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.
106 F.2d 896 affirmed.
Certiorari, 309 U.S. 644, to review the affirmance of decrees in
admiralty, 25 F. Supp. 594, sustaining maritime liens.
Page 310 U. S. 269
MR. CHIEF JUSTICE HUGHES delivered the opinion of the Court.
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.
The charters were time charters on the so-called "Government
form." The owners agreed "to let," and the charterers "to hire,"
the vessel "from the time of delivery" for a specified period, the
vessel to be placed "at the disposal of the charterers" at such
place as the charterers may direct, being, on her delivery, ready
to receive cargo and to be employed in carrying merchandise as
stated. The owners agreed to provide and pay for all provisions,
wages, and shipping and discharging fees of the captain, officers,
engineers, firemen, and crew; to pay for the insurance of the
vessel, and to maintain her in a thoroughly efficient state in
hull, machinery, and equipment. The charterers agreed to "provide
and pay for" coals and fuel oil, port charges, pilotages, etc., and
all other usual expenses
Page 310 U. S. 270
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.
The Circuit Court of Appeals in the instant case followed its
decisions in
The Portland, 273 F. 401, and
The
Page 310 U. S. 271
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.
These decisions, however, were prior to the passage of the Act
of June 23, 1910, 36 Stat. 604, which governs the present case. The
text of the Act, as amended, is set forth in the margin. [
Footnote 1] Its purpose was to simplify
and
Page 310 U. S. 272
clarify the rules as to maritime liens as to which there had
been much confusion. The Act did away with the artificial
distinction between repairs, supplies etc., furnished in home ports
and those furnished in foreign ports. It did away with the doctrine
that, when the owner of a vessel contracted in person for
necessaries or was present in the port when they were ordered, it
was presumed that the materialman did not intend to rely upon the
vessel's credit. It substituted a federal statute for numerous
state statutes purporting to confer liens.
Piedmont &
George's Creek Coal Co. v. Seaboard Fisheries Co.,
254 U. S. 1,
254 U. S. 11.
[
Footnote 2]
In so doing, the statute provided a series of simple and
comprehensive rules. While it was said not to be intended to change
the general principles of the law of maritime
Page 310 U. S. 273
liens, [
Footnote 3] it was
intended to operate in aid of those who supply necessaries to
ships,and it correspondingly restricted the rights of the owners of
the vessels. Any person furnishing repairs, supplies, etc., to a
vessel, whether foreign or domestic, "upon the order of the owner"
or "of a person authorized by the owner," is to have a maritime
lien which may be enforced by suit
in rem. It is not
necessary to allege or prove that credit was given to 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" is
presumed to have authority to procure the necessaries. The officers
and agents thus specified include those appointed "by a charterer,
by an owner
pro hac vice, or by an agreed purchaser in
possession of the vessel." These broad provisions are then
subjected to the qualification that nothing in the Act should 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."
Despite the aim thus to provide simple and clear rules, there
has been no little contrariety of opinion in the application of the
statute -- well illustrated by the conflicting decisions to which
we have referred with respect to the existence of maritime liens
where supplies have been ordered by a charterer who has agreed with
the owner to provide and pay for them. As, in such a case, the
supplies are furnished on the charterer's order, there is no
question that the supplier is charged with knowledge of the
provisions of the charter when he either knows them
Page 310 U. S. 274
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.
We think that our decision in
The South Coast,
251 U. S. 519,
[
Footnote 4] negatives such a
conclusion. That was a case of a bare-boat charter which provided
that the charterer should pay for all supplies and all other
charges and save the owner harmless from all liens. The supplies
were ordered by the master, but, though appointed by the owner, the
master was under the orders of the charterer, and thus the master's
orders were the charterer's orders. When the supplies were ordered,
representatives of the owner at the port of supply warned the
supplier that the vessel was under charter, and that he must not
furnish the supplies on the credit of the vessel. If the owner had
power to prevent the attaching of a lien by this warning, the owner
had done so. But while, under the terms of the charter party, it
was clearly the duty of the charterer to provide and pay for the
supplies and to save the owner harmless, this was held not to
preclude the creation of a maritime lien.
