Petition — Sea-Hire Service, S. A. v. Trinidad Corp.

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Office - Supreme Court, U.S

FILED

83-1730 APR 19 1984

ALEXANDER L. STEVAS

CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1983

SEA-HIRE SERVICE, S.A.,

Petitioner,

—against—

TRINIDAD CORVORATION,

Respondent.

PETITION OF SEA-HIRE SERVICE, S.A.

FOR WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS FOR THE SECOND CIRCUIT

CHARLES L. TROWBRIDGE

40 Wall Street

New York, New York 10005

(212) 344-4700

Attorney for Petitioner

WALKER & CORSA

Jon W. Zinke

Kathleen V. McQuilling

Of Counsel

QUESTIONS PRESENTED FOR REVIEW

May the category of persons permitted to enforce maritime

liens under the General Maritime Law or the United States

Maritime Lien Act, 46 U.S.C. § 971 ef seq., be enlarged

judicially to include an agent of a bareboat chartered

shipowner charged with full responsibility to manage,

operate and conduct the business of the vessel, procure and

pay for the crew, fvel, stores, local port agents, main-

tenance and repairs, and to pay all other costs and expenses

incident to the management, operation and conduct of the

business of the vessel, wherever the vessel may go pursuant

to a continuing term agreement providing for monthly fixed

payments and periodic invoicing, or would such enlarge-

ment be contrary to this Court's decisions in The YANKEE

BLADE, 60 U.S. (19 How.) 82, 89 (1857) and Piedmont &

G.C. Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 12

(1920) that maritime liens are sfricti juris and are not to be

extended by construction, analogy or inference.

. Assuming an affirmative answer to question number 1, does

the vessel manager have the right to arrest and force the

judicial sale of that vessel by in rem proceedings under Title

46 U.S.C. § 971 ef seq. or the General Maritime Law,

where:

(a) On the date of the arrest the payments made to the

vessel manager by his principal, the bareboat chartered

owner, substantially exceeded the outlays made by the

manager to third-party suppliers and materialmen, but the

manager had made commitments to such third-parties to

pay them in the future; and

(b) The vessel management and operation agreement re-

quired the vessel manager to disclose its agency status and

the identity of its principal in all its dealings?

3. Assuming affirmative answers to questions numbers | and

2, where the bareboat charter contained a prohibition of

lien clause, and the existence of the charter was known to,

and a copy thereof in the possession of the vessel manager,

but the manager had not read the charterparty, was the

manager precluded from enforcing a maritime lien against

the vessel, either

(a) Because his lien was not one arising under the United

States Maritime Lien Act, 46 U.S.C. § 971 ef seq., and this

Court's decisions in The Kate, 164 U.S. 458 (1896) and The

Valencia, 165 U.S. 264 (1897) control; or

(b) Because although his lien did gag arise under the Act, he

was charged as a matter of law with sufficient knowledge of

the prohibition of lien clause to overcome the presumption

of the bareboat chartered owner's authority to bind the

vessel provided for in Title 46 U.S.C. 972?

PARTIES TO THE PROCEEDING

NOT LISTED IN CAPTION

MOTOR VESSEL “BEAUFORT MARINER”, her engines,

tackle, machinery, etc.

Platanus Shipping Line, S.A., Claimant

ill

TABLE OF CONTENTS

QUESTIONS PRESENTED FOR REVIEW ..........

PARTIES TO THE PROCEEDING NOT LISTED IN

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TPR OOP FEE CRE CEs cc ck cccec ce tenewenns

TD EI oo cece rececesccccsvsescsuancs

FE CUE ok cis en vasenndvntescetevriinsans

PSE OS) UE BON RIED ocd cccnccesevvrccchonsnses

STATERGENT OF Tite CARE. ccc ccccccacencvessnee

BASIS OF JURISDICTION IN THE DISTRICT

CREME . i hpncccnenteceecdudansenvewas ceweana au

A. The effect of the decision of the courts below is to

extend the availability of the harsh remedy of the

maritime lien in favor of a ship’s agent beyond

that permitted by any previously decided case in

contravention of this Court's directives that the

maritime lien is stricti juris, and in conflict with

Gace GI GOGH ok cc cic néscuacapcess

. The decisions of the courts below ignored the

established proposition of the Federal Law of

Maritime Liens, under the United States Maritime

Lien Act and otherwise, that a maritime lien is

extinguished by payment and cannot arise in favor

of a person who does not himself provide necessa-

ries to a vessel unless and until that person be-

comes subrogated to the rights of third parties

who do provide necessaries by paying them......

C. The courts below have denied effect to a charter-

party prohibition of lien clause in coniravention

of the prior decisions of this Court, or, al-

ternatively, assuming respondent to be a Lien Act

claimant, in violation of that Act by interpreting

the presumption of authority of petitioner to bind

the vessel set forth in § 972 to be operative even

though respondent was charged with actual

Us So ves ca wed nTaccekvesbetvevees spe

APPENDIX A

Decision of the United States Court of Appeals for the

Second Circuit dated January 20, 1984.............

APPENDIX B

Decision of the United States Court of Appeals for the

Second Circuit dated December 2, 1983 ............

APPENDIX C

Decision from the bench of Henry Bramwell, J., dated

PD cei saecese4ssbibunredas kde ceethenees

APPENDIX D

Order of the United States District Court, Eastern

District of New York for interlocutory sale dated July

SEE Ciao 5 04 nd KONG SA DRED ESE RESE DNRC KOO

APPENDIX E

Excerpt from Transcript of July 18, 1983 hearing....

APPENDIX F

Excerpt from Hire Purchase Bareboat Charter Agree-

SS ree ree errr ee ee eee ee ee ee

APPENDIX G

Excerpts from the Vessel Management and Operation

A Ere Oe ee rer Ps re epee gs ae

l4a

23a

TABLE OF AUTHORITIES

Cases: PAGE

The ADVANCE, 60 F. 765 (S.D.N.Y. 1894), aff'd, 71

Pa ee Ge es DO weet ebese. dhadiveganautene 11

The Alcalde, 132 Fed. 576 (W.D. Wash. 1904), ....... 19

Ameejee Valleejee v. Victoria V., 661 F.2d 310 (4th Cir.

Schur sees- ceamaccadaannuen eunesuieneeee 14

The AMERICAN STAR, 11 F.2d 479 (3rd Cir. 1926)... 11

The Ana R. Heidritter, 289 Fed. 112 (D. Mass., 1923) 19

The CENTAURUS, 291 Fed. 751 (4th Cir. 1923) ...11, 12, 16

China Mutual Insurance Co. v. Ward, 59 Fed. 712 (2d

ek I cao ee ws tS Ona Suk See eka ue onto bak oie: i]

The City of Camden, 147 F. 847 (S.D. Ala. 1906) ..... 19

Compagnia Maritima La Empresa, S.A. v. Pickard, 320

ae ee ee Wes DN kc he vcs ccacssacsccunsiuin 13, 14

The Englewood, 57 F.2d 319 (E.D.N.Y. 1932)......... 20

The EUROPIETRO CAMPANELLA, 81 F.Supp. 475

i a ee ss Ki anc Rendcwoeedadeuseateeues 10

Ex Parte Clarke, Fed. Cas. No. 2, 796 (D. Mass. 1843) 11

The FORT GAINES, 24 F.2d 438 (D.C.D. Md. 1928).. 11

The FRANK BRAINERD, 3 F.2d 664 (D.Me. 1925) ... 11

The GENERAL SMITH, 17 U.S. (4 Wheat.) 438 (1819) 1]

The GRAND TURK, | Paine 73 (C.C.N.Y. 1817) ..... 1]

The HOXIE, 297 Fed. 189 (4th Cir. 1924) ............ 1]

Peer rr ere li, 22

The KONGO, 155 F.2d 492 (6th Cir. 1946), cert. denied,

Se Wis PU GUPUED was uccenskccsacucntussouenens 11

Lake U. Drydock Co. v. M/V Polar Viking, 446 F.Supp.

Se GUEA. WN CRUE cnenciincchesexenesnensewen 25

PAGE

The LOTTAWANNA, 88 U.S. (21 Wall.) $58 (1875).... 11

The MARET, 145 F.2d 431 (3rd Cir. 1944)............ 11, 12

The Maud Palmer, 224 Fed. 655 (D. Mass. 1915)...... 19

Nadle v. M/V TEQUILA, 1973 A.M.C. 909 (S.D.N.Y.

SE eth iaicaan wa ee als oaiark on nik Mesiok a ed. be eo wo 12

National Labor Relations Board v. Vapor Recovery

Systems Company, 311 F.2d 782 (9th Cir. 1962) ... . 25

Piedmont & G.C. Coal Co. v. Seaboard Fisheries Co.,

LSE PS ange RR a ORE ee nN mn Een i, 82, 29

PT. Perusahan Pelayaran Samudera Trikora Lloyd vy.

T.S. SALZACHTAL, 373 F.Supp. 267 (E.D.N.Y.

DOC URC Cli. Wubig Wh ena andes bebe 7,17, 18

The PRESIDENT ARTHUR, 25 F.2d 999 (S.D.N-Y.

Ee te Siang Onhe hha bee No aweW en eas 11

The PRESIDENT ARTHUR, 279 U.S. 564 (1929)..... 12

The RALEIGH, 32 Fed. 633 (S.D.N.Y. 1887) ......... 11, 15

Ramsay Scarlett & Co. v. §.S. KOH EUN, 462 F.Supp.

re gee wag ala wis Kies bia ek wien 25

The Ruth E. Merrill, 286 Fed. 355 (2d Cir. 1922)...... 19

Savas v. Maria Trading Corporation, 285 F.2d 236 (4th

ES ioe 6 iu ob eka nee cata nds oben cae dew eke 16

Schooner Freeman v. Buckingham, 59 U.S. 190 (1855) 22

Simmons Creek Coal Company v. Doran, 142 U.S. 417

ei es ied ae eke c eM ae ad awa one misae 25

Todd Shipyards Corporation v. The City of Athens, 83

es Se Ge, ME SN, ong scncwdsnceaced neuen 13

7. 7-T. Stevedores v. Jagat Vijeta, $09 F.Supp. 1072 (E.D.

Tex. 1981), aff’d in part, rev'd in part, 696 F.2d 1135

i Sains Nase ns ened be eieeeeneeevews 24

PAGE

United States v. Carver, 260 U.S. 482 (1923).......... 23

United States v. S.S. LUCIE SCHULTE, 343 F.2d 897

See ee: CEE A isaac din eee Sade eae ee 12, ae: ao

peer Pets, 165 US. 28 CARRE «veka bins occas vicc ii, 22

The YANKEE BLADE, 60 U.S. (19 How.) 82 (1857) .. i, 12

Statutes:

i. PTE ves Lace cunt cs Se RUhed eee e eee nee l

Pe OEE ovcwatpocsavaci nd eecpene tone kaluar 10

as acs UE oS ccc checsehceusecavnens 11

United States Maritime Lien Act, 46 U.S.C. § 971 ef

Sr issabanacacecrsecces by Shy 0, By Ey Sis eee ee ee

Other Authorities:

Black’s Law Dictionary, 4th Ed. 1951................ 20

Gilmore & Black, T’:e Law of Admiralty, 2d Ed. 1975 24

Lt GINO, ANE TEE, GAs ihc ecccccnsatenenses 10

PETITION OF SEA-HIRE SERVICE, S.A. FOR

WRIT OF CERTIORARI TO THE UNITED STATES

COURT OF APPEALS—SECOND CIRCUIT

DECISIONS BELOW

The decision of the United States Court of Appeals, Second

Circuit, entered January 20, 1984, denying petitioner’s petition

for rehearing and suggestion of rehearing en banc is unre-

ported and is reprinted here at Appendix “A”. The order and

decision of the United States Court of Appeals for the Second

Circuit affirming the orders of the United States District Court

for the Eastern District of New York appealed from entered

December 2, 1983 is also unreported and is reprinted here as

Appendix “B”. The orders of the United States District Court,

Eastern District of New York denying petitioner’s motion to

dismiss the complaint, directing that the vessel be sold at an

interlocutory sale and denying petitioner’s motion to be re-

lieved of the order of interlocutory sale made on July 8, 1983,

July 13, 1983 and July 18, 1983, respectively, are also unre-

ported and aie reprinted here as Appendices “C”, “D” and

“E”, respectively.

JURISDICTION

Jurisdiction of this Court is invoked under 28 U.S.C.

§1257(3).

STATUTES INVOLVED

46 U.S.C. Section 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.

46 U.S.C. Section 972. Persons authorized to procure re-

pairs, supplies, and necessaries.

The ;ollowing 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.

