The law of the sea

by George L. Canfield; J. Y. Brinton; George W. Dalzell

10. Temporary Ownership.—

The ship may be chartered so that the hirer will become, in law, her temporary owner. This is ordinarily accomplished by means of a written contract called a charter party. It may contain whatever agreements the parties choose but when its legal effect is to give the hirer exclusive possession, control and management, so that he appoints the master, runs the vessel and receives the entire profits, there is a demise or conveyance of the ship and the hirer becomes owner pro hac vice, or, for the time being. He is then responsible for her contracts and torts and may limit his liability as if he were the actual owner and the latter is freed from personal responsibility. The situation is like a lease of premises on land to a tenant. The officers and crew become the agents or employees of the charterer and, in matters of contract particularly, as for supplies and repairs, the ship may not be subject to maritime liens if the creditor has notice of the terms of the charter party which preclude their creation. To effect this change into temporary ownership, the terms of the instrument should be plain and explicit; if indefinite or ambiguous, the construction will be against a demise of the ship, the courts favoring an interpretation which preserves the liabilities and liens incident to the permanent title.

The temporary ownership of a vessel by a person other than the real owner does not relieve the ship herself from those liabilities which attach to her in any event: For example, her liability for damage caused others by her torts, as faulty navigation; or from liability under those contracts for which the ship itself is primarily responsible, such as contracts for bunkers and supplies and necessary repairs elsewhere than in the home port. This principle is laid down in the case of the Barnstable, 181 U. S. 464, as follows:

The law in this country is entirely well settled that the ship itself is to be treated in some sense as the principal and as personally liable for the negligence of any one who is lawfully in possession of her whether as owner or charterer.

And in the case of Sherlock v. Alling, 93 U. S. 99, where it was said:

By the maritime law the vessel, as well as owners, is liable to the party injured for damages caused by its torts. By that law the vessel is deemed to be an offending thing and may be prosecuted without any reference to the adjustment of responsibility between the owners and the employees for the negligence which resulted in the injury.

The claim of the true owner to his vessel will not, however, be defeated by fraudulent acts of the temporary owner to which the real owner was not privy, because in such a case the theory of the agency of the master or temporary owner for the real owner fails. This subject is discussed in the leading case of the Freeman, 18 How. 182. In that case the temporary owner caused the master to sign bills of lading, certifying that a quantity of flour had been shipped on board the schooner from Cleveland to Buffalo by the temporary owner consigned to the libellants. No such flour had in fact been shipped and the consignees, who had advanced money on the bills of lading, libeled the ship. The real owner filed a claim to the vessel. The Court (Curtis, J.) said:

Bills of lading themselves are not real contracts of affreightment, but only false pretenses of such contracts; and the question is, whether they can operate, under the maritime law, to create a lien, binding the interest of the claimant in the vessel.

Under the maritime law of the United States the vessel is bound to the cargo, and the cargo to the vessel, for the performance of a contract of affreightment; but the law creates no lien on a vessel as a security for the performance of a contract to transport cargo, until some lawful contract of affreightment is made, and a cargo shipped under it.

In this case there was no cargo to which the ship could be bound, and there was no contract made, for the performance of which the ship could stand as security.

But the real question is, whether, in favor of a bona fide holder of such bills of lading procured from the master by the fraud of an owner pro hac vice, the general owner is estopped to show the truth, as undoubtedly the special owner would be.

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We are of opinion that, under our admiralty law contract of affreightment, entered into with the master, in good faith, and within the scope of his apparent authority as master, bind the vessel to the merchandise for the performance of such contracts, wholly irrespective of the ownership of the vessel, and whether the master be the agent of the general or special owner.

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For the ground on which we rest the authority of the master, who is either special owner or agent of the special owner, is, that when the general owner intrusts the special owner with the entire control and employment of the ship, it is a just and reasonable implication of law that the general owner assents to the creation of liens binding upon his interest in the vessel, as security for the performance of contracts of affreightment made in the course of the lawful employment of the vessel. The general owner must be taken to know that the purpose for which the vessel is hired, when not employed to carry cargo belonging to the hirer, is to carry cargo of their persons; and that bills of lading, or charter-parties, must, in the invariable regular course of that business, be made, for the performance of which the law confers a lien on the vessel.

He should be considered as contemplating and consenting that what is uniformly done may be done effectually; and he should not be allowed to say that he did not expect, or agree, that third persons, who have shipped merchandise and taken bills of lading therefor, would thereby acquire a lien on a vessel which he has placed under the control of another, for the very purpose of enabling him to make such contract to which the law attaches a lien.

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There can be no implication that the general owner consented that false pretenses of contract, having the semblance of bills of lading, should be created as instruments of fraud; or that, if so created, they should in any manner affect him or his property. They do not grow out of any employment of the vessel; and there is as little privity or connection between him, or his vessel, and such simulated bills of lading, as there would be between him and any other fraud or forgery which the master or special owner might permit.

Nor can the general owner be estopped from showing the real character of the transaction, by the fact that the libellants advanced money on the faith of the bills of lading; because this change in the libellants' condition was not induced by the act of the claimant, or of any one acting within the scope of an authority which the claimant had conferred. Even if the master had been appointed by the claimant, a willful fraud committed by him on a third person, by signing false bills of lading, would not be within his agency. If the signer of a bill of lading, was not the master of the vessel, no one would suppose the vessel bound; and the reason is, because the bill is signed by one not in privity with the owner. But the same reason applies to a signature made by a master out of the course of his employment. The taker assumes the risk, not only of the genuineness of the signature, and of the fact that the signer was master of the vessel, but also the apparent authority of the master to issue the bill of lading. We say the apparent authority, because any secret instruction by the owner, inconsistent with the authority with which the master appears to be clothed, would not affect third persons. But the master of a vessel has no more than apparent unlimited authority to sign bills of lading, than he has to sign bills of sale of the ship. He has an apparent authority, if the ship be a general one, to sign bills of lading for cargo actually shipped; and he has also authority to sign a bill of sale of a ship, when, in case of disaster, his power of sale arises. But the authority, in each case, arises out of, and depends upon a particular state of facts. It is not an unlimited authority in the one case more than in the other; and his act, in either case, does not bind the owner, even in favor of an innocent purchaser, if the facts upon which his power depended did not exist; and it is incumbent upon those who are about to change their conditions, upon the faith of his authority to ascertain the existence of all the facts upon which his authority depends.

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On these grounds, we are of the opinion that, upon the facts as they appear from the evidence in the record, the maritime law gives no lien upon the schooner that the claimant is not estopped from alleging and proving those facts.

It should be noted that the mere record title does not conclusively establish ownership. That title may be only security for the real owner out of control. The real facts may be shown when necessary (Davidson v. Baldwin, 79 Fed. 95).