Scottish Court of Session Decisions

This was an action at the instance of the registered owners of the steamship “Progress,” of Glasgow, and R. B. Ballantyne & Company, shipbrokers, Glasgow, the managing owners of that vessel, against P. M. Duncan & Son, shipowners and merchants, Dundee, in which the pursuers sought decree for the sum of £208, 0s. 2d., being part of the general average resulting from a salvage claim satisfied by them as owners of the “Progress,” for which as the part of the general average effeiring to cargo they now claimed relief from the defenders as time charterers.

By charter-party, dated 27th June 1894, it was mutually agreed between R. B. Ballantyne & Company, on behalf of the owners of the “Progress,” and the defenders as charterers, that the pursuers should let and the defenders should hire that steamship for the term of three calendar months from the date when she was delivered to the charterers in the port of Sunderland about 9th July 1894, she being then tight, staunch, strong, and every way fitted for the service, and with full complement of officers, seamen, engineers, and firemen duly shipped for a vessel of her tonnage, to be employed in such lawful trades between good and safe ports between Brest and Hamburg as the charterers or their agents should direct.

This charter-party provided, inter alia, as follows:—“That the owners shall provide and pay for all the provisions and wages of the captain, officers, engineers, firemen, and crew; shall pay for the insurance of the vessel; also, for all the engine-room stores, and maintain her in a thoroughly efficient state in hull and machinery for the service. That the charterers shall provide and pay for all the coals, port charges, ballast, pilotages, agencies, commissions, and all other charges whatsoever, except those before stated. That the charterers shall pay for the use and hire of the said vessel at the rate of £240 (two hundred and forty pounds sterling) per calendar month, commencing on the day of delivery, and at and after the same rates for any part of a month.

Page: 379↓

… Payment to be made in cash in Glasgow, half monthly in advance. … That the whole reach, burthen, and passenger accommodation of the ship, if any (not being more than she can reasonably stow and carry) shall be at the charterers' disposal, reserving only proper and sufficient space for ship's officers, crew, tackle, apparel, furniture, provisions and stores. … That the captain, although appointed by the owners, shall be under the orders and directions of the charterers as regards employment, agency, or other arrangement. Bills of lading are to be signed at any rate of freight the charterers or their agents may direct if without prejudice to this charter, the captain attending daily at the offices of the charterers or their agents to do so; the charterers hereby indemnify the owners from all consequence or liabilities that may arise from the captain doing so. That if the charterers shall have reason to be dissatisfied with the conduct of the captain, officers, or engineers, the owners shall, on receiving particulars of the complaint, investigate the same, and, if necessary, make a change in the appointments. The master shall be furnished from time to time with all requisite instructions and sailing directions, and shall keep a full and correct log of the vovage or voyages, which are to be patent to the charterers or their agents. That the charterers shall have the option of continuing the charter for a further period of three months on giving notice thereof to owners fourteen days previous to expiration of first-named term. … The act of God, perils of the sea, fire, barratry of the master and crew, enemies, pirates, robbers, arrests and restraints of princes, and all rulers and people, collisions, strandings, losses and damages caused thereby, and other accidents of navigation excepted, even when occasioned by negligence, default, or error in judgment of the pilot, master, mariners, or other servants of the shipowners. … That the owners shall have a lien upon all cargoes and all sub-freights for freight or charter-money due under this charter, and charterers to have a lien on the ship for all moneys paid in advance and not earned.”

The “Progress” was duly delivered to the defenders, and continued for some months to trade for their account under the charter-party above mentioned. The defenders availed themselves of the option of continuing the charter on the expiration of the first period, and in the month of December 1894 she was still trading under the charter-party.

