Mr. Wm. H. Hayden, of Tacoma, Wash., Mr. Wm. H. Hayden, of Tacoma, Wash., for petitioners.

Mr. Erskine Wood, of Portland, Or., for respondent.

[260 U.S. 494]

Mr. Justice McREYNOLDS delivered the opinion of the Court.

March 19, 1917, through its agent at Tacoma, Wash., Osaka Shosen Kaisha, incorporated under the laws of Japan and owner of the Japanese steamer Saigon Maru, then at Singapore, chartered the whole of that vessel, including her deck, to respondent Lumber Company to carry a full cargo of lumber from the Columbia or Willamette river to Bombay. In May, 1917, the vessel began to load at Portland, Or. Having taken on a full under-deck cargo and 241,559 feet upon the deck, the captain refused to accept more. After insisting that the vessel was not loaded to capacity and ineffectively demanding that she receive an additional 508,441 feet, respondent libeled her, setting up the charter party and the captain's refusal, and claimed substantial damages. The owner gave bond; the vessel departed and safely delivered her cargo.

The Lumber Company maintains that it suffered material loss by the ship's refusal to accept a full load; that [260 U.S. 495] she is liable therefor under the general admiralty law and also under the Oregon statute (Olson's Laws of Oregon, 10281), which declares every vessel navigating the waters of the state shall be subject to a lien for the damages resulting from nonperformance of affreightment contracts.

Petitioner excepted to the libel upon the ground that the facts alleged showed no lien or right to proceed in rem. The trial court ruled otherwise and awarded damages upon the evidence. The Saigon Maru (D. C.) 267 Fed. 881. The Circuit Court of Appeals approved this action. 272 Fed. 799.

Little need be written of the claim under the state statute. The rights and liabilities of the parties depend upon general rules of maritime law not subject to material alterations by state enactments. The Roanoke, 189 U.S. 185, 23 Sup. Ct. 491; Southern Pacific Co. v. Jensen, 244 U.S. 205, 37 Sup. Ct. 524, L. R. A. 1918C, 451, Ann. Cas. 1917E, 900; Union Fish Co. v. Erickson, 248 U.S. 308, 39 Sup. Ct. 112.

Both courts below acted upon the view that while the ship is not liable in rem for breaches of an affreightment contract so long as it remains wholly executory, she becomes liable therefor whenever she partly executes it, as by taking on board some part of the cargo. In support of this view, it is said: Early decisions of our circuit and district courts held that under maritime law the ship is liable in rem for any breach of a contract of affreightment with owner or master. That The Freeman (1856) 18 How. 182, 188, and The Yankee Blade (1857) 19 How. 82, 89, 90, 91, modified this doctrine by denying such liability where the contract remains purely executory, but left it in full force where the vessel has partly performed the agreement, as by accepting part of the indicated cargo. The Hermitage, 12 Fed. Cas. 27, No. 6,410; The Williams, 29 Fed. Cas. 1342, No. 17,710; The Ira Chaffee (C. C.) 2 Fed. 401; The Director (D. C.) 26 Fed. 708; The Starlight (C. C.) 42 Fed. 167; The Oscoda (D. C.) 66 Fed. 347; The Helios (D. C.) 108 Fed. 279; The Oceano (D. C.) 148 Fed. 131; Wilson v. Peninsula Bark & Lumber Co., 188 Fed. 52, 110 C. C. A. 190, were cited. [260 U.S. 496] We think the argument is unsound.

Prior to The Freeman and The Yankee Blade, this court had expressed no opinion on the subject; but, so far as the reports show, the lower courts had generally asserted liability of the ship for breaches of affreightment contracts. 'It is grounded upon the authority of the master to contract for the employment of the vessel, and upon the general doctrine of the maritime law, that the vessel is bodily answerable for such contracts of the master made for her benefit.' The Flash, 1 Abbott, 67, 70, Fed. Cas. No. 4,857; The Rebecca, 1 Ware, 188, Fed. Cas. No. 11, 619; The Ira Chaffee, supra. Since 1857, some of the lower courts have said that the ship becomes liable for breaches of affreightment contracts with her owner or master whenever partly executed by her; but it is forcibly maintained that in none of the cases was the point directly involved. The Hermitage, The Williams, The Ira Chaffee, The Director, The Starlight, The Oscoda, The Helios, The Oceano, and Wilson v. Peninsula Bark & Lumber Co., supra.

The Freeman and The Yankee Blade distinctly rejected the theory of the earlier opinions. They are inconsistent with the doctrine that partial performance may create a privilege or lien upon the vessel. And in so far as the lower courts express approval of this doctrine in their more recent opinions, they fail properly to interpret what has been said here.

