O’brien v. Miller, 168 U.S. 287 (1897)

O’Brien v. Miller

No. 40

Argued April 2, 1897
Decided November 29, 1891
168 U.S. 287

CERTIORARI TO THE CIRCUIT COURT

OF APPEALS FOR THE SECOND CIRCUIT

Syllabus

The Johnson, an American ship, was chartered at Valparaiso to carry a cargo of nitrate of soda, of 1938 tons, from Caleta to Hamburg consigned to a London firm. On the way, she sprang a leak, and put into Callao. There 1200 tons of the cargo were transferred to the Leslie, a British bark, and the Johnson was repaired, the master executing a bottomry bond to meet the expenses of the repairs. That bond bound the Johnson, cargo and freight, hypothecated the portion of the cargo transhipped to the bark and further provided that

if during the said voyage an utter loss of the said vessel [in the singular] by fire, enemies, pirates, the perils of the sea or navigation, or any other casualty shall unavoidably happen, . . . then and in either of the said cases this obligation shall be void.

Both vessels sailed for Hamburg. The Johnson collided at sea with the Thirlmere, a British vessel, and was sunk with a total loss. The bark reached Hamburg safely. The consignees, in order to obtain the cargo, agreed to refer to arbitration by German lawyers the question of its liability for the whole amount of the bond. They decided that it was so liable, and the consignees paid the amount of the bond and received the cargo. The owners of the Johnson libelled the Thirlmere and its owners. The latter were held not to be personally liable, and judgment was rendered only for the value of the Thirlmere. The insurers of the Johnson also paid to its owners the amount of the policies of insurance, and the latter, after receiving the amount of the judgment against the Thirlmere, paid to the insurers their proportionate part of it. This suit was then instituted by the consignors and the consignees of the cargo of the bark to recover from the owners of the Johnson their share of the sum paid on the bottomry bond.

Held:

(1) That the terms of the bottomry bond included not only the Andrew Johnson and her cargo, but the cargo transhipped on the Leslie.

(2) That the owners of the Johnson, to the extent of the damages paid on account of the collision, were liable to the libellants, as creditors of the ship.

In interpreting a contract, the whole contract must be brought into view, and it must be interpreted with reference to the nature of the obligations between the parties and the intention which they have manifested in forming them, and this rule is especially applicable to the interpretation of contracts of bottomry and respondentia.

In an action to recover on a bottomry bond from the shipowner for advances made for his benefit and charged upon the property of the cargo owner’s by the master, if he questions the power of the master to execute the instrument of hypothecation, it is his duty to plead it in defense.

The action of the district judge in refusing to permit the respondent to amend his answer by setting up the plea of laches and res judicata was not error.

The case is stated in the opinion.