The law of the sea

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

6. Damage to Cargo.—

The cargo-owner is entitled to recover his damages from the offending ship and the ordinary measure is the value of the goods at the time and place of a total loss, with interest and incidental expenses. The purpose of the rule is to place him, as nearly as may be, in the same position as if the collision had not occurred. Where the loss is partial, as where the goods arrive in a damaged condition, the measure is the difference between their actual value and what they would have been worth in good condition; to this may be added, in appropriate cases, the expenses of transhipment, reconditioning, warehousing, survey and sale.

Where both vessels are in fault the owner of the cargo may sue either or both, or as was said by Justice Clifford in the Atlas, 3 Otto 302:

Parties without fault such as shippers and consignees, bear no part of the loss in collision suits, and are entitled to full compensation for the damage which they suffer from the wrongdoers, and they may pursue their remedy in personam, either at common law or in the admiralty, against the wrongdoers or any one or more of them, whether they elect to proceed at law or in the admiralty courts.

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Innocence entitled the loser to full compensation from the wrongdoer, and it is a good defense against all claims from those who have lost. Individual fault renders the party liable to the innocent loser, and is a complete answer to any claim made by the faulty party, except in case where there is mutual fault, in which case the rule is that the combined amount of the loss shall be equally apportioned between the offending vessels.

In the foregoing case the owner of a cargo, lost in a collision in which both vessels were held to be at fault, libeled one of them and decreed his entire damage against the vessel which he sued. A vessel so compelled to pay the whole damage to cargo, in a case of mutual fault, is entitled to recover from the other vessel a contribution so as to equalize the loss as between the two ships.

But this important qualification of the foregoing rule must be observed: That a shipper of cargo who is prevented from recovering against the vessel on which his cargo was shipped, as for instance by his contract of affreightment, or by some rule of law, as, for example (in an applicable case), the Harter Act, cannot hold the other vessel for the entire damage but only for one-half thereof.

In the case of the Niagara, 77 Fed. 329, the steamer Niagara was in collision with the bark Hales, the Court held:

Both vessels being, therefore, in fault, the owners of the bark are entitled to recover against the Niagara one-half their damages for the loss of the bark, to be applied so far as may be legally applicable and necessary in payment of the value of one-half of the cargo claimed under the other libel; and the Niagara is liable for any deficiency to make good the whole value of the cargo owners; as well as for one-half the claims for personal effects.

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If the Harter Act, however, were applicable, it would not affect the liability of the Niagara in the present case; but only the application, as between the shipowner and the owners of the cargo, of the sum the Niagara must pay. The Niagara suffered but little damage; while the loss of the Hales, and of the cargo, are estimated to have been respectively about $16,000 and $26,000. In applying the Harter Act to cases of division of damages for mutual fault, I have heretofore held (1) that it was not the intent of Congress to relieve the carrier vessel at the expense of the other vessel in fault, by increasing the latter's liability, but that the intent was that the cargo should bear the consequences of the carrier's neglect in navigation; (2) that the relief given by the Act to the carrier vessel from responsibility for damage to her cargo, could not be nullified indirectly by a charge against her in the shape of an offset in favor of the other vessel in fault on account of that same cargo; (3) that the extent of the latter vessel's previous liability on the particular facts of each case was not to be diminished by the Harter Act from what she would previously have been bound to pay, except as respects her own cargo; and (4) that the result, therefore, must be that the cargo owner of each ship must stand charged under the Harter Act with so much of the cargo damage as the carrier ship is relieved from by that Act, whenever and so far as that is necessary to avoid any increase in the previous liability of the other ship. The Viola, 60 Fed. 296.

Upon any complication, the first inquiry is, to what amount was each vessel, or her owner, liable under the previous law, upon the particular facts of the case? Under the Harter Act, if it is applicable, that liability cannot be exceeded, and it will remain the same, if necessary to make good the damage to the cargo of the other ship. In getting at the amount which either vessel is to pay under the Harter Act, her own cargo is to be treated as nonexistent; because where the Harter Act is operative the carrier vessel (A) is not liable for that item of damage. But the other ship (B) is bound to pay that item of cargo loss, as well as one-half the damage to the two ships, up to the limit previously ascertained, as above stated, if the remaining value of the ship (B) and her pending freight are sufficient for that purpose. Where this value is not sufficient, and the damage to the first vessel (A) is greater than the damage to the other ship (B), two conflicting claims arise, one in favor of the ship (A), for the purpose of equalizing the loss on the two vessels, and another claim for the loss on A's cargo. As those claims arise at the same time, and are of equal merit, the remaining value of the ship (B) and her pending freight should be apportioned pro rata, according to the amount of the two claims.

In the present case the Hales' loss was about $16,000; that of her cargo about $26,000. The loss on the Niagara was slight, and of her cargo, nothing. Before the Harter Act, the Niagara, upon the above figures, would have been obliged to pay $8,000 for half the loss of the Hales (which would, however, have been applied upon the latter's liability to her cargo); $13,000 for half the cargo loss, and $5,000 in addition, on account of the total loss of the Hales, in order fully to indemnify the cargo, making $26,000 in all (The Atlas, 93 U. S. 302). Under the Harter Act, the Hales being relieved from any liability to her cargo for this damage, her owners would retain the $8,000 for their own use, instead of applying it on the cargo as before; but the Niagara's liability is not to be thereby increased or diminished. This item of loss is transferred by the Harter Act to the cargo. The Niagara must pay, therefore, as before, $13,000, and the $5,000 (that is, $18,000), on account of the cargo loss, and the cargo-owner loses the $8,000, which his carrier under the Harter Act is entitled to retain. It is immaterial, therefore, to the Niagara whether the Harter Act is applicable or not. It affects only the distribution of the $26,000.