Reply Brief Petitioner — Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co. of Cal.

- cm yn, re ws Fe :

PFiLeE COPY ‘ees aes

Tih. 29.1

o Port; — WORE UROPLEY

oo CLERK

“IN THE

| Supreme Court of the Bnited States

O¢ TOBER Term, 1939,

No. 662.

Cc a

DAMPSKIBSSELSKABET DANNEBROG, & cerporation, Claimant

_of the Mortorship ‘*Stjerneborg,”’ and A KTIESELSKABET

- Borcestan, a corporation, ( ftaimant of the Motorship

‘*Prand,’ Petitione: ts,

v.

Stexat Or wx Gas Compaxy or Carirorsta, a corporation.

Re sponde ni.

——

PETITIONERS’ REPLY BRIEF.

Upon Writ of Certiorari to the United States Circuit Court

of Appeals for the Ninth Circuit.

¥° Laxe SumMenrs,

Proctor for Petitioners,

Central Building,

Seattle, Washington. +

W. He. Haypex, ° ’ ai

Kk. T. Merritt,

G. H. Reucey,

OF Counsel,

Central Building,

Seattle, Washineton.

orn

cd

a

=)

Press oF Byron S. Anas, Wash INGTON. D.C.

Page

Introduction... 2. .c...... cece we eee PERE See POO ne 1

Lien Not: Authorized by Charter RO eee mare mene 2

Lien Negatived by Oil C ident Sk aataatata ait aaa does 9

RII Ls o-oo oes cece kas POE nee Pe RE Ra NE “14

- 4 TABLE OF ane

Cases:

Astorian, The, o7 F. (2) 85,90 (C. C. AL 9). 00.0... 13

Ben Lawers, The, 42 F. (2) $97 (D. C. W ash.)..... 7,14

Bronx, The, 246 F. 809 (C. OF AL 2)... ec ccc e cece 10.

Cratheus, The, 263 F. 693 (C. C. A. 5)........... 6, 8, 14

' Defiance, The, 3 F. (2) 48 (D.C. NuC.) 2.2.2... eon ae

Dictator, The, 18 F. (2) 131.(D. C. La.)............ 4, 14

Kastern, The, 257 i 874 (D. C. Mass.)......... Paes

— Everosa, The, 93 F.. (2) 732 (C. C. A. 3) re ecu 10

' Everosa, The, 18 F. Supp. 186 (D. C. R. L.)....... ~ 10.

Hammond, The, 30 F.. (2) Ge (i. ©, A: SF;..:,... F

Hatteras,’ The, 209 F. 518 (C. C. A. 2)0........... ia

Henry W. Breyer, The, 17 F. (2) 423 (D. C. Md.).. 7

lrages, The, 283 F. 445 (D. a, Se ee 14

~ In re Marine Transit Corp ‘n, 94 F. (2) 7 ve C.A:2) 13

J. W. Hennessy, The, STP. ( (2) 77 (CC, A. 2)...... 4,5

Kate, The, 164 U.S. 458 2.2 0............. 2, 3, 4, 7,8, 12

King v. Smith, 30 F. (2) S50 (C. C. A. 5). ......... 7

‘Liberator, The, 5 F. (2) 585 (C. C. A. .) ee 12.

Marine Transit Corp'n, In re, 94 Fy (2) 7 (0. C. AL 2) 13

Millinocket, The, 266 KF. 392 (D. ie AS ieee 7, 12, 14

‘Mona, The, 282 F.-468.(C. C. A. 4) 2... ccc cece eee 7

; Morse 1D. De & Repair Co. v. U2 S.,4-F. (2) 233 (0. C.

Pe ete enor addy aa kL b ana er eneaae nicole 6,11

North Coast ices. Co. v. U.S., 17 F. (2) 874 (CLC.

OE SO OA ie ea 10.

Pajola, The, 7 F. Supp. 618 (D. CL N. Y.)........00.. 7,14

_Pensacola 8. Co. v. U.S. 8S. Board, 277 F. 889 A C.

_ AL Se ate ee ee ga ee Re ee 6,7

. Penza, The, 9 F. ( (2) 597 (C. C. _) BER Sere

Piedmont, etc., Coal Co. v. Se peo same c 0.,

204 U.S. 1 :....... Aree ee een eae . 6,10

&.

ae

i yon - INDEX (Continued). °

President Arthur, The, 279 U. S. 5642.00... .6,10, 11.

