while in the custody of third parties, namely, in the customhouse. The shipowner has no more control over the customhouse officials as respects the care and custody of the goods than has the shipper or the consignee. The delivery into the customhouse is no part of the transportation for which the shipowner is responsible. It is purely an incident of the business. To impose, therefore, a liability upon the shipownerMr. EDMONDS. But the burden of proof is on the shipper?

Mr. CAMPBELL. Not necessarily. To impose upon the shipowner a burden of proof which he can not sustain will result in injustice. We believe that that is the kind of a loss which is purely an insurable loss and is one that the cargo underwriter ought to carry. It is one that the shipper certainly will insure against; it is one that the insurer will be paid a premium for, and so it is a risk the insurer ought to carry.

Mr. EDMONDS. The bill only covers between the loading and discharge of the steamer. Now, if the stealing or the theft occurs in the customhouse, by custom officials, the customer does not find it out until he gets the goods and he gives notice all along the line that he is short some goods and he has to prove where that shortage occurred. The shipowner does not have to prove it.

Mr. CAMPBELL. Let us see. Under subsection (q), section 2 of Article IV of the convention, which is paragraph 17 on page 7 of the bill, the shipowner is exonerated from liability for loss arising from

"Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage."

Certainly, under that section, which is the section covering loss by theft, the ship owner can not escape liability unless he shows that the loss did not occur by the act of one of his agents or servants. Now what opportunity has the shipowner to examine a case of alleged hosiery that starts from an interior point and comes by rail to New York; is delivered by the railroad company to a lighter, brought to the ship and loaded onto the ship, put into the ship's hold, taken to Havana, Cuba, discharged onto a lighter and put into the customhouse where the shipowner has no control over it whatsoever? It comes out of the customhouse and two days after the consignee removes it to his place of business he gives notice that it contains bricks and not hosiery. Now what chance has the shipowner of ever showing that that theft was not caused by the negligence of his servants or agents?

Mr. EDMONDS. What chance has the other man to show that it was?

Mr. CAMPBELL. I doubt, in those cases, whether you can show where the theft took place. Certainly, experience has shown, in the last few years, that you could not show where those losses took place.

Therefore, say it is a loss which should be borne by cargo underwriters, and the moment you place a burden of proof on the shipowner to explain the loss, which he can not sustain, you put the shipowner in a position where the shipper collects his loss from the cargo underwriter, and the cargo underwriter sues the shipowner and reimburses himself for the loss which he is paid to insure.

Mr. EDMONDS. Tries to reimburse himself.

Mr. CAMPBELL. Under this bill, he will succeed in doing it.

Mr. HAIGHT. No.

Mr. PAUL. What provision is that, specifically, to which you are referring in the bill?

Mr. CAMPBELL. Page 7, clause 17. It is the practical working out of clause F on page 4 and clause 17 on page 7.

Mr. PERLMAN. Could not the shipowner get insurance to cover that?

Mr. CAMPBELL. Certainly, and that is what he will do; but who is going to pay for the insurance? If the shipowner operates his vessel and is able to pay his expenses of operation, he is going to get his money out of the shipper, is he not?

Mr. PERLMAN. Yes.

Mr. CAMPBELL. Now, if he can not operate his vessel and pay his expenses, his ship will lay up. That is the reason you have about eleven hundred of them laid up now. Mr. PERLMAN. That is not the only reason?

Mr. CAMPBELL. That is one reason, because you can not pay expenses. If you can pay expenses, so that they do operate, the earnings come out of the shippers, and that means that the cost of insurance to the shipowner is going to come out of the shipper; and the cost of his cargo insurance will also be paid by the shipper. So what will you have in the practical working out of the business? A shipper insured against this kind of a loss will collect his insurance from the cargo underwriter; the cargo underwriter will libel the ship, and the shipowner will immediately refer the claim to his P. and I. underwriter, and the two underwriters will get together and

determine which one is to bear the loss. Both underwriters will be paid premiums for the one risk, but the shipper will, in the end, pay the cost of both insurances. The argument is made, in all sincerity, by the strong advocates of the rules as drawn, that they will not work any injustice to the American shipowner, because all shipowners will be in the same position, and the cost will be passed on to the shippers. Well, that would be true if freight rates were regulated arbitrarily or by agreement amongst the shipowners, so that they could say, "We will just figure out approximately what this cost is and add so much to our freight charges and pass it along.' But the shipping business is not carried on that way to-day. I asked Mr. Price whether he shipped by the line from which he got the cheaper rate. Of course he does; that is business. If the British ship has the cheaper rate, he will take the British ship in preference to the American ship at a higher rate. Competition is regulating the rates for ocean transportation, particularly in the North Atlantic, and it is regulating the rates to a very large degree to South American countries. So that the American shipowner is not going to be in a position where he can get together with all other shipowners and say, "We will boost the rate just so much to take care of this increased cost to us."