46 U.S.C. Section 973. Notice to person furnishing repairs,

supplies, and necessaries.

The officers and agents of a vessel specified in $972 of this

Title 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.

46 U.S.C. Section 974. Waiver of right to lien.

Nothing in this chapter shall be construed to prevent the

furnisher of repairs, supplies, towage, use of dry dock or

marine railway, or other necessaries or the mortgagee, from

waiving his right to a lien, or in the case of a preferred

mortgage lien, to the preferred status of such lien, at any time

by agreement or otherwise; and this chapter shall not be

construed to affect the rules of law existing on june 5, 1920, in

regard to (1) the right to proceed against the vessel for

advances, (2) laches in the enforcement of liens upon vessels,

(3) the right to proceed in personam, (4) the rank of preferred

maritime liens among themselves, or (5) priorities between

maritime liens and mortgages, other than preferred mortgages,

upon vessels of the United States.

STATEMENT OF THE CASE

This petition seeks review of an affirmance by the United

States Court of Appeals—Second Circuit of an order of sale of

the tank vessel] BEAUFORT MARINER entered in the United

States District Court for the Eastern District of New York on

July 13, 1983 in an admiralty in rem suit instituted by respond-

ent, and of an order of July 18, 1983 by the same district court

denying a motion to vacate that order.

The basis of the appeal was the non-existence of a maritime

lien on the vessel in favor of respondent for three reasons:

(1) Respondent's status as the vessel’s manager and general

agent;

(2) The fact that respondent had not furnished the services

or materials forming the basis of the alleged lien, nor paid for

them when it caused the vesse! to be arrested;

(3) The existence of a prohibition of lien clause in the

bareboat charterparty from the actual shipowner to petitioner,

precluding petitioner from creating liens upon the vessel, that

was known to respondent well before the arrest of the vessel by

respondent on June 25, 1983.

On July 8, 1983, the district court had upheld the existence

of a maritime lien in favor of respondent against a challenge

based upon respondent’s general agency status.[5-8a] Respond-

ent’s broad responsibilities to, general authority from, and

continuity of relationship with its principal, petitioner, under

its management and operation agreement with petitioner was

such that this decision went beyond any previously decided

case.

Then, on July 13, 1983, the district court directed the vessel

to be sold at marshal’s auction eight days later. [9-13a] On July

i8, 1983, it denied petitioner’s further motion to be relieved of

the sale order and for dismissal of the complaint grounded

upon the prohibition of lien clause in the bareboat charter and

respondent's not having expended the monies claimed as the

subject of its lien until after the arrest. [2ia] After a request

for a stay pending appeal was denied, the sale went forward on

July 22, 1983. The high bid was $620,000 against an actual

value of more than twice that. The sale of the vessel was

confirmed on July 26, 1983, with no one other than respondent

asserting a claim against the vessel.

This distress cash sale totally destroyed petitioner’s interest

in the vessel, because it still owed more than $620,000 toward

the purchase price of the vessel.

The undisputed facts were as follows:

On March 2, 1983, petitioner entered into a hire-purchase

bareboat charter agreement with Platanus Shipping Line, S.A.,

(“Platanus”) the registered owner of the BEAUFORT

MARINER, by which petitioner agreed to purchase the vessel

for a price of $1,040,000 to be paid in installments of hire,

with petitioner occupying the position of bareboat charterer

until the full price was paid.

As part of the transaction, on March 2, 1983, petitioner,

respondent and Ilford Shipping and Trading Corporation Ltd.

(“Ilford”), an earlier bareboat charterer of the BEAUFORT

MARINER from its prior owner, agreed by an assignment and

assumption agreement [30-33a] that petitioner would assume

the obligations of Ilford under a vessel management and

Operation agreement between respondent and Ilford of Sep-

tember 26, 1979, [24-29a]. Simultaneously, respondent released

Ilford and agreed to perform its duties under the management

agreement for petitioner instead of Ilford [30-33a].

The hire-purchase bareboat charterparty between petitioner

and Platanus of March 2, 1983 contained a prohibition of lien

clause reading:

“10. Right to create liens against the Vessel

Neither the Charterer nor the Master of the Vessel nor any

other person except the Owner shall have any right, power

or authority to create, incur or permit to exist upon the

Vessel any lien whatsoever other than liens for Master and

crew’s wages and salvage. The Owner however may create

Mortgage(s) of the Vessel and the Charterer agrees to

place any notice of any such Mortgage(s) aboard the

Vessel in the manner provided by any such Mortgage(s).”

[23a]

The hire-purchase bareboat charterparty was at all material

times on board the vessel and a copy was in the possession of

Trinidad [17a].

Clauses | and 2 of the management and operation agreement

pr wided:

1. Appointment of Manager.

Owner heret:’ appoints Manager as its Agent for the

management, Operation and conduct of the business of

the Vessel. Manager agrees to act as such Agent and to

manage, operate and conduct the business of the Vessel to

the satisfaction of the Owner and in an efficient and

economical manner, and to exercise due diligence to

protect and safeguard the interest of Owner in all re-

spects. All of Manager’s acts hereunder in connection

with the Vessel shall be done as agent for and on behalf of

Owner as bareboat charterer and operator of the Vessel.

Manager shall not represent itself or hold itself out as

owner or charterer of the Vessel, but shall always disclose

its agency and the name of Ilford Shipping and Trading

Corporation Limited ' as bareboat charterer of the Vessel.

2. Operaiion.

Manager agrees on behalf of Owner to man, equip,

victual and supply the Vessel and to pay for all provisions,

wages, fuel, port expense, pilotage, agencies, consular

charges, cabin deck, engine-room, and other stores, and

all other costs and expenses incident to the management,

operation and conduct of the business of the Vessel.

(24-25a].

l Should be read as Sea-Hire Service, S.A. (petitioner) after March 2,

1983 (30-33a].

Respondent agreed to maintain contracts with seamen’s

union or manning agents [25a] to formulate, pursue and collect

insurance claims, to maintain and repair the vessel [25a], to

perform all customary agency duties concerned with loading

and discharging cargoes reserving to itself “the privilege of

using agents for the transaction of customary agency business”

[26a], and to maintain and render full accounting of monies

due, received and expended on a monthly basis if required. The

agreement called for New York Arbitration, with Pennsylvania

Law to apply [29a]. The only meaningful function not dele-

gated to respondent was the chartering of the vessel and the

collection of freights which were reserved to petitioner. The

agreement could be terminated by either party upon 60 days’

written notice, amended in part to 10 days in the assumption

and assignment agreement. Payment by petitioner was to be on

a monthly basis of one-twelfth of the estimated $1,320,000

annual cost of respondent’s performance, plus reimbursement

of certain outlays within 10 business days of receipt of re-

spondent’s invoice therefore. [32a]

Respondent acted as the vessel’s manager and operator for

petitioner from March 2, 1983 [30a] until the day of the arrest,

June 28, 1983. During this period respondent continuously and

without interruption represented the vessel while voyages were

performed from Korea to Indonesia to Singapore to Indonesia

to the Caribbean, and several Caribbean voyages were then

performed, followed by the final one to the United States.

According to respondent's records, as of June 28, 1983, the

date of the arrest, respondent had expended $534,977.64 on

behalf of petitioner pursuant to the vessel management and

operation agreement and had received from or credited peti-

tioner with $653,405.06 meaning that respondent's expenses

and disbursements were less than its outlays by $118,427.42

(respondent admitted in its brief that a $130,000 payment from

petitioner was received by respondent's bank on the day of the

arrest, but claimed such receipt to have been after the close of

respondent’s business day).

Respondent's records also indicated that after the arrest,

while the vessel was in custodia legis and under circumstances

Suggesting that respondent felt it could safely disregard its

agency defense against various suppliers (see management and

operation agreement, Par. | requiring respondent to advise all

third-parties of its agency status and disclose the identity of its

principal [24a]), respondent made payments totalling

$320,649.25, including a $159,251.00 bank transfer to a sub-

agent Consulmar, Bilbao, Spain, for payroll and benefit ex-

penses from April 1983, through September, 1983, which

notations in handwriting indicate was deferred by respondent

on several occasions until after the vessel was arrested;

$6,064.67 was paid to a travel agent in Philadelphia on June

30, 1983 for various plane tickets including at least two flights

taking place after the arrest; $1,011.62 was paid on June 30,

1983 by respondent to itself for various items including interest

after the arrest; $35,000 was advanced to the master after the

ship was under arrest, on June 30, 1983; and then $47,432.38

was paid to Consulmar on July 7, 1983, for wages through

July 8, 1983, including at least 11 days of post-arrest wages;

and $68,838.16 was paid on July 7, 1983 to Texaco Interna-

tional Trader Inc., for fuel.

Petitioner mov d to vacate the arrest by order to show cause

on July 5, 1983. The ground of this motion was the respondent

was a general agent and thus not entitled to a maritime lien. A

hearing was held in the district court on July 7, 1983.

On July 8, 1983, the district court read into the record a

decision [5-8a] denying the motion to vacate the arrest, and

holding that respondent was a special, rather than general

agent. This decision reveals that ihe district court considered it

a condition precedent for a general agency to exist that the

agent procure freights and retain a certain percentage thereof

as his fee [8a] and was of the view that respondent had only

“limited functions” [8a], whereas it had to have “virtually

complete control and dominion” over the vessel to qualify as a

general agent [8a].

The district court did recognize that if respondent was a .

general agent it was not entitled to a maritime lien [119A],

referring to The SALZACHTAL, 373 F.Supp. 267 (E.D.N.Y.

1974). It stated that prior to March 2, 1983 respondent had had

no contact with petitioner and therefore could not possibly

have relied upon petitioner’s credit [8a], evidently assuming

there to be a distinction between the meaning and effect of the

management and operation agreement as between Ilford and

respondent, and the same agreement as between petitioner and

respondent, and that a prior relationship is a sine qua non to

the extension of credit.

On July 12, 1983, respondent moved pursuant to notice

returnable the same day, for an order directing the interlocu-

tory sale of the vessel. The affidavit in support of this motion

claimed that the costs of maintaining the vessel under arrest

were excessive and disproportionate and requested the right of

respondent to bid up to the amount of its lien without making

any cash payment. This motion was heard on July 12, 1983,

and was continued to July 13, 1983 at which time the district

court directed an interlocutory sale to take place on July 22,

1983 as requested by respondent [9-1 3a].

On Thursday, July 14, 1983, counsel for respondent first

obtained a copy of the Platanus-petitioner hire-purchase bare-

boat charterparty of March 2, 1983, and immediately moved

by order to show cause to be relieved from the order of

interlocutory sa'e and for dismissal of the complaint by reason

of the presence of the prohibition of lien clause in that

charterparty.

On July 18, 1983 this motion was heard. A supplemental

affidavit was submitted to the court at that time setting up the

circumstances with respect to the prohibition of lien clause, the

existence of a credit in favor of petitioner in terms of cash

expenditures as of the time of the arrest of the vessel, and

attaching voluminous exhibits in support of petitioner’s argu-

ments with respect to the prohibition of lien clause and the

failure of respondent to have either paid for or rendered

services which import a maritime lien as of the time of the

arrest.

The district court denied the motion from the bench. [21a]

The transcript of the July 18, 1983 hearing [14-23a] reveals

that the district court accepted the testimony of respondent’s

vice president that although he received a copy, he had not read

the bareboat charter containing the prohibition of lien clause,

as justifying a finding that respondent did not have actual

knowledge thereof. [20a] This witness also confirmed that

there was a $118,000 credit in favor of petitioner on the books

of respondent at or one day after the day of the arrest. [19a]

Thereafter, the district court declined to fix the amount of

security required and denied a request for a stay of the

interlocutory sale stating:

THE CourT: “Definitely will not give you a stay.

Before you, it was Mr. Zinke. It has been day to day or

day after day to day—whatever it has been.

We have come here and you have spoken to them or

Mr. Zinke has spoken to Mr. Bowles and you have had

discussions and you should know what the amount is. You

know what they are looking for. I cannot tell them do

something else and I am not going to change.”

MR TROWBRIDGE: With all respect, what if you are

wrong? How can we undo the sale after it is reversed on

appeal?

THE Court: It’s only money. You know what I mean.

If | am wrong, I am sure they good for a little more. You

will get a little more out of them.”[21-22a]

Petitioner noticed an appeal to the United States Court of

Appeals for the Second Circuit and moved that Court for a

stay of the sale pending appeal and for an expedited appeal.

