The Kimball/Opinion of the Court

by Stephen Johnson Field

United States Supreme Court

70 U.S. 37

The Kimball

Two questions are presented for determination in this case: first, whether the lien of the owner of the ship upon the cargo for the freight was waived or displaced by the stipulations of the charter-party; and, second, whether the notes given for a portion of the charter-money constituted payment of the same.

It is admitted that the lien of the owner of a ship upon its cargo for freight is favored by the courts; and will not be displaced, so long as the ship-owner retains possession of the cargo, except by express contract, or by stipulations in the charter-party inconsistent with its exercise. The position of the appellants is, that there are such inconsistent stipulations in the charter-party in this case; and two clauses are mentioned in support of this position,-the clause requiring the delivery of the cargo within reach of the ship's tackle, and the clause providing that the balance of the charter-money remaining unpaid on the termination of the homeward voyage shall be 'payable one-half in five and one-half in ten days after discharge' of the cargo.

There is nothing in these provisions inconsistent with the right of the owner to retain the cargo for the preservation of his lien. The first clause only designates the place where the delivery must be had, which, in this case, is the wharf at which the ship may be lying. The second clause only prescribes the period in which payment must be made after the discharge of the cargo. The discharge mentioned does not import a delivery of the cargo; it only imports its unlading from the ship. Such is the obvious meaning of the term, and so it had been judicially held. ^[1] The clause was intended for the benefit of the charterers. It gives them ample time to examine the goods, and ascertain their condition, and decide whether they will take them and pay the freight, or decline to receive them. They can waive it and take the cargo short of the period designated, if it be ready for delivery.

The cases cited by the appellants do not support their position. In Foster v. Colby, ^[2] the charter-party provided that the remainder due for freight should be paid 'in cash two months from the vessel's report inwards at London or Liverpool, and after right delivery of the cargo.' The stipulation for the payment after the delivery of the cargo was inconsistent with the existence of a lien. In Alsager v. St. Katherine Dock Co., ^[3] the charter-party contained two clauses, one providing for the delivery of the cargo on payment of the freight at a stipulated price, and the other providing for the payment of the freight 'two months after the vessel's inward report at the custom-house.' The court reconciled these clauses by annexing to the first the qualification as to the time of payment contained in the second, and read them together as requiring payment two months after delivery. The payment being thus considered to be irrespective of the delivery, it followed that no lien existed.

There is no doubt that a credit for the freight may be given for so great a period as to justify, in the absence of any provision for the delivery of the cargo, the inference that the ship-owner intended to waive his right to a lien, and to look solely to the personal responsibility of the charterers. It is sufficient, however, that there is no such credit given in the present case. Here the period allowed is only a reasonable one for examining the condition of the cargo.

But if there were any doubt as to the construction of the provision for the credit, it is dispelled by the concluding clause of the charter-party. By that clause the owner binds the vessel, and the charterers bind the cargo for the performance of all their respective covenants, of which the payment of the charter-money is one. Though the law, in the absence of any stipulations on the subject, ordinarily implies this mutual security in every contract of affreightment, yet its distinct statement in the charter-party shows that the attention of the parties was called to it, and is an important circumstance to be considered in the construction of other stipulations of the instrument respecting the payment of the freight.

In the case of the Schooner Volunteer, ^[4] Mr. Justice Story had occasion to consider the effect of a similar clause in a charter-party. In that case the charterers had agreed to pay for the freight 'within ten days after the return of the vessel to Boston,' or in case of loss after she was last heard from; and the question was, whether the allowance of the ten days for the payment of the fright amounted to a waiver of the lien? The learned judge held that it did not, and in this connection considered the effect of the clause named. After an extended examination of the authorities, he came to the conclusion that it contained an express contract for a lien; and if it did not, still that it contained enough to repel any notion that the delivery of the goods should precede the payment of the freight, or that the lien of the maritime law for freight was intended to be waived by the parties.

The second question for determination is, whether the notes given for a portion of the charter-money constituted payment of the same?

The notes were given before the termination of the voyage, and, consequently, before the balance of the charter-money became due. Treating them as an advance of a portion of the freight, they could be recovered back, or their amount, if paid, if the vessel did not arrive. Freight being the compensation for the carriage of goods, if paid in advance, is in all cases, unless there is a special agreement to the contrary, to be refunded, if from any cause not attributable to the shipper the goods be not carried. ^[5] And there was no such special agreement in this case. The notes were drawn so as to mature near the time of the anticipated arrival of the ship, and according to the statement of the broker who made the arrangement, they were given for the accommodation of the ship-owner, and were to be held over or renewed in case they fell due before the arrival. This statement is consistent with the nature of the transaction, and is sufficient to repel any presumption, under the law of Massachusetts, that the notes were taken in discharge or payment of the claim for the charter-money. The presumption which prevails in that State, that a promissory note extinguishes the debt or claim for which it is given, may be repelled by any circumstances showing that such was not the intention of the parties.

By the general commercial law, as well of England as of the United States, a promissory note does not discharge the debt for which it is given unless such be the express agreement of the parties; it only operates to extend until its maturity the period for the payment of the debt. The creditor may return the note when dishonored, and proceed upon the original debt. The acceptance of the note is considered as accompanied with the condition of its payment. Thus it was said, as long ago as the time of Lord Holt, that 'a bill shall never go in discharge of a precedent debt, except it be part of the contract that it should be so.' ^[6] Such has been the rule in England ever since; and the same rule prevails, with few exceptions, in the United States. The doctrine proceeds upon the obvious ground, that nothing can be justly considered as payment in fact, but that which is in truth such, unless something else is expressly agreed to be received in its place. That a mere promise to pay cannot of itself be regarded as an effective payment is manifest.

The rule in Massachusetts is an exception to the general law; but even there, as we have said, the presumption that the note was given in satisfaction of the debt may be repelled and controlled by evidence that such was not the intention of the parties, and this evidence may arise from the general nature of the transaction, as well as from direct testimony to the fact. Thus, in Butts v. Dean, ^[7] where a note was given for a debt secured by the bond of a third person, it was held that it was not to be presumed that the creditor intended to relinquish his security, and, therefore, the note was not to be deemed payment for the original debt. And following this and other like authorities of that State, Mr. Justice Sprague, of the United States District Court, held that a lien for materials furnished a vessel built in Massachusetts, a lien given in such a case, by a law of that State, was not displaced or impaired by the creditors taking the notes of the debtor. ^[8]

And on like grounds, we think that any presumption of a discharge of the claim of a ship-owner, and of his lien upon the cargo in this case, by his taking the notes of the charterers, is repelled and overthrown.

DECREE AFFIRMED.

Notes

1. Certain Logs of Mahogany, 2 Sumner, 589.
2. 3 Hurlstone & Norman, 705.
3. 14 Meeson & Welsby, 794.
4. 1 Sumner, 551.
5. Watson v. Duykinck, 3 Johnson, 335; Griggs v. Austin, 3 Pickering, 20; Phelps v. Williamson, 5 Sandford, 598.
6. Clark v. Mundel, 1 Salkled, 124.
7. 2 Metchlf, 76.
8. Page v. Hubbard, Sprague, 338.