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Colonial Cases

Clarke and Service v. The Standard Oil Co., 1898

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Clarke and Service v. The Standard Oil Co.

United States Consular Court, Shanghai
Goodnow, 8 March 1898
Source: North China Herald, 14 March, 1898


 

U.S. CONSULAR COURT.

Shanghai, 8th March.

Before John Goodnow, Esq., Consul-General, and Messrs. A. W. Danforth and A. C. Hunter, Associates.

CLARKE AND SERVICE, OWNERS OF THE STEAMSHIP "ARDANDEARG," v. THE STANDARD OIL CO.

   This was a claim for Tls. 878.38 for lighterage of cargo from Woosung. Mr. A. P. Stokes, (Messrs. Johnson, Stokes and Master) appeared for the plaintiffs, and the defendant Company was represented by Mr. J. C. Hanson, (Messrs. Dowdall, Hanson and McNeill.)

   Mr. Stokes in opening the case for the Plaintiffs, said that the nature of the case was set forth in the pleadings and he would commence by reading the petition of the plaintiffs, which was as follows:-

   [1.] That they are the owners of the s.s. Ardandearg and resident in Glasgow, Scotland, and carry one the business of ship owners. 

   [2.] That the Defendants are a Company registered in the United States, carrying on business in New York and amongst other places in Shanghai.

   [3.] The defendant Company under a Bill of Lading dated the 15th day of October,1895, shipped on board the said s.s. Ardandearg at New York, United States, as part of her cargo 100,893 cases of Kerosene Oil.

   [4.] By the terms of the Bill of Lading the said cargo was to be delivered at the port of Shanghai or as near thereto as the said steamship might safely get and by another term of the said Bill of Lading (numbered 6) it was agreed that the goods should be received by the consignees immediately the vessel was ready to discharge into lighters at the risk and expense of the consignees.

   [5.] The defendants were the consignees of the said cargo of oil.

   [6.] The Petitioners thereupon discharged part of the defendants' cargo into lighters and the Petitioners became indebted to the owners of the said lighters for their hire in the sum of Tls. 878.38. The Petitioners requested the defendants to pay this sum but the defendants refused to do so and the Petitioners were compelled to pay and have paid the sum of Tls. 878.39 to the owners of the said lighters. The Petitioners have demanded repayment of the said sum from the defendant company but they have refused to pay same.

   The Petitioners therefore pray that the defendant Company may be adjudged to pay to the Petitioners the sum of Tls. 878.38 with costs and that your Petitioners may have such further and other relief as to your Honourable Court may seem meet.

(Signed.) &c.

   The answer put in by the defendants was as follows:-

   [1.] The defendants admit the allegations contained in paragraphs 1 and 2 in the Petition.

   [2.] The defendants admit that on the 5th day of October,1895, they shipped on board the steamship Ardandearg at New York as part of her cargo 100,893 cases of Kerosene Oil and they admit that upon such shipment the Bill of Lading referred to in paragraphs 2 and 4 of the Petition as given and for the terms of such Bill of Lading they crave leave to refer to the Bill of Lading itself. The defendants further say that the shipment aforesaid was made in pursuance of a contract in writing dated the 16th day of September, 1895, and that it was one of the terms  of such contract that the said consignment of oil was to be shipped to and delivered at Shanghai at such Wharf below Pootung Point as might be ordered by the defendants provided there was sufficient water at such Wharf.

   [3.] The defendants admit the allegations contained in paragraph 5 of the Petition.

   [4.] The defendants do not admit any of the allegations contained in paragraph 6 and 7 of the Petition, except the allegation that the Petitioners have demanded payment of the sum of Tls. 878.38 mentioned in the Petition from the defendants and that the defendants have refused to pay the same.

   [5.] The defendants further say that if as the Petitioners allege the steamer Ardandearg when she arrived at Woosung was unable to cross the bar she should have waited until there was sufficient water on the bar to enable her to come up to Shanghai.

   [6.] The defendants say that it is and always has been the custom at the port of Shanghai for steamers and other vessels bound for Shanghai or as near thereto as they could safely get to pay or bear for their owners the expenses of any lighterage which might be necessary to enable them to pass Woosung and reach Shanghai.

   [7.] The defendants say that they are not liable to pay the said sum of Tls. 878.38 or any part thereof.