The motion was heard by telephone conference on July 21,

1983 at which time that Court indicated that a stay for two

weeks, but not pending the appeal which would take longer

because no panels were sitting until August 7, 1983, would be

granted if petiticner could post $60,000 cash that same day to

cover the current expenses of the vessel while a release bond

was obtained. The motion was withdrawn when it became

evident that petitioner could not meet this deadline.

After the sale, the Second Circuit affirmed the district

court’s action in a short form, one page decision [4a] in which

it was concluded that the district court’s findings on two

irrelevant propositions of fact, never contested by petitioner,

were not “clearly erroneous”. Such was the basis for upholding

the district court’s findings that respondent was a special

rather than general agent and that the prohibition of lien clause

was not operative. The Second Circuit rejected the contention

that respondent did not have a mature maritime lien at the time

of the arrest by stating such contention to be “similarly

without merit” [4a]

BASIS OF JURISDICTION IN THE DISTRICT COURT

The Federal Jurisdiction of the United States District Court

for the Eastern District of New York was based upon the

admiralty and maritime jurisdiction of that Court under Arti-

cle III, Section 2 of the Constitution of the United States and

Title 28 U.S.C. Section 1333.

REASONS FOR GRANTING THE WRIT

A. The effect of the decision of the courts below is to extend

the availability of the harsh remedy of the maritime lien in

favor of a ship's agent beyond that permitted by any

previously decided case in contravention of this Court's

directives that the maritime lien is stricti juris, and incon-

flict with decisions in other circuits.

Ever since our courts embarked upon the case by case

development and definition of the extent of the in rem jurisdic-

iion to enforce maritime liens conferred upon the judicial

branch of the United States Government by Article III, Section

2 of our Constitution, there has been a consistent, uninter-

rupted thread of decisions denying lien status to those persons

whose relationship with the owner of the vessel sought to be

made the subject of a lien was one of continuity, closeness and

involved the exercise of discretion in the representation of that

owner.

Thus, a proctor in admiralty obtains no lien on a vessel for

professional services in her defense. The EUROPIETRO

CAMPANELLA, 81 F.Supp. 475, 485 (D.C.D. Md. 1948); nor

does a time charterer who pays and victuals the crew pursuant

to contractua! agreement with the owner. The FORT GAINES,

24 F.2d 438 (D.C.D. Md. 1928). Stockholders and part owners

are not entitled to claim maritime liens for necessaries or

supplies ‘hey provide. The PRESIDENT ARTHUR, 25 F.2d

999 (S.D.N.Y. 1928); THE FRANK BRAINERD, 3 F.2d 664

(D.Me. 1925); The KONGO, 155 F.2d 492 (6th Cir. 1946), cert.

denied, 329 U.S. 735 (1946). Even the master of a vessel was

given no lien for unpaid wages; The GRAND TURK, | Paine

73 (C.C.N.Y. 1817); Ex Parte Clarke, (D. Mass. 1843) Fed.

Cas. No. 2, 796; until the rule was abrogated by statute 46

U.S.C.A. §606 (1968). The direct supplier of voyage necessities

to the vessel was, before enactment of the United States

Maritime Lien Act in 1910, denied a lien if those necessaries

were provided to the vessel at its home port, The GENERAL

SMITH, 17 U.S. (4 Wheat.) 438 (1819); The LOTTAVANNA,

88 U.S. (21 Wall.) 558 (1875).

So too a wharf owner who made his entire pier available to

the shipowner on a continuous basis for a daily fee under an

agreement terminable on notice was denied a lien. The AD-

VANCE, 60 F. 766, (S.D.N.Y. 1894), aff'd, 71 Fed. 987 (2d

Cir., 1896).

Prominent in this lineup of judicial authority are those

decisions which deny to the general agent who represents a

vessel and its Owner on a continuous basis rather than a

one-shot, single transaction basis, and who exercises discretion

and judgment in the course of that representation, the right to

exercise a maritime lien upon the vessel to recover monies due

him for advances or charges under the agency agreement.

China Mutual Insurance Co. v. Ward, 59 Fed. 712 (2nd Cir.

1894); The CENTAURUS, 291 Fed. 751 (4th Cir. 1923); The

MARET, 145 F.2d 431, 443 (3rd Cir. 1944); The AMERICAN

STAR, 11 F.2d 479, 482 (3rd Cir. 1926); The HOXIE, 297 Fed.

189 (4th Cir. 1924); The RALEIGH, 32 Fed. 633 (S.D.N_Y.

1887), and many others.

The ratio decidendi of all these cases is the extent of the

relationship and famiiiarity with which the agent has with the

owner of the ship, viz., he is doing things for the shipowner on

a continuous basis independently of the whereabouts of the

vessel at any given time which the shipowner, were he in

position, might well be doing for himself. It is such that the

lien claimant is identified with the owner whom he knows, and

is too far removed from the classic situation of the one-shot,

single occasion supplier in an Outport who has a need to look

to credit of the vessel, and does so, to be permitted to exercise

this drastic remedy.

The state of the law denying a general agent for a steamship

company a maritime lien against the vessel has not been altered

by the United States Maritime Lien Act, 46 U.S.C.A. 971 ef

seq.; The CENTAURUS, supra; The MARET, supra, at p.

443; The PRESIDENT ARTHUR, 279 U.S. 564, 568 (1929).

Another proposition of the law of maritime liens of at least

equal vintage and vitality today is the rule that such liens,

being secret and indelible, with the potential of adversely

affecting general creditors and bona fide purchasers without

notice, are stfricti juris and are not to be extended by construc-

tion, analogy or inference. The YANKEE BLADE, 60 U:S. (19

How.) 82, 89 (1857); Piedmont & G.C. Coal Co. v. Seaboard

Fisheries Co., 254 U.S. 1, 12, (also holding that the Maritime

Lien Act does not broaden the scope of the maritime lien)

(1920); The LUCIE SCHULTE, 343 F.2d 897 (2d Cir. 1965);

see also Nadle v. M/V TEQUILA, 1973 A.M.C. 909, 913

(S.D.N.Y. 1973).

The affirmance of the district court holding that respondent

was a special agent and therefore entitled to a maritime lien,

has sanctioned a radical departure from, and does serious

violence upon, both of these bedrock principles of the law of

maritime liens. A general agent acting over a continuous term

contract in exchange for monthly payments with almost every

discretionary power which a shipowner itself would have over

the affairs of the ship, has been permitted to obtain a maritime

lien against the vessel it is charged with protecting and manag-

ing.

Both courts have grossly misconceived the criteria for dis-

tinction between general and special agents in producing this

result. Those criteria are spelled out in a long line of cases.

One of the leading authorities dealing with the factual

elements requisite to a determination that a given lien claimant

is Or is Not a general agent, is the opinion of Judge Chesnut in

Todd Shipyards Corporation vy. The City of Athens, 83 F.Supp.

67 (D.C. Md. 1949). That case involved claims of three foreign

agents of a passenger ship. The one who most closely ap-

proached a general agent was named Gastaldi. He was em-

ployed by the owner to act as agent for the vessel at Genoa,

Naples and Brindisi, Italy at which ports the vessel called seven

times. He did the customary services that an agent in an

Outport performs, paying harbor dues, arranging pilotage,

lighterage, stevedoring provisions, taxis, etc., etc., and would

collect outgoing freight and passage money. The court upheld

the lien of Gastaldi pointing out that he had no general control

over the ship's movements or any authority to speak or act for

her other than in relation to the necessary services for the

particular ports he serviced. There was no written contract. He

was a port agent. His accounts with the principal were kept

separately for the ship for each voyage. There was no general

running account between Gastaldi and the owner. Judge

Chesnut cited the Restatement of Agency as follows:

“A general agent is an agent authorized to conduct a

series of transactions (involving a continuity of ‘service

(italics supplied). A special agent is an agent authorized to

conduct a single transaction or a series of transactions not

involving continuity of service” (83 F.Supp. at p. 88).

Here respondent did have a running account with petitioner.

Respondent represented the BEAUFORT MARINER wherever

it went and hired sub-agents at the different ports. There was a

clear continuity of service between respondent and the

BEAUFORT MARINER commencing in September, 1979, and

continuing through the date of the arrest.

The special agent, who has a lien, is engaged on a one-shot

basis or a series of one-shot bases. In Compagnia Maritima La

Empresa, S.A. v. Pickard, 320 F.2d 829% (Sth Cir. 1963) Judge

John R. Brown, in upholding a maritime lien against a claim

of general agency, stated the matter thus:

“The thing which characterizes a general agent as known

in the maritime fraternity is a mutual interdependence on

the financial credit and stability of each of the parties,

agent and owner. The arrangement by its very nature

contemplates that the agent must do many things in

advance of the arrival or after departure of the vessel.

Reimbursement of his expenditures and the payment of

his fees, whether by commissions on freight or otherwise,

is not dependent upon the profitableness of that immedi-

ate venture.” (p. 832).

Judge Brown's opinion described the lien services there

upheld as a “single shot affair” (p. 832).

In the instant case, respondent was to be paid pursuant to

written agreement negotiated with petitioner in equal monthly

installments payable in advance on the first day of each month

in amount equal to one-twelfth of the total annual estimated

Operating costs and expenses of respondent, and petitioner was

to remit the cost of vessel bunkers, port expenses, canal tolls,

port agency fees and expenses and major repairs “within ten

business days following the receipt of an invoice therefore”

from respondent [31-32a]. This is clearly reliance upon the

credit of petitioner wholly independent of the vessel's availabil-

ity to be made the subject of a maritime lien in this or that

port. Is is the exact antitnesis of a one-shot arrangencnt.

Respondent was the manager and operator of the BEAUFORT

MARINER wherever that vessel went, in port or out of port,

at sea or anchor, with the duty “to man, equip, victual and

supply the vessel and to pay for all provisions, wages, fuel,

port expenses, pilotage, agencies, consular charges, cabin,

deck, engine room and other stores, and all other costs and

expenses incident to the management, operation, and conduct

of the business of the vessel.” [25a]

In Ameejee Valleejee v. Victoria V., 661 F.2d 310 (4th Cir.

1981) a Pakistani port agent which had serviced the owner's

vessels only in Karachi, and which did not on its own authority

pay crews, accept non-routine cargo, or exercise any control

outside the port of Karachi, and who reported to the owner's

general agent, was held to be a special agent. The court, after

Stating that the degree of authority exercised by the agent was a

more important factor than continuity of service, noted that

the lien claimant had dealt with the owner’s general agent at

arm's length.

However, the fact is clear that the agent, Amjee, did not

have continuity of service. It only functioned in Karachi.

Here, respondent had both continuity of service and broad

discretion. Respondent reported to no general agent between it

and petitioner; it engaged agents like Amjee; it represented the

vessel wherever it.went, paid the crews, etc., etc., at all times

without geographical or time frame limitation.

The district court predicated its finding that respondent was

a special agent upon another critical misapprehension that “[a]

general agent, by contrast to a special agent, is one to whom

virtually complete control and dominion is entrusted” [8a].

Not so. It is not necessary for a party to exercise complete

control over a vessel in order to be labelled a general agent. It

is sufficient if he exercises extensive control on an ongoing

basis and looks to the credit of the owner (in this instance the

hire-purchase bareboat charterer), not the vessel.

In The RALEIGH, 32 Fed. 633, supra, the libellants

Mudgett & Co. claimed a maritime lien for advances and

supplies furnished by them to the vessel RALEIGH which was

the sole property of a Boston corporation. As agents for the

vessel in New York, Mudgett & Co. obtained charters, col-

lected freights, paid bills, and procured insurance:

*. . . all, however, subject to the direction and control of

Captain Littlefield, who was the general superintendent of

the [vessel-owning] corporation and master of the ship,

who signed all charters, and occasionally collected some

of the freights due.” /d. at 634.

The Court held that Mudgett & Co. were general agents and

not entitled to a maritime lien despite the fact that they did not

possess exclusive control of the ship.

Here, as in The RALEIGH, although respondent did not

possess exclusive control over the vessel, its duties with respect

tO Operating the vessel were abundantly extensive enough to

render it a general agent. The vessel management and opera-

tion agreement [24-29a] itself is the best evidence of such a

relationship, and the utter absence of reference in that care-

fully drawn, detailed agreement to any maritime lien in favor

of respondent confirms the view of the contracting parties that

respondent would not look to the credit of, and go around

arresting the vessel it was charged with protecting and manag-

ing.

In The CENTAURUS, 291 Fed. 751, supra, an agent

claimed a maritime lien for expenditures and advances made

for supplies, provisions and other necessaries furnished to the

ship.

The Fourth Circuit in this 1923 decision affirmed a lower

court decision denying the validity of the petitioner’s lien on

the ground that the petitioner was a general agent. The court

stressed the extent of the agent's discretion and the absence of

separate accounts on a ship by ship, voyage by voyage basis.

