Source: https://supreme.justia.com/cases/federal/us/310/268/
Timestamp: 2019-04-19 18:29:34+00:00

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Justia › US Law › US Case Law › US Supreme Court › Volume 310 › Dampskibsselskabet Dannebrog v. Signal Oil Co.
1 Where, by the terms of a charter party, the charterer has the direction and control of the vessel, and there is no prohibition against the creation of liens for necessary supplies ordered by the charterer, one who, on the order of the charterer, supplies fuel oil to the vessel is entitled to a maritime lien, even though the charter requires the charterer to "provide and pay for" fuel. Construing the Act of June 23, 1910, as amended. Pp. 310 U. S. 271, 310 U. S. 275.
Semble, where the charter party prohibits the creation of a lien for supplies ordered by the charterer, no lien will attach.
2. The fact that the supplier had a general contract with the charterer to supply "the fuel oil requirements of any and all vessels owned, chartered, or operated" by the latter held not to defeat the lien where such contract did not provide that the oil should be supplied on the sole credit of the charterer or negative the creation of maritime liens for supplies actually furnished to the vessels in satisfying their requirements. P. 310 U. S. 276.
3. The Act of June 23, 1910, as amended, provides that "any person to whom the management of the vessel at the port of supply is entrusted" shall be presumed to have authority to procure supplies upon the credit of the vessel. Held that, where, apart from mere navigation, the vessel is placed under the direction and control of the charterer as the hirer of the vessel, who as such may determine to what port she shall go and what she shall carry, subject only to specified exceptions, then the charterer, in the absence of any provision to the contrary, is deemed to be entrusted with the vessel's management, within that provision of the Act. Pp. 310 U. S. 277, 310 U. S. 279-280.
Certiorari, 309 U.S. 644, to review the affirmance of decrees in admiralty, 25 F.Supp. 594, sustaining maritime liens.
The question is whether the respondent is entitled to maritime liens for fuel oil delivered to petitioners' vessels.
In September, 1932, respondent, Signal Oil and Gas Company, made a contract with the Anglo Canadian Shipping Company, Limited, agreeing to sell fuel oil to any vessel which the Anglo Canadian Company might own, charter or operate. In May, 1933, the parties modified the contract so as to include the fuel oil requirements of vessels owned, chartered or operated by W. L. Comyn & Sons. Later, the respective owners of the two vessels here in question, the "Stjerneborg" and the "Brand," chartered them to W. L. Comyn & Sons.
except as before stated. The charterers were to pay "for the use and hire" of the vessel a stipulated amount commencing "on and from the day of her delivery" and to continue until "the day of her redelivery in like good order and condition, ordinary wear and tear excepted, to the owners (unless lost) at a safe port" as designated. It was provided that the captain, although appointed by the owners, should be "under the orders and direction of the charterers as regards employment of agency," and the charterers were to load, stow, and trim the cargo at their expense under the supervision of the captain. If the charterers should have reason to be dissatisfied with the conduct of the captain, officers, or engineers, the owners, if necessary, should make a change in the appointments. The charterers were allowed to appoint a supercargo to accompany the vessel and "see that voyages are prosecuted with the utmost despatch." It was further provided that nothing in the charter should be construed as a "demise," and that the owners were to remain responsible for the navigation of the vessel. The charters contained no prohibition against the creation of liens for necessary supplies ordered by the charterers.
Respondent libeled the vessels for fuel oil supplied to the vessels respectively on the charterers' order, and the owners appeared and filed answers alleging that the oil was furnished upon the charterers' credit, and not upon that of the vessel.
The District Court sustained the liens, 25 F.Supp. 594, and the Circuit Court of Appeals affirmed the decrees. 106 F.2d 896. Because of an alleged conflict with decisions of the Circuit Court of Appeals of the Fifth Circuit in The Cratheus, 263 F. 693, and Pensacola Shipping Company v. United States Shipping Board, 277 F. 889, certiorari was granted. 309 U.S. 644.
Golden Gate, 52 F.2d 397. The Golden Gate was a case of a time charter which required the charterer to provide and pay for fuel oil, but contained no provision denying the right of the charterer to bind the ship for necessary supplies. The court said that, in the absence of such a prohibition, the ship was bound whether the supplies were ordered by the charterer or by the master. The ruling was reiterated by the same court in The Luddco, 41, 66 F.2d 997-998. In further support of its position, respondent cites the following cases from other circuits: The Everosa, 93 F.2d 732, 735; The J. W. Hennessy, 57 F.2d 77, 79, 80; The Anna E. Morse, 286 F. 794, 798; Munson Inland Water Lines v. Seidl, 71 F.2d 791, 793.