On 3rd December 1894 the defenders entered into a charter-party with Messrs J. H. Friedlander & Company of Hamburg, merchants, under which it was provided that the “Progress,” which was therein stated as being tight, staunch, and strong, and every way fitted for the voyage, should sail and proceed to Hamburg, and there, after discharge of inward cargo, load a cargo of about 400 tons wheat in bulk and 50 tons barley in bags, and being so loaded should therewith proceed to Sunderland and deliver the same on being paid freight at the rate therein stipulated. In terms of this last-mentioned charter or sub-charter the “Progress” proceeded to Hamburg, and there loaded a cargo of wheat and barley, in respect of which the master signed three bills of lading in the same form. By these bills of lading the master undertook to deliver the parcels of wheat and barley therein mentioned at the port of Sunderland, subject, inter alia, to the following provisions:—“Barratry and collision, … all accidents, loss, and damage of whatsoever nature or kind, and however occasioned, from machinery, boilers, steam, and steam navigation, … or from any act, neglect, error, misfeasance, or default of masters or mariners, engineers, or other persons in the service of the vessel in navigating the ship excepted, the owners of the ship being in no way liable for any of the consequences of the causes above excepted, … and it being agreed that the agents, captain, pilots, officers, and crew of the vessel in transmission of the goods as between the shipper, owner, and consignee thereof and the ship or shipowners be considered the servants of such shipper, owner, or consignee. … This bill of lading to be only binding between the ship and the consignees as regards delivery of the cargo and for freight. … The ship or owners are not liable for any act, neglect, or default whatsoever of the agents, stevedore, pilots, master or mariners in loading, stowing, transmitting, and discharging the cargo, and in navigating the ship freight, and all other conditions as per charter-party and average accustomed.” These bills of lading did not exclude the warranty of the vessel being seaworthy as at the time when she started on the voyage from Hamburg to Sunderland.

The “Progress” sailed from Hamburg for Sunderland on 11th December 1894. When about fifty miles from the Tyne she accepted salvage services from the steam fishing vessel “George Baird,” and was towed by that vessel into Sunderland.

Thereafter litigation having arisen as to a salvage claim made by the “George Baird,” in which the pursuers were not successful, the pursuers brought the present action, in which they set forth the facts narrated above, which were all admitted, and further averred that the “Progress” was not in a seaworthy condition as at the time when she sailed from Hamburg having an insufficient supply of coal on board to enable her to complete the voyage in safety, and that in consequence of this want of coal she became helpless at sea, and had to accept salvage services from the “George Baird.” They also averred, inter alia—“(Cond. 8) No agreement was made between the masters of the ‘Progress’ and the ‘George Baird’ as to the amount of salvage payable to the latter for said services, and as the claims of the ‘George Baird’ were extravagant, the pursuers were unable to come to terms with her owners. The result was that an action was raised in the Admiralty Court, in which the ‘George Baird’ claimed a large

Page: 380↓

sum for the salvage of the ‘Progress.’ The action was defended by the pursuers, who paid a sum of £300 into Court on the advice of their solicitor to meet the claims, but ultimately this tender was held insufficient, and the sum of £350 and costs was awarded against the ship and cargo. As the pursuers had to give bail for the full amount that might be awarded both against ship and cargo on obtaining an average bond signed by the receivers of the cargo Messrs French & Laird, they were obliged to pay the sum awarded in addition to the costs payable to their own solicitors for defending the action. (Cond. 9) On the action being decided as above mentioned, the whole papers were put into the hands of Messrs Richard C. Chancy & Company average staters of Liverpool and Hull, with a view to their apportioning the various expenses rateably on the value of ship and cargo. The average statement prepared by them, which is correctly made up, is produced and referred to. It shows that of the general average expenses, amounting to £631, 15s. 9d. in all, the proportion falling to be borne by the cargo amounts to £208, 0s. 2d. (Cond. 10) The pursuers, in the first instance, applied to French & Laird to make payment of the said sum of £208, 0s. 2d. They, however, repudiate responsibility on the ground that the expense would not have been rendered necessary but for the fact that the vessel was not seaworthy at the time when she started on the said voyage, and that accordingly there had been a breach of the implied warranty contained in the bill of lading of which they were endorsees and onerous holders. This contention the pursuers stated they had been advised was a good answer to any claim against the cargo owners, and that consequently the pursuers now sought relief against the defenders for the share of the salvage expenses effeiring to the cargo.

The pursuers pleaded, inter alia—“(1) The pursuers having become liable to pay, and having paid the sum sued for in respect of their captain having signed bills of lading as directed by the defenders, they are entitled, in terms of said charter-party, to be indemnified by the defenders against same.”

