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reason of which the respondent was damaged to the extent of $951.27
$ which it retains to cover its damages. The matter was referred by consent to a commissioner who reported that the steamer did not supply sufficient steam. The deficiency of steam caused damages in two respects, viz:
1. $846.27 demurrage claimed to have been paid to the steamship Yarborough because the respondent was unable to furnish her with a dock as soon as would have been possible if the Heathdene had been discharged sooner
2. $105. the amount of the bill of the boss stevedore for the time lost by his men in consequence of the slow delivery.
The commissioner reported that the libellant was entitled to recover $895. being $1000. unpaid freight less the stevedore's bill of $105. and both parties excepted.
I. With respect to the demurrage item the commissioner said, inter alia:
"There being no custom, the law implied an agreement to unload with reasonable diligence under all the circumstances. Empire Transp. Co. v. Phila. & R. Coal Co., 77 Fed. 919, 23 C. C. A. 564, 35 L. R. A. 623, and cases there cited; Marshall v. McNear (D. C.) 121 Fed. 428; Williscroft v. Cargo, etc. (D. C.) 123 Fed. 169.
Cases in which questions of this character are presented are almost invariably suits for demurrage, brought on behalf of the vessel, and no instance has been brought to my attention where the claim was asserted against the vessel ; but the obligation to use reasonable diligence must be mutual, and if there is an absence of such diligence through the fault of the vessel, she should respond in damages. I think that it would have been far from burdensome to require the Heathdene to discharge an average of 1,000 tons a day from three hatches, and that she could easily have done so if ample steam had been supplied. I consider that under the charter she was bound to furnish as much steam as was required to drive the winches effectively in discharging according to the customary method at the place of discharge. The captain's testimony, above referred to, shows that she had previously discharged over 1,900 tons of coal a day, and loaded over 2,100 tons, at three hatches, and it would seem to have been a comparatively easy inatter to discharge 1,000 tons of sugar from the same number of batches, especially when a speedier method was adopted. For some unexplained reason the donkey boiler could not supply the necessary steam, and the captain and engineer were unable or unwilling to make up the deficiency froin the main boilers.
On the 18th of October, respondent wrote libellant that because of the Heathdene's failure to supply sufficient steam to discharge her cargo properly, respondent would hold libellant for demurrage on the Yarborough, 'now awaiting orders, resulting from the above mentioned lack of steam,' and adding, ‘Under ordinary conditions, the Heathdene should be finished by to-morrow evening, and we shall hold you for any deinurrage incurred on the Yarborough after this time. The following day, libellant acknowledged the receipt of this letter, laid the blame on the stevedores, and stated that he declined all responsibility for demurrage on the Yarborough. That vessel, also, carried a cargo of sugar from Java, under a charter to Maclaine, Watson & Co. of London, dated prior to the Heathdene's charter, and the bills of lading, which by their terms were made subject to the conditions of the charter, had been endorsed to respondent. Respondent, therefore, became liable to the Yarborough for demurrage according to the terms of that vessel's charter, which provided that the cargo should be discharged with the despatch customary at the port of destination' (Carver on Carriage by Sea, [4th Ed.] § 637, p. 771). But irrespective of this agreement, respondent was liable for demurrage, since there was no custom that a vessel should await her turn at the dock, and the Yarborough was entitled to a berth within 24
hours after entry at the custom house. Respondent put in evidence a bill which it paid to her agents. This bill was originally made out for 7 days' demurrage from October 17 to October 23 (when she took the berth previously occupied by the Heathdene), at £49.14.0, or $1,692.54 in U. S. money, and was subsequently reduced to $1,571.64 by deducting demurrage for half a day. There was a clause in the Yarborough's charter that 20 days' demurrage should be allowed, 'if required,' at 6d. per net register ton, and the bill was based upon this provision. On the bill is a memorandum that the Yarborough arrived the 14th, entered the 16th, and demurrage commenced the 17th. This is sustained by the testimony, and it is shown that there was no berth for her except that occupied by the Heathdene. Respondent rendered libellant a bill for 342 of the 642 days' demurrage paid the Yarborough. This apportionment was made on the basis of 1,000 tons a day as a fair rate of discharge for the Heathdene, and the amount billed against libellant was