Allanwilde Transport Corp. v. Vacuum Oil Co.

Background

A shipping company operated the sailing ship Allanwilde and carried paid cargo for an oil company and a seller of nails. Both shippers paid freight in advance. The ship left New York on September 11, met a severe storm that forced her back to New York for repairs, and then the Government refused clearance to sailing vessels bound for the war zone. The captain learned of the ban only after returning; the carrier unloaded the cargo under protest when it could not get clearance. The oil was later forwarded by another vessel at higher cost; what happened to the nails is not stated.

Reasoning

The core question was whether the parties’ written contracts covered these events and allowed the carrier to keep the prepaid freight. The Court looked to the charter and bills of lading, which said freight was “earned, retained and irrevocable” and exempted the carrier for “arrest or restraint of governments.” The Court found the clauses were deliberate, applied when the voyage was broken up by storm and by an indefinite government interdiction, and that the carrier acted in good faith trying to repair and obtain clearance. On those grounds the Court answered the certified questions in the carrier’s favor.

Real world impact

The ruling means that when shipping contracts plainly say prepaid freight is earned and nonrefundable and they include government-restraint language, carriers can keep those payments if storms and official bans prevent the voyage. Shippers who pay in advance may face extra costs and should negotiate refund or contingency terms.