President Arthur, The, 72 F. (2 ) 276, (C. CL A webs: . i

— Roséway, The, 34 F. (2) 1380 (C. C. A. 2).. 6

South Coast, The, kt eee ere rs 5, 6,9

South Coast, The, 247 F. 84, 89 (C. C. ASS) eo. L.. 4,5

Starita. Co. : Compagnie Havraise, etc.,. 52 F. (2)

as (CLC. ME Glee Voi sade usec eek ae eas 7

Sylvan Glen, ‘Th. 241 F. 731 (D.C. Pa.)....... Gy =

Therdis, The, 290 F255 °(D. ©.:.N. YV.).:......003:. 7

UL Sov. Carver, 260 UL 8. 482.0000... ROE Pee 6

Valencia, The, 165 U.S. 264....2......... 2, 3, 4, 7, 8, 12

Ville de Djibouti, The, 295 F. 869 (D. C.:Pa.)....... 7

Western Wave, The, a F. (2) 695 (C. C. A. 5)...... 6

Western Wave, The, 2 F. Supp. 386 (D.C. Texas)... 7

Yankee, The, 233 F. 919 (C.'C, A. 3) 6c... ee eee. 7

Yarmouth, The, 262 F.2 250 ia C, » _ See 7,8

Articles:

Harvard Law Review, Vol: 24, p. 182 a Wiis ecse es 6, 11

Yale Law Journal, V ol. OO, PEG. fo ewes taceese ss ©

Statutes: : |

Maritime Lien Act, June 25, 1910 (36 Stat. 604).... 4,6

Mere set Marine Act, June 5, 1920.......... won ‘4, 6,9.

U.S.C. Ay Title 46, sees. 971-9750 0000 ooo. 2914

IN. THE

Supreme Court of the United States

‘OcTOBER TERM, 1939.

.

No. 662°

re

DAMPSKIBSSELSKABET DANNEBROG, a corporation, Claimant

of the Mortorship ‘‘Stjerneborg,”’ and AKTIFSELSKABET

Borcestap, a corporation, Claimant of fhe Motorship

‘*Brand,’’ Petitioners,

v.

Signa Ow axnp Gas Company or CaLirornia, a corporation,

Respondent. .

“&

PETITIONERS’ REPLY BRIEF.

Upon Writ of Certiorari to the United States Circuit Court

, of Appeals for the Ninth Circuit.

SS EEE EEEEEEeEel

INTRODUCTION. :

In reply, petitioners follow the order of the respondent’s

answering brief, discussing :

The question of the charterer’s duiliority to bind the

Mish: and their owners, arising from the Gharter party ;

The question of respondent's credit reliance upon the

veitals arising from its general contract.

_LIEN NOT AUTHORIZED BY CHARTER.

The charter parties of petitioners, as vessel owners, pro-

vided that “‘/he charterers shall provide and pay forall”

the fuel oil (R. 40). By this simple clause petitioners passed

to the charterer and the charterer took to itself the. whole.

responsibility as to fuel for the operation of the ¥essels. / wie

Respondent’s brief (pp. 3-4) says that by this provision

petitioners empowered the charterer to order fuel oil. Pe-

titioners reply that .by this provision they obligated -the

charterer to do so. But this same provision equally and in-

separably authorized and bound the charterer to pay for.

the fuel oil. There was no power vested in the charterer to

provide, which was free from the duty to pay. Respondent

may not divorce the two elements of this single duty en-

tirely shifted from the ae wners to the charterer by

lawful agreement. — - “ °

Petitioners’ brief” (p. 37) lies. asserted that the charter

patties invested the charterer with no authority to, pledge

the credit of the vessels and impose a lien for fuel oil. In

this, petitioners rely not only’ on ‘prineiple but also. on.

precedent, By petitioners’ brief (pp.™44-46)'this Court is

“referred to its own rulings in The Kate, 164 i and.

im’ The Valencia, 165 'U. S. 264. In both ‘cases the charter

“parties required that* the ‘‘charterers shall provida and

pav for’* fuel without other language expressly negativin. '

the charterer’s authority. In both cases this Court held

that from such words the charterer acquired no authority

to hypothecate the vessels. In both the: lien was denied.

