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United States Supreme Court

70 U.S. 37

The Kimball

THE owner of the Kimball chartered her, in July, 1856, to a Boston firm, for a round voyage from New York to Melbourne, Calcutta, and Boston. The charter-party, in most of its provisions, was in the usual form. A portion of the charter-money was to be paid, and was paid, before or during the voyage; 'balance,' the instrument proceeded, 'payable, one-half in five and one-half in ten days, after discharge of homeward cargo.'

The charter-party contained, also, a clause that the cargo should 'be received and delivered within reach of the ship's tackles at the ports of lading and discharging,' and concluded with the not unusual provision, that for the performance of its covenants the parties bound themselves-the party of the first part, the vessel, her freight, tackle, and appurtenances; the party of the second, the freight and merchandise to be laden aboard-each to the other, in the penal sum of $40,000.

While the ship was yet at sea, the charterers, at the owner's request, gave him their notes for $10,000. They were drawn so as to be payable near the time when it was expected that the ship would arrive; and it appeared by the testimony of the broker who had been concerned in the matter, that they were given for the accommodation of the owner, and were to be held over or renewed in case they fell due before the ship reached home. The owner, in a receipt for the notes, stated that he had received them 'on account of the charter,' and that it was 'understood that this amount was to be insured by the charterers and charged to the owners of the ship.' The owner used the notes, and obtained money on one of them at a bank where he had an account. The charterers effected insurance on the $10,000, in pursuance of the agreement. The vessel arrived about five weeks before the notes by their terms fell due.

Shortly before the vessel arrived home, and before the notes fell due, the charterers failed. The owner immediately tendered them back their notes, but they would not receive them.

By the terms of the charter-party the cargo was to be deliberable to the consignees, 'they paying freight as per charter-party,' and after the arrival of the vessel, the owners, asserting a lien on the cargo for the unpaid money, and refusing to credit as payment on account, the notes for $10,000, filed a libel in the District Court for Massachusetts to enforce the lien. This libel was filed on the 18th March, 1858; the notes, which were produced and tendered in court, having fallen due on the 3d preceding. On appeal to this court from the Circuit Court, where the matter went on appeal from the District Court, two questions arose.

1. Whether the ordinary lien of the ship-owner was displaced by anything in the charter-party?

2. Whether the notes of the charterers were to be considered as payment?

The Circuit Court, reversing the District Court, had held negatively on both points.

Mr. Thaxter for the owners of the cargo, appellants:

I. In Raymond v. Tyson [1] it is said, by Wayne, J., that the lien of the ship-owner for freight or hire 'may be considered as having been waived without express words to that effect, if there are stipulations in the charter-party inconsistent with the exercise of the lien, or where it can be fairly inferred that the owner meant to trust to the personal responsibility of the charterer.'

Neither will the subsequent insolvency of the charterer restore a lien once waived or lost. In Alsager v. The St. Katherine Dock Co., [2] a case like this, where insolvency had given rise to the litigation, Chief Baron Pollock said, 'Did the owner intend to abandon his lien and receive payment of the freight two months after the inward report, or did he mean to retain his lien, and keep his right to refuse delivery of the cargo until the freight was paid? If the ship-owner could not have refused to deliver the goods provided the charterer had continued solvent, he cannot maintain that claim now.'

Now, we say that the stipulation in the charter, that the cargo should be delivered within reach of the ship's taekle, is inconsistent with the right of retaining it to enforce the lien set up; which retention involves the unloading and storing of the cargo.

Independently of this stipulation, the credit given for the payment of the balance of the charter-money after discharge at the home port, is inconsistent with the existence of a lien and the discharge of the ship and the delivery of the cargo according to the usual and customary manner. This clause giving this credit was inserted for the benefit of the charterers. It is not merely a formal part of the charter, but is a living, active provision, having reference to the contract intended to be made, and such a construction must be given to the charter as shall make this clause operate as a beneficial credit.