The shipowner does not ask to be excused entirely from responsibility. If the shipowners' servants are guilty of negligence, I do not think the shipowner should come and say, "Why, we ought to be excused from our negligence in the care and custody of the goods." From our point of view, we suggest that a fair distribution of the responsibility would be to impose upon the shipowner the burden of showing that he has exercised due diligence properly to load, care for and preserve the cargo, and to deliver the cargo; but, having exercised such due diligence, and having the burden upon him of showing it as a condition prededent to exemption from liability, then he ought to be excused from any loss that does not arise from a lack of due diligence. That was the suggestion we made to Judge Hough and to Mr. Beecher when they went abroad. This was the provision we submitted:

"Neither the carrier and/or its agent, nor the ship and/or its master, shall be liable for any loss or damage arising from any other cause whatsoever to the contents of any package the nature and/or condition whereof is described on the bill of lading with qualified designation as authorized by section 4 of Article III”—

As, for instance, said to contain, or contents unknown.

*

* provided that the carrier shall have exercised due diligence properly and carefully to load, stow, carry, keep, care for, unload and deliver the cargo. Mr. CHINDBLOM. Would that include he would have to show delivery to the custom officers?

Mr. CAMPBELL. That he should show delivery of the cargo to the custom officers, and that there his liability should cease. I believe that this rule is fair.

Mr. EDMONDS. When a gentleman comes here and he makes a statement that this uniform law will prevent a great deal of legal conflict, it is not a good thing for the lawyer; so that we put this in to help you folks out. [Laughter.]

Mr. CAMPBELL. It is going to help us out to a great degree.

Mr. PERLMAN. But your burden under subsection 17 is simply the burden of showing that neither the actual fault or privity of the carrier, nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. What 1sthe objection to that?

Mr. CAMPBELL. Because the shipowner can not show it.

Mr. PERLMAN. You can not show there was no fault of yours?

Mr. CAMPBELL. No; in the practical working out of it, you can not show the cause of the loss. It is impossible for the shipowner to show that the package was not opened on board ship. It is a physical impossibility for him to do it. He can show the appointment of the best kind of a crew he can obtain, the best of officers, the maintenance of the best kind of watch, and the exercise of due diligence in caring for the goods; but the burden upon him is to show the absence of negligence. He will have to prove a negative, which is very difficult.

Mr. PAUL. It is always true.

Mr. CAMPBELL. You will have to prove a negative.

Mr. EDMONDS. That is the conference word for word, though.

Mr. CAMPBELL. I appreciate that. I am criticizing the convention, and I am doing it for this reason: If you are going to break away from it, if Congress is now about to pass legislation which will deviate from the principle of uniformity, and you are not simply going to put into effect the results of the Brussels convention, then we feel that there are burdens and injustices in the rules, from the point of view of the shipowner, that should have consideration. On the other hand, and I want to make my position clear, while we believe that these injustices exist, nevertheless, uniformity in shipping documents is desirable and, if this convention will be adopted by the principal

maritime nations, the American Steamship Owners' Association is not going to stand against that coming about.

The CHAIRMAN. That is, if they are going to be honest, we are not going to try to make them dishonest; but if they are going to be dishonest, we have no use for them. Mr. CHINDBLOM. Suppose the bill does not operate against you, would you still say if the legislation is enacted you should not have the opportunity to correct such injustices as may exist in the convention?

Mr. CAMPBELL. I do not quite catch your point.

Mr. CHINDBLOM. Are there other particulars in which the bill varies from the Brussels convention to your disadvantage?

Mr. CAMPBELL. Yes. You have deleted entirely Article VII of the rules"Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to, or in connection with, the custody and care and handling of goods prior to the loading on, and subsequent to, the discharge from the ship on which the goods are carried by sea.

You delete that entirely and you say, "We will leave you with the Harter Act governing." I am inclined to agree with Mr. Haight that that is the effect of it. All right. What about the British shipowner? He is going to put that provision in, because England is going to adopt these rules as they came out of the conference. Therefore the British shipowner will be given this freedom of contract which you are to deny to the American shipowner. And what is the result? England will get the benefits of the act and you are going to impose an additional burden on the American shipowner.

Mr. CHINDBLOM. In other words, with the convention in full force, you can contract against this liability, can you?

Mr. CAMPBELL. Well, you raise a question there that will propably engage the attention of the lawyers in litigation--whether or not, if it is carried into law, it will override the Harter Act? I can not tell how the courts will interpret it.

Doctor HUEBNER. Do you believe that should be restored in the bill?

Mr. CAMPBELL. Article VII?

Doctor HUEBNER. Yes.

Mr. CAMPBELL. Yes; I do.