described as 'demurrage on S. S. Yarborough incurred through lack of steam furnished by S. S. Heathdene.' The question is whether demurrage of the Yarborough, caused by her exclusion from the berth by reason of the Heathdene's failure to discharge with due diligence, and paid by respondent under the bills of lading adopting the demurrage clause in the Yarborough's charter, is either fairly and reasonably to be considered as arising, according to the usual course of things, from the Heathdene's breach of contract, or is to be regarded as such damage as may be reasonably supposed to have entered into the contemplation of both parties, when the Heathdene's charter was made, as the probable result of such breach. Primrose v. Western Union Co., 154 U. S. 1, 29, 14 Sup. Ct. 1098, 38 L. Ed. 883. The latter principle, under which special damages are sometimes recoverable, cannot be considered as applicable, since it does not appear that it was ever known to the owners, charterer or master of the Heathdene that the Yarborough had been chartered under conditions which might or would bring her to the same berth at about the same time. Her charter provided that when loaded she should proceed to Port Said for orders to discharge at a port in the United Kingdom, 'or at Bordeaux or Hamburgh, or at an intermediate port, but excluding Rouen, or at Marseilles or Genoa, or to proceed, at Charterer's option, to Delaware Breakwater for orders to discharge at New York, Boston, Philadelphia or Baltimore. Even notice acquired after the Heathdene's charter and before breach would be insufficient. Globe Refining Co. v. Landa Cotton Oil Co., 190 U. S. 540, 23 Sup. Ct. 754, 47 L. Ed. 1171. But it is contended that the Yarborough's demurrage was such damage as ordinarily and naturally flowed from the breach. It is argued with much force that a shipowner must know, or at least reasonably anticipate, that his is not the only vessel which will discharge at the dock to which she is consigned, and that until she leaves, the next ship cannot discharge, and he must also know or expect that if the other vessel is delayed by an unduly slow discharge of the vessel at the berth, the consignee will have to pay demurrage for the delay. In support of this, Welch, Perrin & Co. v, Anderson, 61 L. J. Q. B. 167, 7 Asp. M. C. 177 (Court of Appeal), and The Nadia (C. C.) 18 Fed. 729, are cited. In the first of these cases the defendants had agreed with plaintiff to have their ship ready at a certain dock, on a specified date, to receive a cargo of tiles, but the ship not being ready on the agreed date, the tiles remained aboard the railway trucks on which they had been transported, and the plaintiffs were obliged to pay the railway company for the detention of the trucks. The court held that the shipper could recover the amount of this payment from the shipowners, Lord Esher observing:
'It seems to me that the demurrage payable for the detention of these trucks was the natural, ordinary and reasonable consequence of the defendants' breach. They must have known that the tiles would have to be brought
. in vehicles of some kind or other, whether barges, carts or trucks. If they had been brought in barges, and the ship had not been ready, demurrage would obviously have had to be paid for the detention. *
It was there fore a natural result of the defendants' breach of the contract that the trucks were detained and that the plaintiffs had to pay for the detention.'
In the other case cited (Circuit Court, on Appeal, E. D. Texas), which was a suit for lighterage, Judge Pardee allowed demurrage of a ship as a set-off where the ship had been detained by libellant's tardy performance of an agreement with a cargo owner to lighter the cargo to the ship.
But I consider that I am bound by Judge Brown's view of the law in Petrie v. Heller (D. C.) 35 Fed. 310. That was a suit for freight, in which the respondent sought to offset demurrage paid by him to a schooner while she was waiting at Perth Amboy to receive a cargo of tankage which libellant had agreed to carry from New Haven and deliver to the schooner, the respondent claiming that the cargo should have been delivered to the schooner by a certain date under the agreement between him and the libellant. Judge Brown found that there was no agreement to deliver by the date claimed, and no lack of reasonable diligence in the transportation of the tankage from New Haven, and he disallowed the offset; but he added: "Such damages, more
' over, would not be the mere ordinary damage for the detention of such a cargo of tankage, and could only be recovered upon a special contract made in reference to the schooner, with a liability for such special damage understood, or fairly within the contemplation of the parties.' This, to be sure, is obiter, but as it is a clear and definite expression of the law which this court regarded as applicable to a situation analogous to that presented in this case, I think that I should follow it until the court holds otherwise."
