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Supreme Court of the United States
December 1, 1927, Argued ; December 12, 1927, Decided
[*307] [**134] [***292] MR. JUSTICE HOLMES delivered the opinion of the Court.
This is a libel by time charterers of the steamship Bjornefjord against the Dry Dock Company to recover for the loss of use of the steamer between August 1 and August 15, 1917. The libellants recovered in both Courts [****7] below. 13 Fed. 2d 3. A writ of certiorari was granted by this Court. 273 U.S. 679.
By the terms of the charter party the steamer was to be docked at least once in every six months, and payment of the hire was to be suspended until she was again in proper state for service. In accordance [**135] with these terms the vessel was delivered to the petitioner and docked, and while there the propeller was so injured by the petitioner's negligence that a new one had to be put in, thus causing the delay for which this suit is brought. The petitioner seems to have had no notice of the charter party until the delay had begun, but on August 10, 1917, was formally advised by the respondents that they should hold it liable. It settled with the owners on December 7, 1917, and received a release of all their claims.
The present libel "in a cause of contract and damage" seems to have been brought in reliance upon an allegation that the contract for dry docking between the petitioner and the owners "was made for the benefit of the libellants and was incidental to the aforesaid charter party" &c. But it is plain, as stated by the Circuit Court of Appeals, that [****8] ] the libellants, respondents here, were not parties to that contract "or in any respect beneficiaries" and were not entitled to sue for a breach of it "even under the most liberal rules that permit third parties to sue on a contract made for their benefit." 13 F.2d 4. "Before a stranger can avail himself of the exceptional privilege of suing for a breach of an agreement, to which he is not a party, he must, at least show that it was intended for his direct benefit." German Alliance Insurance Co. v. [*308] Home Water Supply Co., 226 U.S. 220, 230. Although the respondents still somewhat faintly argue the contrary, this question seems to us to need no more words. But as the case has been discussed here and below without much regard to the pleadings we proceed to consider the other grounds upon which it has been thought that a recovery could be maintained.
The District Court allowed recovery on the ground that the respondents had a "property right" in the vessel, although it is not argued that there was a demise, and the owners remained in possession. [****9] This notion also is repudiated by the Circuit Court of Appeals and rightly. The question is whether the respondents have an interest protected by the law against unintended injuries inflicted upon the vessel by third persons who know nothing of the charter. If they have, it must be worked out through their contract relations with the owners, not on the postulate that they have a right in rem against the ship. Leary v. United States, 14 Wall. 607. New Orleans-Belize Royal Mail & Central American Steamship Co. v. United States, 239 U.S. 202.
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275 U.S. 303 *; 48 S. Ct. 134 **; 72 L. Ed. 290 ***; 1927 U.S. LEXIS 628 ****
ROBINS DRY DOCK & REPAIR COMPANY v. FLINT ET AL.
Prior History: [****1] CERTIORARI TO THE CIRCUIT COURT OF APPEALS FOR THE SECOND CIRCUIT.
CERTIORARI, 273 U.S. 679, to a decree of the Circuit Court of Appeals affirming a recovery of damages in the District Court, in a suit in admiralty brought by the respondents against the petitioner.
Disposition: 13 F.2d 3, reversed.
libellants, recovered, charter
Admiralty & Maritime Law, Charterparties, Party Liability, General Overview, Contracts Law, Third Parties, Beneficiaries, Claims & Enforcement, Charter Contracts, Breach, Torts, Commercial Interference, Contracts