Scottish Court of Session Decisions

The defenders in this action were the owners and the master of the vessel “Ann” of Liverpool, and the pursuers Messrs Craig & Rose, colour merchants, Leith, were the onerous endorsees of bills of lading for two lots of olive oil, amounting to 42 and 46 tons respectively, which was shipped

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on board the “Ann” at Bougie, in Algeria, in August 1877. The bill of lading for the larger quantity was in these terms—“Shipped in good order and well conditioned, by D. Bankhardt, in and upon the good ship or vessel called the ‘Ann,’ whereof is master for this present voyage Captain A. M'Gonnell, and now lying in the port of Bougie, and bound for Leith, 280 casks olive oil, weighing 142 tons, being marked and numbered as in the margin, and are to be delivered in like good order and condition at the aforesaid port of Leith (the act of God, the Queen's enemies, piracy, fire, and all and every other dangers and accidents of the seas, rivers, and navigation of whatsoever nature and kind excepted) unto order or to assigns, he or they paying freight and charges for the said goods as per charter-party signed on the 17th July before J. Crispo, ship-broker in Algiers, with per cent. primage and average accustomed.—In witness whereof, the master or purser of said ship or vessel hath affirmed to four bills of lading, all of this tenor and date, one of which being accomplished, the others to stand void. Dated in Bougie this 25th day of August 1877. Not responsible for weight, quality, leakage, or breakage. Alexandes M'Gonnell.” The words “not responsible,” &c., were added by the captain. The second bill of lading for the 89 casks of oil was in the same terms mutatis mutandis. The pursuers acquired these bills from Bankhardt, the shipper, through Robinow, Marjoribanks, & Co., merchants, Leith. On arrival at the port of delivery it was found that the casks in which the oil was contained were leaking to such an extent that over 15 tons of oil had been lost. In consequence this action was raised against James Delargy, executor of John M'Donnell, shipowner, and others, the registered owners of the vessel, and against Alexander M'Gonnell, the master of the vessel. It concluded for £800 in name of damages.

M'Gonnell raised a counter action against Craig & Rose for payment of £33, being a balance of freight which he stated to be due to him. The two actions were conjoined.

It was admitted that the leakage was due to the fault of the shipper, who had used casks of an insufficient quality, but the pursuers averred that this defect was known to the captain. They pleaded—“(1) Under the said bills of lading the defenders were bound to deliver the whole cargo shipped on board said vessel in good order (perils of the sea excepted), and having failed to do so, they are liable to the pursuers, the onerous holders of said bills of lading, for the consequences of such failure. (2) The pursuers having acquired right to said cargo and bills of lading, and paid the price of said cargo on the faith of the statements and representations contained in said bills of lading, the defenders are responsible for all loss and damage resulting to the pursuers through the falsity or inaccuracy of said statements or representations. (3) The shipmaster, for whom the defenders are responsible, having failed to discharge the ship's duty towards the cargo, the defenders are liable for the consequences of his neglect and failure in duty. (4) The pursuers having suffered loss and damage to the extent sued for through the misrepresentation or the fault of the defenders as above condescended on, are entitled to decree as concluded for. (5) The defences stated are untenable as an answer to the pursuers' claim, and ought to be repelled.”

The defenders pleaded, inter alia—“(2) The said loss being due to the fault or fraud of the pursuers' author, the said Mr Bankhardt, the present action cannot be maintained. (3) The loss of the said oil not having been due to the negligence of the defender or their servants, the defenders are entitled to decree of absolvitor. (4) The loss of the said oil having been due to the insufficiency of the said casks, for which the defenders are not responsible, the defenders ought to be assoilzied, with expenses. (6) Eslo that the statements in the bills of lading are false, the defenders, the owners, are not responsible therefor, in respect they gave no mandate to the master to sign bills of lading containing statements inconsistent with fact.”