The respondent excepted to this finding as follows:
“The respondent hereby excepts to so much of the report of the Commissioner made herein, and filed in the office of the Clerk of this Court on the 24th day of April, 1907, as holds that the libellant is entitled to recover $895.00 with interest from November 1, 1905, basing its exception on the following grounds, that is to say :
The demurrage paid by the respondent to the SS. 'Yarborough' was the natural and ordinary consequence of libellant's breach of the contract to give reasonable dispatch, or such as may be reasonably supposed to have been in the contemplation of the parties at the time of making the contract, and respondent should be allowed to set off the amount of said demurrage against libellant's claim for freight."
The question presented is whether under a contract requiring reasonable dispatch for a vessel, the consignee is precluded from recovering
а. demurrage paid by it to another vessel by reason of the occupation of the first of a wharf for an excessive period.
The statement of the case by the commissioner, quoted above, seems to answer the question and it may be assumed that in the absence of the dictum by Judge Brown, he would have so decided. The court, however, is not bound by the judge's expression intended for the case then under consideration and I think that a consignee, for the reasons stated by the cases not followed by the commissioner, is entitled to recover the damages he has so paid. It does not seem just that money so paid out should not be recoverable from the cause thereof.
The exception is sustained.
II. The question of the stevedore's bill has I think been correctly decided and needs no more discussion than has been given to it by the commissioner. He said:
“As to the bill for the lost time of the stevedores. It is to be presumed the captain knew that a piling gang would have to be employed by the consignee, and that the probable consequences of the ship's failure to discharge with reasonable diligence would be to subject the consignee to the expense of the lost time of the men. The bill was concededly an estimate of the time, but the boss stevedore testified that he made the charge low, and I am satisfied it was fair. It was not paid, however, and still remained unpaid when the last hearing was had before me, April 5, 1905, nearly 18 months after it was incurred. According to respondent's testimony, it has a running account with the stevedores, with periodical settlements, and since this claim was incurred there have been several of these settlements, from which the item was always reserved. All other debts arising out of the discharge of the Heathdene have been paid. Respondent's explanation of this situation is that the case was an unusual one, and the item was reserved until the liability for the disputed freight should be determined, to be then settled, along with the legal expenses. The testimony is positive that the item is to be paid, irrespective of the result of this litigation. Under these circumstances, there is no reason in my judgment why it should not be allowed. I think that the item is recoverable under the principle of The Giulio (D. C.) 34 Fed. 909."
The libellant excepted to this finding as follows:
“The libellant hereby excepts to so much of the Commissioner's Report as holds that the respondent is entitled to deduct from the freight due the libellant the sum of $105.00, the amount of the stevedore's bill.
The ground of the exception is that the stevedore's bill is not an item of damage sustained by the respondent in consequence of an act of neglect or default on the part of the libellant, and that the stevedore's charge is not a direct, proximate, natural, nor ordinary consequence of the failure of the vessel to supply steam in accordance with the standard adopted by commissioner."
The exception is overruled.
In re CULLMAN FRUIT & PRODUCE ASSN.
No. 1,242. 1. BANKRUPTCY-PROPERTY PASSING TO TRUSTEE-DELIVERY UNDER SALE CON
Where machinery, sold and shipped to a corporation to be paid for in cash, was delivered without such payment, at its request and promise to send a check, which was not done, and afterward the seller's agent settled the claim by taking negotiable vouchers for the price secured by collateral, the title to the machinery passed to the purchaser, at least on
such settlement, and on its subsequent bankruptcy to its trustee. 2. CORPORATIONS-CONTRACTS-POWERS OF PRESIDENT.
A contract, signed by the president of a corporation, by which it purported to lease from the seller property which had previously been sold and delivered to it, and which provided that the title should remain in the seller, is ineffective to reconvey such title, where it was not authorized by the board of directors.