And petitioners contend that’ these decisions, based on

closely comparable faets, fully support their position.

Respondent claims that these decisions are distinguishe

able, although its brief (p. 13) admits that they have never

been criticized by any subsequent interpretation of this

( ‘ourt, ; 5

“To distinguish The Kate and The Valencia, respondent

says that this Court was there influenced to its exoneration

3

of the vessels by an element of fraud in the dealings be-

tween the supplier and charterer on which the lien was as-

serted. It is true that the opinion in The Kate, 164 U.S.

458, 465-470, while discussing earlier cases, does use the

word ‘‘fraud"’ as‘applied to a supplier’s aia of lien based

on transactions with a master, as the ownér’s confidential

agent, where the supplier had knowledge ov notice that. the

master was without actual authority. But if the character-

ization of fraud was indirectly applied by this Court to

the conduct of the suppliers in The Kate, supra, and-alsa.,

in The/ Valencia, supra (by the: latter’s quotation of the

former), it still does not follow that those eases ‘are dis-

tinguished on that ground from the present: case. The

transactions andAhe conduct of the lien clainiants in those

‘cases were not matérially different from the activity and

attitude of respondent in the present case. However, in

commenting on the facts under immediate consideration,

the opinion in Tire Kate, supra, did not charge actual fraud.

Without use of so blunt a word, petitioners join with this

Court in its description 6f a supplier’s sale to an unan-

thorized charterer and a subsequent attempt to enforee a.

lien against the vessel.

“As the charterer had agreed to provide and pay

for all coal used by the vessel, he hed no authority to

bind the vessel for supplies furnished to it. His want

of authority to charge the vessel for such an expense,

was known or could have been known to the ‘libellant

by the exercise of due diligence on its part. ‘Under the

cireumstances, the libellant was not entitled to deliver

the coal on the credit of the vessel, and its attempt to

hold the vessel liable is in bad faith to the owner. The

law cannot ‘approve or encourage suc ‘h an atte mpt to

wrong the ow ners of the vessel."” The Kate, 164 U.S

458, 465. aii

And while The Kat®, supra, was quoted in The Valencia,

165 U. S. 264, 267, the later case denied the lien by recital

of ultimate facts there involved without colorfil insinua-

tion of fraud, by saving:

cs. . chy . .

‘

4

: | as 4 / P : >

oy e mean only to decide, at this time, that one fur-

nishirig, supplies or making repairs on the order sim- «

ply 6f a person or corporation acquiring the control .

and possexsion of a vessel, inder sucha charter party:

cannot acquire a maritime lien if the citeumstances at-

tending the thavsaction put him on inquiry as to the

* existence and tems of “such charter party, but he

failed to inake inquiry and chose to act on a mere. be-

lief that. the _— would be liable for his claim.’’

The Valencia, 264, 272:

oY * -

% - ~

el

" For’ another reason espondent, argues that The Kate,

supra, and The Valen id supra, are distinguishable. It says

thai those cases were decided before . passage of the

Maritime Lien Act (Act of June 33, 910: BG Stat. 604)

and its substantial reenactment in Sectidin 30 oP the Mer-

chant Marine Act of June 5,:1920 (46 UA. C. A. 971-975).

To this point, respondent’s brief (p. 14) cites the opinions’ *~.

re two lower Courts: The South Coast, 247 Fed. ‘84 rm. <.

9) and The JL W. He niessu, ST Fed. (2d) 77 Ay Sie eck

. Both these opinions mentioned The Kate and The Valencia.

But the appellate courts were passing upon demise charters

cofttaining very different provisions. Hence, they treated.

The Kate and The Valencia as not controlling. But neither

court advanced any persuasive theory for coneluding that

the older decisions of this Court had become obsolete he-

cause‘of the subsequent Congressional legislation.

In The J. We He MRESSY, of Fed. (2d) 77, the opinion made. |

no attempt to explain wherein the statute had deprived The.

Aate and The Falencia of their authoritative interpretation

‘+ of the charter provisions involved in those.cases. In fact,

the opinion wisely did not even nuike any such statement.

