Morse Dry Dock Repair Co v. the Northern Star
| Decision Date | 07 June 1926 |
| Docket Number | No. 326,326 |
| Citation | 271 U.S. 552,46 S.Ct. 589,70 L.Ed. 1082 |
| Parties | MORSE DRY DOCK & REPAIR CO. v. THE NORTHERN STAR et al |
| Court | U.S. Supreme Court |
Messrs. A. H. Stetson, of New York City, and William E. Leahy, of Washington, D. C., for petitioner.
Mr. Frank A. Bernero, of New York City, for respondent.
The petitioner libeled the Northern Star alleging a lien for repairs furnished in New York, the home port of the vessel. The intervener, Luber, set up a mortgage from the owner, the American Star Line, Inc., for over a million dollars, and the question here is which is entitled to priority. Both the District Court and the Circuit Court of Appeals decided in favor of the mortgage. 295 F. 366, 7 F.(2d) 505. A writ of certiorari was granted by this Court. 268 U. S. 683, 45 S. Ct. 509, 69 L. Ed. 1155.
The mortgage, originally given to the United States when the ship was purchased, was executed and recorded on August 11, 1920, and a certified copy was left and kept with the ship's papers from September 23, 1920, but it was not indorsed upon the ship's papers until June 27, 1921. The repairs were made between November 14 and November 7, 1920, at the owner's request. One of the covenants of the mortgage was not to suffer or permit to be continued any lien that might have priority over the mortgage, and in any event within fifteen days after the same became due to satisfy it. Another covenant, probably shaped before the then recent Ship Mortgage Act 1920, June 5, 1920, c. 250, § 30, 41 Stat. 988, 1000 (Comp. St. Ann. Supp. 1923, § 8146 1/4 jjj et seq.), required the mortgagor to carry a certified copy of the mortgage with the ship's papers, and to take other appropriate steps to give notice that the owner had no right to permit to be imposed on the vessel any lien superior to the mortgage. On these facts we feel no doubt that the petitioner got a lien upon the ship, as was assumed by the Circuit Court of Appeals. Ship Mortgage Act, subsection P, 41 Stat. 1005 (Comp. St. Ann. Supp. 1923, § 8146 1/4 ooo).
The owner of course had 'authority to bind the vessel' by virtue of his title without the aid of statute. The only importance of the statute was to get rid of the necessity for a special contract or for evidence that credit was given to the vessel. Subsection R, being Comp. St. Ann. Supp. 1923, § 8146 1/4 pp, it is true, after providing that certain officers shall be included among those presumed to have authority from the owner to create a lien for supplies goes on that 'nothing in this section 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.' But even if this language be construed as dealing with anything more than the authority of a third person to represent the owner so as to create a lien, still when supplies are ordered by the owner the statute does not attempt to forbid a lien simply because the owner has contracted with a mortgagee not to give any paramount security on the ship. The most that such a contract can do is to postpone the claim of a party chargeable with notice of it to that of the mortgagee.
The petitioner's lien was valid and on the other hand there is equally little doubt that the mortgage was valid as soon as it was executed and recorded, before the indorsement upon the ship's papers. This view seems to us plainly to be taken in subsections C and D of the Act (Comp. St. Ann. Supp. 1923, §§ 8146 1/4 kk, 8146 1/4 kkk). So the question more precisely stated is whether the above-mentioned covenants postponed the lien to the mortgage security, as they would seem to do on the facts of the case but for the language of the statute that we shall quote.
The statute, after requiring the instrument to be recorded in the office of the Collector of Customs of the port of documentation, in order to be...
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