Memorandum by the Solicitor for the Department of State.
Washington, May 10, 1907.
the tabasqueño v. the united states.
The records of the department show that on the 30th of July, 1898 (during the war with Spain), the Mexican steamship Tabasqueño, which left Vera Cruz for the port of Sagua la Grande, Cuba, July 25, with a general cargo of provisions, was seized by the U. S. S. Hawk when about 10 miles from the latter port, and taken to Key West for adjudication. Sagua la Grande was not a blockaded port, and as the cargo was not contraband the Mexican Embassy protested to this department against the seizure, and the matter was at once taken up by Acting Secretary Moore with the Navy Department and the Department of Justice, with the result that on August 16 the United States marshal was instructed by the Attorney General to release the vessel, and on August 17 the department was informed that the vessel had been released.
On March 11, 1903, the Mexican ambassador presented a claim on behalf of the owners of the vessel and of the cargo, consisting of the following items:
- Seven thousand eight hundred and fifty-two dollars and sixty cents, amount of expenses incurred during the detention of the ship in the port of Key West.
- Sixty-three thousand one hundred and twenty-four dollars and forty cents, difference in the price of the cargo that ought to have been sold in due time in Sagua la Grande and was subsequently sold in Habana after the war ceased, all as a consequence of the capture.
- Three thousand dollars, the amount at which Capt. Geronimo Andraca estimates his “moral” injuries suffered during the detention and seizure of his ship.
The ambassador called attention to the fact that the United States had made reimbursement in the similar cases of the E. R. Nickerson and the Wary, which were presented to this department by the British and German ambassadors here and for which appropriations were made by Congress for the benefit of the British and German subjects who were interested as owners of the vessels and of their cargoes.[Page 608]
Accompanying the note of the Mexican ambassador is a long argument from counsel for the claimants to show that the United States is responsible in damages for the losses which were suffered as a consequence of the seizure. The department replied on April 1 that it was “not disposed to question the principle of liability for the seizure and detention under the circumstances shown,” provided clear proofs were made “of the Mexican citizenship of the shippers and of the owners of the vessel at the time of the seizure, as well as the captain and engineer, who appear to have been the consignees.” As it appeared that the corporation which is prosecuting the claim seemed to have acquired it since it arose, the department stated that what was desired was evidence of the Mexican citizenship of the parties originally injured. The department also informed the Mexican ambassador that the claim appeared to be greatly exaggerated. Special comment was made on the apparently unreasonable charges for demurrage and the abnormally high prices at which the cargo was estimated, which prices had been claimed to be the market prices prevailing in Sagua la Grande at the time of the seizure.
The Mexican ambassador replied, February 11, 1904, inclosing a statement from claimants’ attorney, in which reference was made to sworn declarations of several merchants at Sagua la Grande, already filed by him with the original note of the embassy presenting the claim, showing that the prices of goods then ruling at that place were the same as those now claimed for by claimants. Proof of the Mexican citizenship of the owners of the vessel at the time the claim arose and the assignees of the cargo is submitted; and though the further proof of the Mexican citizenship of the shipper is not furnished, it appears elsewhere in the papers that the shipper, Ruperto Villaneuva, is a Mexican citizen. At all events, if this Government makes any settlement for this claim it will be made with the Mexican Embassy in full of all damages and the embassy will have the responsibility of the further disposition of the proceeds, the fact of Mexican ownership of the ship and cargo having been satisfactorily established.
The department instructed Consul Baehr, at Cienfuegos, on March 11, 1904, to investigate and report as to the prices of grain and provisions ruling at Sagua la Grande at the beginning of August, 1898, and the consul replied on March 28, dispatch No. 52, that the prices were exceptionally high and that the affidavits submitted by the Mexican Government in support of the claim of the owners of the cargo may be accepted as true as showing the correct prices of goods at that time and place.
On May 6, 1904, the department requested Mr. Aspiroz to furnish it with “the orders made by the purchasers of the cargo and the invoices of the shipment and bills of lading,” “in order to enable the department to investigate the matter completely.” The promise was made to give prompt consideration to the claim when these documents were furnished, with a view to the disposition of the matter. The object of this note was to obtain a basis of settlement on the cost of the goods plus a reasonable percentage of profit.