To do so;would havg been dietuny since the charter party

there im dispute Was a ‘demise charter’? by which ‘the .

chartérer had cxelusive use, control, possession and opera-

tron?” of the vessel (p. 77). Reference in ‘the opinion to”

The Kat: and The Valencia was ce to the ebservation

that: ** The Kate, 164 US. 458, 17S. 130, 41 L. Ed. 512,

and Tie Valencia, 165 U,. S. 264, 17 S. rei 323, 41 L. Ed. #10,

_*

>

5

related to supplies furnished upon the order of a charterer

prior to the passage of the Merchant Marine Act.’? The

J. W. Hennessy, 57 Fed. (2d) 80. °

-In The South Coast, 247 Fed. 84, the district: judge ‘who

wrote the opinion was considering another demise charter

and determing whether necessaries ordered by the master

(not the charterer) would entitle the supplier to a lien.

While the opinion’ discussed the.facts there sb Soy in’

' eontrast to the facts in The Kate and The Valencia, it never

expressed the notion that those rulings of this Court were

superseded by the 1910 Act. On .the contrary, the district

judge recognized their continuing vigor of. authority by

saving: ‘‘These cases of The Kate and The Valencia are

ctherefore without application, further than they purport

“to state general maritime law’’. (Italics added) The South

‘Coast, 247 Fed. 89, 90. Dochtless for the same reason, when

that case was affirmed’ over the dissent of three members

of this Court, no opinion discussed The Kate nor The Va-

lencia whigh ‘involved provisions unlike those in the ‘*South

Coast’? demise but identi¢al-with those in. the ‘*Brand”’

and ‘*Stjerneborg’’ nerenrs. The South Coast, 291 U. S.

O19.

Respondent has whelty failed to sinned that the.

rulings of The Kate and The Valencia have been superseded

~ by the 1910-and 1920 Acts, because they really continue au-

thoritative wifhin their sphere of appliéation. |

The Kate and The Valencia, so far as invoked by the peti-

tioners, held tuat a charter’ party provision requiring the

charterer to *‘ provide and pay for”’’ fuel vests ‘the charterer

with no power to pledge the ovmer’s vessel, and that a fur-.

. nisher of supplies on the order of-such a charterer, when.

the furnisher ‘‘knew or by reasonable diligence could have

ascertained ”’ such absence of power is not entitled to a lien, ©

The subsequent legislation said, nothing affecting Judicial

‘interpretation of any charter party. The later statutes not

only did not abrogate this Court’s rule placing upon the

furnisher the burden to inquire, but they adopted and de-

© 6 . . .

clared the same rule (Seetion 3 of 1910 sats Subsection R

of 1920 Act).

‘In this connection, the Court is refer red to the article en-

titled **The New Federal Statute Relating to-Liens on Ves-

sels** by Fitz-Henry Smith, Jr., (one instrumental in draft-

ing the 1910 Aet) which was published iu January, 1911, by.

the Harvard Law: Review, Volume 24, p. 182, et seq. The

uuthor, when.discussing (p. 193) the same part of the stat-

ufe, said ; .

“The phrase, ‘knew, or by the exercise of reasonable

diligence, could have ascertained,’ is adopted from The

Kate, and was used in the Act of Congress to make if

clear that if the furnisher know of the existence of a

charter. party or of an agreement for the sale of the

vessel, he is put upon inquiry as to its terms, and ean-

not excuse himself by denying ignorance of the terms,

should it tarn out. that ‘the charterer or agreed pur-

chase v had undertaken to, furnish the vessel at his own

cost,”* (Vtalies supplied)

In notes published i in 1935 by the Yale Law Journal, Vol-

ume 44, p. 69%, The Kate is recognized as still declaring the

law that no lién arises where supplies are ordered by one

without authority to bind the vessel and the fufhisher had

knowledge or means of know ledge of such lack of authori-

zation. ~ °

This Court has reiterated the opinion that, except in par-

ticulars not here material, the 1910 and 1920 statutes did

not modify the general maritime law as to liens for neces-

saries. “The President Arthur, 279 U.S. 564, 567, 568: U.S.

v. Carrer, 260. U.S. 482, 489; Pre a ae etc., Coal Co, v.

Scahboard Fisheries (‘o., 2da4 U. | * 11, 12; The South

Coast, 251 US. 519, 5238. And sat opinion has been-in-

dicated by the inferior admiralty courts in The Western

Ware, a7 Fed. 7 695 (CL C.A.O); The Roseway. 34 Fed.