Mr. HAIGHT. So do I.

Mr. CAMPBELL. Now, there is another thing. I think that the penalty which you have carried into the bill is wrong. In section 9 of the bill you impose a penalty of $2,000. That is not in the convention. You propose to impose a penalty of $2,000 upon a shipowner who inserts a void clause in his bill of lading. And what is a void clause? It is a clause under paragraph H of the bill, page 5:

"Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this act, shall be null and void and of no effect."

Any clause within the scope of paragraph H is null and void. That is a very broad section. We can not tell just what clauses would be condemned under paragraph H; but, with the penalty of $2,000, no shipowner would dare to try out one of these clauses, to have determined whether it is void or not, because he would be subjecting himself to liability of the penalty; whereas, your British shipowner, without the penalty, will insert the clause and, if it is a good clause, and not in violation of the convention, it will be valid and binding, and one to which he is entitled. If it is invalid, or in contravention of paragraph H, it will not be binding; it will be void. Thus by inserting in your act a penalty of that kind, and not having it in the convention, you are simply placing that much more of a handicap on the American shipowner, as against the British shipowner.

Mr. PERLMAN. Would not you advise one of your clients, if it is just a matter of testing a clause, that the court would take that into consideration in determining whether to assess a nominal fine or the full fine? It says not to exceed."

Mr. CAMPBELL. No; as a lawyer, I should say, "If you put it in, you take your chance on being fined $2,000."

Mr. CHINDBLOM. There would be no real advantage in having a small fine. Mr. EDMONDS. Still, it is the same provision that is carried in the Harter Act, and you must confess in a great many instances this is a modification of the Harter Act. Mr. CAMPBELL. No, it is not a modification of the Harter Act. This is an international convention, and the only reason we are here at all is because it is an international convention.

Mr. EDMONDS. The only reason for the legislation would be it is a modification of the Harter Act.

Mr. CAMPBELL. No; it may affect the Harter Act, and you may modify the Harter Act so as to give validity and effect to this legislation; but you are not passing legislation per se as a modification of the Harter Act, and that is not the reason for it. You are passing legislation to carry into effect an international agreement for the sake of uniformity.

Mr. EDMONDS. But the effect of it is to modify some of the terms of the Harter Act? Mr. CAMPBELL. Surely.

Mr. PERLMAN. Wouldn't you apply any penalty at all?

Mr. CAMPBELL. No, sir; I would not. I think you should adopt the convention as it is, or not at all. If you are to have uniformity, if that is what you want, you will have to adopt the convention; because, if you start to break away from uniformity, England will, Germany will, and the others will, and there goes the principle. If you are to enact new legislation because you are dissatisfied with the Harter Act, if you are going to throw open wide the door as respects American legislation, that is an entirely different matter.

Mr. PERLMAN. Do you believe a man ought not to be penalized if he refuses to issue a contract of carriage in conformity with this legislation?

Mr. CAMPBELL. No; I would not say that.

Mr. PERLMAN. That is what this provides for here.

Mr. CAMPBELL. No; you go further than that.

Mr. EDMONDS. Here is what the form is in the convention, Article IX:

"The provisions of this convention shall apply to all bills of lading issued in any of the contracting states."

Now, it seems unnatural in our legislation to put in a thing like that, and this was supposed to take the place of it.

Mr. CAMPBELL. That seems to me superfluous-section 9.

Mr. EDMONDS. The bankers and insurance companies undoubtedly will take care of that, anyhow, whether you have a penalty or not; but they might get desperate for business some day and make something that was wrong; but naturally, a man coming into a banker with a bill of lading made up on this form, he would know what it was, and he would not ask any more questions.

Mr. CAMPBELL. The banker does not care one whit what is contained in the bill of lading. All he wants to know is that he has a bill of lading and an insurance policy that covers the risk. That is what the banker is interested in, and he can not be otherwise; because I doubt, unless you are a very highly responsible firm, unless you are some of the packers, whether the average merchant can go and cash in his documents at a bank, his shipping documents, without having a policy of insurance attached.

Mr. EDMONDS. Of course, you were down here during the war, and you know there were a good many people who did not have much responsibility who got into the National City Bank and the Guaranty Trust Co. through other people getting their discounts, and I guess they are sorry for it since.

Mr. CAMPBELL. I think that is all I have to say in this brief discussion. Mr. Chairman. I do want to say again that we are not standing in the way; we do not want to stand in the way of the uniform adoption of the convention as it is, but we do not want any modification.

Mr. EDMONDS. To use Lasker's term. "Our minds are fairly well meeting."
Mr. ENGLAR. May I ask Mr. Campbell a question or two?

The CHAIRMAN. Yes.