The defenders pleaded, inter alia—“(2) The averments of the pursuers are irrelevant and insufficient to support the conclusions of the summons. (3) On a sound construction of the charter-party dated 27th June 1894, the defenders are not liable to indemnify the pursuers against the alleged loss of £208, 0s. 2d. (5) The exhaustion or any shortage of bunker coal having arisen from no fault of the defenders, but being due to the extraordinary severity of the weather encountered, or to the negligence or to an error of judgment of the servants of the pursuers, the pursuers are not entitled to recover the loss arising in consequence thereof from the defenders.”

By interlocutor dated 15th November 1896 the Lord Ordinary (Low), after having heard counsel in the procedure roll, sustained the second plea-in-law for the defenders, and dismissed the action with expenses.

Opinion.—[ After summarising the pursuers’ averments above set forth]—“The ground upon which the claim is made against the defenders is this. When the salvage services were rendered the ‘Progress’ was under a time charter entered into between the pursuers and the defenders. In the charter-party it was provided that ‘bills of lading are to be signed at any rate of freight the charterers or their agents may direct, if without prejudice to this charter, the captain attending daily at the office of the charterers to do so; the charterers hereby indemnify the owners from all consequences or liabilities that may arise from the captain doing so.’ The pursuers' contention is that their liability to disburse the salvage charges effeiring to cargo arose, as in a question between them and French & Laird, from their master having signed the bills of lading, and that the defenders are bound to indemnify them in terms of the clause of the charter-party which I have quoted.

It is not alleged that the defenders were to blame for the ship being insufficiently supplied with coal, and the case was argued upon the assumption that there had been negligence on the part of the master or engineer, who were the pursuers' servants. The question therefore is, whether a liability, the direct cause of which was the negligence of the pursuers' servants, was a consequence or liability arising from the master signing the bill of lading within the meaning of the charter-party. I do not think that it was. The consequence and liabilities contemplated in the charter-party appear to me to be those which arise directly and naturally from the granting of a bill of lading, and not liabilities caused by the fault or negligence of the pursuers' servants. For example, if goods for which a bill of lading was granted were injured during the voyage by the fault of the master or crew, I do not think that the defenders would be bound to indemnify the pursuers. The argument of the pursuers, as I understood it, was that in a question with French & Laird they would not have been liable to pay the portion of the salvage effeiring to cargo if the master had not signed the bill of lading, because it was the warranty of seaworthiness implied in the bill of lading which justified French & Laird in refusing to contribute any part of the salvage money. That is quite true, but the implied warranty of seaworthiness arose because there was a contract for the conveyance of goods, and not because that contract was put in the form of a bill of lading. If the goods had been carried upon a mere receipt, I apprehend that the result would have been the same. Further, in a question with the salvors, I suppose that French & Laird would have been liable so far as the cargo was concerned, but they could have obtained relief from the pursuers on the ground that it was their negligence which had created the necessity for the salvage services. I think it would be an unwarrantable

Page: 381↓

straining of the language of the charter-party to hold that it bound the defenders to indemnify the pursuers against such a claim of relief arising out of their own negligence. It was the implied warranty in the bill of lading which gave French & Laird a title to demand that the pursuers should relieve them of contribution to salvage, but the necessity and liability for salvage were caused by the negligence of the pursuers' servants, and not by the bill of lading. That appears to me to be sufficient for the disposal of the case, and I shall accordingly sustain the second plea-in-law for the defenders and dismiss the action.”

The pursuers reclaimed.

On 26th January 1897 the following interlocutor was pronounced by the Second Division—“Recal the in terlocutor reclaimed against; and on the motion of the pursuers, and of consent of the defenders, before answer allow to both parties a proof of their averments, and to the pursuers a conjunct probation and remit to the Lord Ordinary to proceed in the cause as accords.”

Thereafter joint minutes of admission were lodged, and the parties having renounced probation the diet of proof fixed by the Lord Ordinary in conformity with the interlocutor of the Second Division was discharged.

