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Mr. Haight, who has attended both of these conferences on the other side and has been very active and interested in these rules, is here, and I think we should hear him first. Representatives of the State Department are also here, and representatives of the Shipping Board, but I think Mr. Haight, in all probability, can lay the matter before you more plainly and give you a general idea of what was intended to be accomplished by these meetings at The Hague, and from that we can build up our story.
STATEMENT OF MR. CHARLES S. HAIGHT, CHAIRMAN OF THE BILL OF LADING COMMITTEE OF THE INTERNATIONAL CHAMBER OF COMMERCE.
Mr. Haight. Mr. Chairman and gentlemen of the committee, for about three years and a half I have been the chairman of the bill of lading committee of the International Chamber of Commerce. It is because I have occupied that position that I have been so active in connection with these rules which the International Chamber of Commerce has been backing to the limit of its ability.
There have been, as a matter of fact, five international conferences, at which the effort has been made to arrive at a code which would make possible a standard bill of lading and uniform obligations to be imposed upon ocean carriers, in connection with the transportation of our ocean commerce. The first one took place the end of August, 1921, at The Hague, where these rules were first put into something like definite shape as a code; and, at that conference, shipowners, bankers, cargo interests, and underwriters were all represented, and those are the four interests which are necessarily involved in every international shipment that takes place. Sometimes all four are interested in those shipments; I guess practically always they are.
Ať The Hague, in 1921, a unanimous agreement was reached and it practically amounted to a bargain as between the interested parties as to how they should divide their responsibilities and risks.
In November, 1921, an international conference of shipowners was held in London. That conference was attended by the chief representatives of the owners of the entire world and, again, although with great reluctance, a unanimous agreement was reached. The shipowners were unanimous that the burdens which cargo sought to place upon them were too heavy, but they agreed that, if their shippers wanted this responsibility and thought it meant additional safety for the cargo, they would assume it, provided only the rules should be made uniform the world over; that they should not be shot at by a different law in every country at which their vessels touched.
In October, 1922, the International Maritime Committee held another international conference. The United States was represented at that conference by Judge Hough, perhaps our most distinguished admiralty judge of the cirucit court of appeals for the second circuit; Mr. Beecher, the then admiralty counsel of the Shipping Board, and myself. I sat still. The London conference unanimously agreed upon the rules.
In November, 1922, a diplomatic conference was held in Brussels, and to that conference 24 nations sent duly authorized representatives for the very purpose of agreeing upon an international code covering these rules, and one or two other matters. Judge Hough and Mr. Beecher were the delegates of the United States appointed by the State Department to attend that conference, and Judge Hough was named as the chairman of the committee, to which committee was referred the final work in putting this code into definite shape for international adoption.
There has been practically no change in this code since it left the hands of Judge Hough and his committee at the end of the Brussels diplomatic conference in 1922. It bears the stamp of the work of our most distinguished admiralty judge, sent for the purpose by the State Department.
In October, 1923, the subcommittee of the Brussels diplomatic conference was reconvened and Mr. Beecher was sent back again, representing this country, but they made only slight verbal changes, and Great Britain last July enacted this code into law, in accordance with the recommendation made by her delegate that the international agreement should be adopted in this form.
After these five international conferences there is not much to be said in the way of argument. It will perhaps be helpful if I outline to the committee in some detail what the rules have accomplished.
First of all, they are a codification of our American Harter Act. Only in Great Britain and the United States is the Harter Act really appropriate for adoption, because it is founded on the common law. In order to work out a code which could be adopted by the code countries of the Continent, we had to put it in the form of a code and not in the form of the Harter Act, which is a general prohibition. In addition to codifying the American law, which the rest of the world is now ready to come to, the cargo interests have succeeded, in this bargain, in adjusting, and I think in adjusting fairly, three or four of their long-standing grievances. The cargo interests have always said that it was not fair for a carrier to limit his liability per package to $100, or, as they have done in some cases, to 10 francs; that when a case of shoes, or of attractive canned fruits, disappeared on the voyage, it was not satisfactory to them if they were offered 10 francs for its nonproduction.
