The law of the sea

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

9. Bills of Lading.—

The forms differ greatly in contents and legal effect but have the common features of an acknowledgment of the receipt of the goods; a description by which they may be identified; an agreement to carry to destination and deliver; the rate of freight and an exception of certain perils. In addition to these features it has been usual to include more or less elaborate provisions tending to a diminution or limitation of the ship's liability, sometimes extended to great length in small or illegible type, and the attempt to take advantage of these is sometimes described as "fine print and coarse work." These stipulations, in so far as they attempt to exempt the shipowner from the consequences of his own or his servants' negligence are not enforced in courts of the United States on grounds of public policy. They probably, however, have some value as deterrents of claims and litigation but should be studied in connection with the Harter Act (7 Comp. St. §§ 8029-8035). (See Chapter VIII, p. 119.) The common carrier by sea is subject to the same rules of extraordinary liability as the common carrier by land but this liability is controlled by the admiralty law of limited liability (Liabilities and Limitations, Chapter VIII, p. 112) and the provisions of the Harter Act. Like the land carrier, he may also enlarge or diminish his liability by special contract; such a contract must be clear and plain, based upon a meeting of minds, due consideration or mutuality, and conformity with law; it will not, however, protect against negligence on the part of the carrier. An example is found in the Guildhall, 58 Fed. 796, where a cargo was damaged in a collision occasioned by improper navigation. The owners of the ship based their defense on a provision in the bill of lading, which attempted to exempt from liability for "any neglect or defaults of the master, mariners, or others in the service of the owners, collision, perils of the seas," etc. It was held:

These stipulations are valid by the law of Rotterdam (the port of departure), and of England. But the obligation of the steamer, as a common carrier, was to deliver her cargo safely in this country, at the port of New York. As against the consignee and owner here, she can not commit torts on the high seas against his property with immunity, nor justify such torts, except by some valid contract, proved according to the law of the forum. By numerous decisions of the Supreme Court of the United States, stipulations like these, inserted by a common carrier in a bill of lading, are, first, void as against public policy; and secondly, they are not evidence of any contract to that effect on the part of the shipper and consignee; because unreasonable and not having the necessary element of voluntary assent.

See also Compania de Navigacion La Flecha v. Brauer, 168 U. S. 104:

Exceptions in a bill of lading or charter-party, inserted by the shipowner for his own benefit, are unquestionably to be construed most strongly against him.

In this case the cargo consisted of cattle, and the bill of lading contained this:

On deck at owner's risk; steamer not to be held accountable for accident to or mortality of the animals from whatever cause arising.... It is also mutually agreed that the carrier shall not be liable for loss or damage occasioned by ... accidents of navigation, of whatsoever kind, even when occasioned by the negligence, default or error in judgment of the pilot, master, mariners or other servants of the shipowner.

The vessel was improperly ballasted and rolled over on her beam ends. Some of the cattle were injured and in order to right the ship a number of them were thrown overboard, no discrimination being exercised between sound animals and those which had been injured. The court after laying down the general principles above quoted, further held:

The bill of lading itself shows that all the cattle to be carried under this contract were to be on deck. The words "on deck at owner's risk" cannot have been intended by the parties to cover risks from all causes whatsoever, including negligent or willful acts of the master and crew. To give so broad an interpretation to words of exception, inserted by the carrier and for his benefit, would be contrary to settled rules of construction, and would render nugatory many of the subsequent stipulations of the bill of lading.

The wrongful jettison of the sound cattle by the act of the carrier's servants cannot reasonably, or consistently with the line of English authorities already cited, or with our own decisions, be considered either as an "accident or mortality of the animals," or as a "loss or damage occasioned by causes beyond his control, by the perils of the sea, or other waters," or yet as a loss or damage "by collisions, stranding, or other accidents of navigation." There having been no collision, stranding, or other accident of navigation, there was nothing to which the only stipulation in the bill of lading against the consequence of negligence, default, or error in judgment of the master and crew could apply.

The bill of lading may be both a receipt and a contract and where the shipper accepts it at the time of delivering his goods, he is presumed to have agreed to its stipulations so far as they are reasonable and just. Such a contract merges all prior and contemporaneous negotiations and precludes parole evidence to vary its terms, but the subsequent delivery of a bill of lading will not necessarily affect a prior agreement, written or verbal, for the carriage; in other words, when a contract has been already made, the carrier cannot change it by a bill of lading without the shipper's consent.

If the holder of the bill of lading is also the charterer the rights and obligations of the parties will ordinarily be governed by the charter party. Where the bill of lading incorporates the charter party by reference to it, of course the holder of the bill of lading is bound by the terms of the charter party. Where the charter party provides that bills of lading are to be made subject to the provisions of the charter, the rights of the holder of the bill of lading are subject to the charter party if he had knowledge or notice of it.

A suit in which a conflict arose between a bill of lading issued by a charterer and master, and a charter party of prior date, was the early case of Gracie v. Palmer, 8 Wheat. 605. The owners of the ship America chartered her at Philadelphia for a long voyage, the whole charter hire to be paid on the return of the ship to Philadelphia, but before the discharge of cargo. The owners appointed the master. In Calcutta, the charterer, who was on board, with the master's consent, got an advance of money from Palmer & Company, a Calcutta firm, and gave Palmer & Company a bill of lading which stipulated for the delivery of the cargo free of freight to Palmer & Company's agent in Philadelphia, who were to sell the goods and collect the amount of the advance out of the proceeds, unless the charterer's drafts for the amount of the advance, drawn in Palmer & Company's favor on a Philadelphia house, should be honored, in which event Palmer & Company's agents should deliver the goods to the charterer. The master signed the bill of lading given to Palmer & Company in Calcutta, which contained the clause, "Freight for the said goods having been settled here." The drawee refused to accept the charterer's drafts, and Palmer & Company's Philadelphia agent accordingly demanded the goods on the arrival of the ship. It was held, sustaining the contention of Daniel Webster, who represented the owners, that the shipowner had a lien on the cargo for the charter hire, the Court saying:

On what principles rests the general lien of goods for freight? The master is the agent of the shipowner, to receive and transport; the goods are improved in value, by the costs and cares of transportation. As the bailee of the shipper, the goods are in the custody and possession of the master and shipowner, and the law will not suffer that possession to be violated, until the laborer has received his hire. But this is literally the effect of that provision in the charter party which deprives the charterer of the right of landing the cargo until the stipulated hire be paid; or rather it would seem to go beyond it, and impose a liability beyond what the common law exacts. It may, therefore, be fairly construed into a stipulation, that the charterer should, under no circumstances, dispense with the legal lien of the shipowner.

*****

That the shipowner would not confide in the charter to land his goods without buying off his right to detain, is expressly proved by the contract. That contract was accessible to the foreign shipper, and ought to have been looked into to determine the extent of the power vested in the charterer.... The charterer has contracted with the shipper to do an act, which he could not perform without violating his own contract to the shipowner, and must therefore be considered as having entered into a contract, subordinate in its nature to that previously existing between the owner and charterer.

On-the other hand, it is held that the innocent bona fide endorsee of a bill of lading, which makes no reference to the charter party, and contains nothing to put him on notice or inquiry as to the existence of the charter party, is liable for freight only according to the terms of the bill of lading.