Nor is it essential to be a general agent that the lien claimant

have authority to book cargoes and fix charter parties.

In Savas v. Maria Trading Corporation, 285 F.2d 236 (4th

Cir. 1960), a marine engineer was held to be a special agent for

services he performed on a ship in Norfolk and in Baltimore

but was held to be a general agent for services he performed in

Bremen. The court held that while the plaintiff had acted as an

independent contractor in this country, in Germany he was

acting as the owner's representative. /d. at 339.

Thus, the scope, continuity, payment terms and discretion

characterizing Trinidad’s relationship with Sea-Hire have all

the earmarks of a general agency in every traditional sense.

In this case the Second Circuit decision in affirming the

district court stated:

“Judge Bramwell found that Trinidad believed that its

relationship to Sea-Hire would be limited to a single

voyage from Inchon, Korea to Mexico. This finding is not

clearly erroneous. We conclude with Judge Bramwell that

Trinidad was not relying on the credit-worthiness of

Sea-Hire for this transitory commercial encounter.” [4a]

Whatever petitioner subjectively thought at the outset was

not contested. It is wholly irrelevant to a determination of

respondent's status in relation to petitioner as of the time

respondent purported to exercise a maritime lien on the

BEAUFORT MARINER. The operative considerations are

what did happen. Was there a continuity of relationship and

was respondent, on the undispted facts, cloaked with suffi-

cient discretionary authority on an overall basis in terms of the

actual transactions that took place, so as to be classified as a

matter of law as a general agent not entitled to maritime lien?

The Second Circuit never mentioned these critical factors.

It can not be disputed that respondent represented the vessel

in the broadest respects on voyages from Korea to Indonesia to

Singapore to Indonesia, then half-way across the world to the

Caribbean, for several Caribbean voyages and then a further

voyage to the United States, and was paid $659,151.57 for

doing this by respondent. There are no factual issues in respect

of these actual facts and occurrences.

A general agent does not become a special agent because he

might have subjectively regarded his likely role as “transitory”

at the outset, whatever “transitory” may be intended to mean.

In holding otherwise the Second Circuit completely sidestepped

the legal issue presented to it.

The Second Circuit cited RT Perusahan Pelayaran Samu-

dera Trikora Lloyd v. T.S. SALZACHTAL, 373 F.Supp. 267,

277-78 (E.D.N.Y. 1974) as legal precedent supporting its novel

“transitory” approach. That case is not on point. The language

on pp. 277-78 of SALZACHTAL, to which the Second Circuit

presumably alluded in its opinion is as follows:

“. . .[Wje conclude that the Confidential Agreement re-

placed what was essentially a charter-at-will with an

agency relationship in which Trikora operated the vessel

under Nelson’s direction for a single-shot voyage, any

continuation of the arrangement requiring an additional

agreement... .

We find here that Trikora was not authorized to con-

duct a series of transactions involving continuity of ser-

vice and accordingly was not a general agent.” (Emphasis

added)

The crucial difference between the court’s finding in

SALZACHTAL and the present case is that, in SALZACH-

TAL, the agent's authority to operate the vessel was limited to

a single voyage; further agreements were needed for it to

continue to operate the vessel, and it was not authorized to

conduct a series of transactions.

Here, respondent under the explicit terms of the vessel

management and operation agreement was authorized and in

fact obligated to operate and manage the vessel on a continu-

ing basis terminable by either party only on 10 days notice, and

did so for four months. There were no geographical, time or

voyage limits provided for in the vessel management and

Operation agreement. Whatever respondent may have “as-

sumed” or “believed” the length of its relationship with Sea-

Hire was to be had no bearing on the contractual obligation it

entered into with petitioner.

The Second Circuit's preoccupation with the erroneous and

inapplicable finding that the relationship between petitioner

and respondent was intended to be “transitory”, is hard to

understand. No prior decision has permitted an agent whose

activities would otherwise characterize him as a general agent

to attain lien status by ascertaining an intent on his part at the

outset, not realized as things developed, to be a “transitory”

operative. The allowance of a lien on this basis undermines the

entire body of maritime law which denies a lien to a general

agent, conflicts with the other circuit court decisions cited

above and violates the rule against extending such liens by

inference, construction or analogy enunciated by this Court. It

should not stand.

The fact that the Second Circuit elected to express its

decision in a non-published informal opinion should not, we

submit. deprive petitioner of review in this Court simply

because news of the unjust forfeiture permitted by the courts

below has not been circulated to a wide audience.

B. The decisions of the courts below ignored the established

proposition of the Federal Law of Maritime Liens, under

the United States Maritime Lien Act and otherwise, that a

maritime lien is extinguished by payment and cannot arise

in favor of a person who does not himself provide necessa-

ries to a vessel unless and until that person becomes

subrogated to the rights of third parties who do provide

necessaries by paying them.

It is not disputed that when the sun went down in New York

Harbor on June 28, 1983, the day of the arrest, in terms of

cash receipts and disbursements, respondent © .°14 petitioner

some $118,000 [19a]. As aforesaid, with the ship under arrest

and petitioner's June 28, 1983, $130,000 payment in hand,

respondent went about paying itself and others in respect of

some alleged “commitments” respondent had made prior to

the arrest and also in respect of considerable post-arrest items.

It has long been a fundamental proposition of the law of

maritime liens that a special agent who does not himself

directly furnish the supplies or materia!s to the vessel, but has

engaged third-parties to do so, does not as such have a

maritime lien. To protect the special agent in such instances

admiralty long ago developed the doctrine that if certain strict

conditions were met, the agent making an advance to a

third-party lienor would be subrogated to the lien of that

third-party. The decisicn most frequently cited to this proposi-

tion is The City of Camden, 147 F. 847 (S.D. Ala. 1906). The

Second Circuit adopted the rule in The Ruth E. Merrill, 286

Fed. 355 (2d Cir. 1922).

In order to be subrogated to the maritime lien of a third-

party, it must be shown that it was necessary to advance the

funds. The Ana R. Heidritter, (D. Mass. 1923) 289 Fed. 112

(lien claimant must show the necessity for the repairs, supplies

or advances and their actual use and benefit received by the

vessel in order to have a lien, p. 114); The Maud Palmer, (D.

Mass. 1915) 224 Fed. 655; The Alcalde, (W.D. Wash. 1904),

132 Fed. 576.

In The Englewood, 57 F. 2d 319 (E.D.N.Y. 1932), the court

stated that in order for the advances of a ship agent to pay

seaman’s wages to be afforded a lien status by subrogation it

was incumbent upon the claimant to show the individual

seaman paid and the amounts paid to each.

Blacks Law Dictionary, Fourth Ed., 1951, defines “subroga-

tion” as follows:

“A legal fiction through which a person who, not as a

volunteer or in his own wrong, and in absence of out-

sianding and superior equities, pays debt of another, is

substituted to all rights and remedies of the other, and the

debt is treated in equity as still existing for his benefit

. . . the principle which lies at the bottom of the doctrine

is the person seeking it must have paid the debt under

grave necessity to save himself a loss. The right is never

accorded to a volunteer.” (emphasis added)

Respondent contended it was entitled to lien status because

as of the time of the arrest respondent was “committed” to

make such payments. If it did make such “commitments”

respondent was in violation of Par. | of the vessel management

and operation agreement providing:

“Manager shall not represent itself or hold itself out as

owner or charterer of the Vessel, but shall always disclose

its agency and the name of Ilford Shipping and Trading

Corporation Limited [petitioner now], as bareboat char-

terer of the Vessel.” [24a]

Had it lived up to this undertaking respondent would have

had an agency defense and would not have been under any

“commitments” to third parties.

Thus, respondent at the time of the arrest was not entitled to

be subrogated to the lien rights of anyone it later paid because

at that time it had paid no money. It made the later payments,

either as a volunteer or, if obligated, the “committments” it

had entered were in breach of the above quoted condition of

the management and operation agreement.

It follows that respondent as of the time it a:. ested the vessel

did not enjoy a maritime lien by virtue of whatever “commit-

ments” it had made to pay certain suppliers in futuro, enjoyed

a substantial over-payment from petitioner and was not within

its rights in instituting the in rem proceedings when it did,

whatever its status.

The district court was of the erroneous view that respondent

was a lien act claimant [8a]. Section 971 of the United States

Lien Act, (46 U.S.C.A. §971 ef. seg.) provides for “Any

person furnishing repair, supplies, towage, use of drydock or

marine railways, or other necessaries” to have a lien (emphasis

added). The only theory upon which respondent could have a

lien under the statute is by way of subrogation which, as

discussed above, cannot be operative on the uncontested facts

of this case.

Moreover, § 974 of the Act since its original enactment in

1910 and as re-enacted in 1920 has at all times provided:

“This chapter shall not be construed to affect the rules of

law existing on June 5, 1920, in regard to (1) the right to

proceed against the vessel for advances. . .”

As this Court pointed out in Piedmont & G. C. Co. Vv.

Seaboard Fisheries Co., 254 F. U.S. 1, 12, supra, the Act

produces no changes in the law of maritime liens which are to

remain stricti juris, and are not to be extended by construction

analogy or inference. The Second Circuit’s decision did not set

forth its reason for affirmance on this point, the effect of

which was to expand the lien for advances so as to confer a lien

upon persons who had not made advances, but might be doing

so in the future, a new and unprecedented enlargement of this

remedy.

C. The courts below have denied effect to a charter-party

prohibition of lien clause in contravention of the prior

decisions of this Court, or, alternatively, assuming respond-

ent to be a Lien Act claimant, in violation of that Act by

interpreting the presumption of authority of petitioner to

bind the vessel set forth in § 972 to be operative even

though respondent was charged with actual knowledge of

the absence of such authority.

Clause 10 of the hire purchase bareboat charter party [23a]

contained the prohibition of lien clause quoted supra. Clause

11 required that a signed copy of that agreement be kept

onboard the vessel and exhibited to persons having business

with the vessel which might give rise to a maritime lien.

Respondent's executive vice president testified on July 18,

1983, that a copy of the bareboat charter had been received by

respondent on or about June 7, 1983 [17a] which had been

picked up on shipboard earlier by another representative of

respondent [!7a]. He also testified that he did not read the

charter party. The district court ruled from tie bench that

respondent did not have knowledge of, and was not to be

charged with, the prohibition of lien clause [20a]. The Second

Circuit treated this as an issue of fact and affirmed the ruling

as not clearly erroneous [4a].

This, we submit, was egregious error.

The prohibition of a lien clause was as a matter of law,

effective to prevent a maritime lien (whether statutory or

non-statutory) from arising in favor of respondent whether or

not the clause was actually read.

As to non-statutory liens, such as those for breach of charter

parties, the Second Circuit in United States v. S.S. LUCIE

SCHULTE, 343 fT. 2d 897 (1965), denied a charter party lien by

reason of the existence of a prohibition of lien clause. The

court in that case followed the line of cases decided by this

Court beginning with The Schooner Freeman v. Buckingham,

59 U.S. 190 (1855) and continuing with The Kate, 164 U.S. 458

(1896) and The Valencia, 165 U.S. 264 (1897), which denied

liens where the material man could readily have ascertained the

vessel was chartered and the charterer had agreed to pay the

expense in question.

The leading case prior to the 1971 amendment of the United

States Lien Act (discussed below), United States v. Carver, 260

U.S. 482 (1923), was additionally relied upon. The Second

Circuit in the LUCIE SCHULTE, supra, stated:

“We see no adequate reason for not reaching the same

result in a case where the shipper could have ascertained

the facts by exercise of reasonable diligence—a rule

which, without statutory directive, The Kate and The

Valencia had applied to the equally worthy mate-

rialman. . . . We are dealing in this case with a shipper in

large volume and of extraordinary sophistication.” (p.

901).

This court also stated:

“It follows that if the United States had known that the

LUCIE SCHULTE was under charter and had seen the

charter parties, it would have no lien.” (p. 901) (Emphasis

added)

Certainly respondent is an experienced and sophisticated

organization, it had “seen” the charter party, its contractual

undertaking in the management and operation agreement was

to enable petitioner to perform that charter party [24a], and

any lien that it might lay claim to on the basis of the general

maritime law must be regarded as eliminated dy the prohibi-

tion of lien clause because due diligence by respondent surely

would have disclosed that clause.

Even if respondent was a special agent, and was retroactively

subrogated to the maritime liens of statutory lien claimants by

payments it made after the arrest, it was still precluded by the

prohibition of lien clause.

In 1971 Congress amended § 972 of the Lien Act (46

U.S.C.A. 972) to provide that 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 from the owner to procure repairs, supplies,

towage, etc., etc. This presumption replaced the earlier lan-

guage of Section 972 providing:

“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.”