The ambassador furnished in reply, on August 20, 1904, a number of receipted bills corresponding to all the items upon the bill of lading, except a small consignment of 289 bags of corn. While these bills do not constitute an invoice, it would appear that they represent the cost of the cargo as accurately as the invoice would if furnished.[Page 609]
The ambassador, in transmitting the bills, describes them as “the various bills of purchase of the cargo put on board the said steamer in the port of Vera Cruz.”
A duplicate of the bill of lading was furnished, the original having been attached to the ambassador’s note of March 11, 1903. The ambassador calls attention to the fact that the bills of purchase of the cargo (showing the prices for which it was sold in Habana in October, 1898) were also forwarded, original and translation, with his aforesaid note of March 11, 1903, presenting the claim. It thus appears that the embassy has substantially complied with every request for information thus far made by this department.
No definitive action has yet been taken upon the claim. On December 7, 1905, the new ambassador, Mr. Casasus, inquired the status of the claim, and the department, on the 16th of the same month, answered that the matter would have consideration at the earliest possible moment. Again, on March 27, 1906, Mr. Casasus recalled the case to the department’s attention, referring to the department’s promise of December 16, 1905, and asking that some preference be given to the claim.
As the department has admitted liability in principle in this case, it is assumed that the only question now open to discussion is that of amount, and to this question the following is addressed:
amount of compensation.
There are three general specifications of claim:
|1. Losses at Key West during detention||$7,852.60|
|2. Losses of prospective profits on cargo||63,124.40|
|3. Moral injuries to captain of vessel||3,000.00|
The third item should be disallowed in toto. It would appear to have been added simply by way of aggravation. It is entirely unsupported, and even if supported, it is submitted that damages are not recoverable for moral suffering unattended by any injury to the person. (Hale on Damages, 92; Burdick’s Law of Torts, 94; Beven on Negligence, 2d ed., 77.)
The specification of losses at Key West, which aggregate $7,852.60, is itemized as follows:
|Demurrage, 22 days, at $300 per day||$6,600.00|
|Hotel expenses of captain||25.00|
With regard to the first item, it appears from the protest of the captain and the note of the Mexican ambassador presenting the claim that the vessel was seized July 30, 1898, and was released August 16 following, making a period of 17 days. Five days may be allowed for the vessel’s return to Vera Cruz after her release. This is the time taken by the vessel in going from Vera Cruz to Sagua, the point of capture, and the distance from Key West back to Vera Cruz, [Page 610] the point of the vessel’s departure, is about the same as that between Vera Cruz and Sagua. It is customary to allow for the time taken in returning to the home port, and the claims of the Nickerson and the Wary were settled upon this basis. No mention has been made of the number of days which would ordinarily be consumed in returning from Key West to Vera Cruz, the point of embarkation, but attention has just been called to the fact that the distance between Vera Cruz and Key West, and between Vera Cruz and Sagua, where the vessel was seized, is approximately the same. Therefore the time elapsed before capture, which is determinable and amounts to 5 days, has been calculated as the equivalent which would be occupied in returning to the vessel’s home port. It is customary to allow for time prior to capture.
The period of the vessel’s actual detention was 17 days. Adding 5 days for her return to Vera Cruz makes a total of 22 days. This is the same total of time lost as is asked for by claimant.
With reference to the demurrage rate of $300 per day, it is claimed that this rate is not unreasonable and that the custom established by the steamship companies in ports of the Mexican Gulf is to charge $500 to $600 Mexican—that is, from $250 to $300 United States currency—per day. Claimants refer to the Ward Line of steamers to confirm this statement.
The Tabasqueño, according to the deposition of the captain, was a vessel of 303 tons. In the case of the Three Bells, a British vessel of 92 tons, seized at about the same time as the Tabasqueño, a claim of $1,000 was made for 57 days’ detention. In that case the department estimated that if any allowance were made, the demurrage claim should be reduced to $850.1 At this rate the demurrage for the Tabasqueño, calculated at a tonnage of 303, would amount to about $1,070. In the case of the E. R. Nickerson, referred to by the Mexican ambassador, claim was made for demurrage at £3 per day, the Nickerson being a 68-ton vessel. At this rate the demurrage for the detention of the Tabasqueño on a tonnage of 300 tons would amount to about $1,456. The estimate for the demurrage item in the Nickerson claim was reduced by the department from £3 to £2 per day. If a similar reduction were made in this case, the amount to be allowed for demurrage would be two-thirds of $1,135, or about $970. In the case of the Wary, the other vessel referred to by the Mexican ambassador, claim was made at the rate of £8 per day for demurrage, the vessel being of only 22 tons register. The estimate, however, was for an allowance of £1½ per day. At this rate the demurrage item for the Tabasqueño would be about $2,250. An average of these three estimates gives a result of $1,430. I should say, therefore, that an allowance of $1,500 for this item would be just.
