SS ARMISTAN: BILL OF LADING, AGREEMENT, LIBEL OR AN ESTOPPLE?
A bill of lading (BL or BoL) is a legal document issued by a carrier (transportation company) to a shipper that details the type, quantity, and destination of the goods being carried. A bill of lading also serves as a shipment receipt when the carrier delivers the goods at a predetermined destination. This document must accompany the shipped products, no matter the form of transportation, and must be signed by an authorized representative from the carrier, shipper, and receiver. A ‘clean’ Bill of Lading is issued when goods are received in good condition and do not contain any damage or discrepancies, which is crucial for the carriage of goods. Not having a Clean Bill can lead to legal disputes and financial losses. Furthermore, a Clean Bill of Lading should accurately reflect what has been shipped, how it has been packed and its destination. It helps avoid disputes about damages or missing items during transport and provides proof that the carrier has fulfilled its obligation to deliver goods in original condition. The bill also acts as a receipt for payment by the importer.
To ensure maximum protection from possible problems arising from incorrect documentation, shippers should always pay close attention to details such as loading procedures, weight verification, cargo handling practices and document preparation to avoid errors or discrepancies on Bills of Lading. If a bill of lading is not clean, it can lead to several complications:
1. Delays in Customs Clearance: Unclean bills of lading can cause delays in customs clearance. Customs authorities typically require a clean bill of lading for clearance.
2. Refusal of Shipments: Importers may refuse a shipment if it comes with a clause bill of lading. This is because the importer pays for a certain quantity of goods in a specific condition. If there are goods missing or they are damaged, this will cause a loss to the importer.
3. Financial Losses for Importers: Without a clean bill, importers may face financial losses!. This is because they may not receive funds for the shipment if a bank has issued a letter of credit.
4. Disputes Between Parties: Not having a clean bill of lading can lead to disputes between the parties involved in the transaction.
5. Impact on Banks: Banks often require clean bills of lading to facilitate smooth transactions.
“William A. Higgins & Co. vs. Anglo-Algerian S.S. Co.” is a case that was heard in the United States District Court, Southern District of New York on June 30, 1915. The case was a libel in person and by the assignee of a bill of lading for damage done to part of a cargo of dates shipped on board the steamship Armiston from Bussorah, Iraq for New York,USA in November, 1911.
The steamship Armiston (3502 GRT) with a port of registry of Swansea, UK, from Bussorah, Iraq, was supposed to set sail for New York during the first days of November, 1911. As the steamer lay in the Bussorah Roads, the dates were brought alongside in lighters (flat-bottomed barges for transporting goods through rivers and canals, where large vessels cannot get through), wrapped in oil paper and packed in wooden cases made of three-eighths inch boards. While the loading was going on, heavy tropical rains fell on Bussorah for several nights, drenching the lighters and wetting some of the dates so much that the master refused to take them and sent the lighters back. Some 25,000 cases, nevertheless, were shipped among which were the 3,000 afterwards sold to the libelant. When they came over the side, the mate gave receipts, and in every case noted upon the receipt that the cases were stained by their own contents or were discoloured, or the equivalent.
When the loading was complete, the ship’s agent, at the request of the shippers, gave them a ‘clean’ bill of lading, which read, ‘Apparently in good order and condition. ‘ In the fine printed portion of the bill of lading, however, there appeared this clause: ‘Mate’s receipts to be conclusive evidence of the quantity of and condition in which goods are received by this company from river steamers and craft. ‘ To procure this ‘clean’ bill, the shippers gave to the ship’s agents at Bussorah a contract of indemnity holding them harmless
for all consequences arising therefrom. When the dates arrived in New York, they were placed upon the pier, and it was there found that out of 3,000 cases about 2,000 had been damaged. Of these 2,000 the casings of 440 were stripped, and it was finally ascertained that some water damage had happened to about 500 in all; but whether the damage was from salt or fresh water is in dispute. More than 1,000 of the cases were removed by the libelant without notice of damage, the bill of lading containing a provision that such removal should be a waiver of all claims.
The Master, Carpenter, and the Mate of the Armiston were examined, and testified without contradiction that the hatches were closed during the heavy rains at Bussorah, and that they had examined the holds and found them clean and dry before the loading began. At Muscat more cargo was taken in fine weather, and the ship had no trouble till she passed Gibraltar. In the Atlantic she experienced unusually heavy weather even for December, and for some days rolled heavily and took on board large sea; but no hatches were broken open and there was no evidence of damage to the cargo. The weather was very cold, and when the hatches were opened in New York, it transpired that the holds had sweat, but the sweat did not appear to be enough to cause the damage to the dates, although some cargo was damaged in each of the holds except No. 3.
The case of Higgins v. Anglo-Algerian S. S. Co., Ltd. (D. C.) 242 F. 568, came up and was tried by Judge Learned Hand. The bill of lading provided for delivery at New York “unto order of his or their assigns,” and recited the shipment of the goods “apparently in good order and condition.” The shippers had given letters of indemnity, and while Judge Hand condemned the practice as a fraud on the indorse of the bill of lading, he dismissed the libel, holding that the doctrine of estoppel laid down by the English cases in the lower courts should not be followed because he considered that some of the speeches by the Law Lords in Crawford v. Allan Line, [1912] App. Cas. 130, showed a different opinion, and that they had put the decision of the case on its peculiar facts.
