Home Assurance Co. v. American Steamship Agencies, Inc.

FACTS:
“Consorcio Pesquero del Peru of South America” shipped freight pre-paid at Peru, jute bags of
Peruvian fish meal through SS Crowborough, covered by clean bills of lading. The cargo, consigned
to San Miguel Corporation, and insured by Home Insurance Company arrived in Manila and was
discharged into the lighters of Luzon Stevedoring Company. When the cargo was delivered to
consignee San Miguel Brewery Inc., there were shortages amounting to P12,033.85, causing the
latter to lay claims against Luzon Stevedoring Corporation, Home Insurance Company and the
American Steamship Agencies (shipowner), owner and operator of SS Crowborough.
Because the others denied liability, Home Insurance Company paid SMBI the insurance value of the
loss. Having been refused reimbursement, Home Insurance Company, as subrogee to the consignee,
filed against them before the CFI of Manila a complaint for recovery of the payment paid . In its
answer, Luzon Stevedoring Corporation alleged that it delivered with due diligence the goods.The
CFI, after trial, absolved Luzon Stevedoring Corporation, and ordered American Steamship Agencies
to pay Home Insurance Company the amount demanded with legal interest plus attorney’s fees.
Section 2, paragraph 2 of the charter party, provides that the owner is liable for loss or damage to
the goods caused by personal want of due diligence on its part or its manager to make the vessel in
all respects seaworthy and to secure that she be properly manned, equipped and supplied or by the
personal act or default of the owner or its manager. Said paragraph, however, exempts the owner of
the vessel from any loss or damage or delay arising from any other source, even from the neglect or
fault of the captain or crew or some other person employed by the owner on board, for whose acts
the owner would ordinarily be liable except for said paragraph.
ISSUE: WON the stipulation in the charter party of the owner’s non-liability is valid so as to absolve
the American Steamship Agencies from liability for loss
HELD: Yes. A common carrier undertaking to carry a special cargo or chartered to a special person
only, becomes a private carrier. As a private carrier, a stipulation exempting the owner from liability
for the negligence of its agent is not against public policy, and is deemed valid.
American Steamship Agencies is absolved from liability to plaintiff.
Upon perusal of the agreement, the charter party contract shows that it is one of affreightment over
the whole vessel rather than a demise. As such, the liability of the shipowner for acts or negligence
of its captain and crew, would remain in the absence of stipulation. However, Section 2, paragraph
2 of the charter party, exempts the owner of the vessel from any loss or damage or delay arising
from any other source, even from the neglect or fault of the captain or crew or some other person
employed by the owner on board, for whose acts the owner would ordinarily be liable except for said
paragraph.
The release from liability in this case is not against public policy and is valid. This policy has no
force where the public at large is not involved, as in the case of a ship totally chartered for the use
of a single party.