Of the balance of the items of the claim for moneys disbursed by the owners of the vessels at Key West, vouchers for attorney’s fees, port charges, and court fees, aggregating $946.60, are furnished. It may be observed, however, concerning the bill for court fees, that it was represented to the owners by one of the employees of the court that the amount paid by them for court fees would be returned upon application. The department is not informed whether such return or reimbursement has been made. The balance claimed to have been [Page 611] expended at Key West, for coaling some $200, cablegrams $81, and the captain’s hotel expenses $25, amounting altogether to $306, is not supported by vouchers, and these should be furnished if an allowance is to be made for these items.
In relation to the principal item of the claim, that is, $63,124.10 (American), being the difference between the price which the cargo would have brought if it had been delivered in due time at Sagua la Grande and the amount for which it was actually sold after the war, the bills of lading showed that the goods as described were shipped on the Tabasqueño. The prices, unreasonably high as they seem to be, are supported by affidavits of merchants at Sagua la Grande and confirmed by our own consul at Cienfuegos. The goods were sold at Habana, and claimants present the declarations and accounts of the commission merchants snowing what the cargo sold for. The gross receipts of the sales were $21,928.36, but the expenses of sale were $14,377.37, leaving only $7,550.99 as the actual proceeds.
Concerning the sale of the goods it must be borne in mind, first, that the cargo was of a perishable nature, and, second, that it was not sold in Habana until the middle of October, two months after the vessel’s release. The various memoranda of sale show that different portions of the same consignment brought five or six different prices, according to quality. Nothing could show more plainly the deterioration of the cargo than these memoranda, and it is self-evident that the greater amount of the deterioration was due to the claimants’ own laches, by failing to market their goods more promptly. There is nothing to show even that the portions of the cargo which were in the best condition were up to the market standard, and even the best prices obtained may have been much below the regular market price. In other words, the department does not know, and has no way of ascertaining, how much the cargo would have brought if it had been sold directly after the release of the vessel, and, therefore, the department does not know how much more than the $21,928.36, which was actually brought, would have been realized but for the laches of the claimants. What the department does know is that at the time of the sale some portions of the cargo had shrunk in value several hundred per cent and that parts of it were thrown away altogether. These losses this Government is now called upon to make good.
The expenses of the sale of the cargo are made up of “customs duties, dray age, commissions, insurance, storage,” etc., much the largest item being customs duties. This item in the case of one shipment alone, the lard, being $5,769.53—nearly as much as the gross proceeds of the lard. It must be assumed that had the cargo been delivered in due time at its destination at Sagua la Grande the claimants would have been required to pay the customs duties, commissions, and most of the other items of charge, and proper deductions should, therefore, be made from the claim as presented, if the department decides to accept the basis of prospective profits as the proper one for the adjustment of the claim.
An attempt has been made in the few immediately foregoing paragraphs to show the practical impossibility of arriving at a fair estimate of damages upon the basis of prospective profits; but, in addition to the impracticability of this method, I am convinced from an [Page 612] examination of the precedents that it is incorrect in point of law, and that the estimate upon which settlement should be made is the cost of the goods at the port of embarkation plus a reasonable percentage as profit upon the venture.
A fair way to examine the question would be to consider it as if it would come before the Supreme Court of the United States for final decision or revision and judge it by the rules which that court would almost certainly apply if an appeal lay to that tribunal. There is a numerous class of cases, chiefly actions for breach of contract and involving in most cases the law of common carriers, where special considerations apply, in which it is held that the proper measure of damages is the value of the goods at the time and place where the carrier has contracted to deliver them. The basis of the doctrine in these cases is that it is the policy of the law to hold the carrier liable for the full value at the time and place of destination to remove from him all temptation to fraud.
