Scottish Court of Session Decisions

On 24th September 1880 the pursuer, as master and managing owner of the ship “Victoria,” of Spain, entered into a charter-party with the defender, by which the pursuer undertook that his ship should proceed to a crane berth in Victoria Harbour, Greenock, and there load from the defender a full and complete cargo, consisting of steam-coals, and being so loaded should proceed therewith to Barcelona, on being paid a stipulated freight. It was provided by the charter-party that the ship should remain until 2d October for loading at the part of loading, and that the defender was to have ten days' demurrage at the rate of £8 per day. The charter-party further contained this provision—“The captain to sign bills of lading as presented, at any rate of freight, without prejudice to this charter-party.”

The defender proceeded with the loading of a cargo of coals, but on the morning of the 4th October he stopped. The pursuer represented to the defender that the ship was then short of a full cargo to the extent of 35 tons or thereby, and ultimately, after considerable discussion as to whether the defender was bound to load any more coals, and also whether he was liable for demurrage, the following letters passed between the parties:—

“ Greenock, 5 th October 1880.

Thomas Barr, Esq., Charterer of ‘Victoria.’

Dear Sir—Upon condition that you supply the balance of cargo, say 35 tons coals, I agree to sign clean bills lading, but under protest for three days' demurrage incurred here, to be settled at Barcelona.

Coal to be put on board to-day.—I am, yours truly,

Manuel de Fribis Arrospe.”

“ Greenock, 5 th October 1880.

Captain Manuel de Fribis Arrospe, of ship ‘Victoria.’

Sir—I acknowledge receipt of your note today, and consent to put 35 tons more coal on board your ship, leaving the demurrage claim to be adjusted at Barcelona.—Yours truly,

P. pro. Thomas Barr, David I. Urquhart.”

In terms of this agreement the pursuer made a formal protest before a notary for his claims for demurrage, and the defender shipped the additional 35 tons of coals. The defender then presented to the pursuer a bill of lading for the cargo, but the pursuer declined to sign this unless allowed to add the words “and all other conditions as per charter-party,” which the defender would not agree to. The ship was in consequence unable to sail, as it was necessary that a copy of the bill of lading, together with certain declarations, should be delivered to the Spanish Consul before a Spanish ship could leave a British port. On the expiry of the ten days allowed for demurrage, therefore, the pursuer raised this action, in which he prayed the Sheriff “to grant warrant to the pursuer to discharge and land a cargo of 584 tons or thereby of steam-coals, at present on board his ship ‘Victoria,’ lying in the harbour of Greenock, and to deposit the same in the hands of a storekeeper or other neutral custody for behoof of whom it may concern, and to grant interim warrant to the effect foresaid pending the present process; and further, to grant decree against the above-named defender, ordaining him to pay to the pursuer the sum of £750 sterling, with expenses; and to grant warrant to arrest on the dependence.”

The defender pleaded, inter alia—“(3) Under the charter-party, the pursuer, being bound to sign bills of lading as presented, was not entitled to refuse to sign the bills of lading presented to him by the defender, his alleged claims against the defender as charterer not being prejudiced thereby. (4) The pursuer having expressly agreed, upon condition of the defender giving his vessel other 35 tons of cargo, to sign clean bills of lading for the cargo, was not entitled to refuse to sign clean bills of lading when presented to him by the defender.”

The Sheriff-Substitute ( Spens), after a proof, which largely related to the meaning of the terms “clean bill of lading,” assoilzied the defender, adding this note:—“This case seems to me to turn wholly upon the question of whether pursuer was or was not entitled to require the addition of the words and all other conditions as per charter-party’ in the bills of lading. As the case strikes me, I do not think it is of any importance to inquire into either of the questions, viz. (1) Whether upon Tuesday 5th October three days' demurrage was due by defender? or (2) Whether on that day or previously the pursuer was entitled to demand that 35 tons more coals should be put on board the ‘Victoria?’ Neither does it seem in any way necessary to determine whether the cargo was a general cargo—a question which was mooted at the proof—but if required to decide that point, I would have no hesitation in holding the cargo was not general cargo. By the charter-party pursuer was taken bound to sign bills of lading as presented at any rate of freight; but this condition was qualified by the clause that it should be without prejudice to the charter-party. Then by the charter-party it is stipulated that the owners should have a lien for freight, dead freight, and demurrage. At the meeting at Greenock on Tuesday 5th October the pursuer considered that he had a claim against the defender, not only for demurrage, but also for dead freight, to the extent of 35 tons. Both of these claims were disputed, and, as I have already said, I think it unnecessary for the decision of this case to determine whether these claims were well or ill-founded. But as matter of law, on the clause of the charter-party quoted, the master, up to the time at all events of granting the letter of 5th October produced, was, in my opinion, entitled to refuse to sign the bills of lading without the adjection of the words which he demanded. I read the words without prejudice to the charter-party’ as qualifying the clause that the master shall sign bills of lading as presented.’ Therefore I think he could not be called upon to sign bills of lading which would in any way prejudice his rights or those of the owners under the charter-party. By signing bills of lading without the words desiderated, or words of a similar import, the right of lien, which by the charter-party was expressly stipulated to be not only over freight, but also over dead freight and demurrage, would, as regards the two last-named subjects, have been abandoned. At all events, those rights

