Mate’s Receipt Last updated 28-Jun-2015

‘The master is not the party generally concerned in the shipping and taking on board or stowing of goods. He generally acts in signing his bills of lading upon the mate’s receipt or notes’
William Brass and James Stanes v Frederick Charles Maitland and John Dick Crum Ewing (1856) 119 ER 940 per Crompton J.

General notes on mate’ receipts

Production of mate’s receipt is if not a completely archaic practice then rather outdated nowadays, although apparently still existing in some places. It belonged to pre-containerised-shipping era when general goods, so called break-bulk cargoes (read about Breakbulk ships and Breaking Bulk), were shipped packed in bags, barrels, pallets, etc. Each item of such merchandise when delivered on board of sea carrier, i.e. "shipped", shall be inspected for defects, tallied up and registered by ship’s officer (mate) in receipt in agreement with shipper representative (tally clerk or tallyman). Nowadays such goods usually delivered for shipment in containers, therefore no more need to check and record every item or pallet.

Thus, mate’s receipt is a document originally issued by the first mate of the ship (see photo), who is in charge for cargo operation. Then mate’s receipt or receipts collected by the shipper or his representative and later exchanged for a bill of lading, which should incorporate any qualifications or conditions inserted into the mate’s receipt. In modern practice, mate’s receipt, when exists, is usually signed by the representative of shipping company or its agents, who is responsible for loading and not by ship’s officer. Since, as mentioned above, all the business related to mate’s receipt is of some antiquity, I offer below several illustrations of how it operated in its original mode on case law example from the nineteenth century: Schuster v M’Kellar (1857) 7 El. Bl. 704. It shows way of dealing with mate’s receipts and associated legal issues and liabilities.

Schuster v M’Kellar:
conversion when property never passed from unpaid vendor

In February 1854 London merchants Schuster & Co., by order of another London merchants Coles, Brothers, and on their account, purchased on their own credit and in their own names a large quantity of spelter. They accepted drafts for the price, and debited Coles, Brothers, with the amount of those drafts and a commission of one per cent, for purchasing. The greater part of this spelter was shipped from Hamburg for New York in the name of Schuster & Co. and the bills of lading were made deliverable to their order. The remainder, which consisted of two parcels forming together a little more than 100 tons, was, by order of Coles, Brothers, shipped from Hamburg for London. This also was shipped in the name of Schuster & Co., and, on its arrival, was warehoused in the wharf, in the name of Schuster & Co.

There was a custom between Coles, Brothers and Schuster & Co. (this course of business was general in London) that when Coles, Brothers wished to ship any goods so pledged, the course of business was for Schuster & Co. was to give to the lightermen employed by Coles, Brothers, an order on the warehousemen for the delivery of the goods, taking, at the same time, the lighterman’s undertaking to give the mate’s receipt to Schuster & Co. The lighterman then shipped the goods as directed by Coles, Brothers, taking the mate’s receipt which he delivered to Schuster & Co. In such cases Coles, Brothers, before they got the bills of lading signed, procured from Schuster & Co. the mate’s receipt by paying off the advance upon the goods it was then attached to the bills of lading, which were delivered to the ship’s broker; and then the bills of lading were signed.

In this particular transaction, Coles, Brothers, informed Schuster & Co. that they intended to ship the spelter in question, part to Bombay part to Calcutta; and Schuster & Co., at their request, gave to a lighterman who ordinarily acted for Coles, Brothers, delivery order for 100 tons split in two parcels, one for Bombay and one for Calcutta to be delivered on board of the Emperor. Mate’s receipt for Calcutta’s parcel was in blank (see picture), i.e. without name of shipper from whom the goods were received.

mate's receipt

The shipowner, and the master, of the Emperor, admitted that the goods were delivered and mate’s receipt was signed by the mate of that ship.

Coles, Brothers, sent to the shipowner’s broker for signature bills of lading bearing for 3268 plates spelter, fraudulently expressing that they were shipped by Coles, Brothers, deliverable at Calcutta to order. Ultimately a memorandum "eight pieces in dispute, if on board, will be delivered," was added to the bills of lading; and, with this addition, they were signed and delivered to Coles, Brothers without request for mate’s receipt, who endorsed the bills of lading to The Oriental Bank as security for an advance.

Schuster & Co., after receiving the mate’s receipt, repeatedly applied to Coles, Brothers, to redeem it, and were informed they would do so presently. Schuster & Co. made no application to the ship-brokers, and made no further inquiries, till, on June 24th, Coles, Brothers, failed. Schuster & Co. then learned, for the first time that the Emperor had sailed on the 16th of June.
On arrival at Calcutta master delivered the goods to the holder of bill of lading. Schuster & Co. sued the owner for conversion.