The second complaint has been about the ordinary claim clause in the bill of lading, wherein the consignee is held to have no right of claim, unless he has filed a notice of damage before he took the goods away, filed his notice of claim within 30 days, and brought suit within 60 or 90 days.
A third complaint has been on the question of the burden of proof. The old bills of lading stated that the carrier was not responsible for rust, sweat, vermin, theft, and about 40 other separate things, and, when the carrier delivered a lot of goods badly rusted, he said, “My bill of lading says I am not responsible for rust unless you can prove that the goods became rusted through my fault.” Well
, the shipper and the consignee could prove nothing.
A fourth complaint has been about the deviation clause. Some shipowners have put into their bills of lading clauses which gave them the right to go around the world, two or three times, before they discharged a man's goods, if they saw fit to exercise that right, backwards and forwards, going past their destination and coming back again, out of order, in and out, anything they liked, and if your contract specifies it the contract is good, and the shippers have objected to that.
All of those major complaints have been satisfied in the rules. A shipper to-day is, under the rules, if we adopt them, entitled to $500 per package, and that is about the average, probably, of the package value.
Mr. BLAND. He is entitled to that whether it is worth that, or not?
Mr. HAIGHT. Oh, no-up to $500, provided he can prove his damage is $500. He can not ship a thirty-dollar case and get $500 every time he loses it.
Mr. WHITE. Is there any option of contract between the shipper and the carrier as to the limitation of liability by special contract?
Mr. HAIGHT. Do you mean the rate per package?
Mr. WHITE. For instance, when I used to practice law, the practice obtained that the railroads would ship goods with a full liability upon one rate. Mr. HAIGHT. Yes. Mr. WHITE. Then they had their limited liability contract Mr. HAIGHT. Yes.
Mr. WHITE (continuing). Under which they carried at a lower rate of freight, and the same thing applied with express. Now, is there any such option given to the carrier and to the shipper, to contract
Mr. HAIGHT. They have the full option to contract as to the value above $500. Any clause in the bill of lading which seeks to limit the carrier's liability to less than $500 is made void by the terms of the rules.
Mr. WHITE. Of course, there were some State courts that held those things void, I guess, as against public policy, anyway.
Mr. Haight. We have held uniformly in this country, if a contract is actually closed whereby the value per package agreed upon was $100, that it was a good contract. Under these rules, I think we accomplish what the Harter Act was meant to accomplish; we do not let the carrier and the shipper agree to any value less than $500 per package but, above that figure, you can always pay a higher rate of freight and get the carrier to assume any liability you like.
Mr. WHITE. I see.
Mr. Haight. Under the claims clause in the rules, any man can file a claim and bring suit at any time within 12 months after the delivery of his goods. That cuts out all of this technicality under which 70 or 80 per cent of the claims were outlawed, because the precise terms of the claims clause had not or could not be complied with. As to the burden of proof
Mr. BLAND. How about the claim for nondelivery? You mentioned some period after the date of delivery?
Mr. HAIGHT. Within 12 months after the date on which the goods ought to have arrived, for nondelivery. On the burden of proof, if the carrier delivers goods damaged, having received them sound, he is required to prove himself that the damage did not arise from his own fault—that changes that situation completely-and the carrier is the man who knows how the goods were damaged, and can prove the facts.
Mr. LARSEN. Does it provide that he should specify in the bill of lading the character in which they were received?
Mr. #AIGHT. He is required to state the quantities, the weights, the apparent condition and all of those facts, in his bill of lading when he issues it.
Mr. LARSEN. Now that word "apparent”: Is he permitted to go back of that and say “apparently good,” while they were not?
Mr. Haight. If you receive a case of goods, and the case necessarily conceals the contents, the carrier is not required to guarantee the box is full.
Mr. LARSEN. Who has the burden in that case ?
Mr. LARSEN. To show they were in bad condition when they were received ?
Mr. HAIGHT. Yes; I should say, having received them in apparent good order, if he delivered a case which was half empty, he would be entitled to show that they had been delivered to him half empty by the shipper; but he would have to show it. His bill of lading would be prima facie evidence against him, but not conclusive.