(2d) 130 (CL, ‘ id out D. dD. &: Repair Coa. v. U: S.,.

i Fed. (2d) ase He y S a msacore S.Ce. UR. Ship- .

ping snd 277 F od RRO Me ALS): The Crathens, 263

7

Fed. 693 (C. €. A. 5); The Yarmouth, 262 Fed. 250 (C. CG. A

5); The Yankee, 233 Fed. 919 (C. C. A. 3); The We eens

Wave, 2 Fed. Supp. 386 (D.C. Texas); The Ben Lawers; 42

Fed. (2d) 897 (D. C. Wash.); The Henry W. Breyer, 17

Fed. (2d) 423 (D. C. Md.); Ville de Djibouti, 295 Fed. 869

(D. C. Pa.); The Thordis, 290 Fed. 255 (D. C. N. Y.); mae

Sylvan Glen, 241 Fed. 731 (D. C. Pa.). -

While since the passage of the inaritime lien statutes this

Court has not had occasion to approve its rulings in The

Kate, 164 U. 8. 458, and The Valencia, 165 U. S. 264, either

one.or bothof those cases have been recognized as authori-

tative where applicable, or have been expressly followed by

the lower ¢ourts since - 1910 Act. Starita Co. vy. Com-

pague Harraise, ete, 2 Fed. (2d) 58 (C. C. A. 2); Pensa-

cola 8S. Co. v. U.S. ‘Shipping Board, 277 Fed. 889 (C. C. A

9); The Yarmouth, 262 Fed. 250 (C. C. A. 5); The Hatte ras,

255 Fed. 518 (C. C:'A. 2); The Yankee, 233 Fed. 919 (C. C.

A. 3); The Pajola,.7 Fed. Supp. 618 (D. C. N. Y.); The

Hienry W. Breyer, 17 Fed. (2d) 423 (D. C. Md.); Ville de

Djibouti, 295 Fed. 869 (D. C. Pa.) ; ‘The Thordis, 290 Fed. -

255 (D: C. N. Y.)5 The Millinocket, 266 snore 392 (D.C.

N. Y.).

In cases not reaching this Court, allie, and: -pay’

‘provisions, similar to those in the “Brand”? and ‘‘Stjerne- |

horg’’ charter parties, have been considered not to author- ’

ize the charterer to bind the yessels and-their owners. The

Pajola, 7-Fed. Supp. 618 (D. C.N. Y.); The Ben Lawers, 42 |

Fed. (2d) 897 (D. C. Wash.) ; The Dictator, 18 Fed. (2d)

W51 (D.C. La.) ; The Henry W. Breyer, 17 Fed. (2d) 423 (D.

C. Md.); Ville de Dyibouti,.295 Fed. 869 (D. C. Pa.); The

Thordis, 290 Fed. 255 (D. C. N. Y.); The Millinécket, 266

Fed. 392 (D. C. N. Y.);.The Eastern, 257 Fed. 874 (D. (.

“Mass.); The Sylvan Glen, 241 Fed. 731 (D. C. La.) ; clay

Cory. Compagnie. Harraise, etc, 52 Fed. (2d) ys (C. C.

2); The Hammond, 30 Fed. (2d) 890 (C. C. A. 5); Peg

Penza, 9 Fed. (2d) 527 (C. C. A. 2); The Mona, 292 Fed. 468

(C. C.B. 4); ,Pe nsacola S. Co, ve U.S. Shipping Board, 277

-

Fed. 889 (C. C. A. 5); The Cratheus, 263 Fed. 693 (C. C

A. 5); The Yarmouth, 262 Fed. 250 (C. C. A. 5).

Petitioners submit that respondent has failed both by its ©

own argument and by its citation of lower court opinions

to demonstrate any weakness in this Court’s former rulings

in The Kate, 164 U. S. 458, and The Valencia, 165 U.S. 264.

Because these decisions rest on sound interpretations of

charter party clauses which are the same as those in the

os Brand” and ‘*Stjerneborg”’ charters, it follows that W. L.

Comyn & Sons, as the charterer, had no authority by which

respondent could acquire a.lien.

