US SUPREME COURT DECISIONS

1. Shipowners, as a general rule, have a lien upon the cargo for the freight, and consequently may retain the goods after the arrival of the ship at the port of destination until the payment is made. Presumption is in favor of the lien, but it may be modified or displaced either by direct words or by stipulations incompatible with the existence of such a right.

2. Insolvency of the shipper occurring while the goods are in transit or before they are delivered will not absolve the carrier from an agreement to take an acceptance on time, instead of cash, for the freight, nor authorize him, when he had made such an agreement, to retain the goods until the freight is paid. On the other hand, as a bill of exchange or promissory note given for a precedent debt does not extinguish the debt unless such was the agreement of the parties, a bill or note falling due before the unloading of the cargo and protested and unpaid is no discharge of the lien; and the shipowner, in such a case may stand upon it as fully as if the acceptance had never been given.

Hence where, in the case of a vessel chartered from Liverpool to San Francisco, freight was to "be paid in Liverpool on unloading and right delivery of the cargo" at a rate fixed by the parties,

"such freight to be paid, say one-fourth in cash and one-fourth by charterer's acceptance, at six months from the final sailing of the vessel, and the remainder by like bill at three months from date of delivery, at charterer's office in Liverpool, of the certificate of the right delivery of the cargo agreeably to bill of lading, or in cash, under discount at five percent, at freighter's option. The ship and her freight are bound to this venture,"

Held:

i. That the "charterer's acceptance at six months from the final sailing of the vessel" having been dishonored and he become bankrupt, it was no chanrobles.com-red

Page 72 U. S. 546

payment of the one-fourth agreed to be so paid for, and that the lien for that fourth was not displaced.

ii. That as to "the remainder," which was to be by like bill, at three months from date of delivery, at charterer's office in Liverpool, of the right delivery of the cargo agreeably to bill of lading -- the lien had been displaced, notwithstanding that the charterer had become bankrupt before the vessel arrived at San Francisco.

Appeal from the Circuit Court for the Northern District of California, decreeing against a lien set up by shipowners for freight on libel filed against a cargo. The case was thus:

On the 16th March, 1863, Eccles, of Liverpool, chartered at that place from Taylor & Co., owners of the ship Bird of Paradise, that vessel to carry a cargo of coal of which Eccles was the owner to San Francisco, California at a rate agreed on per ton.

"The freight to be paid in Liverpool, on unloading and right delivery of the cargo, one-fourth in cash, one-fourth by the acceptance of Eccles, the charterer, at six months from the final sailing of the vessel, and the remainder by like bill, at three months from delivery, at charterer's office in Liverpool, of certificate of right delivery of cargo agreeably to bills of lading, or in cash, less five percent, at freighter's option. The vessel to be addressed to the freighter's agent abroad. �500 to be advanced in cash at the port of discharge on account of the freight. The ship and her freight are bound to this venture. The penalty for nonperformance of this agreement is to be the chartered freight in pounds sterling."

The master signed and the freighter, Eccles, accepted a bill of lading in the usual form for the cargo deliverable "to order or assigns, he or they paying freight at the rate of __, as per charter party."

The vessel sailed from Liverpool April 16, 1863, and arrived at San Francisco on the 26th December, 1863, a voyage of eight months and ten days.

The charterer, Eccles, paid the promised one-fourth of the freight before sailing, and gave his acceptance for the second fourth, at six months, falling due October 19, 1863, more chanrobles.com-red

Page 72 U. S. 547

than two months before the vessel arrived, but it was never paid, Eccles having failed in business, and remaining insolvent and a bankrupt. On the arrival at San Francisco, the �500 agreed to be advanced in cash at the port of discharge, was also paid; but the second acceptance, the one, to-wit, for the residue of the freight, was not given, nor the amount paid in money.

The amount due for unpaid freight, regarding the first or dishonored acceptance as a nullity was thus $7,050.

The captain refused to deliver the cargo to the agents of Eccles, but kept control of it himself.

These agents accordingly filed their libel in the District Court for the Northern District of California against the cargo to recover possession of it, the delivery being resisted under a claim of lien for freight.

That court considered that the claim was unfounded and decreed accordingly, and the decree being affirmed by the circuit court, the correctness of such a view was now the question here on appeal. chanrobles.com-red

Page 72 U. S. 552