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might have been prejudiced. As matter of law, therefore, I am of opinion that the master was entitled under the charter-party to insist on the adjection of words in the bills of lading which would preserve his lien for his claims for dead freight and demurrage. On Tuesday the 5th, however, Mr Urquhart, who is said to be a junior partner of the defender's (and whose right to act for the defender was not in any way disputed), had a meeting in Greenock with pursuer, the first witness examined, Joaquin Arellano, and himself—Arellano apparently acting as the pursuer's adviser—the result of which meeting was that the two letters of that date were written out. These I have thought it advisable to quote in extenso in the interlocutor. Arellano, it may be stated, is a clerk in the employment of F. E. Harvey & Company, shipbrokers, Greenock, agents for the owners of the ship, and he negotiated the charter-party for pursuer. Not only was an agreement come to by those letters, or at least was supposed to be arrived at by the defender, or Urquhart as acting for him, but what I cannot hold to be anything else than rei interventus followed in the procuring and loading of 35 tons of coal. Pursuer was claiming that the cargo was not the full cargo which he was entitled to under the charter-party. The answer was that he himself had specified 550 tons as a complete cargo, and on the faith of that statement, which defender alleged had, up till the Monday at least, remained uncontradicted, the specified cargo had been supplied. On the other hand, as regards demurrage, the defenders disputed the claim on the ground that the delay had arisen from circumstances outwith the defender's control. This being the state of matters, the natural explanation, I think, of the agreement of 5th October is that a compromise was arrived at—defender, on the one hand, agreeing to supplement the cargo on board by 35 tons more, while at the same time pursuer agreed to grant clean bills of lading, but under protest for the three days' demurrage, to be adjusted at Barcelona. After this agreement, and up to date, as I understand, pursuer has persistently refused to sign bills of lading except with a reference in grcemio to the other conditions of the charter-party.’ Evidence was led on both sides as to what the adjection ‘clean’ before the words ‘bill of lading’ meant. There were so many witnesses on the one side, and so many on the other, that the adjection of the words specified did not affect the cleanness of a bill of lading, and vice versa. If the whole evidence as to what the phrase meant by the custom of trade were all to one effect, then such interpretation would, I do not doubt, be adopted by the Court; but as the phrase is one on which there is this conflict of opinion among traders, it is not a question, I apprehend, which can be determined by weighing the evidence of one set of witnesses as against the other. Custom of trade to interpret such a phrase must be invariable, and therefore in this case I think that the whole evidence upon the subject referred to must be disregarded. The meaning of the phrase must be interpreted by the Court, and the agents for both pursuer and defender stated that they had been unable to find any legal decision interpreting the word ‘clean’ as applied to a bill of lading. Before, however, adverting to the meaning of the phrase itself, let me for a moment deal with the intention of parties in using the word clean,’ on the supposition that the phrase is an ambiguous one. The dispute up to the 5th October was that pursuer demanded the insertion of the words ‘all other conditions,’ &c. Defender agreed to supply the extra coal, for which otherwise pursuer would claim dead freight. Defender meant something by asking that the word ‘clean’ should be inserted before bills of lading. Urquhart undoubtedly meant that pursuer was to waive his insistence about reference to the conditions of the charter-party. Now, what did pursuer mean by it? Pursuer knew that the dispute as to the bills of lading had arisen from his insistence that the reference to conditions of the charter-party should be inserted in the bills of lading. By the words clean bill of lading’ in connection with the past dispute he must have intended to waive his objection to sign bills without the clause in dispute, and that this was his intention is confirmed by the words which succeed, viz., but under protest,’ &c. These words surely imply either that on the bills of lading, as an exception to their being otherwise clean,’ there should be a protest for the three days' demurrage, or that the bills of lading should be granted without condition and the protest be made elsewhere—a protest in the usual understanding of ships'-captains being a separate document, solemnly attested before a notary-public. It is true that Sinclair speaks of having asked Mr Urquhart at the time of the signing of the letter if the bills of lading were to be with the conditions of the charter-party, and says that the answer was in the affirmative. I cannot hold this to be proved, but if this conversation did take place, Urquhart surely meant that the conditions of the charter-party would remain good as against the shipper, and not that the bills of lading were to be qualified by a reference to the charter-party conditions. Assuming, therefore, the phrase ‘clean’ to be an ambiguous phrase, if it were to be interpreted by what was the intention of parties, I could come to no other conclusion but that the construction put upon the phrase by the defender is the right one. But turning again to the interpretation of the phrase to be deduced simply from the word itself, I think that meaning is ‘without: conditions.’ For instance, the phrase bill of ‘health’ means the certificate of the healthiness of a ship's crew. To that phrase the word ‘clean’ is sometimes appended. I understand that phrase to mean a bill of health without qualification. Of course there are certain understood and well-known conditions invariably inserted in bills of lading—the act of God, the Queen's enemies, &c.—and the phrase ‘clean’ is not to be held as preventing the insertion of such invariable clauses; but I take it that it means that the bill of lading shall be clean or free from any other conditions except those invariable conditions. I am of opinion that it implies that no conditions shall be inserted which may affect its negotiability. And there can be no doubt that the reference to a charter-party which has the effect of importing the unknown conditions of a different document must necessarily affect negotiability. Whether, therefore, the phrase falls to be interpreted by the intention of the parties themselves, or whether its meaning is to be decided by a judicial interpretation of the phrase from what appears to be the proper meaning of the word itself, I am of opinion that the defender's