By the joint minutes it was, inter alia, admitted—“ First, That owing to the fault of the master the said steamship ‘Progress’ sailed from Hamburg on or about 11th December 1894 bound for Sunderland with an insufficient supply of coal; Second, That the master could and would have got a further supply of coal at Hamburg had he deemed it necessary; Third, That the said vessel sailed from Hamburg to Sunderland or about 10th December 1894, and when about 50 miles from the Tyne, having run short of coal, accepted salvage services from the ‘George Baird,“ which were necessary in consequence of the captain's said fault, and was towed by the latter vessel to Sunderland.” It was also admitted that the averments contained in articles 8 and 9 and in the part of article 10 of the condescendence quoted above were true, subject to the qualification that the sum of £631, 15s. 9d., the amount of the general average expenses, was made up as follows— (a) £355 salvage, ( b) £262, 16s. 5d., expenses of the owners of the “George Baird” and expenses incurred by the pursuers themselves m defending the action, in which £1200 was claimed, and (c) £13, 19s. 4d. miscellaneous items—and that the defenders were not notified of or consulted in regard to, nor were they made parties to the Admiralty Court proceedings, or the adjustment of the general average on ship or cargo, and that no claim of any kind was made or intimated by the pursuers against the defenders until after the conclusion of the said proceedings. It was also admitted that the proportion of the sum of £355 effeiring to cargo was £116, 17s. 5d., and that the corresponding proportions of the other two parts of the whole amount of the general average were £86, 10s. 7d. and £4, 12s. 2d.

On 20th November 1894 the defenders telegraphed to the master of the “Progress” at Newcastle-on-Tyne—“Take sufficient bunkers enable steamer reach Cardiff; Have telegraphed Sharp supply same.”

On 23rd November 1894 the defenders wrote to the master of the “Progress” at Teignmouth—“Dear Sir,—We beg to advise that the ‘Progress’ is fixed to load South Dock, Swansea, for Hamburg, and you will therefore proceed to Swansea when discharged. … Please advise us what quantity of bunkers you will require to take steamer to Hamburg and north to Sunderland on the Tyne.”

On 24th November 1894 the master of the “Progress” wrote to the defenders— “Gentlemen,—I am in receipt of your favour of the 23rd, and note contents. … 50 tons of Welsh coal, with what we will have in, should take us to Hamburg and back to coal port.”

On 27th September 1897 the Lord Ordinary issued the following interlocutor:— “Assoilzies the defenders from the conclusions of the summons, and decerns: Finds the defenders entitled to expenses.”

Opinion.—“It is admitted that it was owing to the fault of the master that the steamship ‘Progress’ put to sea for the voyage from Hamburg to Sunderland with an insufficient supply of coal, and the main question seems to me to be, whether, when he committed that fault, the master was acting as the servant of the owners (the pursuers) or of the charterers (the defenders). That question depends upon the construction of the charter-party.

The charter-party was, in my opinion, a time charter, the owners retaining possession of the ship by their master and crew.

[ The Lord Ordinary then stated the material provisions of the charter-party, and proceeded]—“I think that it is clear that the master was the servant of the pursuers alone. He had no contract with the defenders. The only sense in which he could be said to be the servant of the defenders was that the pursuers undertook that he should take his orders and directions from the defenders as regarded employment, agency, or other arrangement.

In these circumstances was the master the servant of the defenders as regarded the duty of seeing that the ship was properly provided with bunker coal? I am of opinion that he was not. The amount of coal required for a voyage was not one of the matters in which the master was to be under the orders and directions of the defenders. A proper supply of coal is a matter upon which the safety of the ship depends, and the defenders could not have compelled the master to set sail with what in his judgment was an insufficient supply. I do not think that it makes any difference that the defenders were taken bound to provide and pay for the coal. That was merely part of the money arrangements of the contract, which in no way affected the relationship of the defenders and the master. If the defenders had refused to

Page: 382↓

supply the master with coal the case would have been different. But it is admitted ‘that the master could and would have go. a further supply of coal at Hamburg had he deemed it necessary.’ I am accordingly of opinion that the exhaustion of the coal which rendered the salvage services necessary was caused by the fault of the master, acting as the servant of the pursuers, to whom they had entrusted the care of their ship.

