APPEAL from the Circuit Court for the Northern District of California, decreeing against a lien set up by ship-owners for freight, on libel filed against a cargo. The case was thus: On the 16th March, 1863, Eccles, of Liverpool, chartered at that place from Taylor & Co., owners of the ship Bird of Paradise, that vessel, to carry a cargo of coal, of which Eccles was the owner, to San Francisco, California, at a rate agreed on per ton. 'The freight to be paid in Liverpool, on unloading and right delivery of the cargo, one-fourth in cash, one-fourth by the acceptance of Eccles, the charterer, at six months from the final sailing of the vessel, and the remainder by like bill, at three months from delivery, at charterer's office in Liverpool, of certificate of right delivery of cargo agreeably to bills of lading, or in cash, less five per cent., at freighter's option. The vessel to be addressed to the freighter's agent abroad. £500 to be advanced in cash at the port of discharge on account of the freight. The ship and her freight are bound to this venture. The penalty for non-performance of this agreement is to be the chartered freight in pounds sterling.' The master signed, and the freighter, Eccles, accepted, a bill of lading, in the usual form, for the cargo deliverable 'to order or assigns, he or they paying freight at the rate of _____, as per charter-party.' The vessel sailed from Liverpool April 16, 1863, and arrived at San Francisco on the 26th December, 1863, a voyage of eight months and ten days. The charterer, Eccles, paid the promised one-fourth of the freight before sailing, and gave his acceptance for the second fourth, at six months, falling due October 19, 1863, more than two months before the vessel arrived, but it was never paid, Eccles having failed in business, and remaining insolvent and a bankrupt. On the arrival at San Francisco, the £500 agreed to be advanced in cash at the port of discharge, was also paid; but the second acceptance, the one, to wit, for the residue of the freight, was not given, nor the amount paid in money. The amount due for unpaid freight, regarding the first or dishonored acceptance as a nullity, was thus $7050. The captain refused to deliver the cargo to the agents of Eccles, but kept control of it himself. These agents accordingly filed their libel in the District Court for the Northern District of California against the cargo, to recover possession of it; the delivery being resisted under a claim of lien for freight. That court considered that the claim was unfounded, and decreed accordingly, and the decree being affirmed by the Circuit Court, the correctness of such a view was now the question here on appeal.
The opinion of the court was delivered by: In a case very similar to this in New York, Comstock, J., said:
Mr. Benedict, for the appellants, owners of the vessel:
I. This is an unconscionable action. The court will make all reasonable presumptions against the libellants.
Eccles chartered the vessel to carry a cargo of coal from Liverpool to San Francisco, a voyage of more than eight months. The vessel performed the voyage in safety, at the expense of the owners, and then finding the charterer bankrupt, refused to deliver the cargo to his agents, unless the freight was paid. The agents refused to pay the freight, and they brought this extraordinary action. Having had the use of the entire ship, without expense, for more than nine months, this bankrupt charterer demands the cargo free of freight, on the sole ground that he had given a written promise to pay the freight, which he neither had performed, nor, being as he was, a bankrupt, ever would or could perform.
A court of admiralty is a court of equity to the extent of doing justice and requiring justice; and it will, in a cause of possession, compel the libellants to do equity before it will transfer to him the possession. Freight is a most just demand.*fn1
Charter-parties are to be liberally construed.*fn2
II. The whole sum due–the entire balance of $7050–should have been paid before a delivery. The freight is a lien upon the cargo by the maritime law, and all presumptions are in favor of the lien. The ship is bound to the merchandise and the merchandise to the ship. This lien is not created by the act of the parties, but by the general maritime law, and is founded in public policy and the interest of commerce. The Kimball,*fn3
in this court, is full to this effect. It gives to the owner and the shipper a responsible indorser and a responsible defendant in every port of the sea. And this rule–an elementary and cardinal one–is to prevail, unless the parties have intentionally excluded it–a thing to be inferred from plain language alone. Nothing can be inferred from silence. The burden is on the shipper to prove an absolute waiver of the lien. He has given no such evidence here.
Now, in this case, the freighter having failed–having become wholly bankrupt–there was no obligation to deliver, unless the whole amount due–we mean both that sum due on the protested draft, and that balance due after the £500 cash were paid at San Francisco–were paid in cash. There is in every contract for a payment by acceptances, when made in a case like this, a condition not the less fundamental because but implied–that the acceptor shall be solvent. This condition the law adds to the contract.
1. By the terms of the agreement, the giving an acceptance was 'non-performance' if it were not paid. It fell due before the end of the voyage, and not being paid at maturity, Eccles failed to perform his part of the contract. Moreover his bankruptcy demonstrated that he never could perform it.
2. So, too, the charter-party declares in substance, 'We have received your cargo, and it will be delivered to you if you pay as agreed in the charter-party. If you do not 'pay' it will not be delivered. We shall not deliver on dishonored acceptances–they are not payment.'
3. So, finally, by the now prevailing rules of commercial law, the rule at this day being, that a mere note or draft does not amount to a payment of a debt.*fn4
Certainly, in cases of sales of goods conditionally, as for cash or indorsed paper, and the cash not paid or the notes not given and the property delivered the delivery is conditional, if the intent of either party that it should be so can be at all inferred from their acts and the circumstances of the case.*fn5
'The analogies to be derived from the law of stoppage in transitu are perhaps not perfect, but they are sufficiently near to furnish a rule for the present case. When goods are sold to be paid for in the notes of the buyer, and he becomes insolvent before the delivery is complete, the seller may arrest the delivery and rescind the sale. There is nowhere in the terms of the contract any such condition. The law implies it, because the assumed ability of the buyer to pay for the goods was the inducement to the sale.'
But in this case we have the very terms of the contract. The charterer had failed to perform the charter-party on his part by not having paid his acceptance for the one-fourth. There was thus 'non-performance' of the agreement; and, by the terms of the contract, 'the penalty for non-performance of this agreement is to be the chartered freight in pounds sterling.' That is to say, in cash on delivery.
There were also in this case circumstances which aid in the construction of the contract. This, it must be remembered, was the longest voyage known to commerce, ending many thousands of miles from the parties; no security except the cargo; the cargo homogeneous, of great value and ready sale; the taking the bill of lading in addition to the charter-party; the making the acceptances fall due before the end of the voyage, so that, if not paid, the charterer would violate the charter-party and the master be entitled to enforce his lien for the whole freight by the bill of lading, and the improbability that any ship-owner would despatch his ship on such a voyage with no possible security for any freight: all these coincide with those provisions of the contract which provide for the usual lien.
III. But if this were not true as to the whole amount conceding that as to the second instalment the language of the charter-party ('the remainder by like bill at three months from delivery, at charterer's office in Liverpool, of certificate of right delivery') may place, as to that balance, the risk of solvency on the ship-owners–yet certainly as to the quarter for which the draft was given and not paid, the case is different. There has assuredly been no payment of that fourth; while payment of it was a condition precedent to delivery. In any ...