Petitioners rely upon our decisions in The Kate, 164 U. S. 458, 164 U. S. 464, and The Valencia v. Zeigler, 165 U. S. 264, to the effect that, where the charter party requires the charterer to provide and pay for supplies, the supplier, being charged with knowledge of the provisions of the charter party, was not entitled to a maritime lien for supplies furnished to the vessel upon the order of the charterer.
"when the furnisher knew, or, by exercise of reasonable diligence could have ascertained, that, because of the terms of a charter party, agreement for sale of the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor."
or by reasonable diligence could have ascertained them. So far, the principle of The Kate and The Valencia, supra, is embodied in the statute. But it does not follow that, in the light of the statute, The Kate and The Valencia can still be regarded as authority for the view that the mere fact that the charterer is bound to provide and pay for the supplies excludes the supplier from having a maritime lien when the charter party contains no prohibition against its creation.
vessel free of liens upon the charterer's failure to make certain payments.
We think that the fair import of our decision in The South Coast is that, when the charterer has the direction and control of the vessel and it is his business to provide necessary supplies, and the charter party does not prohibit the creation of a maritime lien therefor, the materialman is entitled to furnish the supplies upon the credit of the vessel as well as upon that of the charterer, and the lien is not defeated by the fact that the charterer has promised the owner to pay.
When, however, the charter party, with knowledge of which the materialman is charged, prohibits the creation of a lien for supplies ordered by the charterer or the charterer's representative, no lien will attach. This was decided in United States v. Carver, 260 U. S. 482. That was a case of vessels owned by the United States. The charterer, whose representative had ordered the supplies, had agreed that it would "not suffer nor permit . . . any lien" which might have priority over the title and interest of the owner. The question was whether a maritime lien would have arisen against the vessels if they had been privately owned. The court, quoting the provision of the Act of 1910 as to the duty of the materialman to make inquiry, said that he was not entitled "to rest upon presumptions until he is put upon inquiry;" he must inquire.
"If, by investigation with reasonable diligence, the materialman could have found out that the vessel was under charter, he was chargeable with notice that there was a charter; if, in the same way, he could have found out its terms, he was chargeable with notice of its terms."
Coast. In the Carver case, "the primary undertaking" was that "a lien shall not be imposed." The lien was denied not because the charterer was bound to provide and pay for supplies, but because the charter party prohibited the lien. To the same effect is the decision in the case of The St. John's, Colonial Beach Co. v. Quemahoning Coal Co., 260 U.S. 707.
As, in the instant case, the charter parties contained no provision prohibiting the creation of a maritime lien, we are of the opinion that the mere fact that they required the charterers to provide and pay for the supplies did not prevent the liens from attaching.
"may be . . . liable in rem for supplies, although the owner can be made liable therefor in personam, since the dealer may rely upon the credit of both."
proof that credit was given to the vessels."
"was no understanding when the contract was made, or when the coal was delivered by the libelant, that any part of it was for any particular vessel or even for the vessels then composing the fleet. And it was clearly understood that the purchasing corporation would apply part of the coal to a nonmaritime use."
Id., pp. 254 U. S. 10-11, 254 U. S. 13. In the instant case, the oil was supplied exclusively for the vessels in question was delivered directly to the vessels and was so invoiced, and there was nothing in the general contract to the effect that the supplies were to be furnished upon the exclusive credit of W. L. Comyn & Sons and not also upon the credit of the vessels.
"by taking other and different security, upon which it relied, and which it still retains, without stipulating for the retention of the lien, it has waived the lien which it otherwise would have had."
Id., p. 279 U. S. 572. It may be noted that, in the instant case, there was a contention that the liens had been waived by the respondent by entering into a certain creditor's agreement and by accepting certain security. But it appeared that, in those transactions, the right to the liens on the vessels had been expressly reserved. The court below accordingly ruled that there had been no waiver, and its decision in that relation has not been challenged here.
the nature of the charter parties. There is a plain distinction between a case of a bare-boat charter, where the charterer mans the vessel, and a case where the charter party is a mere contract for the carriage of goods. In the former, there is a clear demise; in the latter, the charterer is in substance only a shipper. [Footnote 5] There is an intermediate class of charters which has given rise to many questions in various situations. Time charters of the sort now before us are in this class. The owner provides the master and crew and undertakes the navigation of the vessel and to maintain her in an efficient condition. But the master, although appointed by the owner, is placed "under the orders and direction of the charterers as regards employment or agency." The owners agree "to let" the vessel and the charterers "to hire" her "from the time of delivery" until the date set for "her redelivery." The charterers are to provide and pay for fuel supplies, port charges, pilotages, etc. and all other expenses except those pertaining to the captain, officers or crew.
charterers and the master and crew were under their directions. The vessels, by the terms of the charters, were delivered to the charterers, and where the vessels were to go and what they were to carry, within the broad limits described in the charters, were determined by the charterers.