[Ed. Note.-For cases in point, see Cent. Dig. vol. 12, Corporations, $8 1612, 1621.]
In Bankruptcy. On petition to try title to personal property.
The Cullman Fruit & Produce Association having been adjudicated a bankrupt, the Sprague Canning Machinery Company files this petition, asking that this court direct the receiver to turn over to them certain personal property found in possession of the bankrupt at the time of the filing of the petition, alleging the same to be the property of the petitioners; the facts in relation to the issues being as follows: On or about the 14th day of May, 1906, certain machinery to be used in a canning factory was shipped by the Sprague Canning Machinery Company, a corporation of Illinois, to the Cullman Fruit & Produce Association, a corporation in Alabama. This shipment was made on an order received from the Cullman Association on the 14th day of May, and provided for the shipment on June 1, 1906; the sale being for cash. The shipment was made, with bill of lading and draft attached; but it was not shown whether the bill of lading was in the name of the Sprague Canning Machinery Company or the Cullman Company. After the goods arrived at Cullman, Ala., the Cullman Association wired the Sprague Company to release the car and they would send check. Upon receipt of this telegram the Sprague Company, relying on this promise to send the check, wired the railroad to let the Cullman Company have the goods, and the goods were in fact so delivered; but no payment was ever made by the Cullman Association for the goods shipped to them. About the 1st of August, 1906, after the delivery of the goods, an agent of the Sprague Company went to Cullman, Ala., and saw the president and manager of the Cullman Association, and asserted claim to the property, and made demand for the machinery or the money which had been promised therefor. The president of the Cullman Association admitted the claim of the Sprague Company and then gave the said agent two vouchers, drawn by the president on the treasurer of the company and payable at Parker's Bank, one for $215 and one for $1,000, in payment for the purchase money for the property. Said vouchers were payable August 15th and September 1st, respectively. At the time of the delivery of these "vouchers” (as they were designated by the witnesses) to the agent the Sprague Company, there was also delivered to him by the president of the Cullman Association $1,200 worth of bonds to secure the payment of the drafts or vouchers. These bonds were secured by a mortgage on all the assets of the Cullman Association, and the fact was made known to the agent of the Sprague Company at the time he accepted the bonds. At the time of the acceptance of these vouchers and bonds by the Sprague Company the property was in the possession of the Cullman Association at Cullman, Ala., and was in use as part of its canning factory, being attached to the building by pipes. About the 5th of September, 1906, another agent of the Sprague Company went to Cullman to secure some sort of a settlement of the account between that company and the Cullman Company, and, failing to secure a satisfactory adjustment, a certain contract was entered into, which was signed in duplicate by the Sprague Canning Machinery Company, by its treasurer, and by the Cullman Fruit & Produce Association, by its president, to one of which was attached the seal of the Cullman Company, and to other there was no seal. That contract was in terms a contract of lease by the Cullman Company from the Sprague Company of the identical canning property now in issue; the terms of the lease being that the Cullman Company agreed to pay as rental the identical sums of money as embraced in three notes, which were executed at the same time with this lease. These notes were never paid. It was further stipulated in the said lease that the Sprague Company would make a complete bill of sale to the Cullman Company of the property involved in this proceeding as soon as said notes were paid. No action was taken by the board of directors of the Cullman Company authorizing this lease, or in any manner ratifying the act of the president and manager in executing same; but the president of the Cullman Association represented to the agent of the Sprague Company, at the time the lease was signed, that he had ample authority to sign same. The Sprague Company, which was a corporation under the laws of Illinois, had never complied with the laws of Alabama for entering into business in this state.
Milton Humes and Paul Speake, for petitioner.
HUNDLEY, District Judge (after stating the facts). The first question which confronts us, and, indeed, the controlling and decisive question, is: Did the title to the property in fact and in law ever pass from the Sprague Canning Machinery Company into the Cullman Fruit & Produce Association? It is contended by counsel for petitioner that the whole transaction, from start to finish, shows an intention not to part with the title until the purchase price was paid, and it is insisted that this intention, as disclosed by the testimony in this case, is decisive of the question at issue in favor of the pe