Alcoa Steamship Co. v. United States

L. HAND, Chief Judge.

The question in the case is whether the United States overpaid the freight due to the petitioner, Alcoa Steamship Company, Inc., upon a cargo of lumber shipped upon the petitioner’s ship, “Gunvor.” The United States paid-the agreed freight on the cargo in question, but later deducted the same amount from other freights, concededly due the petitioner upon other shipments; and it has sued to recover the deduction. The facts out of which the claim arises are as follows: On June 13, 1942, the “Gun-vor,” at Mobile lifted a cargo of lumber bound for Trinidad under a “government form” bill of lading; and on the first day out she was sunk by enemy action and she and her cargo became a total loss. In spiteof the carrier’s failure to complete the voyage, the United States paid the freight on September 25, 1942, and the only issue is whether the freight had been earned. That concededly depends on the proper reading of the bill of lading, the important passages in which were the first of seven “Conditions” and the second of seven “Instructions,” all upon the back of the bill. The first “Condition” was as follows: “Prepayment of charges shall in no case be demanded by carrier, nor shall collection be made from consignee. On presentation to the office indicated on the face thereof of this bill of lading, properly accomplished, attached to freight voucher prepared on the authorized Government form, payment will be made to the last carrier, unless otherwise specified.”

The second of the seven “Instructions,” so far as it is important here, was as follows: “The consignee on receipt of the shipment will sign the consignee’s certificate on the original bill of lading and surrender the bill of lading to the last carrier. The bill of lading then becomes the evidence upon which settlement for the service will be made.” The “consignee’s ■certificate” was a “certificate of delivery” spread on the face of the bill, which declared that the consignee had received the goods; but in the case at bar, in place of such a declaration, the following words were substituted: “SS. ‘Gunvor’ has been lost due to enemy action.” The consignee —the District Engineer, United States Engineers Office, Port of Spain, Trinidad— signed the certificate so altered on August 8, 1942; and freight was paid, when the carrier presented the bill of lading, after receiving it from the District Enginéer so endorsed.

The United States relies upon these documents, taken in conjunction with the well-settled law that freight is never earned until the cargo is delivered.1 The carrier answers that the bill of lading had incorporated by reference the carrier’s “usual form” of bill of lading which provided that “full freight to destination, whether intended to be prepaid or collected at destination” is “due and payable * * * as soon as the Goods are received for purposes of transportation; and the same * * * shall be deemed fully earned and due and payable to the Carrier at any stage, before or after loading, of the service hereunder, without deduction (if unpaid). Goods or vessel lost or not lost. * * * ” That is the customary stipulation in bills of lading; and the language alleged to incorporate it into the government bill is the second of the “Conditions,” which was-as follows: “Unless otherwise specifically provided or otherwise stated therein, this bill of lading is subject to the same rules- and conditions as govern commercial shipments made on the usual forms provided therefor by the carrier.” The first issue-is whether the language quoted from the-first “Condition” “specifically provided” “otherwise” than that “full freight * * *■ should be due and payable * * * as-soon as the Goods are received for purposes of transportation.” The Comptroller-General had ruled in April, 1942, when-certain consignees in the Philippines could: not be found because of war conditions,, but, when the goods were in fact delivered! at destination, that the freight had been: earned, although obviously the carrier had! not performed the first “Condition” to the letter. On the other hand the petitioner had had warning from the same official’ that in the circumstances here in question recovery was still an open question. We do not think that the administrative rulings should have any substantial weight in our decision.

It will be noted that the carrier’s-“usual form” provided that full freight should become “due and payable” as soon as it received the goods “for purposes of transportation,” which would mean that the United States would become liable for the entire freight, not when the ship lifted the lumber, but even from the moment it came into the carrier’s possession. In order to construe the first “Condition”' consistently with such a result, we must first read the words: “Prepayment of charges shall in no case be demanded,” as-referring only to the time when- the carrier may ask for payment, and not as imposing any condition upon the obligation itself. True, the “usual form” covered, not only situations in which freight was “intended to be prepaid,” but those in which it was to be "collected at destination”; but it appears to us, even though the words we have just quoted from the “Condition” stood alone, that it would be very unnatural to construe them as applying only to the time ■of payment of an absolute obligation. We can see no reason why the United States— which drew the bill — should wish to defer the payment of a claim which it must inevitably pay at some time. It was not, like a private person, in need of any extension of its credit. Why, if the freight was earned upon mere delivery, should it be interested in postponing its collection ? However, the words did not stand alone, and those that immediately followed prove that, at least in one important respect, the substance of the obligation was changed. The sentence went on to say that no “collection shall be made from the consignee,” and that deprived the carrier of its ancient lien for freight. It must give up the goods to the consignee upon getting his signature to the “certificate of delivery,” and receiving from him the bill so signed. Only then did the bill of lading, “properly accomplished,” become “the evidence upon which settlement for the service will be made.” The petitioner seeks to limit these conditions to cases where the goods have in fact been delivered to the consignee. We cannot agree. As we have said, the denial to the carrier of its lien for freight had nothing to do with the time of payment; and to interpolate into the other language the necessary limitation appears to us grati-utous and quite unwarranted. Rather we think that the “Condition” and the “Instruction” together constitute a carefully devised plan by which the United States, not only asserted the privilege of any shipper under the admiralty law that it should not pay for what it does not get; but went even further by depriving the carrier of one of its best established privileges. Nor is this result unjust to, or hard upon, the petitioner. The law throws upon all carriers the risk of performance, for performance is a condition upon the shipper s promise to pay, just as performance is always a condition upon payment in any contract of service. True, it has become general for carriers to reverse this, and throw the risk upon the shipper; but, although we do not know why this has happened, surely there is ground for supposing that it may have been because of the carrier’s superior bargaining position. So far as it has become a well settled custom, the burden may be distributed by insurance with that as a datum; but it was not unnatural for the United States, if its own insurer, to wish to have the privileges which the law gives to shippers in general.

The second point on which the United States relies is that statute 2 which provides that “in all cases of contracts for the performance of any service * * * payment shall not exceed the value of the service rendered.” Did this forbid the United States to deliver any goods to a carrier under a bill of lading of the “usual form”? Maybe not; it is at least plausible to say that, if the industry concerned accepts mere delivery of the goods to the carrier as a service whose “value” is the whole freight, and throws upon the shipper the risk of performance, and if no provision to the contrary is made by the parties, delivery is a “value” which will satisfy the statute. Nor in that event would it be an “advance of public money,” if the United States, as shipper, paid the freight when the carrier accepted the goods. However, since in the case at bar the parties did specifically provide to the contrary by declaring what the services should be on which payment depended, we may leave the question unanswered.

Decree reversed; petition dismissed.

1 The Gracie D. Chambers, 248 Ü.S. 387, 30 S.Ct. 149, 63 L.Ed. 318.

2 § 529, Title 31 U.S.C.A.