Gilmore & Black, in their treatise, The Law of Admiralty, 2d

Ed. 1975, at p. 686, discuss the effect of this amendment as

follows:

It will no doubt be argued by counsel for materialmen

that only ‘actual knowledge’ (as distinguished from

‘notice’) of lack of authority will defeat the lien. History

suggests that the argument will not be persuasive. In any

field of law in which the acquisitior of rights is condi-

tioned on the absence of knowledge of certain facts, the

judicial criterion for determining when the fatal knowl-

edge exists is, as the matter is usually put, objective and

not subjective. That is, A will not be heard to plead

personal or subjective ignorance of whatever the crucial

fact may be if it appears that he knows other facts from

which any reasonable man would deduce the existence of

the crucial fact.”

In 7. 7-T- Stevedores v. Jagat Vijeta, 509 F. Supp 1072 (E.D.

Tex., 1981) aff'd in part, rev'd in part 696 F. 2d 1135 (Sth Cir.

1983)" a stevedore was held to have had actual knowledge of a

prohibition of lien clause in a charter agreement, the court

stating:”

The Fifth Circuit reversed the district court's factual finding of

actual knowledge because it held that the lower court had improperly

imputed the knowledge of TTT Agencies, an agent of the stevedore to

the stevedore. The Circuit Court held that when TTT Agencies received

the charter party, it was acting as an agent for the shipowner, not the

stevedore.

“T.T.T. Stevedores also knew the provision of the charter,

including the no lien clause, as it had received a copy of

the charter agreement from Dempo.”(p. 1079).

In Lake U. Drydock Co. v. M/V Polar Viking, the court

held that “[t]he legislative history indicates that the assertion

of a lien will be barred if the materialman has knowledge of a

non-lien charter clause.” 446 F. Supp. 1286, 1290 (W.D. Wash.

1978).

Similarly, in Ramsay Scarlett & Co. v. S.S. KOH EUN, the

court held that “[a]ny prohibition of lien clause is thus ineffec-

tive against such a supplier of necessaries absent actual knowl-

edge of a charter including a prohibition of lien clause.“

(emphasis added) 462 F. Supp. 277, 285 (E.D. Va. 1978).

Respondent is a sophisticated and experienced ship operator

and agent. It knew of its principal’s bareboat charter from the

outset. In determining whether a party has actual notice of a

fact, courts have consistently allowed proof of such notice by

either direct or circumstantial evidence; Simmons Creek Coal

Company v. Doran, 142 U.S. 417 (1892); National Labor

Relations Board v. Vapor Recovery Systems Company, 311

F.2d 782, 786 (9th Cir. 1962).

The subjective finding of fact thar the clause was not read by

respondent is thus extraneous. As a matter of law respondent

had sufficient knowledge of the existence of the prohibition of

lien clause in the charter party between petitioner and the

actual Owner to overcome the statutory presumption. That

presumption was obviously designed to protect strangers, not

ship managers.

Once the existence of actual knowledge is established, it is

impossible for a charterer such as petitioner to create a

maritime lien against a vessel owned by another that has been

precluded from arising by \ irtue of a prohibition of lien clause.

At that point the charterer is legally incompetent to create a

lien or to bind the vessel, and the Second Circuit's view to the

contrary, i.e., that petitioner had a duty to call the clause to

respondent’s attention, failing which petitioner would some-

how gain authority to bind the vessel, is way off the mark.

There have been many district and circuit court decisions

struggling with the extent to which the 1971 amendment to the

United States Maritime Lien Act, 46 U.S.C. §971 ef seq., has

wrought changes in the law as laid down by this Court as

regards the effect of charterparty prohibition of lien clauses.

Granting the instant petition may well provide vessel owners,

charterers and materialmen badly needed guidance in this

critical area and at the same time, we are confident, correct a

serious and substantial injustice to an individual litiga:t which

has truly not had fair treatment.

CONCLUSION

IN THIS CASE THE COURTS BELOW, IN CONFLICT

WITH DECISIONS OF OTHER CIRCUITS AND OF THIS

COURT, AND IN CONTRAVENTION OF THE UNITED

STATES MARITIME LIEN ACT, HAVE EXPANDED THE

AVAILABILITY OF THE ALREADY HARSH REMEDY OF

THE MARITIME LIEN TO PERMIT A GENERAL AGENT

NOT ENTITLED TO A LIEN BECAUSE OF ITS STATUS

AS SUCH, WHICH HAS BEEN PAID FOR ALL NECESSA-

RIES TO THE VESSEL IT HAS PROVIDED OR PAID FOR,

TO ARREST AND FORCE THE JUDICIAL SALE OF THE

VESSEL OF ITS PRINCIPAL IN ADMIRALTY /N REM

PROCEEDINGS. THIS HAS HAPPENED NOTWITH-

STANDING THAT SUCH PRINCIPAL IS LEGALLY PRE-

CLUDED BY A PROHIBITION OF LIEN CLAUSE IN THE

BAREBOAT CHARTER FROM BINDING THE VESSEL

AND THAT PRECLUSION IS KNOWN TO THE AGENT.

THE RESULT HAS BEEN A GRIEVOUS MISCARRIAGE

OF JUSTICE WHICH CANNOT BE PERMITTED TO

STAND, AND THE PROBABLE JURISDICTION OF THIS

COURT SHOULD BE NOTED.

Respectfully submitted,

CHARLES L, TROWBRIDGE

Attorney for Petitioner

40 Wall Street

New York, New York 10005

(212) 344-4700

WALKER & CORSA

JON W. ZINKE

KATHLEEN V. MCQUILLING

Of Counsel

APPENDICES

APPENDIX A

Decision of the United States Court of Appeals for the Second

Circuit dated January 20, 1984

UNITED STATES COURT OF APPEALS

SECOND CIRCUIT

No. 83-7610

At a stated term of the United States Court of Appeals, in

and tor the Second Circuit, held at the United States Court-

house, in the City of New York, on the 20th day of January

one thousand nine hundred and eighty-four,

TRINIDAD CORPORATION,

Plaintiff-Appellee,

SEA-HIRE SERVICES, S. A. and THE MOTOR VESSEL

BEAUFORT MARINER, ete.,

Defendants-Appellants,

—

A petition for rehearing containing a suggestion that the

action be reheard in bane having been filed herein by counsel

for the defendants-appellants, Sea-Hire Services, et al.,

Upon consideration by the panel that heard the appeal, it is

Ordered that said petition for rehearing is DENIED,

It is further noted that the suggestion for rehearing in banc

hus been transmitted to the judges of the court in regular active

service and to any other judge on the panel that heard the

appeal and that no such judge has requested that a vote be

taken thereon.

A. Daniel Fusaro, Clerk

FRANCIS X. GINDHART

by Francis X. Gindhart,

Chief Deputy Clerk

APPENDIX B

Decision of the United States Court of Appeals for the Second

Circuit dated December 2, 1983

UNITED STATES COURT OF APPEALS

FOR THE SECOND CiRCUIT

Docket No. 83-7610

Ata stated Term of the United States Court ot Appeals for

the Second Circuit, held at the United States Courthouse in the

City of New York, on the second day of December, one

thousand nine hundred and eighty-three

Present:

Honorable Ralph kK. Winter,

Honorable George C. Pratt,

Circuit Judges.

Honorable Charles M. Metzner,

District Judge.

TRINIDAD CORPORATION,

Plaintiff-Appellee,

—_—V—

SEA-HIRE SERVICE, S.A. and the Motor Vessel “BEAUFORT

MARINER,” her engines, tackle, machinery, etc.,

Defendants-Appellants.

° N.B_ Since this statement does not constitute a formal opinion of

this court and is not uniformly available to all parties, it shall not be

reported, cited or otherwise used in unrelated cases before this or any other

court.

Appeal from the United States District Court for the Eastern

District of New York.

This cause came on to be heard on the transcript of record

from the United States District Court for the Eastern District

of New York, and was argued by counsel.

ON CONSIDERATION WHEREOF, it is now hereby ordered,

adjudged, and decreed that the judgment of said District Court

be and it hereby is affirmed.

Judge Bramwell found that Trinidad believed that its rela-

tionship to Sea-Hire would be limited to a single voyage from

Inchon, Korea to Mexico. This finding is not clearly erro-

neous. We conclude with Judge Bramwell that Trinidad was

not relying upon the creditworthiness of Sea-Hire for this

transitory commercial encounter. Although Trinidad’s author-

ity Over the Operations of the vessel was extensive, it was not so

pervasive as to constitute Trinidad a general agent in light of

the transitory nature of the relationship. See RT. Perusahaan

Pelavaran Samudera Trikora Llovd v. T.S. Salzachtal, 373

F.Supp. 267, 277-78 (E.D.N.Y. 1974).

Judge Bramwell also found that Trinidad did not have actual

knowledge of the prohibition of lien clause and that Sea-Hire

made no attempt to call Trinidad’s attention to it on any of the

numerous Occasions on which it was relevant. That finding is

also not clearly erroneous and the clause is not a bar to a lien

in Trinidad’s favor. See Lake Union Drydock v. M/V Polar

Liking, 446 F.Supp. 1286, 1291 (W.D. Wash. 1978).

We have reviewed appellant’s other contention and find it

similarly without merit. We therefore affirm.

Honorable Ralph K. Winter

HONORABLE RALPH K. WINTER

Honorable George C. Pratt

HONORABLE GLORGE C. PRATT

Honorable Charles M. Metzner

HONORABLE CHARLES M. METZNER

APPENDIX C

Decision from Bench of Henry Bramwell, J. dated July 8, 1983

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

83 C 2779

TRINIDAD CORP,

Plaintiff

—versus—

SEA-HIRE SERVICE S.A. & ANO.,

Defendant

—

United States Courthouse

Brooklyn, New York

July 8, 1983

4:00 O'clock PM.

Before:

HONORABLE HENRY BRAMWELL, U.S.D.J.

THE COURT: Defendant Sea Hire Services, the bareboat

charterer of the vesse]| BEAUFORT MARINER, has moved to

vacate the arrest of the vessel pursuant to Eastern District

Admiralty Rule of Civil Procedure 13, and Federal Rule 12 (b)

(6). Plaintiff Trinidad had the vessel arrested on June 28, here

in New York Harbor.

The arrest is based upon what plaintiff contends is a valid

maritime lien under 46 U.S.C. #971, created when defendant

Sea hire defaulted in the payment of approximately $285,000

consisting of various management fees and outlays owed to

plaintiff.

The record reveals that by agreement dated July 26, 1979,

Trinidad contracted with Sea-Hire’s predecessor, Ilford Ship-

ping, to perform certain services in connection with the opera-

tion of the Beaufort Mariner. By assignment dated March 2,

1983, Sea-Hire was substituted for Ilford. The terms of the

Original management agreement were not otherwise changed.

Under the terms of the July 26, 1979 agreement, each party

was given specifically delineated responsibilities. Under para-

graph 1, Trinidad was specifically forbidden from holding

itself out as the owner or charterer of the vessel. Under

paragraph 3 Sea Hire was given the right to supersede crew

contracts made by Trinidad. Under paragraph 4, Sea Hire was

made responsible for procurement of insurance. Under para-

graph 5, Trinidad was required to obtain prior approval before

undertaking repairs in excessof $25,000. Under paragraphs 7 &

8, 1t was Sea Hire’s responsibility to bill and collect for freights

and charters. Under the terms of the agreement, defendant was

to advance plaintiff 1/12 of the estimated annual operating

costs on the first of each month.

Prior to the March 2 assignment Sea Hire had no prior

dealings with Trinidad. On that date, Sea Hire advised Trini-

dad that the vessel, then in South Korea, was to proceed to

Mexico where it would begin a bareboat sub-charter. At that

point, Sea Hire advised Trinidad that their relationship was to

terminate pursuant to the terms of the 1979 agreement. There-

after, the plans changed upon Sea Hire’s obtaining a contract

for transport of oil from Indonesia to St. Croix. On May 17,

after the vessel stopped at several intermediate ports and

requests for payment of fees and reimbursement for service

outlays had been made, Trinidad had the vessel arrested pur-

suant to an in rem attachment, in the U S. District Court for

the Virgin Islands. After Sea-Hire made its account current

with Trinidad, Trinidad had the vessel released. On June 8,

after Sea Hire defaulted in making another monthly payment.

Trinidad had the vessel arrested again this time pursuant to

process issued by the Admiralty Court of Trinidad. After

making additional arrangements satisfactory io it, plaintiff

once again released the vessel.

