Overview
Case summary
This case involves a dispute over charter hire under a voyage charter party from New York to West Coast South American ports. The charterers agreed to pay a lump sum of £4,500, with a guaranty that the steamer would carry at least 3,000 measurement tons. When the vessel was loaded with only 2,393 tons, the master and ship's agents settled freight at 30 shillings per ton. The shipowner disavowed this settlement and sued for the balance of the £4,500. The district court ruled for the shipowner. On appeal, the Circuit Court held that the guaranty referred to capacity to carry ordinary West Coast South American cargo, not mere cargo space, and that the master had no authority to vary the charter terms. The court reversed in part, finding the vessel had capacity for 2,760 tons, and remanded for recalculation of the concession.
Abstract
A dispute arose over a voyage charter party where charterers agreed to a lump sum freight with a guaranty for minimum cargo capacity, but the vessel loaded less than guaranteed, leading the master to settle at a per-ton rate, which the shipowner disavowed and sued to enforce the original terms. The appellate court held the guaranty concerned capacity for ordinary cargo rather than mere space and that the master lacked authority to vary the charter, finding actual capacity at 2,760 tons. The decree was reversed in part with instructions to recalculate the concession and award for the shipowner with costs.
Opinion of the court
opinionWALLACE, Circuit Judgejoined by LACOMBE, Circuit Judge, SHIPMAN, Circuit Judge
- Guaranty clause interpreted as capacity to carry specific type of cargo
- Master lacks authority to vary charter terms
- Concession should be based on 2,760 tons capacity rather than 2,393 tons loaded
Jurisdiction
not challenged- Appeal from decree of district court adjudging liability for unpaid charter hire
Procedural posture
- Interpretation of charter party guaranty clause
- Authority of master to settle accounts
Legal categories
Case record
Issues & holdings
de novo
Guaranty interpreted as capacity to carry specific type of cargo, not mere cargo space
Issue preserved for review
de novo
Master has no authority to release charterer from paying hire reserved in charter party
Issue preserved for review
Holdings of the court
Error analysis
- District court misinterpreted guaranty clause as referring to cargo space rather than capacity to carry specific cargo — evidentiary · error foundError affected calculation of concession amount · not harmless
- District court failed to properly consider extrinsic evidence of parties' intent — evidentiary · error foundLed to incorrect interpretation of contract · not harmless
Statutory interpretation
1Standards of review
- Interpretation of charter party guaranty clause — de novo Contract interpretation reviewed de novo
- Authority of master to vary charter terms — de novo Legal question of agency authority reviewed de novo
Timeline
Master and Livermore & Co. settled freight at 30 shillings per ton for 2,393 tons
Outcome: Settlement made but later disavowed by shipowner
Attempted variation of charter terms by agents
Livermore & Co. informed London agents that charter could be closed with appellants conditioned on owners guarantying 3,000 tons cargo
Shows charterers' intention to have freight at 30 shillings per ton or lump sum with capacity guaranty
Charter party signed in New York City
Formal execution of contract containing disputed guaranty clause
Vessel delivered to charterers
Commencement of charter period
Charterers loaded 2,393 measurement tons of cargo
Actual cargo loaded fell short of 3,000 tons, triggering dispute over guaranty
District court entered decree for shipowner for full £4,500
Outcome: Decree for shipowner
Trial court ruling appealed to Circuit Court
Facts & evidence
Incident
Key facts
8 facts- Charter party signed May 26, 1892 for voyage from New York to West Coast South American ports
- Charterers agreed to pay lump sum of £4,500 sterling
- Charter contained guaranty clause: 'Owners guaranty that steamer will carry under deck at least 3,000 measurement tons of 40 cubic feet'
- Concession of 30 shillings per ton for shortage below 3,000 tons
- Vessel delivered August 26, 1892; charterers loaded 2,393 measurement tons
- Master and ship's agents settled freight at 30 shillings per ton for 2,393 tons
- Shipowner disavowed settlement and sued for balance of £4,500
- District court held shipowner entitled to full £4,500
Disputed questions
- Whether guaranty clause referred to cargo space or capacity to carry specific type of cargo
- Whether master had authority to settle freight on basis different from charter terms
Procedural history
6 steps- Charter party executed May 26, 1892
- Vessel delivered August 26, 1892
- Freight settlement made by master and agents
- Shipowner brought action to recover balance
- District court entered decree for shipowner
- Appeal to Circuit Court of Appeals
Evidence in the record
- Charter party document containing guaranty clause
- Cablegram from London agents: 'Close according to your telegram, £4,500 sterling. Owners guaranty 3,000 tons measurement, 40 cubic feet'
- Proofs regarding cargo space and stowage characteristics
- Charter party
- Cablegrams between agents
- Charterers' business in West Coast South American trade
- Characteristics of cargoes shipped from New York to West Coast South American ports
- Expert name: Not specified · Expertise: Shipping industry knowledge · Opinion: Variation in stowage of measurement cargoes ranges from 7 to 20%; West Coast South American cargoes typically lose 12% in stowage
Objects of relevance
Authorities
Cited authorities (3)
Standards & doctrines
- De novo review of contract interpretation
- Agency authority principles for ship masters
Legal principles applied
- Master has no authority to release charterer from paying hire reserved in charter party
- Contracts interpreted in light of surrounding circumstances and parties' intent