   [8.] The defendants further say that the oil consigned to themselves was a part only of the cargo on board the steamship Ardandearg and that in any case only a proportionate part of the expenses of the lighterage can be claimed from them.

   [9.] The defendants therefore pray that the petition be dismissed the petitioners be decreed to pay the costs and that they may have such other or further relief as to the Court may seem meet.

   The learned counsel went on to say that the case was one in which the Court would be asked to determine whether the bill of lading or the freight note was the contract. This issue was set forth in par. 6 of the answer, which read as follows:

.  .  .  

This concluded the evidence, and counsel on both sides having summed up very exhaustively, the Court reserved judgment.


 

Source: North China Herald, 21 March 1898

U.S. CONSULAR COURT.

Shanghai, 15th March.

[As above.]

JUDGMENT.

   In the case before the Court the s.s. Ardandearg sailed from New York about 15th October,1895, laden with 100,893 cases (weighing about 3,800 tons) of kerosene oil, shipped by the Standard Oil. Co, at New York to the Standard Oil Company at Shanghai, and about 200 tons of miscellaneous cargo for other parties in Shanghai.  It is testified, but not with much certainty, that she also had about 500 tons of cargo for Yokohama. The ship arrived at Woosung on the 16th December,1895, drawing 23 feet of water, while the high tide on the inner bar was during that winter from 18 to 20 feet. 37,000 cases of kerosene were transferred to lighters at Woosung and brought to Shanghai thus; and the ship then being able to cross the bar came to the wharf of the Standard Oil Co. and there discharged the remainder of the cargo. The cost of this necessary lighterage was Tls. 878,38 which was paid by the ship. Plaintiffs assert that this payment was made under protest, which the defendant denies, but no issue is made on this point. The plaintiff sues for Tls. 878.38, being the amount of lighterage, and Court costs; and presumably interest from date of payment to present time.

   The defendants contend that the governing contract is a certain memorandum of contract dated 16th September,1895, denying that a bill of lading can be more than a receipt. The plaintiff rests on the bill of lading which was signed for the maser of the ship on the 15th October,1895. We must hold first that while the bill of lading is a receipt, and in so far is liable to contradiction by parol testimony, it is also a contract of carriage complete in all its parts and as such is to be treated as any other written contract.

    See Greenleaf Evidence, section 305; Abbott's Shipping, Section 324; Babcock v. May et al. 4 Ohio 334; Barrett v. Rogers, 7 Mass. 297; Wayland's Administrators v. Moseley, 39 Am. Dec. 336; O'Brien v. Gilchrist, 56 ibid 676; Wolfe v. Myers, 3 Sandf. 7, etc., etc.

   It is the controlling contract in this case, not only is it of later date, and the provisions of the earlier document are not contradictory to it but are all incorporated in it, so far as they have not been completed before it was signed, but the first documents says explicitly:

This contract is made subject to the terms and conditions of the form of bill of lading in use by this line.

   In the case as governed by the Bill of Lading the only dispute is as to the right delivery of the cargo. The consignees received the goods on good condition; the ship could not by any reasonable delay be floated over the Woosung Bar by a high tide; it was necessary to lighter the whole 37,000 cases; under the side note in the Bill of Lading the ship delivered the cargo to the Eastern Wharf; no claim is made that the ship was tacitly or expressly waived any of its rights under the Bill of Lading. There is even no claim for demurrage. When the ship needed lighterage, the captain or agents procured lighters under Clause 6 of the Bill of Lading and all proper speed was used to unload. 

   The only point before the Court is this:

Had the ship the right to compel the consignees to accept delivery of any or all of the cargo at Woosung, thus completing the freight contract and earning the entire freight agreed upon for that part of the cargo, or must all be brought to the Eastern Wharf of the Oil Co. in or near the anchorage limits of Shanghai and there delivered without lighterage charges?

   It may be as well at this point to define what is meant by the Port of Shanghai, technically and practically. By the Customs Regulations "the Port of Shanghai is Iimited by a line drawn from Paoshan Point to the Battery on the right bank of the river below Woosung."

   "The anchorage of foreign vessels is between East Gate creek and the creek below the British naval yard."

