CHAPTER IV.

SHIPPING CONTRACTS AND DOCUMENTS AND SOME LEGAL ASPECTS THEREOF.

Section 1. Introduction.

The carriage of goods by water and the related operations of loading and unloading, together with the rights and duties incident to them, are governed by a large variety of customs and rules, in connection with which certain well-known documents-such as charter parties, bills of lading, marine insurance policies, and manifests-are employed. In some respects these business methods and documents are similar to those employed in other forms of transportation, but in many respects the business of transportation by water is subject to distinct and peculiar customs, rules, and laws. For this reason it is advisable to discuss the subject at least briefly.

Methods and instruments employed in transportation by water are based primarily on certain maritime usages which have grown up in the course of centuries, forming a body of customary law governing maritime transactions. This customary law has, however, been supplemented and modified in numerous ways-by the rules of commercial and shipping associations and local authorities, by the decisions of the courts in admiralty and maritime cases, and also by statute, in the United States to some extent by the acts of State legislatures, but mainly by various acts of Congress under its power to regulate foreign and interstate commerce.

One difficulty in discussing briefly this highly technical subject in a general consideration of coastwise, lake, river, and canal transportation is the fact that in some respects commerce on inland streams is not governed by the same rules and customs as commerce on the high seas.

No attempt will be made to present a complete description of the methods, instruments, and rules of transportation by water, but some attention will be given in this chapter to the following topics: Ship brokers and other agencies employed in securing business. Contracts of carriage by water, including some account of stipulations usually found in such instruments as charter parties and bills of lading and an examination of typical documents in use in the United States.

The liability of carriers by water for loss or damage, as governed by stipulations in bills of lading and as regulated by various statutes, notably by the so-called Harter Act of 1893.

The relation of the interstate commerce acts of 1887 and 1906 to transportation by water, in regard to the filing of rates, the establishment of joint rail and water routes, and the liability of carriers.

Manifests, and the legislation governing their use as public records in domestic trade.

Section 2. Ship brokers and agents.

An important feature in connection with transportation by water is the matter of procuring cargoes. Steamship lines with regular ports of call generally maintain their own agencies or freight solicitors, as do the railroad companies. In the carriage of bulk cargoes, however, in tramp steamers and sailing vessels which operate from one port to another as the largest profit appears, this manner of seeking freight is not practicable. The necessity for finding cargoes for these "tramp" vessels, and on the other hand for finding such vessels available, renders the employment of a broker useful both to the vessel owner and to shippers. Thus the ship broker acts for both parties.

He receives as his compensation a certain percentage (generally 5 per cent) of the freight money received by the vessel. Frequently the broker's commission is divided with another broker. For example, a broker at Boston may have a vessel and another broker at Portland, Me., may have a cargo. By correspondence each learns of the other's needs, the contract of transportation is arranged, and the two brokers divide the commission between themselves. It sometimes happens that a large shipper will have all his chartering done through one broker, to whom all the brokers having vessels must apply.

In addition to securing cargoes or "freights" for vessels, brokers also act as port agents for vessels in advancing money for the payment of a crew's wages on arrival in port before the freight money becomes payable and in settling the vessel's bills for stores, supplies, repairs, etc.

Brokers also are often permanent agents or managing owners for vessels in which they generally own a small part, settling the accounts of each vessel at the end of each trip, paying to the several owners such dividend as may be declared from the earnings, or, if the earnings prove insufficient, assessing such sum as may be necessary to keep the vessel in repair and operation.

The increase in the number and importance of regular steamship lines, employing a number of salaried agents at the several ports of call, has had a decided tendency to decrease the business of the ship brokers at all the important ports on the coasts and on the Great Lakes. Tramp vessels as a rule require full cargoes for profitable operation and the increase in the size of this class of carrier leaves the cargoes formerly carried by the small tramp vessel to be carried. to-day by the regular-line steamship. A representative of a firm of ship brokers and steamship agents made the following statement:

A line of steamers running regularly between its termini affords far better facilities for shippers than do vessels of the tramp type. Among these advantages may be mentioned cheaper rates, quicker service, and the acceptance of cargo irrespective of size. The tramp vessel usually requires a full cargo to be delivered at one destination and this is not always obtainable at the last port of delivery.

On the Great Lakes ship brokers are found at the important ports. Many of the bulk cargoes of ore, grain, coal, and lumber are carried by contract made directly between the shipper or consignee and the vessel owners. In many cases contracts run for a season for the operation of a single specified boat or for the transportation of a certain number of tons, say, of coal or ore, at the rate of a specified number of tons per month. The vessel owner taking these contracts may charter outside boats to carry so much of the traffic contracted for as can not be carried by his own boats. These charters appear to be effected largely through brokers, as are also the trip-to-trip charters of grain and lumber carriers.

In some instances ship brokers are encountered in connection with canal and river traffic. At Buffalo numerous firms and individuals, formerly acting as canal forwarders have been consolidated into two concerns, the Marine Forwarding Company and the Ryan Elevator and Forwarding Company. The situation at Buffalo is especially important, by reason of the fact that this port is the terminus also of the Erie Canal. Conditions there have a large effect on the use of that canal. Brokers are also found (principally at Norfolk) who arrange for shipments through the canals of Virginia and North Carolina.

On the western rivers the conditions are somewhat peculiar. The ownership of practically all the bulk carriers on these rivers being in the companies having the cargoes for shipment, the necessity for the employment of brokers is obviated to a large extent. At many points on these rivers, however, several lines of steamboats may operate

regularly on different routes, and, as is frequently the case, the amount of business done at a particular river port by any one boat line may not warrant the maintenance of a salaried agent to solicit business. At such ports are steamboat agents; that is, agents who act for all the boat lines, receiving as compensation a percentage of the freight money paid the carrier on business secured. Such agents often control the most available landing privileges at river points, and sometimes receive also from shippers and consignees of the port a fee levied on the goods carried over the wharf boat maintained at the landing. Not infrequently these steamboat agents also act as city or town wharf

master.

Section 3. Maritime contracts.

In the case of De Lovio v. Boit et al., involving the jurisdiction of the Federal courts in admiralty causes, decided in 1815, Judge Story included under the term "maritime contract," among other things, the following: Charter parties; affreightments; marine hypothecations; contracts for maritime service in the building, repairing, supplying, and navigating of ships; contracts between part owners of ships; contracts and quasi contracts respecting averages, contributions, jettisons; and policies of marine insurance."

In the carriage of freight or of passengers, the employment of a vessel may be agreed upon between the contracting parties in two different ways (a) either the owner lets out his ship's services to a person or body of persons undertaking to carry goods or passengers for their own account, or, (b) having announced her sailing, either direct for one port or for several ports in a fixed rotation, he agrees with single shippers or passengers to convey the former's goods or the latter's persons to certain places in the said rotation. Both forms of contracts are contracts of affreightment, or contracts for the carriage of goods or persons in vessels. The first class of such contracts are contracts by charter party. When a vessel is employed in the latter form it is technically called a general ship.

There are two instruments used to embody the conditions relating to the employment of a vessel for the carriage of goods, viz, a charter party, which contains the contract between the owner and the charterer for the hire of the whole or part of the available space in the ship's hold, for a time and purpose agreed upon and in consideration of the payment of freight; and a bill of lading, whereby the owner acknowledges receipt of goods shipped on board his vessel, and engages with the shipper to convey them to the port named, under certain specified conditions, and for a fixed remuneration. The fol

a 7 Federal Cases, p. 418 (1815).