Opinion — United States v. Carver

482 OCTOBER TERM, 1922.

Statement of the Case. 260 U.S.

UNITED STATES, OWNER OF THE STEAMSHIPS

“ CLIO,” “ MOOSEABEER,” “ FORT LOGAN,” AND

“ MORGANZA,” ET AL. v. CARVER ET AL., CO-

PARTNERS, UNDER THE FIRM NAME OF

BAKER, CARVER, AND MORRELL.

CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS FOR THE

SECOND CIRCUIT.

No. 402. Argued December 6, 1922—Decided January 2, 1923.

1. Under the Maritime Lien and Ship Mortgage Acts, June 23, 1910,

c. 373, 36 Stat. 604; June 5, 1920, c. 250, § 30, 41 Stat. 1000, 1005,

no lien arises for supplies furnished a chartered vessel where the

charter forbids it, and where the material-man, by reasonably dili-

gent investigation, could have ascertained there was a charter and

gained knowledge of its terms. P. 489.

2. A charter-party provided that the charterer would not “ suffer

nor permit to be mtinued any lien ... which has or might

have priority over ihe title and interest of the owner,” and that,

in any event, within fifteen days, the charterer would provide for

the satisfaction or discharge of every claim that might have such

priority, or cause the vessel to be discharged from such lien, in any

event, within fifteen days after it was imposed. Held, that the

charterer was under a primary obligation not to suffer any lien

to be imposed. P. 489.

Questions certified by the Circuit Court of Appeals,

arising upon an appeal from a judgiment of the District

Court, in admiralty, upholding a claim of right to a

matitime lien, in a suit in personam brought against the

United States and the receiver of a ship corporation,

under the Suits in Admiralty Act.

Mr. Norman B. Beecher, with whom Mr. Solicitor Gen-

eral Beck, Mr. Assistant Attorney General Ottinger, Mr.

J. Frank Staley, Special Assistant to the Attorney General,

and Mr. Arthur M. Boal were on the briefs, for the Unifed

States.

UNITED STATES v. CARVER. 483

482 Argument for the United States.

Maritime liens for necessaries or supplies would not

have arisen against either the Clio or Morganza had both

vessels been privately owned.

The person ordering the supplies or necessaries was

without authority from the owner to impose maritime

liens on either the Clio or Morganza.

The fact that the order for the supplies came from a

shore agent and not from the master put the supply man

on inquiry as to the extent of the authority of the person

giving the order to bind the vessel. His failure to make

any inquiry rebuts any possible presumption of authority

in the person giving the order to impose liens on the

vessel.

Under the lien statutes a supply man receiving an

order from a person other than the master, is put upon

inquiry as to the relation of the person giving the order

to the vessel. If he fails to make any inquiry he is

charged with such knowledge as a reasonable inquiry

would have disclosed of any lack of authority in the per-

son giving the order to bind the vessel.

Any possible presumption of authority in the person

ordering the supplies for the Morganza to impose a mari-

time lien on the vessel is rebutted by knowledge in fact in

the supply man of his lack of such authority.

The United States is not liable for what would have

been & maritime lien had the vessels affected been pri-

vately owned.

The United States is not liable for the personal indebt-

edness of the States Steamship Corporation in respect of

supplies and necessaries furnished to a vessel in respect

of which no maritime lien would have arisen had such

vessel been privately owned.

Mr. E. Curtis Rouse for Carver et al.

A maritime lien arose for the supplies furnished the

Clio which would have been enforceable in rem had that

vessel been privately owned.

484 / / OCTOBER. TERM, ‘1922.

- Argument for Carver et al. 260 U.S.

Whether the contracts under-which the State Steam-

ship ‘Corporation ‘obtained. possession. of the. Clio and

Morganza be called conditional or partiel: payment pur-

chase contracts or charters, the fact remains that they

were @ complete and absolute cemise of the vessels. The

corporation was the owner pro hac vice of the vessels at

the time... That the comporation' wes in lawiul possession

has never been questioned.

Tras crvceus eligi souetiabstenithene woreda 00

sha;pesen inten themanngornast othe youre st he

port of supply had been intrusted..