Mr. BLAND. Very much like the custom in respect to receipts? Mr. HAIGHT. Yes. Now, because of these great improvements
Mr. LARSEN. Of course, that is a matter he might determine by the weight of the case; if it was half empty, that could be determined by its weight; but, suppose a case was somewhat damaged, aside from the weight, is the burden still on the carrier to show, at the time he received them, they were not in good condition?
Mr. HAIGHT. If the carrier receipts for them “in apparent good order and condition," and they are delivered damaged, a prima facie case is raised in favor of the complainant against the carrier; but the carrier can always prove that the goods were stored by him in a proper compartment, were never touched by water, were delivered by him in precisely the same condition in which he received them, and if he proves that then the damaged contents would not be charged to him.
Mr. LARSEN. The bill of lading must specify the character of the goods at the time they were delivered to the carrier ?
Mr. HAIGHT. Yes.
Mr. LARSEN. It is either apparently good or else very bad, so he must note that on the bill of lading; is that correct?
Mr. HAIGHT. Right. Because of these advantages which the shippers have derived, the shippers are naturally well pleased with the rule. The shippers all over the world-I can speak from the standpoint of the International Chamber of Commerce-the shippers all over the world are desperately anxious to see this reform made, because if these rules become internationally operative they will give shippers greater security and greater safety than they have ever had before.
Mr. LARSEN. At the same rate, at an equal rate to the former rate?
Mr. HAIGHT. I do not think the freight rate will be changed so that anybody can see the change; but, of course, it is always true that the expense must in the end be taken up in the freight.
Mr. LARSEN. Well, will they be changed upward?
Mr. HAIGHT. I do not believe there will be the slightest change. My belief is this added responsibility will mean greater safety for the goods; you will have an economic saving, and they will save money instead of spending it as they are now.
Mr. EDMONDS. The $500 valuation on the package, of course, would make the shipper secure to the extent of $500; and, of course, the man owning the ship would insure up to $500 against that.
Mr. HAIGHT. He will.
Mr. EDMONDS. That will affect materially not the ultimate cost to the shipper, but it would perhaps change the situation by which the shipping man would require more insurance. That would be about the situation?
Mr. HAIGHT. Yes; but if the greater responsibility means the steamship owners will watch over the goods more carefully, you will have fewer claims and less loss.
Mr. EDMONDS. There will be an economic saving?
Mr. HAIGHT. There will be an economic saving. The bankers are tremendously interested in seeing this international reform brought about, because it means greater security for them while they hold the bill of lading as security against drafts. You gentlemen, of course, know that practically all of our export and import cargo moves under drafts, and the financing is done by the bankers here and abroad. While they hold the bill of lading as security for their advances, they have often little but the bill of lading to protect them; and, if a man gets into financial trouble, they have nothing else to protect them. Mr. CAMPBELL. What about the insurance policy?
Mr. Haight. They have the insurance policy too quite right; but if your bill of lading has a clause which I have seen, reading this way,
The carrier shall have a lien upon the goods shipped hereunder for all freight due on this shipment, and on any past shipments,” your insurance policy does not do you any good, and it might turn out that a particular shipper had not paid his freight on the last three or four shipments and the shipowner says, "I claim all those goods for unpaid freight," and where would the banker be protected?
Mr. LARSEN. Is that situation obviated in this?
Mr. HAIGHT. I should say they could not possibly work that scheme under these rules; I do not think so.
Mr. WHITE. Does a shipowner have a lien on goods he carries, for the freight
Mr. HAIGHT. Always.
Mr. WHITE (continuing). On goods which have passed out of his possession?
Mr. HAIGHT. No.
Mr. WHITE. In other words, he can not assert, as against a particular shipment, a lien for unpaid freights on past shipments?
Mr. Haight. He can if he contracts for it; but, of course, the purpose of these rules has not been to cover the freight end quite so much. That is a question by itself.
Mr. LARSEN. He could not so contract as to endanger the liens of other persons, could he, not a party to the contract ?
Mr. Haight. If he gets a prior lien by his contract I think he can hold it.
Mr. LARSEN. But would he, if another party already had a lien ?