1. Wharfage service rendered to an arrested ship with the
approval or permission of the admiralty court and inuring to the
benefit of the fund arising from her sale is entitled to
preference, in the distribution of the fund, over the claims of
libeling cargo owners. P.
274 U. S.
120.
2. Such preference is not based on a lien, but is an incident of
the equitable administration of the fund. P.
274 U. S.
120.
3. A finding of a special commissioner, confirmed by the
district court, as to the reasonable value of wharfage should not
be disturbed here when based on a fair trial and sustained by
evidence. P.
274 U. S. 123.
4. Objections respecting the amount so found, not raised or
considered below, will be examined here only so far as necessary to
make certain that no palpable error was committed. P.
274 U. S. 123.
9 F.2d 838 reversed.
297 F. 345 affirmed.
Certiorari (269 U.S. 547) to a decree of the circuit court of
appeals which reversed a decree of the district court, in
admiralty, allowing preferential payment of wharfage out of a fund
arising from the sale of a vessel.
Page 274 U. S. 118
MR. JUSTICE STONE delivered the opinion of the Court.
This case involves the right of a wharf owner to preferential
payment from the proceeds of a vessel, for wharfage furnished the
vessel while in the custody of a United States marshal under a
warrant of arrest in admiralty. The owner of the steamship
Poznan entered into a contract with petitioner, the owner
of a private pier in New York harbor, for the use of the pier for
discharging cargo from December 1, 1920, until completion. The rate
agreed upon was $250 per day, plus certain incidental charges not
now material. On December 2, 1920, the
Poznan was made
fast to the pier. Later in the day, she was arrested by the United
States marshal for the district upon libels, afterward consolidated
into a single cause, for nondelivery of the vessel's cargo and for
damages for breach of contracts of affreightment. The marshal
allowed the vessel to remain at the pier. Later, on application of
one of the libeling cargo owners, the district court ordered the
delivery of a part of the cargo which that libelant had shipped,
and made the order applicable to all other libelants who should
make a like claim. The discharge of the cargo was then begun, and
deliveries were made to the several libelants in the consolidated
cause, including respondent, the John B. Harris Company.
After the cargo had been about one-half discharged, the
charterer applied to the district court for leave to move the
vessel to another pier where the cargo could be removed more
expeditiously, but, on request of some of the libelants and a
committee representing the shippers,
Page 274 U. S. 119
the application was denied on January 5, 1921. The vessel was
unloaded by February 18, 1921. Delivery of the cargo from the pier
was completed March 1, 1921, but the vessel remained fast to the
pier to and including March 11, 1921, when she was removed.
Meanwhile, the marshal having declined to pay the bill for
wharfage without an order of the court, petitioner, in April, 1921,
filed its libel against the vessel for the balance of wharfage
charges unpaid, aggregating $17,462. By order of the district
court, the libelants in the consolidated cause were permitted to
intervene. Respondent, the John B. Harris Company, served notice of
intervention, and filed its answer denying the allegations in the
libel and praying that it be dismissed on the ground, among others,
that the wharfage was furnished while the vessel was in the custody
of the marshal, and hence no maritime lien could arise. Respondent
has since prosecuted the defense in behalf of all the other
libelants in the consolidated cause.
The vessel was later sold under an order in the consolidated
cause and the proceeds, which were not enough to satisfy the
libelants, paid into the registry of the court. The libelants in
the consolidated suit have made common cause by stipulation that
the recovery under the final decree should be paid to trustees and
distributed in accordance with the instructions of a committee
representing all of them. The committee found the total claims of
the libelants to exceed the amount of the proceeds of the ship. A
pro rata distribution has been made to the claimants, and
an adequate amount reserved to pay the demand of the petitioner, if
allowed in this suit. The marshal, although refusing petitioner's
request for payment of the wharfage charge, nevertheless included
it in his bill of costs and expenses in the consolidated cause and
charged his commission on this amount. The court disallowed these
items, but "without prejudice to any
Page 274 U. S. 120
rights of the New York Dock Company to have recourse against the
proceeds of the vessel. . . ."
The district court, in the present libel, allowed as a
preferential payment from the proceeds of the ship the reasonable
value of the benefits resulting to the consolidated libelants from
the wharfage and incidental service furnished by petitioner, to be
determined by a special master. This was found by the master and
held by the district court to be the reasonable value of the
wharfage. A decree for this amount, less certain payments on
account made by the owner of the ship, pursuant to the original
contract of wharfage, 297 F. 345, was reversed by the Circuit Court
of Appeals for the Second Circuit, 9 F.2d 838. This Court granted
certiorari. 269 U.S. 547.
The court below held that, as the wharfage was furnished after
the arrest of the ship, and while it was in the custody of the law,
no maritime lien could attach, and that a preferential payment
could not be supported upon any other theory applicable to the
facts of this case.
A question much argued both here and below was whether the case
could be considered an exception to the general rule that there can
be no maritime lien for services furnished a vessel while in
custodia legis. Cf. The Young America, 30 F. 789;
The Nisseqogue, 280 F. 174;
Paxson v. Cunningham,
63 F. 132;
The Willamette Valley, 66 F. 565. But, in the
view we take, the case does not turn upon possible exceptions to
that rule, as we think petitioner's right of recovery depends, as
the district court ruled, not upon the existence of a maritime
lien, but upon principles of general application which should
govern whenever a court undertakes the administration of property
or a fund brought into its custody for the benefit of suitors.
