Railroad Company v. Broadnax, 109 Pa. 432, 1 A. 228, 58 Am.Rep. 733.
Average agreements or bonds are allowed and recognized by the admiralty courts, as a substitute for the common-law lien for general average which the ship owner has upon the cargo. The ship owner who attempted to enforce his lien by holding the cargo against a tender by the cargo owner in settlement of general average found himself in a difficult position. He was bound to assert his lien for the benefit of other interests, The Santa Ana (C.C.A.) 154 F. 800, but it was impossible to fix the amount accurately until the cargo had been valued and that could not be done until after delivery. Besides, if he undertook to hold it after discharge, though he might not lose his lien, he would have to bear the cost of warehousing it. As a result, the practice early obtained of exacting agreements of this kind from the cargo owners, sometimes in the form of a bond with surety, sometimes accompanied by a deposit, and sometimes guaranteed by the underwriters.
The origin and history of average agreements is fully discussed in Huth v. Lamport, 16 Q.B.D. 442, 735, and in the American cases of Wellman v. Morse (C.C.A.) 76 F. 573, 581; The Nesco (D.C.) 47 F.2d 643; Lowndes, General Average (6th Ed.) § 77; Congdon, General Average, p. 156.
Since the agreement in its essence was intended to take the place of the lien, it would seem but reasonable that the ship owner's rights under it should rise no higher than what they would be if he were asserting his lien.
The Nesco, supra, The Caserta, 1932 A.M.C. 51, and the recent Supreme Court decision in the United States v. Atlantic Mutual Ins. Co. (May 25, 1936) 298 U.S. 483, 56 S. Ct. 889, 80 L. Ed. 1296, all have to do with the admissiblity and effect as evidence of a general average statement prepared ex parte at the direction of the ship owner and are consequently beside the point. In Wellman v. Morse, supra, however, the ship owner required a bond very similar to the agreement in this case. The cargo owner refused to sign it without an additional provision, and one of the questions involved was, whether the cargo owner had the right to insist upon his proposed addition. The court held that it was unreasonable to ask for it. Stating the rights and liabilities of parties on the tender of an average agreement, the court said "* * * the result of the case [Huth v. Lamport] shows that anything which in substance demands more than this, [referring to a form of average agreement known as the 'London Form' which was conditioned in the simplest terms to pay the obligor's share of general average when called upon] or which would in any way prejudice the owner of the cargo in denying the entire liability, or in questioning the amount of it if the liability was established, or which would close any of the methods which the law gives for ascertaining and determining the existence or extent of liability, cannot receive the approval of the courts. On the other hand, it is evident, reciprocally, that the master, on surrendering his lien, is entitled to demand security of an effectual character, and of such nature as will leave open, in his behalf, all legal methods of determining any controversy which may arise, and of promptly enforcing whatever amount the result of such determination may show he is entitled to. While, on the one hand, he cannot foreclose any questions which the owner of the cargo is entitled to have determined," etc. After thus pointing out the limits of what the ship owner was entitled to demand, the court held that the average bond without the clause insisted upon by the cargo owner, met the legal requirements.
The cross-libelant relies strongly upon the New York case of Rebora v. British & Foreign Marine Ins. Co., 258 N.Y. 379, 180 N.E. 90, 91. That was a suit at law, not upon the average agreement, but upon a guaranty given by the defendant insurance company. The bill of lading bound the cargo owners when they shipped their goods to sign an agreement for general average contribution in terms much more sweeping than those in any other case cited. The average agreement so executed said "we further agree to fully recognize and to satisfy without litigation the findings of such adjustment, not to oppose by any means the adjustment and settlement to be presented by the adjusters in fulfillment of the charge conferred upon them." The intention is clearly manifested to be bound to general average contribution regardless of the cause of the loss or at the very least to submit the matter to the adjusters as an absolute arbitration. The distinction between this and the present agreement is too obvious to require discussion. Even so, Judge Mack in The Caserta, supra (which arose under the same documents), expressed doubts as to whether the findings of the adjusters were conclusive in all particulars. The New York case is clearly distinguishable, but even if it were not it would not bind this court, although entitled to the greatest respect.
Turning to the agreement itself, it may be briefly noted that its terms are more than merely suggestive of the view that the right to contest the existence of any liability on the ground that the case was not one for general average was carefully preserved. The recitals are that "it is alleged" that in the prosecution of her voyage, the vessel stranded and floated with assistance, and that by reason of occurrence of the voyage, certain losses, etc., were incurred which "may" constitute a charge by way of general average upon the cargo. The adjustment is to be stated "according to * * * the loss laws * * * applicable." In The John M. Chambers (C.C.) 24 F. 383, an average bond in terms quite as broad as the one in this case, did not preclude the cargo owner from contesting the question whether the expenses and sacrifices resulted from faulty navigation, although, as a matter of fact, that point was decided against him.
Enough has been said, I think, to indicate that the argument of the cross-libelant, based upon the supposedly binding effect of the average agreement, is entirely without merit.
A decree may be submitted in accordance with the foregoing findings and conclusions.
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