U.S. Supreme Court
The Elfrida, 172 U.S. 186 (1898)
Argued November 10-11, 1898
Decided December 12, 1898
172 U.S. 186
Where the stipulated compensation in a salvage contract is dependent upon success, it may be made for a larger compensation than a quantum meruit, and much more so when such success is to be achieved within a limited time, and such contract, after execution, will not be set aside simply because the compensation is excessive unless shown to have been corruptly entered into or made under fraudulent representations, a clear mistake or suppression of important facts, in immediate danger to the chanrobles.com-red
ship, or under other circumstances amounting to compulsion, or when its enforcement would be contrary to equity and good conscience.
Many leading cases in this country and some in England, where salvage contracts have been set aside and compensation awarded in proportion to the merits of the services, examined and shown to establish (1) that the courts of both countries are in entire accord in holding that a contract of salvage which the master has been corruptly or recklessly induced to sign will be wholly disregarded; (2) that some of the American courts have also laid down the rule that all salvage contracts are within the discretion of the court, and will be set aside in all cases where, after the service is performed, the stipulated compensation appears to be unreasonable, to which this Court is unable to give its assent; (3) that while in England there has been some slight fluctuation of opinion, by the great weight of authority, and particularly of the more recent cases, it is held that if the contract has been fairly entered into, with eyes open to all the facts, and no fraud or compulsion exists, the mere fact that it is a hard bargain, or that the service was attended with greater or less difficulty than was anticipated will not justify setting it aside.
Where no circumstances exist which amount to a moral compulsion, such a contract should not be held bad simply because the price agreed to be paid turned out to be much greater than the services were actually worth.
On the continent of Europe, the courts appear to exercise a wider discretion and to treat such contracts as of no effect if made when the vessel is in danger, but this Court cannot accept this as expressing the true rule on the subject.
The facts relating to the making of the contract which is in dispute in this case, as detailed in the opinion of the Court, show that few cases are presented showing a contract entered into with more care and prudence than this, and the Court is clear in its opinion that it should be sustained.
This was a libel in rem by the firm of Charles Clarke & Co., of Galveston, Texas, against the British steamship Elfrida to recover the sum of $22,000, with interest and costs, claimed to be due them for services rendered in the performance of a salvage contract with the master to release the Elfrida, then stranded near the mouth of the Brazos River.
The principal averments of the answer were in substance that the agreement was signed by the master under a mutual mistake of fact, or by mistake on his part, which libelants took advantage of, as to the danger in which the vessel was, and that it was improvidently made, for an excessive compensation, chanrobles.com-red
without a proper understanding by him of the vessel's alleged freedom from danger; that the master had been prevented from carrying out his instructions to accept a tender made, if lower, impossible by information of the cable being conveyed to the salvors before the master saw it; that the parties were not upon an equal footing; that libelants made an unreasonable bargain with the master because of the stress of the situation and that of his vessel, and acted collusively with other salvors in obtaining from him the agreement.
On Friday, October 5, 1894, the Elfrida, a steel steamship of 1,454 tons register, 290 feet long, 38 feet in width, and drawing 11 feet 10 inches, bound for the port of Velasco, Texas, in ballast, grounded on the bar between the jetties which extend from either bank of the river, about a mile into the Gulf, the outer end of these jetties for a distance of a thousand feet or more being submerged. The heel of the ship touched, there being but five inches between the bottom and the bar, and an easterly wind swung her bow against the west jetty. The captain ran out a kedge from the starboard bow, hove taut with the windlass, put the engine full speed astern, but could not move the ship. The wind and sea increased during the afternoon and evening, while the ship was straining and bumping heavily. The weather moderated somewhat on the following day, and the same efforts were continued unsuccessfully until the evening, when the sea rose, carrying her over the submerged outer end of the jetty, and some distance further shoreward on the beach. She brought up that night about a cable's length to the west of the west jetty. That part of the jetty which was above high water projected seaward beyond her stern and sheltered her from easterly winds. She lay parallel with the jetty, about four hundred or five hundred feet from the beach, head on, and about one thousand feet from water of sufficient depth to float her. The shore at this point is very flat, the bottom consisting of a layer of quicksand about ten feet deep. The steamer settled in the quicksand to her normal draft, rocking and moving in it whenever there was a high chanrobles.com-red
sea. She lay in nine feet of water at high tide. The weather continued generally favorable from the 7th to the 17th, with occasional gales and high seas. The ship drifted somewhat further on the beach, but efforts to relieve her by her own resources seem to have been practically abandoned.
On Tuesday, October 9, the master sent the following letter to the libelants:
"Velasco, Oct. 9, 1894"
"Capt. Chas. Clarke, re S.S. Elfrida"
"Dear Sir: Please tender for to float and place in a place of safety, say Galveston, where her bottom can be examined, furnishing diver and his apparatus. Also to furnish all material and labor in floating said steamship Elfrida; also time required. Reply at your earliest convenience, under seal, to Jas. Sorley, Lloyd's agent, or myself. No cure, no pay."