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construction is that which must be held to be established.

“The agent of pursuer contended that there was no offer on the part of the defender to accept a bill of lading with the words ‘but under protest of three days' demurrage,’ &c. I am not clear that the letter of 5th October implies that it was conditioned that these words were to be adjected to the bill of lading; indeed, I incline to think that it meant a separate protest. Be that, however, as it may, I think it rested upon the pursuer, if such was his construction of that letter, to propose that these words should be adjected. Instead, however, of making any such proposal, he persistently stuck to the demand that the words ‘all other conditions,’ &c., should form part of the bill of lading.

Arriving at the above conclusions, it follows that no judicial authority can be given to the pursuer to land the cargo, and necessarily also the claim of damage, based upon his allegation, falls.

Had the pursuer's statements been proved, questions of some difficulty would have required determination, viz.—(1) Whether pursuer would have been entitled to hold the charter-party at an end, and been therefore entitled to land the cargo? and (2) as to the measure of damages which would fall to be awarded, imputing the breach of contract to defender. It is not, of course, necessary to express any opinion on either of these points.”

On appeal the Sheriff ( Clark) adhered. He added this note:—“The charter-party taken by itself would seem to bear out the defender's contention. The phrase ‘without prejudice to the charter-party’ simply means that the charterer is to settle with the shipowners on the basis of the charter-party, whatever the bills of lading may bear. The effect is that the chartering merchant reserves to himself the right of chartering to others at different rates of freight and discharge, but remains bound to the shipowners as in terms of the charter-party.—See Shand v. Sanderson, 1859, L.J., N.S. Exch., p. 278, and Marquand v. Burness, 6 Ellis and Blackburn, 232. But this construction becomes greatly strengthened when the two letters are considered. These were written after a very full and anxious discussion of the rights of parties in reference to the very contention now raised. I do not think they can be read otherwise than in accordance with the defender's view. On any other construction it would be very difficult to see what the adjected word ‘clean’ can possibly mean.”

The pursuer appealed to the Court of Session, and argued—Anterior to the agreement of 5th October the pursuer would clearly have been entitled to sign bills of lading with the condition he desired added, for it could not be contended that the words in the charter-party, “the captain to sign bills of lading as presented, at any rate of freight, without prejudice to this charter-party,” entitled the charterer to override all the other conditions of the charter-party. What, then, did the captain undertake on the 5th October when he agreed to sign clean bills of lading. A clean bill of lading was a bill in which the obligation on the consignee was measurable by what appeared ex facie of the bill or was clearly imported into it. Now, a bill with the condition “all other conditions as per charter-party” was a clean bill, because the means were there given of settling the obligations of consignee. The bill was negotiable, because a copy of the charter-party could be annexed. In so signing the bill, therefore, the pursuer would be fulfilling his obligation.

Argued for defender—The pursuer was bound to sign without adding the words he wished ( a) independently of the letters of 5th October, because of the condition in the charter-party, “the captain to sign bills of lading as presented, at any rate of freight, without prejudice to this charter-party.” The object of such a condition was to enable the charterer to re-charter the vessel on such new terms as he thought fit. But ( b) the agreement of 5th October made it obligatory on the captain to sign a clean bill, and what he proposed to do was to sign one which was not clean. In fact he desired to reopen the whole dispute.

Authorities—Craig & Rose v. Delargy, 18th July 1879, 6 R. 1269; Reed v. Larsen, L.R., 12 Eq. 378; Pearson v. Gosehen, 23d June 1864, 33 L.J., C.P. 265; Gabarron v. Kreeft, L.R., 10 Ex. 274; Shand v. Sanderson, 28 L.J., Ex. 278; ( Gray v. Carr, L.R., 6 Q.B. 522; Chapel v. Comfort, 31 L.J., C.P. 58; Porteous v. Watney, 2d July 1878, L.R., 2 Q.B. 534; Wegener v. Smith, 24 L.J., C.P. 25; Abbot on Merchant Shipping, 265; Ford on Merchant Shipping, 500; Maclachlan on Merchant Shipping, 391.