Respondent's brief (pp. 14, 19) almost ventures the hint

that it was not chargeable with petitioners’ limitation upon

the charterer’s authority. But.no serious,contention t6 this

-effeet is open.to respondent. By the general contract which

respondent made fgr future sales to W. L. Comyn & Sons

that concern was accepted as a buyer for oil to be supplied

later to“‘any and &j! vessels.owned, chartered and/or op-

erated’? by it (R. 52, 58; Ex. TD). This contract was effec-

tive as to W. L. Comyn & Sons in May, 1933 (R. 32). And

respondent has stipulated in this case that, both before and

after that time, it knew or could have easily learned that

W. LeComyn & Sons was in business, not as a vessel owner,

but as a commission merchant, & freight contractor and

cbroker, andas a operator of vessels, sometimes for owher’so

account and sometimes - for charterer’s account (R. 41).

All this respondent knew approximately a year before it

filled orders of W. L. Comyn & Sons in 1934 rs the peti-

tioners’ vessels. As to the ‘*Brand”’, its chief engineer ac-

cepted in April and again in May a supply to that vessel

only ‘for tine°ckarterer’s account’, according to each of

his qualified written receipts given at theetime of successive

deliveries (R. 37-88). As to the “*Stj jerneborg’’, in order-

ing fay oil W. L, Comyn & Sons especially advised respan-

dent that such vessel was then *‘on our time charter’? (R.

38). To alj these facts respondent has stipulated (R. 31-

154). { ;

9

-

Subsection R, Section 30, of the 1920 statute said that no

lien shall be conferred ‘‘when the furnisher knew, or by ex-

ercise of reasonable diligence could have ascértained, that.

because of the terms of a charter party, * * * the person

ordering the ** * supplies * * * was without authority to

bind the vessel therefor’’ (46 U. S. C. A. 973).

. Henee, coupling this Court’s interpretation of the charter .

party provision in The Kate, supra, and The V alencia,

supra, with the rule of those cases as affirmed by the stat-

ute, it follows that the question of authority in this case

_ should be resolved against respondent and its claim of lien.

Respondent’s brief (p. 4) insists that The South Coast,

251 U.S. 519, is controlling. Petitioners repeat their as-

sertion. that it is not in point. The opinion in that case

shows that different charter terms. reflected an intention

that lien. might be imposed by the charterer.’ In this case

uo language reflects any such intention ‘by petitioners. The

opinion in that case shows that the master ordered”’ the |

supplies (p. 522). In this case, the- supplies were sold solely

on the charterer’s order (R. 37, 38, 39). The opinion in_

that case shows that the charter party was-a deniise—*‘ the

bare vessel at the time-was under charter’? (p. 522). In this |

casé, the charter was: not a demise—the charter party by

clause 25 expressly declared. to the contrary: ‘‘Nothing

herein stated is to be construed as : a demise of the steamer

to the time charterers’’ (R. 124, 135).

In consequence, upon the charter point .respondent’s

‘claim of lien fails.

LIEN NEGATIVED BY OIL CONTRACT.

As to the question of respondent’s exclusive, credit reli-_

ance upon the personal obligation of W. L. Comyn & Sons

with whom it dealt under its general sales contract, the re-

spondent’s brief (pp. 16-22) offers very little in answer to

the contention of petitioners. :

- Respondent tacitly confesses that it, too, is wiable to cite

‘any opinion by this court determining the effect upon a

~

&

ee

ery | | 10

‘maritime lien of a future supply contract like respondent’s, .

which bound it te furnish fuel for ‘‘any and all vessels’’

Which might be, subsequently ‘owned, chartered’ and/or

operated’’ (R. 32). . Mela

The respondent comments on the decisions in the -Presi-

dent A rthur, 279 U.S. 564, and Piedmont etc. Coal Co. v.

Seaboard Fisheries Co., 254.0. S. 1, as if petitioners had

cited them as being squarely in point on the facts. Admit-.

tedly they involved different contracts. Petitioners turned

to those: cases simply to quote this court’s statements of

applicable principle. . }

Directed to the question of respondent’s eredit reliance

arising out of its contract, respondent cites only two. cases:

The Everosa, 98-F. (2) 732 (C. CL A. 1); and The Bronx.

246 F809. CAL 2). 7 | |

The Everosa, supra, was discussed by petitioners’ main

‘hrief in this court (pp. 30, 31). As there stated, by the

.