The certificate states that these libelants had no notice

x er Sis ot ced chaos ah aetaens wecder Whig the

State Steamship.Corporation held the Clio, or that they

mare other. than-owners, and that: they, ted no suse to

aye rtemcarti cag pe

- The: ofthe Maritime Lien Statute of 1910

held-liabie in rem, and. subject: to liens, for ‘supplies fur-

seaass alpetgh appsiand ty oeciresr-ondtins

enciciek: nena! # The various Circuit Courts have been uni.

form in their construction of this statute. The Oceana,

244 Fed. 80 (certiorari denied 245 U. S. 656); The Yankee,

283 Fed. 919; 926 (certiorari denied 243 'U. 8, 649); The

Penn, 276 Fed: 118; The St. Johns, 273 Fed. 1005; 277

Fed. 1020 (certiorari’ ranted 257 U. 8. 626); The Ascut-

ney, 278 Fed. 991; The Portland, 278 Fed. 401; ‘The South

Coast, 251 U.S. 519; The Cratheus, 263 Fed. 693.

‘The appellant, relying on # forced construction of cer:

tain: language used in the decision in Piedmont Coa

Cox ¥., Seaboard Fisheries Co., 254 U. 8. 1, urges here

exactly as was unsuccessfully urged in- The Oceana, that

UNITED STATES v. CARVER. 485

482° Argument for Carver et al.

in the case where a charter exists, the Lien Statute of

1910. does not apply, and thatthe rule of The Valencia,

165 U. S. 264; ‘still obtains, and that ‘a supplyman cannot

obtain a lien where a charterer ordered the

iebsel inalijahtions ptiied-ont by the Court in The

Shas Whdinbt: Manrgheendciiatithy after the Valen~iz

decision and obviously to modify its harshness and ‘yet

supplies.. This interpretation of the decision is sup-

ported by Piedmont. Coal: Case;'254 U. 8. 1, and’ The

South Coast, 251 U.8.510 =

“Taaraiintdbcna tinted celina: diesel, eed: dig

ment made by the appellant here that the mere fact

would mullify in fact the entire point and foree of the

486 OCTOBER TERM, 1922.

Argument for Carver et al. 260 U.8.

statute. It would require that every supplyman, on re-

ceiving an order, would have to initiate an inquiry, not as

to the home port, it is true, but as to whether he was

dealing with a representative of a charterer, vendee or

other owner pro hac vice. If he found that he was deal-

ing with other than an owner personally, he would be

obliged, at his peril, to inquire the exact authority of

that person to order for the ship, and the fact that the

person was in open, visible control of the management

of the vessel at the port of supply or said he was the

owner would be immaterial. He would be obliged to go

to the original charter or contract or letter of appoint-

ment and record title. He could not rely on the state-

ment of the purchaser or of the charterer. It is not al-

ways true that these charters or contracts are readily

available. Therefore, the express words of the statute

that these respective offieers or agents, when appointed

by a charterer, agreed purchaser in possession, or owner

pro hac vice, are to have the same authority as when ap-

pointed by the owner, or as the owner himself, would be

expressly nullified. It seems too clear for extended argu-

ment that this could not have been the intention of the

framers of the statute.

It is urged by the appellant that this difficulty would

be cured by insisting on the order being signed by the

master. The weakness of this lies in the fact that usually

these charters are bareboat form, where the master is

the appointee of the charterer, or agreed purchaser in

possession. He has no greater authority than they, and,

being the appointee of the charterer or vendee, his au-

thority must necessarily. be subject to the same inquiry.

The master, as master, has no inherent power, in absence

of the statute, to pledge the credit of the vessel. He

never could do it in the home port, or where the owner

was present. He could not do it in a foreign port unless

necessity was shown, and also he had no funds and the

UNITED STATES v. CARVER. 487

482 Opinion of the Court.

owner had no credit. But by § 2 of the statute he

is now given that power and is placed in the same class

as managing owner, ship’s husband or any other person

such as the marine or port superintendent, or captain, to

whom the management of the vessel, at the port of supply,

is entrusted. This is the force of the decision in The

South Coast, 251 U. 8. 519, as applied to the present case.

The charter clearly contemplates that a lien may, in

the course of operations, be incurred, and that this lien

may be continued to exist for a limited time; that the

vessel may be arrested to enforce such lien and may

continue under such arrest for a limited time. It is prac-

tically the same clause which this Court said in The South

Coast, 251 U. S. 519, was not a prohibition; The Oceana,

supra; The Yankee, supra. The lien was not denied, in

the Valencia Case, because of the language of the clause,

but because of the home port rule.

A maritime lien arose for the supplies furnished the

Morganza herein which would have been enforceable in

rem had that vessel been privately owned.

There being a right to a lien in rem against the ships,

had they been privately owned, this suit was maintain-

able under the Suits in Admiralty Act.

Mr. Justice Howares delivered the opinion of the

Court.

This is a libel in personam against the United States

and the receiver of State Steamship Corporation, a com-

pany of the State of Delaware, bankrupt, to charge the

United States for supplies furnished to the steamships

Clio and Morganza. Act of March 9, 1920, c. 95, 41 Stat.

