Court Opinion

ID: 6837415
Source: CourtListenerOpinion
Date Created: 2022-07-23 20:08:29.359983+00
Date Added: 2024-06-11T16:04:44.707844
License: Public Domain

L. HAND, Circuit Judge
(dissenting). There are two questions at issue — first, whether the acceptances were a payment; if not, whether their receipt by the libelant was a “waiver” (of) “his right to a lien * * * by agreement or otherwise.” If the claimant had not been a party to the acceptances, it may be assumed that they would have been a payment. Atlas S. S. Co. v. Colombian Land Co., 102 F. 358 (C. C. A. 2); N. Y. & Cuba S. S. Co. v. Texas Co., 282 F. 221 (C. C. A. 2); Hall v. Stevens, 116 N. Y. 201, 22 N. E. 374, 5 L. R. A. 802. If, on the other hand, it had agreed only to deliver its note, and had done' so, the note would not have been a payment. The doctrine that a note, in the absence of an agreement to that effect, is not payment, is not limited to eases where it is given upon a pre-existing debt, but equally applies when the only promise is to deliver it, The Bird of Paradise, 5 Wall. 545, 18 L. Ed. 662; Reed v. Van Ostrand, 1 Wend. (N. Y.) 424, 19 Am. Dec. 529; Combs v. Bateman, 10 Barb. (N. Y.) 573. Logically, it is true, the promise is performed when the note is delivered, but the law looks-to the essence,'which is the payment of the money, of which the note is only another promise. When the buyer is to deliver the note of another person he has never agreed to pay at all, but if he joins in the paper, the presence of other obligors does not affect his primary obligation. As he still remains liable, he has never paid.
The question of “waiver” is more difficult. Under the maritime law, the eases were in great conflict as to what security taken at the time forbade the inference that the buyer meant to rely on the ship. The strongest case for the claimant is a bottomry bond, and this was held to “waive” the lien. The Ann C. Pratt, Fed. Cas. No. 409, affirmed sub nom. Carrington v. The Ann C. Pratt, 18 How. 63, 15 L. Ed. 267. It would seem that a mortgage was equally strong evidence of the same intent, but the decisions are at variance. In The A. R. Dunlap, Fed. Cas. No. 513, The D. B. Steelman (D. C.) 48 F. 580, The Thomas Morgan (D. C.) 123 F. 781, The Cimbria (D. C.) 214 F. 128, and The Fairhope (D. C.) 235 F. 1007, the lien survived such a mortgage, but not in The Lucille (D. C.) 208 F. 434, and The Yankton (D. C.) 7 F.(2d) 384.
Other kinds of security have also an equivocal effect. The Circuit Court of Appeals for the Fifth Circuit held that a wharfinger’s lien was not waived by taking a surety bond in advance (El Amigo, 285 F. 868), and that a maritime lien was not waived by retaining title to the machinery installed (Ricou v. Fairbanks Morse & Co. [C. C. A.] 11 F.[2d] 103). The Pearl (D. C.) 189 F. 540 and The E-270 (D. C.) 16 F.(2d) 1005, are in accord with the last ease. The acceptance of an unindorsed note of the owner is not a “waiver.’,’ The Kimball, 3 Wall. 37, 18 L. Ed. 50; The Bird of Paradise, 5, Wall. 545, 18 L. Ed. 662, supra. Judge Brown held the same of the note of a third person in The James T. Easton (D. C.) 49 F. 656, and Judge Betts in The Active, Fed. Cas. No. 34. In Moore v. Newbury, Fed. Cas. No. 9772, and The Theodore Perry, Fed. Cas. No. 13879, the same was held as to indorsed paper, taken, however, after the goods had been sold. Justice Miller on the other hand held flatly the contrary at Circuit (Taylor v. Commonwealth, Fed. Cas. No. 13787), even though the note was in fact never delivered. On the facts it is hard to see how this conclusion could have been reached. In Phelps v. The Camilla, Fed. Cas. No. 11073, Chief Justice Taney at Circuit decided that when the sellers took notes of the ship’s agent, they showed that they meant to rely upon them and not upon the ship, and he added obiter that the taking of a note would have released a lien anyway.
Mechanics’ liens are not released by a reservation of title (Chic. & Alton R. R. Co. v. Union Rolling Mill Co., 109 U. S. 702, 3 S. Ct. 594, 27 L. Ed. 1081; Leschen, etc., Co. v. Mayflower, etc., Co., 173 F. 855, 35 *651L. R. A. [N. S.] 1 [C. C. A. 8]; Hooven, etc., Co. v. Featherstone, 111 F. 81, 95 [C. C. A. 8]), nor by taking other security (Smith v. Butts, 72 Miss. 269, 16 So. 242; Hinchman v. Lybrand, 14 Serg. & R. [Pa.] 32; Phelps Lumber Co. v. McDonough Mfg. Co., 202 F. 445 [C. C. A. 9]). Perhaps this is because such liens are favored, unlike maritime liens or those of vendors. Cordova v. Hood, 17 Wall. 1, 21 L. Ed. 587; Williams v. Roberts, 5 Ohio, 35; Griffin v. Blanchar, 17 Cal. 70.
It must be confessed, therefore, that the decisions are confused and that on authority the ease might go either way. Before 1910 the question was whether the seller had shown that he had taken the credit of the ship and not that of the owner, though prima facie be succeeded if tbe ship were in a foreign port. The statute has, however, changed the burden (Piedmont Coal Co. v. Seaboard Fisheries Co., 254 U. S. 1, 12, 41 S. Ct. 1, 65 L. Ed. 97), because it establishes the lien whenever the goods are ordered by any of the specified persons. Why should the seller not want some added security, or be understood to take the note in substitution for tbe lien?
The claimant must show just that; he must affirmatively prove, there being no agreement and no estoppel, that the parties could not have intended both securities to stand together. I can find no warrant for so strong a conclusion. Maybe, if the libelant still had the burden, this evidence would not show positively enough that he had given credit to the ship. But he has not got to do that any longer; the boot is on the other leg, and the claimant must show that the lien was released, for that, in substance, appears to me to be the equivalent of “waived” under these circumstances. The proof falls far short of that. Courts may still look jealously at maritime liens, but tbe statute has accomplished something and that in their favor. If it has not even gone so far as meets the libelant’s needs here, I should think it bad done nothing at all. I think that the decree should be reversed.