   "Except under special permission the place for shipping and unshipping cargo shall be confined to the limits of the anchorage."

   Thus it will be seen that while Woosung is technically within the port of Shanghai it is not so for the purpose of the delivery of cargo. Ships can unload there into bonded lighters and no actual delivery can be made to consignees except in the anchorage limits. The contention of the plaintiff that the ship anchored at Woosung was at Shanghai as intended by the bill of lading cannot be allowed. In the contract knowledge of the usual unloading place is implied by the fact that it was deemed necessary to put in a special clause empowering the consignees to order the ship to the Eastern Wharf or some other wharf below Pootung Point and hence outside the anchorage limit, provided there was sufficient water at Eastern wharf.

   "The port of discharge is generally a place of wide extent, some parts of which only are suitable for the discharge. In determining the point of discharging, the ship owner must conform to the regulations and the ordinary practice of the place - that is the only reasonable manner of performing his contract." Carr on Carriage by Sea, 451,

   The Bill of Lading of this cargo allowed an alternative destination if it was found impossible for the loaded ship to reach the delivery place in the Port of Shanghai. It reads "to be delivered at the Port of Shanghai (or so nearer thereto as she may safely get." - By the terns of this Bill of Lading it was the ordinary duty of this ship to come to Shanghai if possible; failing that, to come as bear as possible with safety. It is admitted that the ship, with her cargo could not reach the wharves of the Port, in order that the alternative destination might be in the actual one, it was necessary, first, that the obstruction must be "within the ambit if the Port." Lord Campbell, (4 E. and B. 886).  In Schizzi v. Derry (4 E and B. 873), where the vessel was to go to Galatz, "or so near thereto, etc." it was decided that an obstruction at the Sulina mouth of the Danube 90 miles from Gaklatz would not come under such provision of the bill of lading. In Metcalfe v. Britannia Iron Works Co.  (2 Q.B.D. 423) an impossibility to enter the Sea of Azov at Kertch 300 miles from Taganrog did not render a delivery at Kertch as alternative to Taganrog under this clause. In the case before the Court it will not be claimed but that the Ardanearg at Woosung had come within the ambit of the Port of Shanghai.

   Second, the obstruction must be reasonably permanent. In Dahl v. Nelson (6 Appeal Cases, 38) it was held that a ship must wait a reasonable time, say a fortnight, if she could then proceed to her primary destination. In this case Lord Blackburn said - "If the ship cannot get at all, it cannot get safely." In the case before us, passage for the loaded ship was absolutely impossible and made so by the existence of the bar extending across near the mouth of the Whangpo River above Woosung. 

   Third, it is held, and we believe rightly, that the ship can only lighter at the expense of the consignee so much of her cargo as will allow her to proceed to her primary destination with the remainder. In Hillstrom v. Gibson (22 Law Tines Reports 248) the Lord President of the Court of Sessions of Scotland said: "I should therefore think that it was reasonable that the shippers should have been allowed at their own expense to unload in part in order that the vessel might be able to get to Glasgow with the remainder." The majority of the Court agreed with him, Lord Dean only dissenting and his argument was that the ship was entitled to deliver the whole cargo "as near as she could get safely" with the whole cargo.

   The defendants, however, set up that "It is and always has been the custom at the port of Shanghai for steamers and other vessels bound for Shanghai or as near thereto as they may safely get to pay or bear for their owners the expenses of any lighterage which might be necessary to enable them to pass Woosung and reach Shanghai."  The testimony before the Court established this usage in all cases except that where the claim had been arbitrated in London, the consignee had been forced to return the lighterage cost to the ship.  So far as this Court has knowledge, about one-half of the Bills of Lading to Shanghai are without the clause giving an alternative destination.  To such the argument of usage might be reasonably applied as explaining the intent of the parties in the absence of explicit written statements.

   In construing such extracts as the one before the Court, the evidence of such usage cannot be considered. It is axiomatic that usage cannot be brought forward to vary or contradict the express terns of written contract. The contract may contradict usage for it may be written expressly to contravene a local usage; but a usage cannot contradict the contract. It must be read with and into the contract and only admitted where it is I intended to explain or make clear an indefinite or ambiguous contract. For example, a ship contracts to deliver goods to the Port of Shanghai. Evidence of usage is admissible to show the ordinary practice of unloading such cargo in the Port of Shanghai. But if the ship contracts in terms to deliver to the Eastern Wharf, evidence cannot be brought forward to show that the Eastern Wharf is outside the usual limits for unloading ships and therefore that a delivery within the usual limits will satisfy the contract. If the ship agrees to deliver the goods as near to the Port of Shanghai as she can safely get, evidence of usage will not be competent to show that she must deliver them at the Port of Shanghai even though she cannot get there at all. 