525. The United States owned the vessels, but they were

in the possession of the corporation under charters by

which the corporation was to pay all costs and expenses

incident to the use and operation of the vessels, and “ will

not suffer nor permit to be continued any lien, encum-

488 OCTOBER TERM, 1922.

Opinion of the Court. 260 U.8.

brance, or charge which has or might have priority over

the title and interest of the owner in said vessel.” It was

stipulated further that in any event within fifteen days

the charterer would make adequate provision for the sat-

isfaction or discharge of every claim that might have

priority over the title, &c., or would cause such vessel to

be discharged from such lien in any event within fifteen

days after it was imposed. Supplies or necessities were

furnished to the Clio upon the orders of the corporation’s

port captain who was charged with the duty of procuring

them. The libelants did not know any facts tending to

show that the corporation did not own the vessel, and

so far as appears made no inquiry or effort to ascertain

what the facts might be. The case of the Morganza is

similar except that before furnishing some of the supplies

the libelants’ agent who dealt with the corporation knew

facts putting the libelants upon inquiry but preferred to

avoid making it. The liability of the corporation is

admitted. That of the vessels is asserted under the Act

of June 23, 1910, c. 373, 36 Stat. 604, and the Ship Mort-

gage Act, being § 30 of the Merchant Marine Act, 1920;

Act of June.5, 1920, c. 250, § 30, subsections P. Q. & R..,

41 Stat. 988, 1000, 1005.

The questions certified are whether a maritime lien

would have arisen against (1) the Clio or (2) the Mor-

ganza, if they had been privately owned; (3) if yes,

whether the United States is liable for the amount of

what would have been the lien; and (4) whether the

United States is liable for. the personal indebtedness of

the State Steamship Corporation for supplies in respect

of which no maritime lien would have arisen if the vessel

had been privately owned.

We take up first questions 1 and 2. The Act of 1910,

by which the transactions with the Clio were governed,

after enlarging the right to a maritime lien and providing

who shall be presumed to have authority for the owner to

UNITED STATES v. CARVER. 480

482 Opinion of the Court.

procure supplies for the vessel, qualifies the whole in § 3

as follows: “ but nothing in this Act shall be construed

to confer a lien when the furnisher knew, or by the exer-

cise 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 or-

dering the repairs, supplies, or other necessaries was with-

out authority to bind the vessel therefor.” We regard

these words as too plain for argument. They do not allow

the material-man to rest upon presumptions until he is

put upon inquiry, they call upon him to inquire. To as-

certain is to find out by investigation. If by investiga-

tion with reasonable diligence the material-man could

have found out that the vessel was under charter, he was

chargeable with notice that there was a charter; if in the

same way he could have found out its terms he was

chargeable with notice of its terms. In this case it would

seem that there would have been no difficulty in finding

out both. The Ship Mortgage Act of 1920 repeats the

words of the Act of 1910.

But it is said that the charter-party if known would

have shown that the master at least, if not the agent who

ordered the supplies, had authority to impose a lien, since

the charter-party contemplated the possibility of one

being created and provided for its removal. The South

Coast, 251 U. S. 519, is cited as establishing the position.

But there is a sufficient difference in the language employed

there and here to bring about a different result. In The

South Coast the contract went no farther than to agree

to discharge liens within a month. Here the primary

undertaking was that “ the charterers will not suffer nor

permit to be continued any lien,” &c. We read this as

meaning will not suffer any lien nor permit the same to

be continued. Naturally there are provisions for the

removal of the lien if in spite of the primary undertaking

one is imposed or claimed. But the primary undertaking

490 OCTOBER TERM, 1922.

Syllabus. 260 U.8.

is that a lien shall not be imposed. We are of opinion

that the libelants got no lien upon the Clio, and a fortiori

that the Morganza was free. The denial of a writ of

certiorari imports no expression of opinion upon the

merits of the case, as the bar has been told many times.

Therefore it is unnecessary to consider whether the libel-

ants’ argument is supported by the decisions to which

they refer. The Yankee, sub nom. Rivers & Harbors

Improvement Co. v. Latta, 243 U. 8. 649. The Oceana,

sub nom. Morse Dry Dock & Repair Co. v. Conron

Brothers Co., 245 U. S. 656.

As the libelants disclaim the contention that the United

States is liable even if the vessels would not have been

subject to a lien it is unnecessary to.answer the fourth

question. It is that the first and second are

answered, No

Ansoor te, questions 1 and. 5, No.

RUN Ee