Sandeman v Scurr (1866) LR 2 QB 86

Facts

The defendants were owners of the ship The Village Belle. The ship was chartered to a Mr Hodgson to load from the charterer’s agents at Oporto a full cargo of wine for carriage to a safe port in the United Kingdom. The cargo was to be loaded and discharged at the merchant’s risk and expense. The captain was to ‘sign bills of lading at any rate of freight, without prejudice to the charter’. The claim was for damage caused by bad stowage to goods shipped by the plaintiffs.

Held

Cockburn CJ: . . . The ship accordingly proceeded to Oporto, consigned to the agents of the charterer. She was by them put up as a general ship, but without it being at all made known that the vessel was under charter. The plaintiffs delivered their goods on board without any knowledge that the ship was not entirely at the disposition of the owner. Bills of lading for the goods in question were signed by the master in the usual form. The cargo was stowed by stevedores employed and paid by the charterer’s agents, but the amount so paid by the latter was repaid to them by the master.

The goods having been damaged by reason of improper stowage, the plaintiffs have brought their action against the defendants, as owners of the vessel; and the question is whether the defendants, under the circumstances stated, are liable. We are of opinion that they are liable, and that the action against them lies.

On the argument, it was contended on behalf of the defendants, that, as the use of the ship had been made over to Hodgson, the charterer, and the ship had been put up as a general ship by his agents, and the bill of lading had been given by the captain in furtherance of a contract for freight of which the charterer was to have the benefit, the captain must be considered as having given the bill of lading as the agent of the charterer, and the contract as having been made with the latter, and not with the defendants, the owners of the vessel; and that, consequently, the charterer was alone responsible for the negligent stowing of the goods in question.

It is unnecessary to decide whether the charterer would or would not have been liable, if an action had under the circumstances been brought against him. Our judgment proceeds on a ground, wholly irrespective of the question of the charterer’s liability, and not inconsistent with it, namely, that the plaintiffs, having delivered their goods to be carried in ignorance of the vessel being chartered, and having dealt with the master as clothed with the ordinary authority of a master to receive goods and give bills of lading on behalf of his owners, are entitled to look to the owners as responsible for the safe carriage of the goods.

The result of the authorities, from Parish v Crawford (1746) 2 Strange 1251 downwards, and more especially the case of Newberry v Colvin (1832) 1 Cl & F 283, in which the judgment of the Court of Exchequer Chamber, reversing the judgment of the Court of Queen’s Bench, was affirmed on appeal by the House of Lords, is to establish the position, that in construing a charter party with reference to the liability of the owners of the chartered ship, it is necessary to look to the charter party, to see whether it operates as a demise of the ship itself, to which the services of the master and crew may or may not be superadded, or whether all that the charterer acquires by the terms of the instrument is the right to have his goods conveyed by the particular vessel, and, as subsidiary thereto, to have the use of the vessel and the services of the master and crew.

In the first case, the charterer becomes for the time the owner of the vessel, the master and crew become to all intents and purposes his servants, and through them the possession of the ship is in him. In the second, notwithstanding the temporary right of the charterer to have his goods loaded and conveyed in the vessel, the ownership remains in the original owners, and through the master and the crew, who continue to be their servants, the possession of the ship also. If the master, by the agreement of his owners and the charterer, acquires authority to sign bills of lading on behalf of the latter, he nevertheless remains in all other respects the servant of the owners; in other words, he retains that relation to his owners out of which by the law merchant arises the authority to sign bills of lading by which the owner will be bound.

It appears to us clear that the charter party in the present instance falls under the second of the two classes referred to. There is here no demise of the ship itself, either express or implied. It amounts to no more than a grant to the charterer of the right to have his cargo brought home in the ship, while the ship itself continues, through the master and crew, in the possession of the owners, the master and crew remaining their servants.

It is on this ground that our judgment is founded. We think that so long as the relation of owner and master continues, the latter, as regards parties who ship goods in ignorance of any arrangement whereby the authority ordinarily incidental to that relation is affected, must be taken to have authority to bind his owner by giving bills of lading. We proceed on the well known principle that, where a party allows another to appear before the world as his agent in any given capacity, he must be liable to any party who contracts with such apparent agent in a matter within the scope of such agency. The master of a vessel has by law authority to sign bills of lading on behalf of his owners. A person shipping goods on board a vessel, unaware that the vessel has been chartered to another, is warranted in assuming that the master is acting by virtue of his ordinary authority, and therefore acting for his owners in signing bills of lading. It may be that, as between the owner, the master, and the charterer, the authority of the master is to sign bills of lading on behalf of the charterer only, and not of the owner. But, in our judgment, this altered state of the master’s authority will not affect the liability of the owner, whose servant the master still remains, clothed with a character to which the authority to bind his owner by signing bills of lading attaches by virtue of his office. We think that until the fact that the master’s authority has been put an end to is brought to the knowledge of a shipper of goods, the latter has a right to look to the owner as the principal with whom his contract has been made . . .

Notes

1 In this extract the Chief Justice referred to an agreement that the master would sign bills of lading on behalf of the charterer. It is more common today to find agreements authorising the charterer, or the charterer’s agent, to sign bills as agent for the master or the shipowner. In The Rewia [1991] 2 Lloyd’s Rep 325, the Court of Appeal held that a bill of lading signed for a master could not be a charterer’s bill unless the contract was made with the charterer alone and the person signing had authority to sign and did sign on behalf of the charterer and not the owners.

2 The usual assumption in the case of a chartered ship is that the contracting carrier is either the owner or a charterer. Cockburn CJ hints in this extract that in some circumstances both might be liable, an idea that was said in The Starsin, below, to be ‘unobjectionable in legal principle’, but which has not been developed in decided cases.

3 Demise clauses. The original aim of these clauses (see an example below, in the extract from The Starsin) was to ensure that time charterers, who could not claim the protection of the legislation limiting the liability of shipowners, would not be held liable as carriers: (1990) 106 LQR 403, per Lord Roskill. The right to limit liability was, as the law then stood, only available to a shipowner or demise charterer. The right to limit liability was extended to time charterers in 1958. Nevertheless demise clauses continued to be included in bills of lading and were treated as effective in English courts: The Berkshire [1974] 1 Lloyd’s Rep 185; The Vikfrost [1980] 1 Lloyd’s Rep 560; The Jalamohan [1988] 1 Lloyd’s Rep 443. The decision of the House of Lords in The Starsin now leaves little future for these clauses in liner shipping, unless perhaps they are printed prominently on the front of a bill of lading and do not contradict other statements that appear there.

4 Further reading: Pejovic, C, ‘The identity of carrier problem under time charters’ (2000) Jo Mar L & Com 379 (a comparative treatment).