   On the point that usage cannot vary or contradict a written contract, the cases are very numerous. 

"If an agreement be reduced to writing, reference to usages of a particular place ought to appear by the terms of the contract. To allow particular usages to control or vary the construction or legal effect of   written contract would be repugnant to the rules of evidence." (Eager v. Atlas Ins. Co. 25 Am. Dec. 365.)

   "Public policy requires that when parties assume obligations which the law does not impose or release obligations which it does not impose it should be done by express contract." (Dickinson v. Gray, 83 Am. Dec. 656.)

   "At law the contract is valid - is a legally binding contract - from its inception; and shall that law permit a usage to be proved which makes it void at and from its inception?" (Sweet v. Jenkins, 36 Am. Dec. 242.} 

   Where there is no ambiguity of terms it is not perceived how even the subsequent conduct of the parties can change the plain meaning of the contract as written. (Riply v. Crocker, 74 Am. Dec. 491.)

   Oral evidence cannot be given to vary, or contradict, enlarge, or qualify,  written contract, or to prove that the parties intended differently from the legal import of their language, although witnesses may testify, directly and positively, to such different intention. Neither can such result be attained indirectly by proof that a local custom exists, and has become so known and general that parties are presumed to have contracted with reference to it, and thus made the custom a part of their agreement. The former is an offer to make direct proof of an inadmissible fact; the latter an effort to prove circumstances of facts from which, when offered directly, is inadmissible. The statement of such a proposition is inadmissible. Barlow v. Lamber, Am. Dec. 65 - Page 378.

   "No custom, or usage, will overturn an express stipulation. Should the law allow this, it would contradict itself." (Bishop on Contracts, sec. 460.)

   Usage may be admissible to explain what is doubtful; but it is never admissible to contradict what is plain." Abbott's Shipping, sec. 277.)

   "It is an inflexible rule that parol evidence is not admissible to supply or contradict, enlarge or vary, the words of a contract in writing." (Kent. Vol. 2, sec. 556.)

   The very learned Judge Storey is quoted in almost all such cases and I may be excused for quoting him fully. He says: "The true and appropriate office of a usage or custom us, to interpret the otherwise indeterminate intentions of the parties, and to ascertain the nature and extent of their contracts, arising not from express stipulations but from mere implications and presumptions and acts of a doubtful and equivocal character.  It may also be admitted to ascertain the true meaning of a particular word or words in a given instrument when the word or words have various senses. But I apprehend that it can never be proper to resort to any usage or custom to control or vary the positive stipulations of a written contract and, a fortiori, not in order to contradict them. The express contract of the parties is always admissible to supersede  or  vary or control a usage or custom; for the latter may always be waived at the will of the parties; but a written and express contract cannot be controlled or varied or contradicted by a usage or custom - for that would be not only to admit parol evidence to control, vary or contradict written contracts, but it would be to allow mere presumptions and implications properly arising in the absence of any positive expressions of intentions, to control, vary, or contradict the normal and deliberate written declarations of the parties." (Schoomer Reeside, 2 Sumner, 567.)

   He says: "Usages among merchants should be very sparingly adopted as rules of law by courts of justice, as they are often founded on mere mistakes and still more often in the want of enlarged and comprehensive views of the full bearing of principle. (Donnell et al. v. Columbian Ins. Co. 22 Sumn. 377.)

   In the contract under consideration there is no ambiguity. There is an alternative destination but that destination is clearly defined and where it is to be sought. Delivery into lighters was customary at Woosung of enough of the cargo that the ship may safely bring the remainder to Shanghai earns for the ship the entire freight on that part of the cargo, completes her undertaking in so far, [??] the remainder of the cargo must be brought to the usual place of discharging before its proportion of the freight is fully earned.

