The law of the sea

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

8. Power to Sell or Mortgage Cargo.—

This power to dispose of the cargo arises out of the necessity of the case. The duty is to complete the voyage, if possible. Money for repairs and expenses can frequently only be secured by disposing of some of the property in the master's charge. If so, he has the requisite power; of course, he should first realize what he can on the credit of the ship and freight-money but after this he may resort to the cargo and pledge or even sell it accordingly. In the leading case of Post v. Jones, 19 How. (U. S.) 150, Mr. Justice Grier said:

It cannot be doubted that a master has power to sell both vessel and cargo in certain cases of absolute necessity.... Without pretending to enumerate or classify the multitude of cases on this subject, or to state all the possible conditions under which this necessity may exist, we may say that it is applied to cases where the vessel is disabled, stranded, or sunk; where the master has no means and can raise no funds to repair her so as to prosecute his voyage; yet where the spes recuperandi may have a value in the market, or the boats, the anchor, or the rigging, are or may be saved, and have a value in market; where the cargo, though damaged, has a value, because it has a market, and it may be for the interest of all concerned that it be sold.

Such dealing with the cargo must be prudent and in the interest of the cargo-owner; the master must not sacrifice the cargo to the ship more than the ship to the cargo. If he can prudently delay for communication with the owner he must do so; the exercise of this power depends upon the necessity and the utmost good faith.

The case of Australasian Steam Navigation Co. v. Morse, L. R. 4 P. S. 222; 1 Aspin. 407; 27 L. T. Rep. N. S. 357; 8 Moore P. C. N. S. 482; 20 Weekly Rep. 728; 17 Eng. Reprint 393, was decided by the Privy Council in 1872, on appeal from the Supreme Court for New South Wales. It appeared that a quantity of wool had been shipped in December, 1865, on board the Boomerang by owners living inland, for transportation from Rockhampton to consignees in Sydney. The vessel stranded and filled and the cargo was so damaged by water that it became dirty, heated and liable to ignition. It was transferred to a relief vessel which had been sent out from Rockhampton and was returned to that place, where there were no facilities for storing or drying it, and it was in danger of total loss. There does not appear to have been any means of communicating promptly with the shippers, but there was testimony on the question whether it might have been possible to reach the consignees in Sydney, a distance of 900 miles, by telegraph, considering the imperfect state of the telegraph in New South Wales in 1865, the method of management of the particular telegraph line, and the fact that communication, to accomplish anything, must have been attempted on Sunday or on the next day which was Christmas. Under these circumstances, the master, after having the wool surveyed by the local Lloyds agent and a merchant, sold it without attempting to communicate. For the Privy Council, Sir Montague Smith announced the law as follows:

The general principles of law are not in dispute, viz., that the authority of the master of a ship to sell goods of an absent owner is derived from the necessity of the situation in which he finds himself placed; and consequently that, to justify his thus dealing with the goods he must establish (1) the necessity for the sale; and (2) his inability to communicate with the owner and obtain his instructions. Under these conditions and by force of them the master becomes the agent of the owner, not only with power but under the obligation (within certain limits) of acting for him; but he is not in any case entitled to substitute his own judgment for the will of the owner in the strong act of selling the goods where it is possible, as hereafter explained, to communicate with the owner and ascertain his will.

The Council defined the necessity of sale as meaning "that the course taken must be clearly highly expedient," "the best and most prudent thing to be done for the interest of the owner of the goods," and said:

A sale of cargo by the master may obviously be necessary in the above sense of the word, although another course might have been taken in dealing with it; for instance, if, in this case, the wool, which had no value but as an article of commerce, could have been dried and repacked and then stored or sent on, but at a cost to the owner clearly exceeding any possible value to him when so treated, it would plainly have been the duty of the master to sell, as a better course for the interest of the owner of the property than to save it by incurring in his behalf a wasteful expenditure. In other words, a commercial necessity for the sale would then arise, justifying the master in resorting to it.

On the subject of the necessity for communicating with the owners of the cargo, the Council say:

The possibility of communicating with the owners must, of course, depend on the circumstances of each case, involving the consideration of the facts which create the urgency for an early sale; the distance of the port from the owners; the means of communication which may exist; and the general position of the master in the particular emergency. Such communication need only be made when an answer can be obtained, or there is a reasonable expectation that it can be obtained before the sale. When, however, there is ground for such an expectation every endeavor, so far as the position in which he is placed will allow, should be made by the master to obtain the owner's instructions.