In consequence of some evidence that was given at the proof, the Lord Ordinary (Craighill) allowed the defenders to make this addition to their statement of facts—“The pursuers are suing the present action under an arrangement with Robinow, Marjoribanks, & Co., agents for the shipper of the oil, under which they are guaranteed by Robinow, Marjoribanks, & Co. against all loss through deficiency in the quantity of the oil delivered, or through the present action;” and also to add the following plea—“The loss of oil having been caused by the insufficiency of the casks, for which the shipper is responsible, the pursuers are not entitled to recover, as they are suing the present action in the interest of the shipper.”

The Lord Ordinary pronounced this interlocutor:—“Finds as matters of fact—(1) That the casks containing the oil in question when offered for shipment, and when shipped, were in bad condition and insufficient for the voyage, and that the loss of oil from which the claim sued for arises was due entirely to this insufficiency; (2) That this insufficiency was known at the time to Bankhardt, the shipper, from whom the title of the pursuers as purchaser was obtained, for value, by indorsation of the bills of lading referred to on the record; and (3) That the master of the ship ‘Ann,’ the property of the defenders, which had been chartered by Bankhardt to carry the oil from Bougie, in Algeria, to this country, objected to the condition of the casks when brought forward; but on the representation and assurance of Bankhardt that the casks were sufficient for the carriage of the oil, and that whatever might happen the owners of the ‘Ann’ would be held free from the consequences, the oil was taken on board, and the said bills of lading were thereupon granted: Finds, as matter of law, the facts being as above set forth, that as in a question with Bankhardt, the shipper, or with any parties suing the defenders in his interest, the value of oil lost upon the voyage through insufficiency of the casks could not be recovered from the defenders: Finds, further, as matters of fact—(1) That the said oil was sold to the pursuers by Bankhardt, the shipper, through Robinow, Marjoribanks, & Co., merchants in Leith, his agents in this country; (2) That it was a condition of the contract between the parties that the pursuers should be protected against all loss from leakage of the oil upon the voyage exceeding one per cent., and the fulfilment of this condition by Bankhardt was guaranteed by his said agents; (3) That the present

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action was raised, and has been prosecuted against the defenders, in the interest, for the protection, and at the risk of Bankhardt, the shipper, and his said agents, in furtherance of an arrangement to this effect concluded between them and the pursuers: Finds, further, as matters of law, that the facts being as these have now been found, a defence which would have been available against Bankhardt and his agents is also available against the pursuers; and that as a consequence the defence rested on the insufficiency of the casks when shipped, and on the representation and assurances given by Bankhardt to the master of the ‘Ann,’ by which the owners were to be held free from responsibility, has been competently urged against the pursuers, and must be sustained: Therefore assoilzies the defenders from the conclusions of the summons, and decerns: In the second place, in the action in which Craig & Rose are defenders, decerns against these defenders for £33, &c.

“ Note.—The oil in question was shipped at Bougie, a port in Algeria, on board the ‘Ann,’ in August 1877, and the bills of lading sued on by the pursuers were granted by the master of that vessel, which belonged to the defenders, after it had been taken on board. These bills bore that the cargo was in good order and well conditioned when shipped; but the facts are—(1) That the casks containing the oil were not in good order and well conditioned; (2) That they were objected to by the master of the ship because of their insufficiency; and (3) That the bills of lading were granted only after he had been assured by the shipper that the casks were sufficient, and that his owners would in no event be held responsible on account of the terms in which the bills of lading were expressed. The first of these facts is not disputed upon either side. On the contrary, it is the basis both of the defence and of the action. The second and third, however, are contested by the pursuers; but both have been proved to the satisfaction of the Lord Ordinary. The evidence of the master is clear, and nobody was adduced to contradict in any way his testimony. On a perusal of the letters which are part of the documentary proof there is no difficulty in seeing why it was that the shipper did not appear as a witness.