Thereafter, Trinidad continued to incur additional unreim-

bursed expense. By the end of June, plaintiff contends that it

was Owed some $285,000 by Sea Hire and continued to incur

additional expense. As a result, when the vessel reached N.Y.

harbor, the instant action was commenced and the boat was

once again arrested. The boat is currently under arrest there,

and plaintiff states that it continues to incur expense at the rate

of $3000 per day, representing seamans’ wages for the crew on

board.

The central inquiry today, is whether Trinidad acted in the

capacity of a special or general agent. The former is entitled to

a maritime lien, the latter is not. Although section 971 does not

specifically emply this language, cases construing it have uni-

versally recognized the significance of this distinction. Perhaps

the distinction is best set out by Judge Bartels of this Court, in

a 1974 case, reported at 373 F. Supp 267. I quote from page

276:

“There is a distinction between a general and a special

agent. A special agent is limited both in his scope of

authority and his relationship to the owner. As a rule, this

function is to supply services or other necessaries to the

vessel Or tc make advances to one who has supplied such

necessities. He does not rely upon the credit or stability of

the owner but instead on the credit of the vessel. Accord-

ingly, he is entitled to a lien.”

Viewing the facts of this case against the standard, the Court

is convinced that Trinidad acted in but one capacity here—that

of a special agent. It is clear that the responsibiltiies entrusted

to plaintiff were strictly limited under the 1979 agreement. The

paragraphs of that agreement which | just alluded to do not

contemplate the broad and all encompassing authority most

commonly associated with a general agent. A general agent, by

contrast to a special agent. is one to whom virtually complete

control and dominion is entrusted. Unlike the case of a special

agent, it is he and not the owner who procures freight and

charter contracts and operates them as he sees fit retaining a

certain percentage of the profits as his fee. Here it was Sea

Hire who procured the contracts and directed the manner in

which each voyage was to proceed. Also significant here, is the

fact that prior to March 2, 1983, Trinidad had no contact with

Sea Hire and thus could not possibly have been relying on their

credit worthiness. Significantly, paragraph 4 of the March 2

assigriment provided for Sea-Hire to indemnify and hold harm-

less the vessel from all claims of Trinidad made upon it.

lnideed, this assignment clearly bespeaks reliance by Trinidad

not on the credit of Sea Hire, but on the credit of the vessel

itself.

In view of all of the foregoing, therefore it is quite clear that

the relationship contemplated here limited Trinidad to per-

formance of only limited functions. Moreover, Trinidad cannot

be said to have looked at any point to the credit of Sea Hire—a

principal of whom it knew virtually nothing at the time the

relationship commenced.

Accordingly, the Court finds this afternoon that because

Trinidad has a valid maritime lien under Section 971, the arrest

is in all respects proper. Therefore, the motion is DENIED.

APPENDIX D

Order of the United States District Court, Eastern District

of New York for interlocutory sale dated July 13, 1983

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF NEW YORK

83 Civ. 2779

Judge Bramwell

TRINIDAD CORPORATION,

Plaintify,

—against—

SEA-HIRE SERVICE, S.A., and the Motor Vessel, BEAUFORT

MARINER, her engines, tackle, machinery, etc.,

Defendant.

ORDER FOR INTERLOCUTORY SALE

BRAMWELL, J.:

This matter having come on for hearings on July 7 and July

13, 1983, on the motion of TRINIDAD CORPORATION,

plaintiff herein, for an order directing the sale of the M/V

BEAUFORT MARINER; and the Court having read thie

moving papers and affidavits submitted in support thereof,

and the motion having been argued and submitted to the

Court, and the Court being fully advised herein;

And it appearing to the Court that the M/V BEAUFORT

MARINER was arrested on June 28, 1983, and taken into

custody by the U.S. Marshal, pursuant to process duly issued

in this matter; that the defendant has not secured the release of

the arrested property, and does not intend to do so; and that

such property remains in the custody of the U.S. Marshal;

10a

And it further appearing to the Court that the property is

perishable in nature, that the expenses of keeping the vessel

are, or will be excessive and disproportionate to the value

thereof, and that there has been an unreasonable delay in

securing the release of the property; further, the BEAUFORT

MARINER is a non gas-free tanker, and requires a crew on

board and a supply of bunkers to maintain her inert gas system

in Operation to prevent the ship from becoming explosive and

to comply with U.S. law; now, therefore, it is hereby

ORDERED that the United States Marshal for the Eastern

District of New York be, and hereby is, authorized and

directed te sell the M/V BEAUFORT MARINER and to make

all necessary preparations and arrangements in the furtherance

of such sale which is to take place in the lobby of the U.S.

District Court, Eastern District of New York, 225 Cadman

Plaza East, Brooklyn, New York, on the 22d day of July, 1983

at 1:00 p.m., at public auction for cash to the highest bidder

upon the following terms:

(a) A cashier's or certified check expressed in U.S. currency

and drawn on a New York City bank, or cash, deposit of ten

percent (10%) of the bid shall be paid at the time of sale and

the remaining ninety percent (90%) shall be paid by cashier's

or certified check expressed in U.S. currency and drawn on a

New York City bank, or cash within forty eight (48) hours after

the completion of the auction. If full payment is not made in

conformity with the above terms within forty-eight hours after

the completion of the auction the deposit shall be forfeited by

the bidder. If the sale should not be confirmed, the United

States Marshal shall return all monies to the highest bidder

immediately after rejection of the bid by the Court.

(b) The high bidder must, in addition to the requirements of

paragraph (a) above, deposit with the Court in cash, or

certified check drawn on a U.S. bank in New York City or

bond satisfactory to the Court in the amount of $25,000.00 as

security for its cbligations, immediately upon confirmation of

sale, to man the vessel, supply it with bunkers and maintain its

lla

inert gas system in operation. The deposit required hereunder

will be returned to the high bidder upon proof of satisfactory

compliance with this provision, which would include reimburs-

ing Trinidad Corporation for its expenses of maintaining the

vessel, its crew, and bunkers at and during any period between

the confirmation of sale and the time the owner takes over the

vessel and releases Trinidad Corporation from its present

obligations. If Trinidad Corporation is the high bidder, this

paragraph is inapplicable to it.

this Court on the 26th day of July, 1983 at 1:00 p.m.; and it is

further

ORDERED that notice of sale, in the form attached hereto as

Exhibit A, shall be published at the instance of plaintiff,

Trinidad Corporation, for at least six days in The New York

Times, and Journal of Commerce provided that if any of these

publications do not appear frequently enough to meet the six

day requirement, the requirement is waived as to such publica-

tion. It is understood that plaintiff, Trinidad Corporation, has

engaged the services of a ship broker, Jacq. Pierot Jr. & Sons

Inc. of New York City to arrange the above-mentioned publi-

cation and take other reasonable steps to publish widely the

Notice of Marshal's Sale. And it is further

ORDERED that all expenses of maintenance, including

without limitation, crew costs, bunkers, advertisements, bro-

ker’s fees, and fees for port risk and other insurance procured

by plaintiff, Trinidad Corporation, to cover the vessel during

the period of arrest to the date the sale is confirmed, and any

other expenses necessarily incurred by the Marshal for the

safekeeping and preservation of the M/V BEAUFORT

MARINER shall be deemed administrative expenses, and to-

gether with the Marshal's commission and expenses, shall be

deducted from the proceeds of the auction sale with the

balance remaining to be deposited in the Registry of this Court

to stand in place of the M/V BEAUFORT MARINER pending

l2a

further disposition of this action, all without prejudice to the

rights of any claimants to present the claims against the

proceeds of the auction sale for determination by this Court.

Dated: Brooklyn, New York

July 13th, 1983

/s/ HENRY BRAMWELL

U.S.D.J.

NOTICE OF MARSHAL’S SALE

The tank vessel) BEAUFORT MARINER, Panamanian

Flag, ON 11635 PEXT-1, length 754 feet 7 inches, beam 104.2

feet, depth 53.9 feet, summer deadweight 58,380 tons, gross

tonnage 30,982, net tonnage 23,345, steam turbine powered,

19,250 horsepower, built IHI Japan, 1965, equipped with inert

gas system and segregated ballast tanks. Last drydocked Janu-

ary 1982 in Tampa, due for special survey September 1984 with

year of grace. Now at anchor at Bay Ridge Flats, off

Brooklyn, New York Harbor, in operating condition, with

partial crew abroad, and with inert gas system energized.

ALL PARTICULARS BELIEVED TO BE CORRECT

BUT NOT GUARANTEED, WILL BE SOLD

“AS IS, WHERE IS”

FREE AND CLEAR OF ALL LIENS AND ENCUMBRANCES at

public auction to be held in the lobby of the U.S. District

Court, Eastern District of New York, 225 Cadman Plaza East,

Brooklyn, New York on the 22d day of July, 1983 at 1:00 p.m.

by the United States Marshal for the Eastern District of New

York pursuant to the order of this Honorable Court dated July

13th, 1983. The sale will be to the highest bidder, subject to

confirmation by the Court. Ten percent (10%) of the purchase

price shall be deposited with the U.S. Marshal at the time of

bid, in U.S. currency, or by cashier's or certified check ex-

pressed in U.S. currency, and drawn on a New York City bank.

l3a

Payment of the balance of the purchase price shall be paid to

the U.S. Marshal in the same fashion on or before the

forty-eighth hour following completion of said auction.

IN THE EVENT OF A SUCCESSFUL BIDDER’S FAILURE TO

TIMELY CONSUMATE THE PURCHASE, THE TEN PERCENT

DEPOSIT WILL BE FOREFEITED.

The high bidder must, in addition to the requirements above

regarding the purchase price, deposit with the Court in cash, or

a certified check drawn at a New York City bank or bond

satisfactory to the Court in the amount of $25,000.00 as

security for its obligation, to immediately upon the confirma-

tion of the sale, to man the vessel and to supply it with bunkers

and maintain the BEAUFORT MARINER's inert gas system

in Operation. This deposit will be returned to the buyer upon

proof of satisfactory compliance with this provision, which

would include reimbursing Trinidad Corporation for its ex-

penses to maintain the vessel, its crew and bunkers, etc.,

during any period between the confirmation of sale and the

time the new owner takes over the vessel and releases Trinidad

Corporation from its present obligations. If Trinidad Corpora-

tion is the high bidder, this paragraph is inapplicable to it.

The vessel may be inspected by appointment by calling Mr.

William B. Mollard, Jacq. Pierot Jr. & Sons Inc., ship brokers,

29 Broadway, New York, New York 10006, Telephone 212-344-

3840.

[3]

l4a

APPENDIX E

Excerpt from Transcript of July 18, 1983 hearing

MR. TROWBRIDGE: May | approach, your Honor?

THE COURT: Yes.

MR. TROWBRIDGE: I am Charles Trowbridge, a mem-

ber of the firm of Walker & Corsa.

| have been out of town but I'd like to argue the motion

on behalf of the defendants, if I may.

THE CourRT: Surely.

MR. TROWBRIDGE: After the Court's ruling last week

and the Friday before, two facts came to our attention

which we submit require dismissal of the complaint as a

matter of law.

Those two facts are these: The Bare Boat charter party

referred to in the complaint and which has at all relevant

times been in existence between our client, Sea-Hire and

the actual owners of the ship, Platanus, contains a prohi-

bition of lien claus in Clause 10 which was been quoted in

the motion papers and the law is quite clear if anyone

seeking to impose a lien on a vessel has knowledge of such

clause he has no lien. That is the first fact.

The second fact we learned is that as of the date this

ship was arrested, on June 28th, if we refer to [4] the

documents provided by the plaintiff after the ruling on

the validity of the maritime lien—this is Exhibit 2 to this

rather fat affidavit | burdened the Court with—we can

see, on June 28th, the day the ship was arrested, there was

in fact a balance owning, according to Trinidad’s own

documents, of only about $11,000, a $20,000 item less a

$9,000 item.

The funds—in other words, the first day this ship is

under arrest, Trinidad’s own records show that it received

$130,000 from our client.

lSa

Now, at that point, one day after the arrest of this ship,

while it is in the custody of the Court, under Trinidad’s

own numbers in terms of expenditures, it has a balance in

favor of the defendant of $118,000.

Thereafter, while the ship is under the custody of the

Court some $320,000, listed on the bottom oj the second

page of Exhibit 2, to my affidavit, were paid.

Now your Honor, it is absolutely basic that you cannot

get a maritime lien if you don’t either perform services or

expend money. They did neither.

As of the time this ship was arrested and as of the time

this complaint is verified, there was either—depending on

how you construe the duties—$11,000 owed to Trinidad

or $118,000 in favor of our client.