Evidence provided by the merchant witnesses in the court was to the effect that bills of lading ought to be given to the holder of the mate’s receipt, and that, though sometimes they were signed without requiring its production, yet, if it was known that the mate’s receipt existed, that was irregular. A mate’s receipt was always given when goods are shipped from a lighter, but not when they are shipped from the quay; so that a mate’s receipt does not necessarily accompany all bills of lading.

The court held that Schuster & Co. purchased the spelter from the merchant at Hamburg, with the view of transferring it to Coles, Brothers; and their profit was to be a commission on the price paid for it: but they purchased it in their own names; they paid for it with their own money; they received it under a bill of landing making it deliverable to their own order; it was warehoused in their own names in the port of London; and the intention of the parties was that it should remain the property of the shipowner till, according to the usual course of dealing, they received the price of it from Coles, Brothers, by the redemption of the mate’s receipt. Accordingly the property therefore remained in Schuster & Co. when the spelter was delivered at Calcutta. The master was held to be responsible for conversion because he, as employed to superintend the loading of the ship, had known that there was a mate’s receipt, and it would have been his duty to have required the production of it, and to have attached it to the bill of lading. Their knowledge of it might well have been presumed, and was not negatived by any evidence.

Mate’s receipts continued their existence as a mere receipt for goods tallied up for shipment in the twentieth century. Nippon Yusen Kaisha v Ramjiban Serowgee [1938] A.C. 429 case distinguish function of mate’s receipt from that of bill of lading, in particular that mate’s receipt is not a document of title to the goods shipped and its transfer does not pass property in the goods, nor is its possession equivalent to possession of the goods.

Nippon Yusen Kaisha v Ramjiban Serowgee:
evidence of the quantity and condition of the goods received

In that case Ramjiban Serowgee, brokers and merchants of Calcutta, on May 4, 1926, entered into three identical contracts with three mills respectively for the purchase of 250 bales of gunnies. On the same day respondents sold the same quantity of 250 bales and on the same terms to the International Export Company, Limited (hereinafter called the "Export Company").

Clause 3 of the terms and conditions provided that "Payments to be made in cash in exchange for … mates’ receipts (which … are be handed … to the seller’s representatives)";
and by clause 4:
"The buyers hereby acknowledge that so long as such … mates’ receipts (whether in sellers’ or buyers’ name) are in possession of the sellers, the lien of the sellers as unpaid vendors subsists both on such mates’ receipts and the goods they represent until payment in full."

The contracts stipulated for delivery free alongside export vessel in the port of Calcutta.
The Export Company booked freight space with the shipowners, Nippon Yusen Kaisha, and stipulated in the shipping order that the mate’s receipts must be exchanged for bills of lading. On May 4, 1926, the Export Company gave shipping instructions to brokers Ramjiban Serowgee, which they passed on in the same terms to the three mills, and in due course the goods were sent on board two of the owners’ vessels for delivery to Kobe, Japan, and mates’ receipts, in which the Export Company was identified as shippers, were delivered to the mills on May 17, 18, 24 and 25.

The shipowners forthwith issued respective bills of lading to the Export Company without the mates’ receipts being given in exchange, but in exchange for letter of guarantee or indemnity from the Export Company by the appellants. The brokers Ramjiban Serowgee paid for the goods and obtained the mates’ receipts, and then tendered the mates’ receipts to the Export Company, who defaulted in payment. Thereupon the brokers Ramjiban Serowgee, on May 27, 1926, notified the shipowners in writing that they had an unsatisfied lien or claim for the price of the goods as unpaid vendor, and that bills of lading must not be issued by the master until the mates’ receipts had been surrendered to them. By that time, however, the Export Company, having the bills of lading in their possession, had resold the goods to purchasers in Japan, and had drawn bills of exchange for the price on the purchasers, which bills they had discounted with the International Banking Corporation and he endorsed the bills of lading to that Bank by way of security the bills of lading.

The brokers Ramjiban Serowgee, as they could get no satisfaction from the Export Company, and as the shipowners replied that they had passed bills of lading on the shipper’s (that is, the Export Company’s) own letter of guarantee and referred the respondents to the shippers, issued their writ, claiming payment of the price from the Export Company and damages from the brokers. In due course the vessels, the Moji Maru having sailed on May 19 and the Hakata Maru on June 4, 1926, proceeded to their destination, and the goods were delivered at Kobe on presentation of the bills of lading. The brokers claimed from the shipowners the value of these three consignments of jute gunny bags.

