The Acting Secretary of State to the Mexican Ambassador.
Washington, July 2, 1907.
Excellency: Answering your note No. 50 of the 9th of May last, I have the honor to inform you that the department has made a careful examination of the claim submitted by your embassy in behalf of the owners of the ship and cargo on account of the seizure of the Mexican steamship Tabasqueño by the U. S. S. Hawk July 30, 1898, off the port of Sagua la Grande, Cuba, and the subsequent detention of the vessel at Key West.
The evidence submitted by your embassy in support of this claim shows that there are three general specifications of damage:
|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|
With regard to the third item the department is unable to recommend that any allowance be made. It appears to be entirely unsupported, and the department is constrained to say that, even if it should be sustained by documentary or other proof, the decided preponderance of legal authority is to the effect that damages are not recoverable for mental suffering unattended by any injury to the person.
With regard to the specification of losses at Key West during the detention of the vessel, the department notes that the principal item of claim is for the detention of the vessel. The department accepts the basis proposed by the claimant, of 22 days, including 17 days actual detention and 5 days for return to port of embarkation, but it is unable to agree to the reasonableness of the charge of $300 per day for such detention. After calculating the amounts paid for demurrage in cases of other seizures made by American cruisers during the late war, where the vessels were ultimately released, the department has reached the conclusion that a total allowance of $1,500 for demurrage would be just under the circumstances.
For the balance of the items of the claim for moneys disbursed by the owners of the vessel at Key West, vouchers for attorney’s fees, court charges, and court fees, aggregating $946.60, are furnished. It may be observed, however, concerning the bill for court fees, [Page 616] amounting to $160.90, that it was represented to the owner by one of the employees of the court that the amount paid by them for this charge would be returned upon application. The department is not informed whether such return or reimbursement has been made. The balance claimed to have been expended at Key West for coal consumed, $200, cablegrams, $81, and the captain’s hotel expenses, $25, amounting altogether to $306, is not supported by vouchers. Vouchers should be furnished for these items before an allowance can be made therefor.
The principal item of the claim is for $63,124.10, being the difference between the price which the cargo would have brought if it had been delivered in due time at Sagua and the amount for which it was actually sold after the war.
The bills of sale at Habana show that the gross receipts were $21,928.36, while the expenses of the sale were $14,377.37, leaving $7,550.99 as the actual proceeds.
Concerning the sale of the goods, it is observed that the cargo was of a perishable nature and 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. These memoranda plainly show the deterioration of the cargo, and it would appear that the greater amount of this deterioration was due to the claimants’ laches in failing to market their goods more promptly. The department does not know how much the cargo would have brought if it had been sold directly after the release of the vessel, and therefore it is unable to estimate how much more than the sum which it actually brought would have been realized but for the laches of the claimants.
The expenses of the sale of the cargo are made up of “customs duties, drayage, commissions, insurance, storage,” etc., much the largest item being for 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, the claimants would have been required to pay the customs duties, commissions, and most of the other items of charge.
The observations immediately foregoing may serve to indicate the practical impossibility of arriving at a fair estimate of damages upon the basis of prospective profits, but in addition to impracticability of this method, the department is convinced from an examination of the precedents that such a basis of damages is incorrect in point of law, and that the estimate upon which settlement should be made in the ordinary case of a marine tort is the cost of the goods at the port of embarkation, plus a reasonable percentage of profit on the venture.
As early as 1804, in the case of The Charming Betsy, this rule was enunciated by Mr. Chief Justice Marshall. (The Charming Betsy, 2 Cranch, 64, 1804.) In that case 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 damage 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. (The Lively, 1 Gall., 325, 1812; the Anna Maria, 2 Wheat., 327, 1817; the Amiable Naney, 3 Wheat., 560; La Amistad de Rues, 5 Wheat., 389, 1820; the Appollon, 9 Wheat., 362, 1824. And see also the collision cases: Smith v. Condry, 1 How., 28, 1843; The Telegraph and Vaughan, 14 Wall., 258, 1871.)
In the case of the Apollon (9 Wheat., 362) Mr. Justice Story said:
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.
Upon the authority of the foregoing cases this department concludes that the amount of damage sustained by the owners of the cargo of the Tabasqueño must be measured in the first place by the cost of the goods at the port of embarkation. Whether or not, under all the circumstances, a percentage should be allowed for profits is reserved for the consideration in a subsequent paragraph.
Bills of purchase covering nearly all of the cargo have been submitted by your embassy, amounting to the equivalent of about $18,000 in United States currency. Estimating the value of the corn, for which no bill of purchase was submitted, at $750, the total estimate for the entire cargo amounts to $18,750.
Upon this original outlay a credit must be deducted of $7,550.99, the proceeds of the sale at Habana, which the claimants have already received. This would leave in round numbers $11,200 to be paid on account of the cargo.
With regard to an allowance for profits, the department is of the opinion that under the circumstances of this case, as presented to it, no recommendation should be made. No explanation has been offered of the claimants’ failure sooner to market their cargo after the release of the vessel. It seems evident to this department that if the sale had been made before the cargo, which was known to be perishable, had been allowed to deteriorate, a much larger sum could have been realized than that actually received at the sale at Habana, and the balance remaining to be paid in order to save the claimants harm-Jess would have been correspondingly reduced. The department therefore sees no reason why it should make good the deficit and in addition make an allowance for profit where the claimants’ own apparent negligence had minimized if not made impossible the opportunity for any profit at all.
The department would be glad to have the embassy supply further proofs as to the minor items of expense at Key West, to which the [Page 618] attention of the embassy has been directed in the foregoing paragraphs, and it would also be glad to be informed as to whether the Mexican Government agrees with the calculations as above made, with respect to an allowance of $1,500 for demurrage and $11,200 on account of the cargo. On all allowances the department is of the opinion that 6 per cent interest should be added, from the time of the injury to the date of satisfaction. If these views meet with the concurrence of the Mexican Government, the department will recommend to Congress, at its next session, an appropriation for the settlement of the case in accordance with the views above expressed.
Accept, Excellency, the renewed assurance of my highest consideration.