The oil thus shipped was purchased by the pursuers from Bankhardt through the intervention of Robinow, Marjoribanks, & Co., his agents in this country. The stipulated price was full value, and it was a condition of the contract that the shipper should make up to the purchasers whatever loss beyond one per cent. might be suffered through leakage from the casks in the course of the voyage; and for the fulfilment of this condition Robinow, Marjoribanks, & Company interposed for their constituent. Bills of lading having been transmitted in ordinary course to London, and the price, under arrangement between the pursuers and their bankers, having been settled by bankers' acceptance, these were delivered.

The ‘Ann’ arrived in Leith in October last, and then the loss of oil, which is the subject-matter of suit, was discovered. As to the extent of the loss there is hardly any controversy, but there is a dispute as to the rate at which the value of the missing quantity should be estimated. This, however, like several other controversies in the case, has come to be immaterial, as judgment in favour of the defenders has been pronounced.

The action is founded on bills of lading which are regarded by the pursuers as ‘clean bills.’ The grounds of defence as originally presented were—(1) That these bills were not in effect ‘clean bills,’ inasmuch as they contained a clause bearing that the ship should not be responsible for weight, quality, leakage, or breakage; and (2) That, however this might be, the pursuers must be held to represent the shipper to the extent at least of being affected by his conduct in shipping the oil in insufficient casks, and in obtaining from the master of the vessel the bills of lading sued on, upon representations and assurances that the casks were sufficient, and that no responsibility for loss of oil, should loss occur, would attach to the ship. On all these points parties joined issues, and a proof was allowed. In the course of the proof something transpired which induced the defenders to put forward an additional defence, rested on the statement then added to the record, that the pursuers are suing under an arrangement with Robinow, Marjoribanks, & Company, agents for the shipper of the oil, to protect the interests of these parties (agents and shipper) against the consequences of the shipment of the oil in insufficient casks. The record as thus enlarged having been re-closed, the proof was resumed, and a large body of evidence, both parole and documentary, touching this new question was adduced.

The Lord Ordinary has come to the conclusion that upon this new question the defenders are entitled to prevail, and that as this success is enough for the decision of the action, the other points upon which parties are at issue are not points upon which it is necessary, or would be expedient, that judgment should be pronounced.

That the present action was instituted for the protection as well as at the risk of the shipper and his agents has been, the Lord Ordinary thinks, fully established. He regrets, for the sake of the pursuers, as well as of Robinow, Marjoribanks, & Company, that he has been obliged to come to this conclusion. As regards Bankhardt, the shipper, all that need be said is, that he is entitled to no commiseration For the pursuers it may be urged that they at any rate acted disinterestedly, for they might by following the plain course have obtained almost instant redress for the loss which they had suffered. All that they had to do was to insist that the shipper or his agents should make good the deficiency from leakage beyond one per cent. which had occurred. Instead of so proceeding, they allowed themselves to be influenced by consideration for others; and they did this unfortunately in the knowledge that the result might be, and in fact could not but be, hardship, if not injustice, to the owners of the ship. For the course pursued by the agents of the shipper the mitigating circumstances of disinterestedness cannot be suggested as a palliation; and all the Lord Ordinary will say further regarding them is, that his astonishment is as great as his regret, that they knowing what they knew as to the shipment of the oil, and making the representations they made to the shipper, should even, for the sake of escape from the consequences of an obligation which could not otherwise be averted, have endeavoured, by means of the arrangement into which they entered

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with the pursuers, to throw upon the owners of the ship a loss which, as they again and again told him, ought to be borne by their constituent.