The House of Lords held that the brokers never had delivered the goods to the ship in their own name as shippers, because mate’s receipts were in the name of Export Company. Thus they never had title in the goods and property never passed from them, therefore the brokers never had a right in the nature of property and would not be able to support an action in conversion or trespass. Lord Wright gave the following characteristic to mate’s receipt, at p.445:

The mate’s receipt is not a document of title to the goods shipped. Its transfer does not pass property in the goods, nor is its possession equivalent to possession of the goods. It is conclusive, and its statements do not bind the shipowner as do the statements in a bill of lading signed within the master’s authority. It is, however, prima facie evidence of the quantity and condition of the goods received, and prima facie it is the recipient or possessor who is entitled to have the bill of lading issued to him. But if the mate’s receipt acknowledges receipt from a shipper other than the person who actually receives the mate’s receipt, and, in particular, if the property is in that shipper, and the shipper has contracted for the freight, the shipowner will prima facie be entitled, and indeed bound, to deliver the bill of lading to that person.

Both cases above were concerned with situations where unpaid vendor was trying, in one case successfully and in another not, to recover their damages partly resulted from the fact that shipowner signed bill of lading without exchanging it for mate’s receipt(s). Unpaid vendor succeeded in case when, although mate’ was in blank, on the weight of the evidence provided in the court it was found that a regular practice of London merchants required that bills of lading ought to be given to the holder of the mate’s receipt. But the main tenor was that property was not intended to pass and actually always remained with the vendor, i.e. delivering the goods to the holder of bill of lading constituted conversion.

On the other hands, when vendor delivers the goods as being shipped by the another company who books freight from the owner, and also takes a mate’s receipt which expressly stated the name of this another company as shippers, then such unpaid vendor has no course of action against shipowner, because the former has never had possession of the goods, which was always with the shippers and the owners therefore were entitled, and indeed bound, to deliver the bill of lading to the holder of bill of lading.

The Nogar Marin:
master’ duty of care when signing documentation

Another and more recent case examined below concerns another side of operation of mate’s receipt. On Jan. 4, 1980, the Nogar Marin sailed from Caen from Tampa laden with a cargo of wire rods in coils. The charterers were manufacturers of the goods, who conveyed them to the quay at Caen, and shipped them for their own account. Although some of the coils were rusty when shipped, the ship’s agents signed clean bills of lading. Upon arrival at Tampa the damage was discovered. The receivers of the cargo arrested the vessel and made a claim to which the shipowners had no answer except on quantum, since the bills had not been claused. The owners settled this claim under bill of lading contract and proceeded with a claim against the Charterers alleging that the Charterers were obliged to indemnify them to the extent that the bill of lading imposed greater obligations on them than the charterparty did.

In particular the Owners’ contended that the Charterers could not seek to defeat the Owners’ claims on the grounds of the master’s negligence in signing clean bills of lading because since they knew about the true condition of the cargo and the discrepancy between its true condition and its description on the mate’s receipt and bill of lading, it could not be said that the master was in breach of a duty owed to the Charterers.

The Court of Appeal disagreed with the Owners, holding that the fact that Charterers might have actual or constructive knowledge of the condition of the cargo does not mean that a master owes them no duty of care when signing documentation which will be negotiated for value to third parties.

Mustill LJ said at p.420:

… a mate’s receipt is in a quite different category from a bill of lading. No doubt the parties foresee that some such document will be signed. But the mate’s receipt is what its name indicates: an acknowledgment to the shippers that the ship has taken delivery of the goods.

Nor does it share the prime characteristic of a bill of lading, of being a document which can be negotiated to third parties, thereby putting the shipowners into a new contractual relationship over which they have no control. It is a simple receipt. True it is, that if the mate or master signs it without qualification, it may put his owners into difficulties with the shipper who bails the goods into the custody of the ship, because it is prima facie evidence of receipt in good order and condition. But this creates no new liability, and no new party is involved. The master must choose for himself how to act, and the notion that if the charterer happens also to be the shipper he is in breach of duty under the charter-party by offering the master a document which, if carelessly signed by the master without proper enquiry, will constitute evidence in favour of the person who tenders it, is not a concept which we can grasp.

Recent London Arbitration case shows that neglect recording of cargo quantities in mate’s receipts will make owners liable for cargo-related claims, such for example as deadfreight. Four draft surveys each showed a load of more than the amount recorded by the shore scales. Neither mate’s receipt nor bills of lading reflected any discrepancy between shore measurements and draft surveys. Master issued Letter of Protest but only when he has already signed bills of lading. Charterers’ claim succeeded on the basis of Tribunal’s findings that the Master did not do all he reasonably could to protect the Respondents’ interests. He should have made direct contact to advise them promptly of the discrepancy. He also should not have signed the mate’s receipts before obtaining their instructions.

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