In February 1914, Emery Co shipped a full cargo of mahogany logs from Belize to New York on the steamship Felix. Part of the cargo was stowed on deck. This was done to trim the ship and to secure additional freight and was in accordance with a custom of the trade known to and acquiesced in by the shipper. The bill of lading issued contained a clause stating that 'General average payable according to York-Antwerp Rules, and, as to matter not therein provided for, according to usages of port of New York'.

During the voyage, the vessel was stranded. In order to float it, part of the deck cargo was jettisoned. One of the logs jettisoned became jammed between the propeller and the stern frame, causing damage to the ship. Other damage to the ship also occurred as a result of the jettison, but all without fault on the part of the ship, its officers, or its crew. General average was declared. No allowances were made or claimed for the cargo. However, the shipowner claimed contribution from the cargo owner for the damage suffered by the vessel and its equipment in the course of jettison. The District Court for the Southern District of New York upheld the claim. The defendant appealed to the Court of Appeals for the Second Curcuit.

Held: The appeal is dismissed.

The majority judgment was given by Swan Cir J. First, he stated that were the York-Antwerp Rules not part of the contract, the cargo loss by jettison, in a trade in which deck cargo is customary, would have to be good as general average (The Hettie Ellis (CC) 20 F 507; The John H Cannon (DC) 51 F 46; Lowndes on General Average (6th edn) 74). Damage incidental to the jettison would also be regarded as good as general average (Lowndes 83; Columbian Insurance Co v Ashby and Stribling 13 Pet, 331, 343, 10 L Ed 186.)

The York-Antwerp Rules excluded the loss of deck cargo from being made good as general average. The defendant argued that, therefore, the damage to the ship incidental to the jettison of the deck cargo was also excluded. It said that since damage incidental to the jettison was included in the general average when the cargo loss is included, so conversely, when the cargo loss was excluded, all incidental damage should follow in its train. It asserted that the language of r 1 intended to exclude the act of jettison with all its consequences. Rule 2, in turn, should be interpreted harmoniously with r 1 by limiting it to damage done by the jettison of underdeck cargo.

The Court did not accept this argument. The Court considered it to be a strained construction of the words used. Moreover, this interpretation would result in the most inequitable consequences. For illustration, it was supposed that in making the jettison of deck cargo, a hatch was torn off, and water damaged the underdeck cargo belonging to a different owner. According to the construction proposed, this damage would be excluded. That appeared to be 'a shocking injustice'.

The defendant also contended that sacrifice could not be made for the common safety unless the sacrifice is one for which allowance was to be made in general average. This was based upon the premise that the Liverpool conference of 1890, which adopted the York-Antwerp Rules of the same year, intended to make no change in the meaning of r 2 of the York-Antwerp Rules of 1877. The authority for the premise was the German case Hansen v Becker. However, this decision directly opposed the defendant's contention and was the only authority that was found on the precise point.

The Court referred to the version of r 2 that appeared in the York-Antwerp Rules 1877 (Lowndes 807). It reads:

Damage done to goods or merchandise by water which unavoidably goes down a ship's hatches opened, or other opening made, for the purpose of making a jettison, shall be made good as general average in case the loss by jettison is so made good.

Damage done by breakage and chafing or otherwise from derangement of stowage consequent upon a jettison shall be made good as general average in case the jettison is so made good.

By comparing r 2 of the Rules of 1890, the Court stated that the phrase 'for the common safety' was twice substituted for the phrase 'in case the loss by jettison is so made good' that appeared in the earlier Rules. The Court said that this change of language cannot be ignored. It is against the defendant's contention and included any jettison made to avert a common physical peril which threatens the whole venture. The Court concluded that the jettison of a portion of the deck cargo might be deemed for the common benefit of all persons interested in the venture, including the deck cargo owner.

Therefore, it was found that r 2 covered the damage to the ship caused by a jettison of deck cargo.

