highbury should receive and carry a full and complete cargo of about 11,500 quarters of wheat in bulk. There being no willful or fraudulent misrepresentation, the description 'of the burden of 1,100 tons, or thereabouts, registered measurement,' (if it could, under other circumstances, be held a warranty,) is controlled by the designation of the ship by name, and by the unequivocal stipulations regarding the cargo to be carried. Brawley v. U.S., 96 U.S. 168; Norrington v. Wright, 115 U.S. 188, 204; S.C.., ante, 12; Barker v. Windle, 6 El. & Bl. 675; Ashburner v. Balchen, 7 N. Y. 262; Morris v. Levison, 1 C. P. Div. 155. The refusal of the charterers to accept her cannot therefore be justified.

2. The concluding clause of the charter-party, by which 'to the true and faithful performance of all and every of the foregoing agreements' the parties bind themselves, their heirs, executors, administrators, and assigns, and also the vessel and freight and the merchandise to be laden on board, each to the other, 'in the penal sum of estimated amount of freight,' is clearly not a stipulation for liquidated damages, but a penalty to secure the payment of the amount of damage that either party may actually suffer from any breach of the contract. The principal object of this clause appears to be to pledge the ship and freight as security for the preformance [sic] of the agreements of the owner on the one hand, and the merchandise to be laden on board as security for the performance of the agreements of the charterer on the other. It is in the form of a penalty; it covers alike an entire refusal to perform the contract, and a failure to perform it in any particular, however slight, and for any breach, whether total or partial, a just compensation can be estimated in damages. At the common law, indeed, before the statute of 8 & 9 Wm. III. c. 11, § 8, judgment might have been rendered for the full amount of the penalty. But in a case like this a court of equity would stay proceedings at law upon payment of the damages actually suffered. Clark v. Barnard, 108 U.S. 436, 453, et seq.; S.C.. 2 Sup. Ct. Rep. 878; Sloman v. Walter, 1 Brown, Ch. 418; In re Newman, 4 Ch. Div. 724. And at the present day, even a court of law would regard such a clause in such a contract as a penalty only, and not as liquidating the damages. Tayloe v. Sandiford, 7 Wheat. 13; Van Buren v. Digges, 11 How. 461, 477; Higginson v. Weld, 14 Gray, 165; Harrison v. Wright, 13 East, 343. In Abb. Shipp. (Shee's Ed.) pt. 4, c. 2, § 2, speaking of charter-parties, it is said that 'it is usual for each of the parties to these contracts to bind himself, his heirs, executors, and administrators, and the owner or master to bind the ship and her freight, and the merchant the cargo to be laden, in a pecuniary penalty for the true performance of their respective covenants. This is commonly done by a clause at the end of the instrument. Such a clause is not the absolute limit of damages on either side; the party may, if he thinks fit, ground his action upon the other clauses or covenants, and may in such action recover damages beyond the amount of the penalty, if in justice they shall be found to exceed it. On the other hand, if the party sue on such a penal clause, he cannot in effect recover more than the damage actually sustained.'