The next question is, whether the indemnity clause applies. I adhere to the opinion which I previously expressed, that it does not do so, and upon the same grounds. I think that the consequence and liabilities that may arise from the master signing a bill of lading referred to in the indemnity clause are those which are distinctive to bills of lading, and not such as would attach whether there was a bill of lading or not. The defenders undertook to indemnify the pursuers from all consequences and liabilities arising from the captain signing a bill of lading, but they did not undertake to relieve the pursuers from the consequences of the captain setting sail with a ship which owing to his own carelessness was unseaworthy.

“I am, therefore, of opinion that the pursuers have not made out their claim against the defenders. When the action was previously before me I decided it upon relevancy, and therefore dismissed it. The present judgment proceeds upon proof, and I think that the defenders are entitled to absolvitor.”

The pursuers reclaimed.

The argument, in so far as dealt with by the Court, sufficiently appears from the opinions of the Lord Ordinary and the Judges.

The following authorities were referred to:—

For the pursuers—(1) On the question of the primary liability of the shipowners— Duncan v. Dundee, Perth, and London Shipping Company, March 8, 1878, 5 R. 742; Abbott on Shipping, 740; The Ettrick (1881), 6 P.D. 127; Steel & Craig v. State Line Steamship Company, Jnlv 20, I877, 4 R. (H.L.) 103, 3 App. Cas., 72; Gilroy, Sons & Company v. Price & Company, November 21, 1892, 20 R. (H.L.) 1; The Ferro [1893], P. 38; Scrutton on Charter Parties, 171; Manchester Trust v. Furness [1895], 2 Q.B. 282 and 359. (2) Upon the indemnity clause:— Manchester Trust v. Furness, cit., per Matthews, J., at p. 288; and in the Court of Appeal, per Lindley, L.J., at p. 544; per Lopes, L.J., at p. 547; and per Rigby, L.J., at p. 549; Baumwoel Manufactur von Karl Scheibler v. Castle-gate Steamship Company [1893], A.C. 8; Morgan v. Castlegate Steamship Company [1893], A.C. 38; Shand v. Sanderson (1859), 28 L. J., Ex. 278; Gledstanes v. Allen (1852), 12 C.B. 202. (3) As regards excepting the warranty of seaworthiness in bills of lading— Steel & Craig v. State Line Steamship Company, cit., per Lord Blackburn, at p. 193; The Cargo ex Laertes (1887), 12 PD 187.

For the defenders—(1) On the exceptions clause in the charter-party—Steel & Craig v. State Line Steamship Company, cit.; Gilroy, Sons & Company v. Price & Company, cit. (2) Upon the obligation to make a ship seaworthy before leaving an intermediate port— Worms v. Storey (1855), 11 Ex. 427; Thin v. Richards & Company [1892], 2 Q.B. 141 (time charter).

An argument was also presented upon the question whether the pursuers were entitled to recover the expenses of the salvage litigation in spite of the fact that they had not given the defenders notice, the pursuers maintaining that notice was not necessary if the action of the pursuers was reasonable, and the defenders on the other hand arguing that notice was essential. In the view which the Court took of the case it was not necessary to decide this question.

The following authorities were referred to in argument:—

For the pursuers— Barkley & Sons v. Simpson, January 16, 1897, 24 R. 346; Duffield v. Scott (1789), 3 T.R. 374, per Buller, J., at p. 377; Smith v. Compton (1832), 3 B. and Ad. 407; Mors-le-Blanch v. Wilson (1873), L.R., 8 C.P. 227, per Grove, J., at p. 233; Hammond & Company v. Bussey (1887), 20 Q.B.D. 79; Struthers v. Dykes, July 7, 1847, 9 D. 1437, per Lord Cockburn, at p. 1457; Collier v. Beath, December 6, 1836, 15 S. 195; Clason v. Black, February 15, 1842, 4 D. 743.

For the defenders— Barkley & Sons v. Simpson, cit.; Clarke v. Scott, January 30, 1896, 23 R. 442; and Struthers v. Dykes, cit.

At advising—