As stated by Judge Learned Hand, District Judge (after stating the facts as above).
“In spite of the very reasonable scepticism with which courts regard the proof of a ship’s crew in such cases as this, there is no just reason to disregard their testimony, which stands quite unimpeached, and which is not contradicted by any inferences necessarily to be made from the evidence touching the dates before they came aboard. Whether they got wet in the lighters while alongside, or whether they were wet before the lighters got them, does not appear; but that they were damaged is certainly the case, and that they were damaged by the rain is certainly favoured by all the probabilities. Upon the issue of whether they were wet by salt water I find against the libelant; that is, if they were wet by salt water, I think it was not on the ship. The only reason to suspect salt water is that examiner Kemp found a salt reaction by nitrate of silver, but a trace would be enough for that, and salt may grow in the dates, or it may get on them in the lighters. All the other witnesses say that the damage was not from salt water, and Kemp was not very certain upon cross-examination. Therefore, I find that the dates were not injured by sea water while on the ship.”
“The only other possible water damage which could have reached them is from the sweat of the holds, but the libelant lays little stress upon this. That the holds did sweat is true enough, and some of the water may have fallen on the cargo but it is hard to see why, if this was the cause, the Muscat dates should all have come off uninjured, while the Bussorah dates which came aboard discoloured and after exposure to foul weather should be injured. Certainty is perhaps not possible, but the likelihood is very strong that the damage did not happen from sweat. Therefore find that the damage occurred through the wetting of the dates either by rain or by sea water before they came aboard and while upon the lighters. As the bill of lading contained an exception against liability for damage from rain or spray or for risks of lighterage, it follows that there is no liability under the contract of carriage.”
“To meet this difficulty, the libelant relies upon the ‘doctrine of estoppel’ and insists that the words of tire bill of lading, “in apparent good condition,” are not qualified by tire clause giving effect to the mate’s receipts. I shall accept their position for the purposes of tire case and consider it as though the bill of lading created a complete estoppel. What is the ship estopped to assert? Certainly no more than that the goods were in apparent good condition. I cannot see that this should be extended so as to forbid their showing that they were actually damaged by rain or spray and that such damage was-excepted from tire bill of lading. To give such a bill of lading is in my judgment a tort, for which the libelant has a remedy; but I am now considering simply tire ship’s liability in contract, to be worked out through an estoppel. It is no doubt
unfortunate that, owing to our complicated jurisdiction, I cannot give a remedy upon that tort; but I cannot, and the distinction is therefore vital. If the libelant proceeds by estoppel, the limit of the estoppel’ is that tire ship shall be held to the words used. Obviously, if the cases had not been stained or discoloured; if the goods had in fact been in apparent good condition, the ship could have proved that they were wetted by the rain or by spray while in lighters and that the ship was excused under the exceptions of the bill of lading. How can the estoppel put the ship in a worse position than if the statements had been in fact true?” In any case there could be no recovery for so many of the cases as were removed before notice.
“While therefore the libelant fails upon this proceeding, I have no doubt that to utter such a bill of lading is a tort, since it is an utterly unjustifiable “fraud*. The excuse that a bill of lading is not negotiable has no merit whatever, nor have any of the authorities cited any bearing on a case where a false statement is deliberately inserted to be acted upon by innocent third persons. To allow the ship to escape liability under such circumstances would be intolerable. Nothing could more clearly show the corrupt purpose of the parties than the indemnity agreement itself. There are two reasons, however, which prevent any recovery in this case upon that theory.
1. The first is that the libel must be amended to set up a new cause of action, which it is perhaps too late now to do.
2. The second is that this is an admiralty court only and would have no jurisdiction over such a case if the libels were amended, because the bill of lading was issued at Bussorah, if that be the wrongful act, and negotiated in New York, if the wrongful act be its negotiation. One of these acts was a tort, but a tort on land, over which admiralty has no jurisdiction. It is not necessary to consider whether in any event admiralty would have jurisdiction over a deceit committed on the high sea.
On appeal, Judge Hand’s decision was reversed by the Circuit Court of Appeals. In the same case hearing in 1918, Judge Ward, in his opinion for the Circuit Court of Appeals, followed the doctrine of estoppel laid down in the British cases above discussed, holding that in effect the shipowner had committed a fraud by issuing a false bill of lading, and, consequently, could not even avail itself of the notice of claim clause, therein contained.
Judge Ward said at page 388:
“It is to be noted that in all the foregoing cases the statement, though untrue, was the result of negligence, or misunderstanding, or mistake; whereas, there can be no other explanation of the carrier’s conduct in this case than that it was willing to assist the shipper in misleading subsequent holders of the bill of lading, provided he agreed to hold it harmless for so doing. Although a bill of lading is only a quasi-negotiable instrument, we are not impressed by the argument that, because the carrier could have set up this defence against a shipper, it can set it up against the subsequent holder of the bill of lading, who was intended to be misled, because he is the assignee of the shipper.”
Thus, the libel was dismissed, without costs.