While, perhaps, not essential to the decision, this court, through Mr. Justice Curtis, said in The Freeman:

'Under the maritime law of the United States the vessel is bound to the cargo, and the cargo to the vessel, for the performance of a contract of affreightment; but the law creates no lien on a vessel as a security for the performance of a contract to transport cargo, until some lawful contract of affreightment is made, and a cargo shipped under it.'

'Now, it is a doctrine not to be found in any treatise on maritime law that every contract by the owner or master of a vessel, for the future employment of it, hypothecates the vessel for its performance. This lien or privilege is founded on the rule of maritime law as stated by Cleirac (597): 'Le batel est obligee a la marchandise et la marchandise au batel.' The obligation is mutual and reciprocal. The merchandise is bound or hypothecated to the vessel for freight and charges (unless released by the covenants of the charter party), and the vessel to the cargo. The bill of lading usually sets forth the terms of the contract, and shows the duty assumed by the vessel. Where there is a charter party, its [260 U.S. 498] covenants will define the duties imposed on the ship. Hence it is said (1 Valin, Ordon. de Mar. b. 3, tit. 1, art. 11) that 'the ship, with her tackle, the freight, and the cargo, are respectively bound ( affectee) by the covenants of the charter party.' But this duty of the vessel, to the performance of which the law binds her by hypothecation, is to deliver the cargo at the time and place stipulated in the bill of lading or charter party, without injury or deterioration. If the cargo be not placed on board, it is not bound to the vessel, and the vessel cannot be in default for the nondelivery, in good order, of goods never received on board. Consequently, if the master or owner refuses to perform his contract, or for any other reason the ship does not receive cargo and depart on her voyage according to contract, the charterer has no privilege or maritime lien on the ship for such breach of the contract by the owners, but must resort to his personal action for damages, as in other cases. ... 'And this court has decided, in the case of The Schooner Freeman v. Buckingham, 18 How. 188, that the law creates no lien on a vessel as a security for the performance of a contract to transport cargo, until some lawful contract of affreightment is made, and a cargo shipped under it."

'In the present case the cargo was delivered [260 U.S. 499] in pursuance of the contract, the goods in the custody of the master, and subject to his lien for freight, as effectually as if they had been upon the deck of the ship, the contract confessedly binding both the owner and the shipper; and, unless it be held that the latter is entitled to his lien upon the vessel also, he is deprived of one of the privileges of the contract, when, at the same time, the owner is in the full enjoyment of all those belonging to his side of it.'

'The doctrine that the obligation between ship and cargo is mutual and reciprocal, and does not attach until the cargo is on board, or in the custody of the master, has been so often discussed and so long settled, that it would be useless labor to restate it, or the principles which lie at its foundation. The case of the Schooner Freeman v. Buckingham, decided by this court, is decisive of this case.' The Lady Franklin, 8 Wall. 325, 329 (19 L. Ed. 455).

'It is a principle of maritime law that the owner of the cargo has a lien on the vessel for any injury he may sustain by the fault of the vessel or the master; but the law creates no lien on a vessel as a security for the performance of a contract to transport a cargo until some lawful contract of affreightment is made, and the cargo to which it relates has been delivered to the custody of the master or some one authorized to receive it.' The Keokuk, 9 Wall. 517, 519 (19 L. Ed. 744).

The theory that partial acceptance of the designated cargo under a contract of affreightment creates a privilege of lien upon the ship for damages resulting from failure to take all, is inconsistent with the opinions of this court and, we think, without support of adequate authority. In The S. L. Watson, 118 Fed. 945, 952, 55 C. C. A. 439, 446, the court well said:

'The rule of admiralty, as always stated, is that the cargo is bound to the ship and the ship to the cargo. Whatever cases may have been decided otherwise disregarded the universal fact that no lien arises in admiralty except in connection with some visible occurence relating to the vessel or cargo or to a person injured. This is necessary in order that innocent parties dealing with vessels may not be the losers by secret liens, the existence of which they have no possibility of detecting by any relation to any visible fact. It is in harmony with this rule that no lien lies in behalf of a vessel against her cargo for dead freight, or against a vessel for supplies contracted for, but not actually put aboard. The Kiersage, 2 Curt. 421, Fed. Cas. No. 7,762; Pars. Ship. & Adm. (1869) 142, 143. It follows out the same principle that Mr. Justice Curtis states in The Kiersage, 2 Curt. 424, Fed. Cas. No. 7,762, that admiralty liens are stricti juris, and that they cannot be extended argumentatively, or by analogy or inference. He says: 'They must be given by the law itself, and the case must be found described in the law."