   The cases to be considered are all British. In Postellthwaite v. Freeland (Appeal Cases, 6096) the consignees under this case lightered the ship outside the bar. The only contention was in regard to the speed of the work.  In the case of the Alhambra (6 Probate Div. 1881, 68) the consignees offered to so lighten the ship outside that the vessel could come in safely. This was refused only in the ground that in the opinion of the captain the vessel could not be safely anchored at the customary place for lightering.  In this case the Court held: "Custom if it is proved is in no way admissible to control what is the true construction of the contract independently of any such custom proved." In Andrews v. Roach (37 Am. Dec. 718), lighterage over shoals in a river was allowed to be added to the contracted freight rate, as per custom; but only because such lighterage was for the benefit of the owner of the goods, getting to market quicker than by waiting for such a rise in the river as would carry the steamer over the shoals without lighterage.

   In Hillstrom v. Gibson (8 Sess. Ca. 3d 263), and Capper v. Wallace (5 Q.B.D. 163), the court held on the only point in contention that the ship could only compel the consignees to accept delivery outside of so much of the cargo as would enable her to go safely to the primary destination. In Dahl v.  Nelson et al. (6 Appeal Cases, 38) the ship was chartered to proceed "to the London Surrey Commercial Docks or so near thereto as she can safely get." She reached the dock gates. The dock was quite full and at least five weeks would elapse before the ship could be discharged. Held that if the ship owner could only go into the dock by waiting an unreasonable time (say a fortnight) he was entitled to call upon the charterer to take delivery outside the dock gates at the charterer's expense - Lords Selborne, Blackburn and Watson agreeing in the decision. In Hayton v. Irwin (5 CPD 130), a vessel as to deliver at a safe port "or so near thereto as she could safely get." She was ordered to Hamburg and proceeded thither but was laden too deep to cross the bar at Stade, 8 miles bel ow.  The charterer refused to take delivery of any part of the cargo at Stade, and in answer to an action for the cost of lightering the surplus part of the cargo to Hamburg, he alleged a custom of the port of Hamburg by which he was not bound to take delivery anywhere but at that place and was not liable for the expense of lighterage. It was held by the Court of Appeal, nem. con., affirming Mr. Justice Grove, that the alleged custom was inconsistent with the contract, for it required the ship to deliver at Hamburgh whether she could get there or not. The charterer was bound to take delivery at Stade until the vessel was sufficiently lightened to enable her to proceed. The decision of the Court of Appeal was as follows:

"The words of the Charter Party provide that the vessel was not to go at all hazards into port itself and the express contract of the parties cannot be controlled by this custom. The terms of the contract exclude the custom. When the vessel reached Stade she was as near to Hamburgh as she could safely get and the defendant was bound to take at Stade delivery of her cargo, until she was sufficiently lightened to enable her to proceed up the river to Hamburg; as she failed to do his, he must pay the lighterage expenses incurred by the plaintiff." 

The last two case are quoted by Scrutton and Carver as the leading cases.

   In regard to the claim set forth in Sec. 8 of the answer that the defendant should only pay such proportion of the lighterage as his consignment bore to the whole cargo, we think it must be allowed. Both Kent (Vol. 3, sec. 239) and Parsons Maritime Law (p.312) seem to imply that such an expense as this should be borne by the whole cargo and not alone by the part which happened to be most convenient to be lightered. This appeals to our sense of equity also. It seems only right that if A, B, C and D own cargo in a ship and it is necessary to lighten the ship in order that she may deliver the goods, and  A's goods alone are lightered, that A should not be alone burdened with the expense of such ligherage and B, C, and D receive their goods at the wharf free of extra expense. All parties should bear their just and proportional share of the extra expense incurred under the necessities of the voyage. In this case the Standard Oil Co. having, by the testimony submitted, 3,800 tons, while 700 tons were for other parties in Shanghai and Japan, should only be chargeable with 38/45 of Tls. 878.39, or Tls. 741.75.

   Judgment is hereby ordered for the plaintiffs, Clarke and Service, against the defendants, the Standard Oil Co., in the sum of Tls. (Shanghai) 741.75, with interest at the rate of 6 per cent per annum from 16th December,1895, and the costs of this action.

Shanghai, 14th March,1898.

Published by Centre for Comparative Law, History and Governance at Macquarie Law School