But the rule of damages in cases of marine torts is an entirely different one. It was announced as early as 1794 by the Supreme Court of the United States, in the case of Del Col v. Arnold (3 Dall., 333) that for an unlawful spoliation of cargo the measure of responsibility was “the full value of the property injured or destroyed.”
The rule was next enunciated by Mr. Chief Justice Marshall in the case of the Charming Betsy, 2 Cranch, 64 (1804), wherein it was ordered that—
the commissioners be instructed to take the actual prime cost of the cargo and vessel with interest thereon, including the insurance actually paid and such expenses as were necessarily sustained in consequence of bringing the vessel into the United States, as the standard by which the damages ought to be measured.
The rule of damages thus established has been followed from that time through a series of decisions entirely unbroken and unchanged.
In the case of the Lively, 1 Gall., 325 (1812), Mr. Justice Story, after reviewing all the authorities up to that time involving analogous principles, stated (p. 324) that he was not aware of a single authority in the higher courts of admiralty in which supposed profits formed an item of damage in cases of restitution. The learned justice continues:
Independent, however, of all authority, I am satisfied upon principle that an allowance of damages upon the basis of a calculation of profits is inadmissible. The rule would be in the highest degree unfavorable to the interests of the community. The subject would be involved in utter uncertainty. The calculation would proceed upon contingencies, and would require a knowledge of foreign markets to an exactness in point of time and value which would sometimes present embarrassing obstacles. Much would depend upon the length of the voyage and the season of arrival, much upon the vigilance and activity of the master, and much upon the momentary demand. After all, it would be a calculation upon conjecture, and not upon facts. Such a rule, therefore, has been rejected by courts of law in ordinary cases, and instead of deciding upon the gains or losses of parties in particular cases, an uniform interest has been applied as the measure of damages for the detention of property. * * *
Again in 1817, in the Anna Maria (2 Wheat., 327), Mr. Chief Justice Marshall announced the same rule, and the next year, in the case of the Amiable Nancy (3 Wheat., 560), Mr. Justice Story, citing with approval the cases of the Anna Maria and Del Col v. Arnold, said:
Another item is $3,500, for the loss of the supposed profits of the voyage on which the Amiable Nancy was originally bound. In the opinion of the court [Page 613] this item was also properly rejected. The probable or possible benefits of a voyage, as yet in fieri, can never afford a safe rule by which to estimate damages in cases of marine trespass. There is so much uncertainty in the rule itself, so many contingencies which may vary or extinguish its application, and so many difficulties in sustaining its legal correctness, that the court can not believe it proper to entertain it. In several cases in this court the claim for profits has been expressly overruled; and in Del Col v. Arnold (3 Dall., 333), and the Anna Maria (2 Wheat., Rep., 327), it was, after strict consideration, held that the prime cost, or value of the property lost, at the time of the loss, and in case of injury, the diminution in value by reason of the injury, with interest upon such valuation, afforded the true measure for assessing damages. This rule may not secure a complete indemnity for all possible injuries, but it has certainty and general applicability to recommend it, and in almost all cases will give a fair and just recompense.
Two years later, in 1820, in the case of La Amistad de Rues (5 Wheat., 389), Mr. Justice Story said:
In the cases of marine torts this court have deliberately settled that the probable profits of a voyage are not a fit mode for the ascertainment of damages. It is considered that the rule is too uncertain in its own nature and too limited in its applicability to entitle it to judicial sanction.
And in 1824 (The Apollon, 9 Wheat., 362) the same great justice declared:
This court, on various occasions, has expressed its decided opinion that the probable profits of a voyage, either upon the ship or cargo, can not furnish any just, basis for the computation of damages in the cases of marine tort. The basis has accordingly been, in every instance, rejected. Where the vessel and cargo are lost or destroyed, the just measure has been deemed to be their actual value, together with interest upon the amount, from the time of the trespass. * * * And it may be truly said that if these rules do not furnish a complete indemnification in all cases, they have so much certainty in their application, and such a tendency to suppress expensive litigation, that they are entitled to some commendation, upon principles of public policy.
* * * * * * *
The second item is perfectly correct, except as to the allowance of the 10 per cent. The cargo was sold at the market, though not at the port, of its destination, and from the appraisement it appears to have sold for a higher price than it was valued at. The ground of the allowance of the 10 per cent then fails, for that is given for supposed losses upon a forced sale, or a falling market.