The question whether, under a charter containing these or similar provisions, the materialman may have a lien for supplies furnished on the order of the charterer has given rise to conflicting views, [Footnote 6] and no little confusion has resulted.
case, apart from mere navigation, the vessel is placed under the direction and control of the charterer as the hirer of the vessel, who, as such, may determine to what port she shall go and what she shall carry, subject only to specified exceptions, we think the charterer must be deemed to be entrusted with the vessel's management for the purpose of applying the statutory test of authority to obtain necessary supplies upon the credit of the vessel, in the absence of a provision to the contrary.
The origin of the maritime lien is the need of the ship. Piedmont & George's Creek Coal Company v. Seaboard Fisheries Co., supra. The lien is given for supplies which are necessary to keep the ship going. The materialman, when furnishing such supplies on the order of the charterer, is charged with knowledge of the terms of the charter party when he can ascertain them, but when it appears that, by these terms, the charterer has direction and control of the vessel and that he is the one to obtain the essential supplies, and that there is no prohibition of the creation of a maritime lien, the materialman is protected by the terms of the statute. He furnishes the supplies on the order of the person authorized to obtain them, and he is entitled to rely on the credit of the vessel as well as upon the credit of the one who gives the order.
charterer's business to obtain supplies to keep the vessel on her way and the charter has not prohibited reliance upon the credit of the vessel.
"§ 971. Persons entitled to lien. Any person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel."
"§ 972. Persons authorized to procure repairs, supplies, and necessaries. The following persons shall be presumed to have authority from the owner to procure repairs, supplies, towage, use of dry dock or marine railway, and other necessaries for the vessel: the managing owner, ship's husband, master, or any person to whom the management of the vessel at the port of supply is entrusted. No person tortiously or unlawfully in possession or charge of a vessel shall have authority to bind the vessel."
"§ 973. Notice to person furnishing repairs, supplies, and necessaries. The officers and agents of a vessel specified in section 972 shall be taken to include such officers and agents when appointed by a charterer, by an owner pro hac vice, or by an agreed purchaser in possession of the vessel, but nothing in this chapter shall be construed to confer a lien when the furnisher knew, or by exercise of reasonable diligence could have ascertained, that, because of the terms of a charter party, agreement for sale of the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor."
Other provisions, §§ 974 and 975, relate to the waiver of liens and the superseding of state laws.
See also The Yankee, 233 F. 919, 924; The Oceana, 244 F. 80, 82; Senate Report No. 831, 61st Cong., 2d sess.; House Report No. 772, 61st Cong., 2d sess.
Senate Report No. 831, 61st Cong., 1st sess. Marshall & Co. v. The President Arthur, 279 U. S. 564, 279 U. S. 568.
The facts are more fully set forth in the opinion of the Circuit Court of Appeals. The South Coast, 247 F. 84.
See Reed v. United States, 11 Wall. 591, 78 U. S. 600; Leary v. United States, 14 Wall. 607, 81 U. S. 610; United States v. Shea, 152 U. S. 178, 152 U. S. 189-191; The Barnstable, 181 U. S. 464, 181 U. S. 468.
See, e.g., upholding the lien: The India, 14 F. 476; 16 F. 262; The Bombay, 38 F. 512; 38 F. 863; The George Dumois, 68 F. 926; The Anna E. Morse, 286 F. 794; The A. S. Sherman, 51 F.2d 782; The Golden Gate, 52 F.2d 397; The Everosa, 93 F.2d 732. See, e.g., contra: The Cratheus, 263 F. 693; Pensacola Shipping Co. v. United States Shipping Board, 277 F. 889; The Thordis, 290 F. 255; The Ville de Djibouti, 295 F. 869; The Pajala, 7 F.Supp. 618; The Dictator, 18 F.2d 131. Compare The J. W. Hennessy, 57 F.2d 77, 80.

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