Again: we think that by the true construction of this charter, the parties intended that the cargo should be discharged and delivered in the usual and customary manner. If, then, the retention of the cargo for the purpose of retaining a lien thereon until the expiration of the credit, will prevent the discharge and delivery of the cargo in the usual and customary way, such retention cannot be authorized. [3] The usual and customary course is to give notice to the consignee or owner of the goods when his goods are to be discharged, and then to discharge them upon the wharf, when the liability of the carrier as such ceases, and the goods are at the risk of the owner. [4] But to give full effect to the credit specified, and preserve the lien, the master must have discharged his cargo and stored it, no matter how many different subfreighters there may have been.

The printed clause at the end of the charter-party,-a clause found in nearly all charter-parties-which agrees to bind the freight and merchandise to be laden on board to a performance of the contract,-has no application to this part of the contract. As was said by Baron Bramwell, in Foster v. Colby,3 'The true meaning of that clause is, that the owner is to have a lien so far as a lien is possible.' Baron Watson, in the same case, said, in reply to the argument that this clause gave an absolute lien on the cargo, 'It is impossible there can be a lien for money not due.' And again, 'If the vessel is discharged abroad, the freight is 'to be paid in cash on right delivery of the cargo.' The clause giving a lien would attach in that case. The true meaning is, that wherever there can be a lien the ship-owner is to have it,' &c. So in this case, the clause giving a lien would attach to the outward freight and to demurrage.

The cases of The Volunteer, [5] and of Certain Logs of Mahogany, [6]-circuit rulings of the late Story, J.,-might be supposed to militate with our view. But they do not. The former is distinguishable from this. There the freight was payable 'within ten days after the schooner's return to Boston.' It appeared by the duty-collection list that the time for entering at the custom-house was such that Story, J., found 'that an unlivery could be rightfully postponed beyond the ten days after the return of the ship, when by the terms of the charter-party the freight would become due.'

The case of Certain Logs of Mahogany is peculiar, and can well stand upon the fact that it was agreed that the cargo should be subject to the lien for freight, notwithstanding the provision making the freight payable in five days after her discharge.

II. As respects the notes. We suppose it to be well settled where an advance is made upon freight or charter-money, in money or notes, with an agreement that the advance is to be insured for or by the shipper or charterer, that such advance shall be treated as a pre-payment of freight, at the risk of the shipper, which, to the extent of it, discharges the lien. [7]

And whatever may be the doctrine of particular States as to the effect of taking a promissory note on the original debt, yet it is equally true that it will be treated by all courts, everywhere, as payment, where it appears that the parties so intended it: as we think it was intended here.

Whether these notes are to be considered as payment of not, it is well settled that no action could be brought on the original debt until their maturity, and the taking of them was tantamount to an agreement on the part of the owner to give the charterers the credit expressed on their face for that amount of the charter-money. [8] The notes were not due when the ship arrived and the cargo became deliverable; nor till five weeks afterwards.

Mr. B. R. Curtis, who argued the case fully on principle and authorities, contra.

Mr. Justice FIELD delivered the opinion of the court:


^1  17 Howard, 59; see also Dimech v. Corlett, 12 Mocre, Privy Council, 199.

^2  14 Meeson & Welsby, 794.

^3  Foster v. Colby, 3 Hurlstone & Norman, 705; Alsager v. St. Katherine Dock Co.

^4  Richardson v. Goddard, 23 Howard, 28; Houlden v. The General Steam Nav. Co., 3 Foster & Finlason, 170; Black v. Rose, 10 Jurist, N. S., 1009

^5  1 Sumner, 570.

^6  2 Id. 602.

^7  Hicks v. Shield, 7 Ellis & Blackburne, 633; Jackson v. Isaacs, 3 Hurlstone & Norman, 405; Trayes v. Worms, 12 Law Times, N. S., 547; Tolmaco v. Simpson, 13 Id. 160.

^8  Belshaw v. Bush, 11 Common Bench, 191; Price v. Price, 16 Meeson & Welsey, 239; Wheeler v. Schroeder, 4 Rhode Island, 383.

This work is in the public domain in the United States because it is a work of the United States federal government (see 17 U.S.C. 105).