Opinion of the appellate court, the effect of the supplier’s

contract Was not investigated. The Circuit Court of Ap-

peals, by express comment, declared that another point was

decisive. The greatest support that respondent can derive

from the decision is its reversal of the lower court in The

Ererosa, 18 F. Supp. 186 (D.C. R. 1.) which was favor-

able to petitioner's contention. ‘<2 ; ;

. The Bronx, supra, involves facts not even remotely com-

parable. It can be of interest only to the extent of the

statement which respondent has quoted from the opinion:

‘The lien is presumed on proof of due delivery on —

request of lawful supplies, .antil such presumption is

destroyed by affirmative proof of agreement that the

promising party was to be exclusively liable-for pav-

meent.”" The Brone, 246 F. 809,

But at this‘stage of the litigation the burden of proof is

of small moment. As said by the Ninth Circuit Court of

Appeals: **In as much as all the facts are before the court,

the question of the burden. of Jproof. is perhaps unimpor-—

tant °° °°. North Coast Steredoring Co. v. U.S..17 F-.

(2) 874, 877 (C. C. AL 9). re:

e.

»

. 11

This court and other admiralty courts have observed that

the first section of the 1910-Act relieved the supplier of

alleging and proving, in the first. instance, that he relied

on the credit of the vessel, thus giving the supplier the

initial benefit of a prima facie presumption. The statute

so provided to counteract the old presumption of the gen-

erabmaritime law that when a supplier dealt with the,owner .

direetly no lien was contemplated. Morse D. D. d& Repair

Co. v. US. 1 FL (2) 233 (Cc. C. A. 2). This history and

_purpose are explained by Fitz-Henry Smith, .Ir., one of the

‘draftsmen of the statute, when his artiele says:

The first section also removes the presumption of

credit to the-owner in the case of contracts gnade by ~

him, and simplifies the hiw by making the lien depend

upon a contract by the furnisher with one in authority

to bind the vessel’ for necessaries. * °-* -The last

‘provision of the first section does not mean, however,

that the Hien shall exisf regardless of the question of

credit.’ Harvard Law Rericw, Vol. 24, pp. 189, 190.

But respondent did not merely fill an isolated order for

oil. Respondent in supplying the petitioners’ vessels, dealt

with its buyer under ‘an tnpesing long-terny contract) by

which it provided for its own protection.” To have inserted

therein an express reservation of alien might. have de-

prived respondent of a prospective profitable eustemer, As

stated by this court, respondent made a specific contract

‘instead of resting on the lien which the law would other-

wise give’? and “must rely on tbe contract it’ made for

itself." The President Arthur, 279 US. 572. ° See also,

The Defiance 3 F. (2) 48, 51 (0D. C.N.€.). Respondent's

agreement with W. L. Comyn & Sons is fully exposed be-—

fore this court. And to repeat the quotation from Fitz-

Henry Smith, ir, the statute does not mean ‘that the.

lien shall exist regardless of the question of credit.’? That

question ix to be determined objectively from the contract;

for ‘*the subjective intertion of the (supplier), if contrary

to the written memorial of the contract made by the par-.

ties, is immaterial.”’) The President Arthur, 72 ®. (2) 276, -

279 (1984-C. C. A. 2). aaront

. J Ga *°

A | | ° . 12 \

About ‘the formal document, respondent has tendered

practically nothing in defense of petitioners’ construction.

As to the facts outside of that instrument, respondent’s

brief (p. 18) in substance merely says that its habit of typ-

ing the name of the vessel supplied upon its invoice for the

“price of oil was inconsistent with sele reliance upon the

‘| personal credit of.its buyer. Perhaps. But such invoices mi

were mailed only to W. L. Comyn & Sors (R. 101, 105, 113).

- Respondent's system of billing, in the absence of demands

“upon the vessel owners, teaded merely to keep straight the

numerous dealings with its buyer (R. 6373 Ex. H), Respon-

_dent’s correspondence treated all indebtedness, as that of

W. L. Comyn & Sons and contained -no suggestion of de-

mand upon the vessel owners (R. 64-99). In addition, re-

spondent listed W. Lo Comyn & Sons in its ‘sales register,

and sales made to it were entered therein, under its name"’

(R. 34). Respondent's custom of designating each vessel

reach invoice serves to emphasize all -respondent’s.other

practices and all provisions of the for ural agreement which

join in reflecting clearly responderit's exelusive | reliance

upon its buyer's individuel credit.

A furtnisher’s method of billing or invoice ing the price of

necessaries has often been disregarded or outweighed by

ng courts in their denial of a maritime lien. For instance, .