So, we say two things: We say that Trinidad had [5] to

have notice of the prohibition of lien clause—

THE COURT: You assume notice?

MR. TROWBRIDGE: I assume this. We have known

facts—

THE COURT: You don’t have to argue with me at this

point on that position because it is either proved or

disproved. You can go ahead with your proof. But you

don't have to argue to me. You can go ahead and prove it

to me now. You can hold your argument and save it for

later.

MR. TROWBRIDGE: Surely.

I will say this—because I think I have to do something

now because of the imminence of the sale—

THE COURT: You can put witnesses on right now and

prove what you say.

MR. TROWBRIDGE: As my proof I offer the following:

This is the affidavit put into the Court today from Mr.

Irvin, Vice President of the plaintiff.

If you look at the second page of that affidavit you will

see in Paragraph V he says the Trinidad obtained a copy

of this Bare Boat Charter on or about June 7, 1983 in

Trinidad. That means he had it.

l6a

Now, he says here he didn't read it. I say as a matter of

law, your Honor, if you have a copy of the document in

the course of business you are charged [6] with having

read it.

THE COURT: Where is this that you say it appears?

MR. TROWBRIDGE: The second page of the affidavit

handed up today by my adversaries, of Mr. John Ervin.

(Pause.)

THE CourT: I have it.

MR. TROWBRIDGE: The second page toward the bot-

tom, paragraph B.

THE COURT: Would it be nice if you would put some

people on here and—

MR. TROWBRIDGE: | will call Mr.—

THE CouRT: I don't care who you call but wouldn't it

be nice if they would testify to the situation and I can hear

it instead of your going back and forth and trying to

prove and disprove what the papers show?

MR. TROWBRIDGE: If that is your preference.

THE COuRT: It is not my preference.

| am not telling you how to handle your hearing. You

can stand there and argue and then | may have to take

credibility.

MR. TROWBRIDGE: | will add to my initial proof that

there was notice of the prohibition of lien clause by

calling Mr. Jack Ervin to the witness stand, if I may.

THE COURT: You can call him if you want to, sure.

{7] MR. TROWBRIDGE: Would you please take the wit-

ness stand, Mr. Ervin.

THE CourT: Don't feel | am requiring you to do

anything. You understand?

If you are calling him it is because you want him. Don't

feel | am requiring you to do anything. It is just a matter

of whether or not you want to make a record. That is

your problem.

17a

[8] JOHN J. ERVIN, called as a witness, having been duly

sworn by the Clerk ot the Court took the witness stand and

testified as follows:

Direct Examination by Mr. Trowbridge:

Q Mr. Ervin, you are Executive Vice President of the plain-

tiff in this case?

A Yes, | am.

Q You have been familiar with the arrangements between

the plaintiffs and defendant Sea-Hire Service since the incep-

tion?

A Yes.

Q And you have filed affidavits in this case; two so far?

A Yes.

Q And in the affidavit that was sworn to on July 18, 1983,

today, which I will put before you, on the second page you

State in substance, do you not, that the bare boat charter party

between the owner of the Beauford Mariner and the defendant

in this case or one of them, Sea-Hire, S/A was received by

Trinidad on or about June 7, 1983?

A That's correct.

Q How did you come to have that document?

A The copy of the bare boat charter was obtained by one of

our representatives attending the vessel Trinidad in [9] June

and he returned a copy to this office. He was given a copy by

the Master.

Q That copy or another copy had been on shipboard?

A Yes.

Q And the name of that gentleman?

A Carlo Palmieri.

Q Now, did you have any discussion—

MR. TROWBRIDGE: Strike that.

Q Did you read the charter party in question?

A No.

Q Did you know at the time you received the charter party

that Sea-Hire Service was a bare boat charter rather than the

actual owner?

A Yes.

l8a

[12] . * .

Q Now, during the course of—how long a period of time—

for how long a period did your company perform services for

Sea-Hire from the beginning When did it first start?

A March 3rd until the vessel was arrested.

Q This year?

A 1983.

Q During that period of time several of your employees

went onboard the ship, did they not, at different ports?

A We had maybe two or three people onboard the vessel.

Q Um huh. Okay.

When you participated in the decision to lien the Beauford

Mariner on this latest occasion, did you have or refer to any

record as to what amounts of money your [13] company had

expended at that time that had not been repaid to it?

A Yes.

Q How much?

A We had commitments for—

Q No, no—expended.

A I'd have to refer to my records.

Q Would you look at this sheet of paper, two sheets attached

to my affidavit submitted and sworn to today as Exhibit 2.

| ask you and the Court to disregard the dark ink stains.

A This record was prepared after the fact—

Q But it is prepared—

A From our office.

Q By you?

A Yes.

Q Whose handwriting is that?

A One of our accountants’.

Q Do you have any reason to think it is not reliable?

A No.

Q Can you tell us what that document indicates Sea-Hire

owed to Trinidad or Trinidad owed to Sea-Hire in respect of

actual expenditures by Trinidad as of two dates: June 28, June

29, 1983?

19a

{14) MR. BOWLES: You are excluding the commitments

made by Trinidad?

MR. TROWBRIDGE: I am asking about out of pocket

expenditures.

You can have him testify to commitment.

Out of pocket expenditures is how you get liens.

MR. BOWLES: Objection.

THE CoOuRT: That is self-serving, so you can help

ourself,

MR. TROWBRIDGE: I am trying to.

THE Court: | know.

A There was a deficit cash position of some $20,000.

Q What happened the next day?

A There were two adjustments. There was a receipt of

$130,000 in cash and there was an adjusting entry made

crediting the—or charging the previous owner with some

storage.

Q As of the end of June 29th, what was the position in

terms of actual outlay?

A $118,000.

Q Sea-Hire had a positive cash position of $118,000?

A Yes.

Q You are aware, are you not, that June 29th was the day

after the ship was arrested?

A Yes.

{19} ° * °

MR. BOWLES: In the memorandum of law provided

this afternoon and the second point, particularly the

recent cases stress the requirement of the owner or char-

terer to give actual notice.

They have an affirmative duty to give such notice in

advance before people prejudice themselves and get them-

selves into a situation such as Trinidad has, by [20] the

failure of Sea-Hire or the owner to give this type of actual

notice.

20a

One case, including one cited by the Sea-Hire group,

Ramsey Scarlet Inc. v. S.S. KOHEUN, cited at Page 9 of

my brief, specifically noted that the fact that a party has

knowledge of a bare boat charter does not bar a lien if

they have no actual notice of the provisions of a prohibi-

tion of lien clause.

THE COURT: Yes.

MR. TROWBRIDGE: I have no further questions of Mr.

Ervin.

If I could briefly respond to counsel’s statement |

would simply say that we have here a situation where an

experienced and sophisticated corporate entity admits that

the charter was on the ship it visited and it had a copy of

this bare boat charter.

In the circumstances I suggest that it has got to be—

THE Court: Did it have knowledge?

MR. TROWBRIDGE: | say it is charged with knowledge.

THE CouRT: In this case I don’t see knowledge. I don’t

see that at all, counsel.

[30] * * *

THE COURT: You see, it is unfortunate. It is unfortu-

nate, but in circumstances such as these, you know, a

creditor is not going to feel is he going to be any better off

with seeing you sale across the Pacific—there goes the

boat. You know what I mean?

Be realistic. Be realistic and don’t feel that he is going

to look out on the sea as you go across the waves. Don’t

feel that way.

MR. TROWBRIDGE: I don’t.

THE CoOuRT: You had best be realistic.

MR. TROWBRIDGE: | am not usually accused of being

unrealistic.

THE CourRT: It is unfortunate, but it is life.

[31] MR. TROWBRIDGE: Here is what | am asking you,

your Honor—

2la

THE COURT: You can ask me anything.

MR. TROWBRIDGE: If you disagree with our legal posi-

tion and we cannot get the money up, we will satisfy the

Coast Guard. We have talked with them. We will get the

ship gas free and pay the money, a $100,000.

THE COURT: You better get together with them and if

you can work out your money factor I don’t see there will

be any problem. You will get your ship, but if you don’t

work it out that’s going to be it. I can tell you that now,

because | am not going to change. I am not changing.

MR. TROWBRIDGE: When you say, “them”, is it the

Coast Guard or plaintiff's attorneys?

THE COURT: Sort of round them up. This is the last

round up for you.

MR. TROWBRIDGE: I am asking your Honor to defer

the sale—

THE COURT: I am not going to do that. I am not going

io do that, absolutely not. | wouldn't do that especially if

he has gone to the expense of publication. I definitely will

not do that. No sir. We have gone into this too much. I

might only say, your application is denied. The sale will

continue as [32] originally scheduled by this Court. That

is what I am telling you.

MR. TROWBRIDGE: You will not give me a stay, your

Honor?

THE COURT: Definitely will not give you a stay.

Before you, it was Mr. Zinke. It has been day to day or

day after day today—whatever it has been.

We have come here and you have spoken to them or

Mr. Zinke has spoken to Mr. Bowles and you have had

discussions and you should know what the amount ts. You

know what they are looking for. | cannot tell them, do

something else and | am not going to change.

MR. TROWBRIDGE: With all respect, what if you are

wrong? How can we undo the sale after it is reversed on

appeal?

22a

THE CourRT: It’s only money. You know what I mean.

If | am wrong, I am sure they good for a little more.

You will get a little more out of them.

MR. TROWBRIDGE: It is not your money with all re-

spect. It is not your money nor the Government's.

* * *

[38] * * *

Mr. BOWLES: One last matter.

A continuing problem has been to keep a supply of fuel

on the ship so that her boilers and inert gas system can

continue to operate.

As of last week the owner did arrange to put bunkers

onboard but in a small token amount of something like

725 barrels and it is going to run dry and | would ask for

more.

If we have to pay for it, we will do it, but it has to be

done tomorrow.

MR. TROWBRIDGE: If you put off the premature sale

we will not only put bunkers on the ship but take her out

and clean her off.

THE COURT: That is between all of you. I will permit

the sale to continue.

MR. SCHULMEISTERS: It should be an administrative

expense.

{39] MR. TROWBRIDGE: It comes off the top.

Mr. BOWLES: Who is going to arrange for it?

MR. TROWBRIDGE: Let’s talk, as the Judge suggested.

THE COURT: You have got up to the date of sale. That

is as much as I can see.

Anything else?

Mr. BOWLES: No, your Honor.

THE CourRT: Thank you, thank you.

23a

APPENDIX F

Excerpt from Hire Purchase

Bareboat Charter Agreement

10. Right to create liens against the Vessel

Neither the Charterer nor the Master of the Vessel nor any

other person except the Owner shall have any right, power or

authority to create, incur or permit to exist upon the Vessel any

lien whatsoever other than liens for Master and crew’s wages

and salvage. The Owner however may create Mortgage(s) of

the Vessel and the Charterer agrees to place any notice of any

such Mortgage(s) aboard the Vessel in the manner provided by

any such Mortgage(s).

24a

APPENDIX G

Excerpts from the Vessel Management

and Operation Agreement

Exhibit A

VESSEL MANAGEMENT AND

OPERATION AGREEMENT

THIS IS AN AGREEMENT dated September 26, 1979 between

ILFORD SHIPPING AND TRADING CORPORATION LIMITED, a

Bermuda corporation with offices at Hamilton, Bermuda,

Bareboat Charterer (“Owner”) of the Liberian flag vessel

BEAUFORT MARINER, Official number 2215, (“Vessel”); and

TRINIDAD CORPORATION, a Delaware corporation (“Man-

ager”) with offices at 926 Public Ledger Building, Phila-

delphia, Pennsylvania 19106.

1. Appointment of Manager

Owner hereby appoints Manager as its Agent for the

management, operation and conduct of the business of the

Vessel. Manager agrees to act as such Agent and to manage,

operate and conduct the business of the Vessel to the satisfac-

tion of Owner and in an efficient and economical manner, and

to exercise due diligence to protect and safeguard the interest

of Owner in all respects. All of Manager's acts hereunder in

connection with the Vessel shall be done as agent for and on

behalf of Owner as bareboat charterer and operator of the

Vessel.

Manager shall not represent itself or hold itself out as owner

or charterer of the Vessel, but shall always disclose its agency

and the name of liford Shipping and Trading Corporation

Limited as bareboat charterer of the Vessel.

2. Operation

Manager agrees on behalf of Owner to man, equip, victual

and supply the Vessel and to pay for all provisions, wages, [2]

fuel, port expenses, pilotage, agencies, consular charges, cabin,

deck, engine-room, and other stores, and all other costs and

expenses incident to the management, operation and conduct

of the business of the Vessel.