It was argued at the debate that if there was an arrangement that the action should be carried on for the benefit of others, that the pursuers Robinow, Marjoribanks, & Company, who had interposed for the shipper by giving a guarantee, were the only persons to be benefited. The Lord Ordinary is of opinion that the proof points and leads to a different result, He thinks that by the parole evidence, particularly by the evidence of the pursuers' managing man Macgregor, and by the correspondence, particularly the letters of Robinow, Marjoribanks, & Company, it is shown that the interests of the shipper were in view, and were to be protected. Whether the legal result would be different, even if the limitation suggested for the pursuers were to be conceded, appears to be doubtful; but it is unnecessary to make that a point of decision. There is, moreover, real evidence which satisfies the Lord Ordinary that his reading of the other parts of the proof is correct. The action covers the value of the oil which was lost through leakage in the course of the voyage; but that is not all which is sued for. There is a sum of over £40 incurred to coopers, porters, and others in Leith, when the cargo was in course of delivery, which is also included in the pursuers' claim. Not one farthing of that sum was paid by the pursuers. Nor was this disbursement covered by the guarantee of Robinow, Marjoribanks, & Company. They paid it; and as the pursuers could not but know they so paid it, as the agents of the shipper, this circumstance, even if more were required than what is afforded by the other parts of the proof, is, in the opinion of the Lord Ordinary, ample corroboration,” &c.

The pursuers reclaimed, and argued—The Lord Ordinary had proceeded on evidence which had been incompetently admitted, and which, even if admitted, did not bear out the interlocutor. On the original grounds of action—(1) The bills of lading were clean bills. The addition by the captain did not in any way qualify the leading statement—“Shipped in good order, &c.” The added words merely laid upon the owner of the goods instead of upon the shipowner the burden of proving that the master was in fault— Moes, Moliere, & Tromp. The bills remained clean bills, i.e., expressions of the captain's belief that the cargo was shipped in good order. Now, in making that implied expression of his belief the captain was stating what was false; for the casks were not shipped in good order, and he did not believe that they were shipped in good order. In fact, he probably added the words with the intention of qualifying the leading statement. But his intention would not give to the words any other than their legal meaning, at least so as to affect onerous endorsees who knew nothing except what appeared on the bills. (2) The Bills of Lading Act 1856 gave an endorsee the right of action on the bill of lading; but he could before the Act have vindicated his right to the cargo on his title of endorsee alone, and if the Act, while permitting him to sue on the contract, subjected him to all the liabilities pleadable against the shipper, its value would be almost nil. The true interpretation was that he was subject only to such liabilities as were pleadable on the face of the bill.

Authorities— Moes, Moliere, & Tromp v. The Leith and Amsterdam Shipping Company, July 5, 1867, 5 Macph. 988; Steel & Craig v. State Line Steamship Company, March 16, 1877, 4 R. 657—July 20, 1877, 4 R. (H.L.) 103; Shankland v. Athya, May 28, 1865, 3 Macph. 810; Bogle v. Dunmore, Feb. 2, 1787, M. 14, 216; 1 Bell's Com. 198 (M'L. 212–13); Bell's Prin. sec. 418.

Argued for the defenders—(1) The bills were not clean bills. The words added took them out of that category. The effect of these words was to put an endorsee upon his guard. A clean bill meant, among other qualities, a bill in which the captain and shipowner undertook the onus of proving that injuries to the goods did not happen through their own negligence. Now, at the least, the excepting words changed the onus on to the pursuers— Moes, Moliere, Jr. (2) The shipowners were not answerable for a mistake as to quantity in a bill of lading, whatever might be the case as regards the master— M'Lean Hope v. Munck—and therefore by analogy they were not responsible for a mistake as to the quality of the casks in this case. But it was more than doubtful on the evidence whether the master even had been guilty of negligence—Was a master bound to know the peculiar properties of every cargo he carried?— Ohrloff v. Briscall. (3) The Bills of Lading Act conferred upon endorsees a right of action upon the bill—before that Act he could merely vindicate the possession of the cargo with all its faults—but this right of action was conferred subject to all the exceptions pleadable against the shipper. That was the plain construction of the Act. Here obviously the shipper had no right of action for damage due to his own fault.

Authorities— M'Lean Hope v. Munck, June 14, 1867, 5 M. 893; M'Lean Hope v. Fleming, April 3, 1871, L.R., 2 Sc. App. 128, 9 M. (H.L.) 38; Ohrloff v. Briscall, June 20, 1866, L.R., 1 P.C. 231.

At advising—