The Kate and
The Valencia were cited unavailingly. When the charter
party was examined to see if it prohibited liens, it was found that
it did not do so; it recognized the possibility of liens. It
provided that the owner might retake the vessel in case of the
failure of the charterer to discharge within thirty days any debt
which was a lien upon it, and also for a surrender of the
Page 310 U. S. 275
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."
The court added that there would have been no difficulty in
finding out both. The court found a difference between the language
of the charter party in the
Carver case and that used in
The South
Page 310 U. S. 276
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.
The argument is pressed that respondent was under a general
contract to supply "the fuel oil requirements of any and all
vessels owned, chartered, or operated" by W. L. Comyn & Sons.
But this contract did not provide that the oil should be supplied
on the sole credit of Comyn as the owner or charterer of the
vessels, or negative the creation of maritime liens for supplies
actually furnished to the vessels in satisfying their requirements.
The decisions which petitioner cites are not apposite. In
Piedmont & George's Creek Coal Co. v. Seaboard Fisheries
Co., supra, the Coal Company had made a contract with a
corporation, which owned both steamers and factories, to furnish
such coal as should be required. The court observed that the
difficulty which confronted the Coal Company in seeking to enforce
a maritime lien did not lie in the fact that a contract had been
made for the supply of coal. "A vessel," said the court,
"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."
So the court recognized that if, in that case,
"the coal had been furnished to the several vessels by the
libelant, maritime liens would have arisen and could have been
established under the statute without
Page 310 U. S. 277
proof that credit was given to the vessels."
The difficulty which blocked recovery by the Coal Company was
"solely that it did not furnish coal to the vessels." There
"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.
In the other case relied upon,
Marshall & Company v. The
President Arthur, 279 U. S. 564, the
point was that the maritime lien had been waived by the libelant
under an agreement by which trade acceptances endorsed by
designated persons had been received; that,
"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.
There remains the contention that, apart from any prohibition of
the creation of liens, the vessels could not be bound for supplies
ordered by the charterers because of
Page 310 U. S. 278
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.
There is thus a distribution of responsibility, and liability or
the legal consequences of particular conduct would be determined
accordingly. While the owners assumed responsibility for the
navigation of the vessels and their maintenance in an efficient
state, we are not concerned with any questions relating to faults
in navigation or failure in maintenance. The mere fact that the
owners furnished the master and crew cannot be regarded as decisive
of the question before us.
See United States v. Shea,
152 U. S. 178,
152 U. S.
190-191;
United States v. Cornell Steamboat
Co., 267 U. S. 281.
Aside from the navigation of the vessels, they were placed under
the control of the
Page 310 U. S. 279
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.
We think that this conflict may be resolved by having due regard
to the manifest purpose of the governing statute. The Act says
nothing about types of charters. In speaking of those who shall be
presumed to have authority to procure supplies, the statute
expressly includes not only the "ship's husband" and the "master"
but "any person to whom the management of the vessel at the port of
supply is entrusted," and these persons are to 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." We think that the purpose of the statute
is not properly served by construing the term "management of the
vessel" as referring to her "navigation." Management is a broader
term connoting direction and control for the purposes for which the
vessel is used. Where, as in this
Page 310 U. S. 280
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.
We are of the opinion that it would thwart the purpose of the
statute to compel the materialman furnishing supplies to the vessel
to resolve the ambiguities which may be found in such charters as
those here involved. The statute was intended to afford the
materialman a reasonably certain criterion. The owner has a simple
and ready means of protection. All that it is necessary for him to
do, as the materialman in dealing with the charterer is charged
with notice of the charter, is to provide therein that the creation
of maritime liens is prohibited. When the owner does not do so, he
should not be heard to complain when it appears that it is the
Page 310 U. S. 281
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.
The judgment of the Circuit Court of Appeals is
Affirmed.
[
Footnote 1]
The Act of June 23, 1910, 36 Stat. 604, as amended by the Act of
June 5, 1920, § 30, 41 Stat. 1005, 46 U.S.C. 971-973, provides:
"§ 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.
[
Footnote 2]
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.
[
Footnote 3]
Senate Report No. 831, 61st Cong., 1st sess.
Marshall &
Co. v. The President Arthur, 279 U. S. 564,
279 U. S.
568.
[
Footnote 4]
The facts are more fully set forth in the opinion of the Circuit
Court of Appeals.
The South Coast, 247 F. 84.
[
Footnote 5]
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.
[
Footnote 6]
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.