1 The Kate, 164 U.S. 458, 460, the supplier charged the

sal fo the gap and to-the vessels as well; in The

Valencia, 165 U.S. 264, 265. the suppher charged the coal

on its books to ‘*S.S. Valencia and owners’’; in The Lib-

erator, 0 F. (2d) 585-(C. CL A. 4), the supplier r ‘‘kept its

zecount against each ship, its agents.and owners’?! and in

The Milinockét, 266 F. 392, 393 (D.C. §. Y.), ‘the name of

the vessel is typewritten first in the bills fer the coal.’’

These eases are sufficient to show that respondent's busi-

Ness habit of invoicing its buyer vessel by vessel, is a mere

circumstance tobe given proper, but. not undue, considera-

tion along with other faets. Here, it-is the only off-key note

in the entire song. ; ear e

13

Since the problem of whetheryespondent’s oil contract

negatived the maritime liens pedo ainst the ‘* Brand’’.

and the ‘*Stjerneborg”* is largely of first hnpression in this

court, petitioners repeat their’ contention that such

contract Operated to waive ix dimine respondent’s right to,a

lien, which could arise only upon later actual delivery. of

oil. to a vessel (46 U.S. C. At 974). Distinguishing between

the advance waivervof the right before the lien has drisen,

and the subsequent waiver of the lien itself after it has ae-

erued, an appellate court has recently said:

“Ir considering the question ‘of | waiver, there is:a

wide difference hetween taking a security at the time

the supplies are furnished to the vessel and taking one

thereafter. In the first situation insistence upon a se-

curity may indicate that the credit of the vessel was

not relied upon; and without such reliance: no lien

arises. W. A. Marshall & Co. v. The S.S. President

Arthur, 279 U. S..564, 73 L. Ed. 846. As that, case

shows, the facta are strictly construed ‘to imply a

saiver’ of lien in the first situation.’* Jn re Marine

Transit Corporation, 94 F. (2) 7 (CL C. A. 2).

Even in the Ninth € irenit Court of Appeals, which has

been extreme in the allowance of the maritime lien for nee-

essaries, the right to that remedy was denied because ef a

waiver in dimine as a part.of the supplier’s original contract

‘with the charterer. The Astorian, 57 F.(2) 85, 90 OCLC.

A. 9). | ith .

Where a supplier, for a fixed term becomes legally obli-

gated to sell fuel oil on the credit of its buyer for use of

‘‘any and all vessels owned, chartered and/or operated”’

‘iater by the buyer, petitioners tontend :

(1) That, in-the absence of express provision to the con-

trary, fuel oi} sold thereunder is delivered on. the sole credit

of the buyer; — .

(2) That since the supplier can not | possibly know in ad-

vance whether the buyer's subsequent chartering or op-

erating agreement will vest it with authority to bind the

14

vessels, the supplier i has lost its power. of choice and cannot

be relying-on the credit of the vessel ;

r

(3) That, in the language of this court in the Piedmont

wase (254 U. S. 9), the pledge of the vessel’s credit was not —

necessary to her ceceipt of fuel Gil under the contract; and.

(4) That the supplier,has waived in limine his right to a °

future lien ‘by agr eement or yaerene (46 U.S.C. A.

974).

To this contention support has been: extended by decisions

denying a lien claimed by suppliers 's SO ees in similar

- general contracts. .

The Cratheus, 263 F. 693 (€. C. A. mu

~The Pajola, 7 F. ey 3 618 (D.C. % );

The Ben Lawers, 42 F. (2) 897 (D. *S Wash.) ;

The Dictator, 18 F: (2) 131 (D. C. La.) ;

+ The lrages, 283 F. 445 (D. C. Fla.) ;

The Millinocket, 266 F. 392-(D. CL N. Y.).

c : ?

In consequence, upon the oil contract point, respondent’s: ‘

claim of maritime lien fails.

CONCLUSION.

- Petitioners renew the prayer of their main brief. in this

court.

a , 2

Respect®ally submitted, - _

Laxe’SumMens, ,

/Proctor for Petitioners.

£ / Central Building,

_ / - Seattle, Washington.

W. H. Haypen, | fone

F.T. Meret, = = /

G. H. Bucey,

- OF Counsel.

Central Building,

- Seattle, Washington.

- ‘

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