Mr. ENGLAR. Mr. Campbell, in the case that you put of the package said to contain stockings: It is discharged in Havana and goes into the customhouse, and it is taken out of the customhouse a month later and found to contain bricks. Is it your understanding that there is anything in these rules or in this act, rather, which would enable the consignee, on merely showing he took a package out of the customhouse a month later which contained bricks, to recover from the steamship company, just on that showing?

Mr. CAMPBELL. If the bill of lading contained, as it will in practice, a recital "shipped one package or one box said to contain silk hose," and two days after the delivery from the customhouse a claim is put in saying that it contained bricks, in my view the shipowner can not escape liability under the rules unless he can show the absence of negligence-unless he can prove a negative.

Mr. ENGLAR. You have defended lots of such cases, and let us assume you are representing the steamship company: You would advise them not to pay. Let us assume you do advise them not to pay, and the consignee goes into court and he proved he took this case out of the customhouse and it contained bricks, and he gave this notice two days later to the steamship company; do you think he could recover without showing that it contained bricks when the steamship company discharged it-without showing the bricks were not substituted in the customhouse?

Mr. CAMPBELL. Yes, I do; if he has a bill of lading reciting hose.

Mr. ENGLAR. I do not see any possible ground for that. There is nothing in the ules that says the steamship company is liable for the package while it is in the custom house.

Mr. CAMPBELL. That is just the point; I think it does; I think the rules cover that situation. When these rules were originally drawn, you will see

Mr. ENGLAR. You are speaking of subsection 2. Subsection 2 would not come into effect until it was shown that the loss happened while the goods were in the carrier's custody. The carrier would not have to prove anything under subsection 2. Mr. CAMPBELL. I am not so sure about that.

Mr. ENGLAR. Unless it was proved that the loss happened while the goods were in his possession?

Mr. CAMPBELL. For instance, as the rules were first drawn, the liability carried through from the time the goods were loaded to the time they were delivered from the ship. You remember that we got into a long controversy as to whether that included delivery to the consignee, as the word "delivered" as used in the rules, evidently included delivery to the consignee. Then the conference substituted the words "discharged from the ship" for the word "delivered," but when they came to write section 6, Article III, the burden of proof section, they did not change the word "delivered" to the words "discharged from the ship." They leave the burden under section 6, Article III, which fixes responsibilities and liabilities so that it carries beyond the point of discharge from the ship and reaches delivery to the person entitled to delivery.

Mr. ENGLAR. That only relates to the notice of claim. That has nothing to do with the substantive liability of the carrier; it provides that the owner shall put in a notice of claim. It does not say the carrier shall be liable, however, specifically, for the loss of the goods.

Mr. CAMPBELL. Yes; "such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.'

Mr. ENGLAR. It does not say the notice is evidence of anything.

Mr. CAMPBELL. It says, "Such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading. If the loss or damage is not apparent, the notice must be given within three days of the delivery of the goods. Mr. ENGLAR. It is prima facie evidence in favor of the carrier, but not against the carrier.

Mr. CAMPBELL. It is if the notice has not been given.

Mr. ENGLAR. It is prima facie evidence in favor of the carrier; but it does not say if notice is not given that raises a presumption in favor of the consignee.

Mr. CAMPBELL. Do I understand your position under section 6, combined with subsection Q, Article IV, to be that the shipowner carries no responsibility whatsoever after the goods leave ship's tackle? If so, then the interpretation of the rule given us this morning by Mr. Beecher was wrong, because I understood he agreed with the views I have expressed.

Mr. ENGLAR. These rules do not fix any responsibility upon him; whatever responsibility he has would be under the law as it stands to-day. Before and after the rules take effect he may be responsible under the Harter Act, or some other act, but he is not responsible under these rules, because these rules definitely say they apply only from the time of beginning loading until they finish discharging.

Mr. CAMPBELL. No; they use the word "delivery."

Mr. ENGLAR. They say from the time when the goods are loaded on until the time they are unloaded.

Mr. CAMPBELL. Why not delete the words entirely; why not make it clear, if you are going to reframe the convention?

Mr. ENGLAR. We are not going to reframe the convention.

Mr. CAMPBELL. I do not want it reframed; but to make the rules consistent with your view, then you should rewrite section 6.

Mr. ENGLAR. That is your liability to-day; this has nothing to do with your liability at all; it simply furnishes you with an additional defense if we do not do a certain thing.

Mr. CAMPBELL. My dear sir, anything that has to do with shifting the burden of proof has to do with liability. The effect of section 6 is to shift the burden of proof, is it not?

Mr. ENGLAR. The effect of section 6 is to shift the burden of proof in certain cases to the consignee a greater burden than he already has; but there is nothing there that shifts any burden of proof to you in any case.

Mr. CAMPBELL. No; because the burden is already fixed by the bill of lading.

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