In a different species of marine tort, but one apparently involving the same principle—namely, damages caused by collision—Mr. Chief Justice Taney held that the actual damage sustained at the time and place of the injury is the measure of damages and not the probable profits at the port of destination. (Smith v. Condry, 1 Howard, 28, 1843.) A similar rule was likewise laid down in 1871, by Mr. Justice Swayne, where a cargo was lost in transitu. (The Telegraph and Vaughan, 14 Wall., 258.)
The principle expounded in the foregoing decisions is followed by Mr. Justice Nelson in the case of the Ocean Queen (5 Blatch., 493), citing the Anna Maria, Smith v. Condry, and the Lively.
Upon the authority of the foregoing cases, it is submitted that the amount of damage sustained by the owners of the cargo of the Tabasqueño must be measured by the cost of the goods at the port of embarkation, plus a reasonable percentage for profit. The bills of purchase, excluding the corn, which have been furnished to the department, aggregate $35,891.37 (Mexican), equivalent to about $18,000 in our currency. The department does not know the cost of the corn, as no bill of purchase has been furnished for this item. [Page 614] Its selling price in Habana was $738.76. By a comparison of the cost of the cargo in Vera Cruz and the gross selling price therefor in Habana, I find that they are approximately the same. An estimate for the corn is therefore placed at $750. This would make the estimate for the entire cargo $18,750.
It is true that a more liberal rule was applied by England in the Delagoa Bay seizures (cf. the cases of The Mashona and The Beatrice, Foreign Relations, 1900, pp. 529–618) during the South African war, where shipments of provisions owned by American merchants were in several cases paid for at the price prevailing in the port of destination at the time of the seizures. But it will be recalled that these cases were not strictly analogous to the present one, for it was there held that there was probable cause for the seizure and detention of the vessels, and the offer to purchase the supplies was made by the British Government, because it appeared to be a convenient way of making good to the neutral owners the loss which, in view of the Government, would have accrued to the owners through the delay caused by the arrest of the carrying ship; and in the case of one of the American claimants Lord Salisbury said that the payment was made purely ex gratia. (Foreign Relations, 1900, pp. 617–618.)
In view of the fact that the voyage of the Tabasqueño was made in good faith and that she was engaged in an innocent traffic, I would incline to the view that a somewhat liberal interpretation might be given to the rule of damages governing the cargo if it were not for the fact that the vessel lost so much time after her release at Key West, in the middle of August, before proceeding to Habana, the goods not being sold in that city until almost two months thereafter. The cargo would have been much more valuable and would have brought a much higher figure if the vessel had proceeded at once to Habana. It appears to me, therefore, that this Government would be acting generously if it fixed a compensation which would save the claimants harmless on account of their venture and set off an allowance for probable profits against the loss by deterioration during the period of the two months’ delay for which this Government is in no way responsible. This loss is an indeterminate one, but it is certainly equivalent to any fair percentage which would be allowed by a prize court for profit reckoned on the prime cost of the cargo.
If this basis of settlement is adopted, the cost of the cargo will be placed at $18,750. Deducting from this the sum of $7,550.99, proceeds of the sale at Habana, would leave in round numbers $11,200, which may be paid on account of the cargo, to which it would be no more than just to add interest at 6 per cent from the time of the injury to date of satisfaction. If the claimants can show that they were not responsible for the two months’ delay in the sale, I will recommend that an additional allowance of $3,000 be made for profits—approximately 15 per cent upon their venture.
With regard to the amount of damages which may be paid on account of the vessel, I recommend that an allowance of $1,500 be made for demurrage, $785.70 for attorneys’ fees and port charges, for which vouchers have been furnished, and that the embassy should [Page 615] be asked to furnish vouchers for the items of coal, cablegrams, and the captain’s hotel expenses, and also to state whether the charge of $160.90 for court fees was reimbursed to claimants; that Mr. Creel, the new Mexican ambassador, be advised of the department’s conclusions in the premises, and that he be informed that upon receipt of the additional data called for the department will make a recommendation to Congress asking for an appropriation for reimbursement of the claimants in the sums as calculated in the foregoing memorandum.
- The department subsequently denied all liability for this seizure and rejected the claim in toto.↩