"By B. Burgess, Master"
"P.S. -- A convenient time to be laid to get the ship off, and if at the expiration of the time, the vessel is still aground, all claim on this contract to cease and to be null and void."
"B. Burgess, Master"
In reply to this, libelants submitted a tender, offering to perform the service for the sum of $22,000, which was accepted by the advice of Lloyd's agent, who was on board the vessel at the time, and with the consent of Pynam, Bell & Co., of Newcastle-on-Tyne, owners of the Elfrida.
The following contract, which forms the basis of the present suit, was thereupon entered into:
"The State of Texas"
"County of Brazoria"
"This agreement, made and entered into this 15th day of October, 1894, between the steamship Elfrida and the owners thereof, represented herein by B. Burgess, master of said steamship, as party of the first part, and Charles Clarke & Co., of Galveston, Texas, as party of the second part:"
"Witnesseth, that for and in consideration of the covenants
and agreements herein contained on the part of the said party of the first part, to be kept and performed, the said party of the second part hereby agrees and binds himself, his administrators and assigns, to float and place in a safe anchorage, Quintana or Galveston, as directed, the S.S. Elfrida, which is now stranded west of and near to the west jetty at the mouth of the Brazos River in said county and state; to furnish all labor and material at the cost of said party of the second part, and to furnish diver and necessary apparatus to survey or examine the bottom of said steamship, and to complete the same within twenty-one (21) days from date hereof."
"The said party of the first part agrees to pay to the said party of the second part for such service, i.e. when he shall have successfully floated said ship, as above set forth, the sum of twenty-two thousand dollars ($22,000), the said party of the first part, however, reserving the right hereby to abandon the ship to and in favor of the said second party in lieu of the amount of $22,000 agreed to be paid as aforesaid."
"It is further understood and agreed by and between the parties hereto that a failure to float and place in a position of safety, as above stated, said steamship, within the time hereinbefore specified, to-wit, twenty-one days from date hereof, that said party of the second part shall receive no compensation whatever from said first party for work performed, labor, tools, or appliances furnished."
"Anything that may be discharged to enable vessel to float shall be replaced when she is in a position of safety. It is also agreed and understood that the use of crew and engine shall be at the use and disposal of said party."
"Witness the hand of B. Burgess, master of the steamship Elfrida, for himself, said ship, and the owners, party of the first part, and the hand of Charles Clarke & Co., party of the second part, this 15th day of October, 1894."
"Chas. Clarke & Co."
"M. P. Morrissey."
"J. H. Durkie"
"Master S.S. Lizzie, of Whitby"
The day before the contract was signed, the libelants, having learned that their tender for the work had been accepted, hired the schooner Louis Dolsen, of fifteen tons, for which they paid $100, to take their plant to Galveston in tow of their tug Josephine. They also hired a large force of men, procured nearly a month's supplies, cables, chains, anchors, two tugboats, two lighters, and two schooners, fully manned and equipped. Some of this plant belonged to them, but the schooners and lighters and their equipments were hired. For one of the lighters they agreed to pay $6,500 if she should be lost. Their entire outfit was worth from $30,000 to $50,000. On arriving at Velasco on the same or following day, they engaged a derrick lighter for use in laying the anchors, and on the two following days, the 16th and 17th, the salvors were at work planting the anchors and connecting cables from them to the winches of the ship. This work was completed during the afternoon of the 17th, the water ballast pumped out, when the Elfrida's engines, winches, and windlass were started by her own steam, and in less than half an hour she began to move herself off. She went slowly for the distance of about a thousand feet, when she floated clear, but was carried by the current against the west jetty. The libelants' tug then for the first time took hold of her, and towed her away from the jetty, and at 7:40 p.m., four hours after the work of hauling her off was begun, she was free and clear of everything, and put to sea under control of the pilot. Subsequent examination of her bottom, in the dry dock at Newport News, showed that she was wholly uninjured except for a slight indentation about a foot long in the bilge, which was probably caused by contact with the jetty. At the time she was stranded she was insured for the sum of £18,000, subsequently reduced to £16,000.
Upon a full hearing upon pleadings and proofs, the district court entered a final decree in favor of the libelants for the stipulated sum of $22,000, with interest and costs. Claimants appealed to the circuit court of appeals, which reversed the decree of the district court, one judge dissenting, chanrobles.com-red
and remanded the case, with instructions to enter a decree in favor of libelants for the sum of $10,000, with interest at six percent. 77 F.7d 4. A petition for rehearing having been denied, libelants applied to this Court for a writ of certiorari, which was granted.