St. Johns N. F. Shipping Corp. v. . S. A. Companhia Geral Commercial Do Rio De Janeiro
Headline: Court affirmed that a clean bill of lading implies under-deck stowage, making the ship liable when cargo was placed on deck and lost, protecting shippers and consignees who rely on the bill’s wording.
Holding: The Court held that when a clean bill of lading follows a freight agreement allowing on- or under-deck stowage, the bill implies under-deck carriage and the carrier who stows cargo on deck and loses it is liable for its value.
- Treats a clean bill of lading as a promise of under-deck carriage.
- Holds carriers liable when deck stowage contradicts the bill and cargo is lost.
- Limits use of bill’s exception clauses to avoid liability for deviations.
Summary
Background
General Commercial Company, a New York exporter, sold 800 barrels of rosin to a Brazilian corporation and arranged carriage with the schooner St. Johns under a written freight agreement that allowed stowage “on or under deck, ship’s option” and referred to a later bill of lading. The goods were loaded, clean receipts given, and a clean bill of lading was later issued after prepayment. The rosin was actually placed on deck unknown to the shipper or consignee. In a storm the master jettisoned the deck cargo and the consignee sued for its value.
Reasoning
The Court addressed whether the clean bill of lading should be read as a promise that the goods would be carried under deck. The Court found no contradiction between the freight agreement and the bill and held that, in the absence of a known custom permitting deck stowage, a clean bill imports under-deck carriage. Because the bill effectively represented that the option had been exercised to stow under deck, the ship’s actual deck stowage breached the carriage contract, exposed the goods to greater risk, and made the carrier liable for the loss. The Court also held the carrier could not avoid liability by relying on exception clauses after such a breach.
Real world impact
Shippers and consignees can rely on a clean bill as assurance of under-deck carriage when no custom says otherwise. Carriers who put cargo on deck contrary to the bill face liability for the value at destination. The lower court’s decree for the consignee was affirmed.
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