3. Manning the Vessel

Manager agrees, on behalf of Owner, to maintain contracts

with appropriate seamens’ unions or manning agents for both

licensed and unlicensed personnel. All crewmembers engaged

for employment aboard the Vessel shall be employees of

Manager. Manning of Vessel shall be maintained at all times as

required by governmental authorities and classification so-

cieties having jurisdiction over the Vessel. Manager shall main-

tain earning and other necessary or customary records for such

seamen, and prepare necessary tax returns and other reports as

required by appropriate governmental authorities, unions, or

pension and benefit bodies. Owner reserves the right, upon not

less than thirty (30) days’ written notice to Manager, to enter

contracts directly with unions, individuals, or vessel manning

agents for manning of the Vessel, provided, however, that

contracts entered into by Owner shall not be in conflict with,

or breach of, contracts previously entered into by Manager.

[4] . * *

5. Maintenance and Repairs

Manager shall exercise reasonable care in accordance with

good commercial practice to maintain the Vessel in highest

classification of the American Bureau of Shipping and any

appropriate governmental agency for vessels of its type, and to

keep the Vessel in a thdroughly efficient state in hull, ma-

chinery, equipment, personnel and other particulars relating to

the seaworthiness of the Vessel, and to keep the Vessel working

26a

and to prevent loss of time. Except in cases of serious emer-

gency, no maintenance or repairs shall be made or incurred and

no alterations in hull, machinery or equipment shall be made

by Manager in excess of $25,000.00 without first securing the

written authorization of Owner. Manager shall arrange for the

repair of the Vessel in shipyards at the direction of and in

accordance with specifications and procedures from time to

time authorized or prescribed by Owner.

6. Port Turnaround and Dispatch

Manager agrees to perform all the necessary and customary

duties of managing and operating the Vessel; and to perform,

or cause to be performed, all the customary agency duties

concerned with loading and discharging cargoes at all ports,

and all things necessary for the protection and safeguarding of

the interest of Owner. Manager reserves the privilege of naming

port agents for the transaction of customary agency business,

the reasonable fees and expenses of such agents to be for

Owner’s account. All expenses and disbursements referred to

herein as chargeable to the Vessel and Owner are to be those

which are the usual and customary expenses for a vessel of this

type engaged in similar trade.

[8] * * o

13. Payment of Vessel Costs by Owner to Manager

Owner shall pay to Manager, in equal monthly installments

each payable in advance on the first day of each month during

the period of this Agreement, an amount equal to one-twelfth

of the total annual estimated operating costs and expenses of

the Manager attributable to the operation of the Vessel

(“Operating Advance”). The operating costs and expenses for

the Vessel as of October 1, 1979 are estimated to be

$5,911,000.00 per annum. The Operating Advance shall be

adjusted on a monthly basis, but only when mutually agreed by

Owner and Manager and operating budgets shall be updated

from time to time (but at least quarterly) to reflect the actual

27a

operating expenses of the Vessel. Any cost or expense reim-

bursement to Manager by insurance or otherwise, which has

been included in any of the aforesaid amounts, will be de-

ducted from the next payment of Operating Advance required

hereunder. Any reimbursement by insurance for wages or

salaries of employees of Manager shall [9] be retained by

Owner or remitted to Owner if made to Manager. If at any

time Owner shall fail to pay the Operating Advance as required

herein, Manager shall have the righ!, upon 10 days’ written

notice to Owner, to terminate its obligations under this Agree-

ment; such termination to be without prejudice to any of

Manager’s rights arising prior to said termination.

14. Management Fee

In addition to the payments provided in paragraph 13 above,

Owner shall pay to Manager, as full-compensation for Man-

ager’s services hereunder including the management expenses

and overhead costs incurred by Manager in performing under

this Agreement, a fee commencing as of September 19, 1979 of

(a) $250.00 for each day the Vessel is operating, or (b) $125.00

for each day the Vessel is in lay-up. Unless otherwise agreed in

writing, Manager shall be entitled to its fee as if the Vessel were

operating for the first thirty (30) days subsequent to the

Vessel’s entering lay-up, and lay-up fees shall cease and operat-

ing fees commence upon receipt by Manager of notice from

Owner to proceed to activate the Vessel. Said Management Fee

shall be payable monthly in advance and shail be based upon

the status of the Vessel anticipated by Owner for the month or

any pro rata part thereof, and any variance in status shall be

adjusted in the statement for the following month.

15. Owner’s Obligations and Reservations

(a) Owner may during the term of this Agreement, [10] elect

to take unto itself the management of the Vessel’s Maintenance

and Repair as set forth in paragraph 5 above. If such option is

elected, Owner will provide written notice to Manager at least

sixty (60) days prior to the effective date of such election, and

28a

the parties will on the effective date transfer the Maintenance

and Repair function. On and after the effective date of transfer

of this function, the Management Fee due Manager hereunder

shall be reduced by twenty-five (25) percent.

(b) Owner shall comply with all provisions of the bareboat

charter with respect to the Vessel and all provisions of any ship

mortgage to which the Vessel may be subject, except those

provisions which are delegated hereunder to Manager.

other parties to perform, upon ten (10) days’ notification to

Manager, any services which Owner from.time to time elects,

subject however to Manager’s authority x respect to the

overall management and conduct of the business of the Vessel

and subject to Manager's responsibility to correct (or, if be-

yond Manager's ability to correct, to notify Owner of) any

present or potential difficulty, whether or not arising from

services directly performed by Manager.

16. Liability.

(a) Owner agrees that Manager shall be under no liability to

Owner of any kind or nature whatsoever in the event that

Manager should fail, by reason of any labor shortage, dispute

{11} or difficulty or any strike or lockout or any shortage of

material or any act of God or peril of the sea or any cause

beyond the control of the Manager, to obtain officers or crew

for the operation of the Vessel or fail to arrange for the fitting

out, refitting, maintenance or repairing of Vessel or fail to

perform any other service hereunder.

(b) Owner agrees that Manager shall be under no responsi-

bility or liability to the Owner for loss or damage to the Vessel

arising out of acts or omissions of the Master, officers and

crew of the Vessel and Owner agrees to indemnify and hold

Manager harmless from any losses, claims or damages arising

out of the management, operation or conduct of the business

of the Vessel except those resulting from the negligence of

Manager.

29a

17. Term and Termination

(a) This Agreement and the management of the Vessel by the

Manager, as provided for herein, shall be for a term of one

year from October 1, 1979 through September 30, 1980 and

thereafter shall continue until terminated upon sixty (60) days’

written notice by either party to the other.

* * *

[14] * 7 *

enforcement and the rights and remedies of the parties hereun-

der, shall be governed and construed by and in accordance with

the laws of the Commonwealth of Pennsylvania.

ILFORD SHIPPING AND TRADING

CORPORATION LIMITED

By BERNARD L. STESNEY

Vice President

TRINIDAD CORPORATION

By J. A. ELMAN

President

30a

ASSIGNMENT AND ASSUMPTION AGREEMENT

AGREEMENT, made as of the 2nd day of March, 1983, by

and among Trinidad Corporation, a Delaware corporation

(“Trinidad”), Ilford Shipping and Trading Corporation Lim-

ited, a Bermuda corporation (“Ilford”) and Sea-Hire Service,

S.A., a Panamanian corporation (“Sea-Hire”).

WITNESSETH:

WHEREAS, Trinidad and Ilford have entered into a certain

Operating agreement dated September 26, 1979 (the “Trinidad

Agreement”) with respect to the Vessel ARCO COLUMBIA now

known as the BEAUFORT MARINER (the “ Vessel”); and

WHEREAS, pursuant to an Agreement of Sale dated as of

February 14, 1983 between Beaufort Mariner, Inc., the owner

of the Vessel (“Owner”) and Sea-Hire (the “Agreement of

Sale”), Sea-Hire is to assume all obligations of Ilford under the

Trinidad Agreement and hold harmless Owner and Ilford from

certain matters relating to the Agreement of Sale;

Now, THEREFORE, in consideration of the premises, the

mutual covenants contained herein, and other good and valu-

able consideration, receipt of which is hereby acknowledged,

the parties hereto agree as follows:

1. Ilford hereby (a) transfers to Sea-Hire all of Ilford’s

right, title, and interest in and to the Trinidad Agreement, and

all of its obligations and liabilities with respect thereto, (b)

agrees to remain liable to Trinidad for all of its obligations and

liabilities under the Trinidad Agreement outstanding on or

incurred prior to the date hereof, and (c) releases Trinidad

from all claims or iiability based upon or arising out of the

Operation or management of the Vessel under the Trinidad

Agreement prior to the date hereof.

2. Sea-Hire hereby (a) assumes all of the obligations and

liabilities of Ilford under the Trinidad Agreement from and

after the date hereof, assumes all of the obligations and duties

3la

of Ilford under the Agreement of Sale after the date hereof,

and (b) agrees to be bound by and to perform the terms of the

Trinidad Agreement after the date hereof.

3. Trinidad hereby (a) consents to the foregoing transfer and

releases and relieves Ilford of and from any and all liability,

obligation, cost or expense under the Trinidad Agreement

incurred after the date hereof, any language ‘» the Trinidad

Agreement to the contrary not withstanding and (b) agrees to

discharge its duties and obligations to Sea-Hire under the

Trinidad Agreement with respect to the Vessel after the date

hereof.

4. Sea-Hire hereby agrees to indemnify and hold harmless

the Vessel, Ilford and Owner, and all their respective officers,

Directors and employees, from and against all obligations,

demands or payments to Trinidad arising out of or in connec-

tion with (a) the sale of the Vessel pursuant to the Agreement

of Sale or (b) the Trinidad Agreement with respect to matters

occurring after such sale.

5. After the date hereof, the Trinidad Agreement shall

continue in full force and effect in accordance with the terms

applicable on the date hereof except only as amended in the

following respects.

(a) Pararaph 4, page 3. Sea-Hire will deliver to Trinidad

copies of insurance policies, cover notes or certificates from

insurance brokers for the stated minimum amounts within

30 days after the date hereof;

(b) Paragraph 13, page 8. Shall read in full as follows:

13. Payment of Vessel Costs by Owner to Manager.

Owner shall pay to Manager, in equal monthly

installments each payable in advance on the first day

of each month during the period of this Agreement,

an amount equal to one-twelfth of the total annual

estimated operating costs and expenses of the Man-

ager attributable to the operation of the Vessel, exclu-

sive of bunkers, port expenses, canal tolls, port

32a

agency fees and expenses and major repairs (“Operat-

ing Advance”). Said operating costs and expenses for

the Vessel as of February 28, 1983 are estimated to be

$1,320,000 per annum. The Operating Advance shall

be adjusted on a monthly basis, but only when

mutually agreed by Owner and Manager and operat-

ing budgets shall be updated from time to time (but at

least quarterly) to reflect the actual operating ex-

penses of the Vessel. Owner shall remit the cost of

Vessel bunkers, port expenses, canal tolls, port agency

fees and expenses and major repairs within 10 busi-

ness days following receipt of an invoice therefor

from Manager. Any cost or expense reimbursement to

Manager by insurance or otherwise, which has been

included in any of the aforesaid amounts, will be

deducted from the next payment of Operating Ad-

vance required hereunder. Any reimbursement by in-

surance for wages or salaries of employees of

Manager shall be retained by Owner or remitted to

Owner if made to manager. If at any time Owner shall

fail to pay the Operating Advance or any operating

cost or expense of the Vessel as required herein,

Manager shall have the right, upon 10 days’ written

notice to Owner, to terminate its obligations under

this Agreement; such termination to be without preju-

dice to any of Manager's rights arising prior to said

termination.

all notices required or permitted to be given under the

Agreement of Sale shall be:

Sea-Hire Service, S.A.

c/o International Cargo Brokerage Company

c/o Navtal Agency, Inc.

65 Broadway

New York, NY 10006

Attention: John Weaver

33a

6. This Assignment and Assumption Agreement shall be of

no force or effect unless signed in original or counterpart

copies by each of the parties to be bound hereby.

IN WITNESS WHEREOF, each of the parties has caused this

Agreement to be duly executed on the date first written above.

TRINIDAD CORPORATION

By J. E. ELMAN

Title Executive Vice President

ILFORD SHIPPING AND TRADING

CORPORATION LIMITED

Title

SEA-HIRE SERVICE, S.A.

Title

IN WITNESS WHEREOF, each of the parties has caused this

Agreement to be duly executed on the date first written above.

TRINIDAD CORPORATION

Title

ILFORD SHIPPING AND TRADING

CORPORATION LIMITED

By BERNARD L. STESNEY

Title Vice President

SEA-HIRE SERVICE, S.A.

Title

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.