The libelants in the consolidated cause were not only concerned
as owners in securing delivery of the cargo, but, as lienors they
were interested in the ship, and, as eventually appeared, in the
whole of her proceeds. Service
Page 274 U. S. 121
rendered to the ship after arrest, in aid of the discharge of
cargo, and afterward pending the sale, necessarily inured to their
benefit, for it contributed to the creation of the fund now
available to them. The most elementary notion of justice would seem
to require that services or property furnished upon the authority
of the court or its officer, acting within his authority, for the
common benefit of those interested in a fund administered by the
court should be paid from the fund as an "expense of justice."
The Phebe, 1 Ware, 354, 359, Fed.Cas. No. 11,065. This is
the familiar rule of courts of equity when administering a trust
fund or property in the hands of receivers. The rule is extended,
in making disposition of the earnings of the property in the hands
of the receiver, to require payment of sums due for supplies
furnished before the receivership where their use by the debtor or
receiver in the operation of the property has produced the
earnings.
See Fosdick v. Schall, 99 U. S.
235;
Thomas v. Western Car Co., 149 U. S.
95,
149 U. S. 110;
Virginia & Alabama Coal Co. v. Central R. Co.,
170 U. S. 355;
St. Louis. etc., R. Co. v. Cleveland, etc., Ry.,
125 U. S. 658,
125 U. S. 663,
125 U. S. 673;
Southern Ry. v. Carnegie Steel Co., 176 U.
S. 257;
-Pennsylvania Steel Co. v. New York City
Ry., 208 F. 168;
Pennsylvania Steel Co. v. New York City
Ry., 216 F. 458, 470.
Such preferential payments are mere incidents to the judicial
administration of a fund. They are not to be explained in terms of
equitable liens in the technical sense, as is the case with
agreements that particular property shall be applied as security
for the satisfaction of particular obligations or vendors' liens
and the like, which are enforced by plenary suits in equity. They
result rather from the self-imposed duty of the court, in the
exercise of its accustomed jurisdiction, to require that expenses
which have contributed either to the preservation or creation of
the fund in its custody shall be paid before a general distribution
among those entitled to receive it.
Page 274 U. S. 122
We need not inquire here into the exact limits of the powers of
courts of admiralty to administer equitable relief, as
distinguished from that peculiar to the courts of admiralty. This
is not a suit, as the court below seemed to think, for the
enforcement of an equitable lien. The court of admiralty is asked,
in the exercise of its admiralty jurisdiction, to administer the
fund within its custody in accordance with equitable principles as
is its wont.
Cf. United States v. Cornell Steamboat Co.,
202 U. S. 184,
202 U. S. 194;
The Eclipse, 135 U. S. 599,
135 U. S. 608;
Benedict, Admiralty (5th ed.) ยง 70. It is defraying from the
proceeds of the ship in its registry an expense which it has
permitted for the common benefit and which, in equity and good
conscience, should be satisfied before the libelants may enjoy the
fruits of their liens.
Such a preferential payment from the proceeds of the ship, for
wharfage furnished to her while in custody, was allowed by the
court below in
The St. Paul, 271 F. 265. But, in the
present case, that court thought that the
St. Paul case
was to be distinguished on the ground that there, the wharfage
service was furnished and the obligation incurred in accordance
with an order made by the court and with the consent of the
libelants. But here, the court denied a motion to remove the ship
from petitioner's wharf with the consent of some of the libelants
and with full knowledge of all concerned that the wharfage was then
being furnished. The libelants in the consolidated cause, who are
united in interest with respondent in the present case, thus appear
to have acquiesced in this determination. We are unable to perceive
any basis for a distinction between action of the court in
authorizing the ship to proceed to the wharf to enable it to
discharge its cargo in the one case, and authorizing it to remain
there for a like purpose in the other. It is enough if the court
approves the service rendered or permits
Page 274 U. S. 123
it to be rendered and it inures to the benefit of the property
or funds in its custody.
Objection is made that the amount found by the special master
and confirmed by the district court as the reasonable value of the
wharfage furnished is excessive, but this issue of fact was fairly
tried. The finding of the special commissioner is supported by the
evidence, and should not be disturbed here. Respondent attempts to
raise here questions with respect to the amount of recovery which
were neither raised nor considered below. We have examined them
only so far as is necessary to ascertain that no error was
committed by the district court so plain or apparent as to warrant
our consideration on such a state of the record.
Cf. Pierce v.
United States, 255 U. S. 398,
255 U. S. 405;
Hiawassee Power Co. v. Carolina-Tenn. Co., 252 U.
S. 341;
Ill. Cent. R. Co. v. Mulberry Coal Co.,
238 U. S. 275,
238 U. S. 281;
Givens v. Zerbst, 255 U. S. 11,
255 U. S. 22;
Tilden v.
Blair, 21 Wall. 241,
88 U. S. 249.
The decree below must be reversed, and that of the district
court reinstated.
Reversed.
MR. JUSTICE HOLMES took no part in the consideration and
decision of this case.