Manton Cir J (dissenting): The authorities speaking on the subject consistently stated that damage which is considered incidental to a jettison is regarded as part of the loss sustained by the jettison (Gourlie on General Average 109; Lowndes 83). It is the rule to allow the loss of freight on a general average to be caused by a jettison if the jettison of the cargo is allowable in general average (Columbian Insurance Co v Ashby, 13 Pet, 331, 10 L Ed 186; Re Nathanial Hooper Fed Cas No 10032, 3 Sumn 542). Therefore, it is settled that if the cargo jettisoned is to be contributed to a general average, then the damage suffered by the vessel in such jettison is to be contributed to the same general average. The reason for allowing so is based on the principles of equity and natural justice (McAndrews v Thatcher 3 Wall 347, 18 L Ed 155; Ralli v Troop 157 US 386, 15 S Ct 657, 39 L Ed 742; Burton v English 12 QBD 218). So, the rights involved should be considered from the point of equity. General average is a contribution by all the parties in a sea adventure, to make good the loss sustained by one of their number on account of the sacrifice voluntarily made on the part of the ship or cargo to save the remainder and from an impending peril or extraordinary expenses necessarily incurred by one or more of the parties for the general benefit of all interested embarking in the adventure (Barnard v Adams 10 How 270, 13 L Ed 417). The damage to the ship is collateral to the jettison. So, unless there is a jettison for the common safety, there is no common sacrifice and no general average. Rule 1 expressly excuses where deck cargo is jettisoned. It does not merely excuse the contribution for the benefit of the cargo owner, but it refers to the jettisoning of deck cargo with all that the phrase means, ie, the act of jettisoning with all its consequences.

Rule 2 and the other York-Antwerp Rules deal with the consequences of the act of jettisoning and specify in each instance what consequences are included within the scope of each rule and to what interest the cargo or freight or either of them applies. Rule 1 refers to the deck cargo and stipulates that there cannot be recovery for its jettison. Therefore, r 2 can only deal with the jettison of other than the deck cargo in so far as it deals with jettisoning at all. It also appeared to the Judge that the wording of r 2 refers to the under deck cargo, for it is phrased: 'A ship's hatches opened or other opening made for the purpose of making a jettison'. So, since r 1 deals with the deck cargo and r 2 with the under deck cargo, there is no liable damage as general average in the considered case.

Furthermore, the deck cargo was jettisoned for the purpose of saving the rest of the adventure. The owner of the deck cargo could not receive any contribution for its loss. Although the deck cargo owner had made the sacrifice, the shipowner asked for further sacrifice by way of contribution for damage done to the ship while jettisoning. The Judge concluded that 'such a claim lacks every essential quality of an equitable demand'. It would be a contradiction of terms to permit the shipowner to recover the contribution from the cargo owner without contributing to the general average itself.

One of the persuasive reasons for r 1 is to relieve the under deck cargo from any and all consequences of the hazard jointly accepted by the deck cargo and the ship when the shipowner saw it fit to earn hire by deck stowage (Strang v Scott (1889) 14 Appeal Cases 609). Therefore, r 2 could not expect a general average contribution for damage sustained by relieving the ship of a hindrance to navigation, which the shipowner accepted without the consent of the under deck cargo (Wright v Marwood (1881) 7 QBD 62).

As for the argument that the change of the wording indicated the intention to allow the contribution as claimed by the shipowner, the Judge stated that r 2 merely extended the right of the ship in addition to the cargo to share in the contribution of the general average where it is allowed in the case of jettison. In the German case Hansen v Becker provided by the defendant, it was attempted to show that the York-Antwerp Rules 1890 were not intended to make any change to the effect of r 2. It was pointed out that the 1890 Conference intended that there should be a general average where the sacrifice is made for the common safety. Taking this into account, the words 'for the common safety' are equivalent to the expression used in the earlier Rules 'in case the loss by jettison is so made good'. Therefore, the damage caused to the ship could not be compensated for if the cargo jettison could not be regarded as a contribution to the general average. To be 'for the common safety', the act of jettisoning should be allowed for compensation. If there were to be no contribution for jettisoning the deck cargo, there could be no general average for the damage caused to the ship.