The Lulu - 77 U.S. 192 (1869)
U.S. Supreme Court
The Lulu, 77 U.S. 10 Wall. 192 192 (1869)
77 U.S. (10 Wall.) 192
The Grapeshot, 9 Wall. 129, affirmed on the second point adjudged therein (pp. 77 U. S. 133-141), and the doctrine again declared, that in the case of alien asserted against a vessel supplied or repaired in a foreign port, necessity for credit must be presumed where it appears that the repairs and supplies for which a lien is set up were ordered by the master, and that they were necessary for the ship when lying in port, or to fit her for an intended voyage, unless it is shown that the master had funds, or that the owners had sufficient credit, and that the repairer, furnisher, or lender knew those facts, or one of them, or that such facts and circumstances were known to them as were sufficient to put them on inquiry, and to show that if they had used due diligence they would have ascertained that the master was not authorized to obtain tiny such relief on the credit of the vessel.
This was a suit in admiralty to enforce a lien claimed upon the steamer Lulu for repairs made upon her at the request of the master. It was consolidated with other suits, all brought by materialmen for supplies or repairs to the vessel to the extent of $8,796.21.
The steam vessel was owned in New York, which was her home port, but employed in the trade between Baltimore, in Maryland, and Charleston, in South Carolina. When the libel was filed she had been plying in the trade about eleven months, that is to say, from April, 1866, to March, 1867. The repairs and supplies for which satisfaction was sought were furnished in Baltimore during and after July, 1866, but chiefly in November and afterwards, at
fair prices, and were proper and necessary, and there was no proof whatever that the master had any funds which he could have applied to procure the repairs and supplies.
In each suit a New York company filed a claim and answer, asserting a prior right to satisfaction out of the proceeds of the steamer, which under an order of the court had been sold, bringing but $10,250. The claim of this company was founded upon a bill of sale, made to it by the former owners of the vessel (residents of New York also) in consideration of an advance of $12,000 on the 24th of August, 1866. This bill of sale, though in form absolute, was intended as a mortgage to secure repayment of the advance in six months from the date, but no part of it had been repaid.
The only question in the case was: "Were the repairs and supplies in question furnished under such circumstances as would entitle the materialmen to the liens which they claimed?" If they were, this lien was superior to that created by the bill of sale or mortgage, whether prior or posterior in time, and the mortgage or most of it was cut out.
The district court, in which the libel was originally filed, decreed for the materialmen, but the case coming before the circuit court, held by the Chief Justice in November, 1868, and therefore before the recent judgment in The Grapeshot, [Footnote 1] which explained what had been received as law since The Laura [Footnote 2] (Thomas v. Osborn), and more particularly since The Sultana [Footnote 3] (Pratt v. Reed), in which last case the Court stated the rule thus:
"The proof of a necessity at the time of procuring a supply for a credit on the vessel . . . is as essential as that of the necessity of the article itself. . . . It is only under very special circumstances, and in an unforeseen and unexpected emergency, that an implied maritime hypothecation can be created,"
and put the decision of the case upon the ground not that the supplies were not necessary, but that there was no sufficient proof of necessity for the implied hypothecation of the vessel or of any unexpected or unforeseen exigency
that required it -- the circuit court finding itself "unable to make any distinction which had substance" between that case and the present, felt "constrained" to reverse the decree, and with obvious reluctance deprived the materialmen of their lien.
The case was now here on appeal from that reversal, the case of The Grapeshot being in the meantime decided, and deciding that if there have been,
1. A necessity for the repairs,
2. If the credit have been given to the ship and not to the owner, master, or agent,
3. Then a presumption of necessity for the credit will arise, conclusive in the absence of evidence to the contrary, if the materialman has acted in good faith.