Alcoa Steamship Co. v. United States
The Supreme Court ruled that a shipping company could not collect freight charges for lumber that was lost when its ship was torpedoed during World War II, even though the company's own contract said freight was due whether or not the cargo survived.
The Court found that the government's standard shipping paperwork required proof of actual delivery before payment, overriding the carrier's usual 'lost or not lost' clause, and upheld the government's refusal to pay for undelivered goods.
“Payment for transportation charge will be made only for the quantity of stores delivered at destination”
The government voucher instruction the Court relied on to require actual delivery before payment.
How it got here: The shipping company sued the government in federal district court in New York; the district court ruled for the company, but the Second Circuit reversed, and the Supreme Court took the case.
The Case in Depth
What happened
During World War II, a shipping company's vessel, the S.S. Gunvor, carried a government lumber shipment from Alabama toward Trinidad under a government-issued bill of lading. The ship was torpedoed and sunk on its first day out, destroying both ship and cargo. The War Department initially paid the carrier's freight claim, but a government auditor later disallowed the payment, concluding the freight had never been earned because the goods were never delivered.
The question before the Court
When a government-shipped cargo is lost at sea, does the standard government shipping contract still require the government to pay freight charges even though the goods never arrived?
Why it matters
The ruling clarified how the government's standard bill of lading interacts with carriers' own contract terms, guiding resolution of a large batch of similar wartime freight claims. Shipping companies carrying government cargo now know they cannot rely on standard 'lost or not lost' clauses to collect freight when government paperwork requires proof of delivery.
What changes now
This decision is a final merits ruling and resolves the freight-payment dispute for this shipment. Because the Court noted the issue would guide many similar pending claims, the interpretation of the government bill of lading and voucher requirements will apply going forward to other wartime cargo-loss claims involving the same standard government shipping forms.
What this does not decide
The Court expressly did not decide whether the government's argument about past administrative practice was relevant or how much weight it deserved, and it did not address liability for the value of the lost cargo itself — only whether freight charges were owed.
Concurrences and dissents
How the Justices voted
Majority (1). Justice Reed (author).
Dissent (2). Justice Frankfurter (author), joined by Justice Burton.
Dissent — Justice Frankfurter
Justices Frankfurter and Burton dissented, adopting the reasoning of Judge Augustus N. Hand's opinion in the lower court, which had favored the carrier's right to collect freight despite non-delivery. Read the full dissent →
How the Court got there
The legal reasoning, step by step
- The Court began from the general maritime rule that carriers only earn freight once cargo is actually delivered, while noting that carriers commonly add contract clauses making freight payable even if goods are lost — as the carrier's bill of lading did here.
- The Court then asked whether the government's own standard bill of lading specifically overrode that carrier clause, since the parties agreed the carrier clause would control unless the government paperwork said otherwise.
- Applying the rule that unclear contract language is read against whoever drafted it, the Court examined the government's payment conditions requiring a bill of lading that was 'properly accomplished' and a supporting payment voucher.
- The Court read 'properly accomplished' to require more than simply handing back the bill of lading — it required the delivery-related certificate and loss report sections to reflect an actual, undamaged delivery, which never happened here.
- The Court also pointed to the government payment voucher, a separate required document, which stated in plain terms that transportation charges would be paid 'only for the quantity of stores delivered at destination.'
- Reading the bill of lading and voucher together, the Court concluded the government's documents gave clear, specific notice that payment depended on actual delivery, which was enough to override the carrier's standard 'lost or not lost' clause.