61 F.2d 455 (1st Cir. 1932), 2681, United States v. Palmer & Parker Co.

Docket Nº:2681.
Citation:61 F.2d 455
Case Date:June 27, 1932
Court:United States Courts of Appeals, Court of Appeals for the First Circuit

Page 455

61 F.2d 455 (1st Cir. 1932)




No. 2681.

United States Court of Appeals, First Circuit.

June 27, 1932

On Rehearing Oct. 28, 1932.

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Appeal from the District Court of the United States for the District of Massachusetts; James M. Morton, Judge.

O. P. M. Brown, of Washington, D. C. (Frederick H. Tarr, U. S. Atty., and A. Chesley York, Asst. U. S. Atty., both of Boston, Mass., and Chauncey G. Parker, of Washington, D. C., on the brief), for the United States.

John W. Lowrance, of Boston, Mass., and Nathan W. Thompson, of Portland, Me. (Richard S. Chapman, of Portland, Me., on the brief), for appellee Palmer & Parker Co.

Harold Williams, Jr., of Boston, Mass. (George A. Furness, of Boston, Mass., on the brief), for appellee Bowery & East River Nat. Bank.

Before BINGHAM, ANDERSON (retired), and WILSON, Circuit Judges.

ANDERSON, Circuit Judge.

In the court below three admiralty suits were consolidated and a final decree entered on June 26, 1931, requiring the United States to pay to the Palmer & Parker Company $241,606.01, with interest, and to pay to the Bowery & East River National Bank $43,202.95, with interest.

On March 23, 1921, the United States filed its libel in rem (No. 1969 Civil) against the freights, subfreights, charter hire and/or subcharter hire of the Mt. Shasta, a merchant steamship belonging to the United States acting through the shipping board. This vessel had been chartered to the Mt. Shasta Steamship Company on May 19, 1920, for thirteen months at a gross hire of $506,940, payable in monthly installments in advance. The charter party provided, inter alia, that:

'The Owner shall have a lien upon all cargoes, and all subfreights, for any amounts due under this charter party. * * *'

'The charterer will not, without the written consent of the owner first obtained, make any sale, mortgage, pledge or other transfer

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of any right under this charter party; * * * and such consent shall be upon the condition that the transferee shall, together with the charterer, assume jointly and severally all obligations of the charterer under this charter party, but the charterer may subcharter said vesesel for uses lawful for an American vessel, subject to all provisions of this charter party. * * *'

'The charterer will not suffer nor permit to be continued any lien, incumbrance or charge which has or might have priority over the title and interest of the owner in said vessel; but the charterer will in due course, and in any event within fifteen days after the same becomes due and payable, pay, discharge or make adequate provision for the satisfaction or discharge of every lawful claim or demand which, if unpaid, might, in equity, in admiralty, at law or by any statute of this or any other nation where said vessel may be navigating or berthed, have such priority over the said title and interest. * * *'

'A certified copy of this charter will be carried with the ship's papers; and the charterer shall take such other appropriate steps, as designated to it by the owner from time to time or required by the circumstances, as will give notice to the world that the charterer has no right, title or interest in said vessel, save and only the right specifically conferred on the charterer by this charter party, and that the charterer has no right, power nor authority to suffer or permit to be imposed on or against said vessel any liens or claims which might be deemed superior to, or a charge against, the title and ownership of the owner in said vessel.'

On July 14, 1920, Victor S. Fox & Co., Inc., agents of the Mt. Shasta Company, and Palmer & Parker Company (hereinafter referred to as appellee), executed a charter party for the transportation of a cargo of mahogany logs from the west coast ofAfrica to Boston. Two days later, Fox, agent, borrowed from the Bowery & East River National Bank (hereinafter referred to as intervener) $75,000, and assigned to the intervener, as security, the charter party to the appellee and the freights accruing thereunder. A further like transaction took place on September 16, 1920, for a loan of $40,000. The intervener made no examination of any public records or other inquiry to ascertain the real ownership of the Mt. Shasta, but claims to have relied upon representations of Fox, agent, that it and/or the Mt. Shasta Steamship Company owned the vessel. Before these loans were made, the Mt. Shasta was registered by the bureau of navigation, department of commerce, as owned by the United States; the vessel's certificate of registry was on file in the custom house at New York City, in Lloyd's Register of Shipping issued July 1, 1920, in the Record of American and Foreign Shipping issued January 1, 1920, and in the American Bureau of Shipping. There is no contention that the intervener's loans were made to furnish the Mt. Shasta or were so used.

The vessel arrived on the west coast of Africa on August 8, 1920, was loaded with mahogany logs, and sailed for Boston on September 19th; she should have arrived thirty-five days later, on October 24th, but actually arrived on February 19, 1921. Discharge of her cargo was completed on March 7, 1921, and the vessel repossessed by the shipping board on June 7, 1921.

Meantime, Fox & Co. and the Mt. Shasta Steamship Company were in receivership. None of the freight for the voyage was ever paid except $52,500, half the estimated freight for the voyage; this was paid to the intervener. The balance of freight money and earned demurrage was kept by the appellee when the cargo was discharged. When the appellant's libel was filed, there was due the government under the demise charter $289,680. The libel sought to require the appellee to pay the freight money into court. The appellee resisted this claim, contending that it had claims for advances made to furnish the vessel, and a large claim for cargo damage on account of delay in the voyage. The court below sustained these objections and ordered the libel dismissed, as not falling within the admiralty jurisdiction. The Mount Shasta (D. C.) 291 F. 92. On appeal to the Supreme Court this decision was reversed, United States v. Freights, etc., of The Mount Shasta, 274 U.S. 466, 47 S.Ct. 666, 71 L.Ed. 1156.

Thereupon, it was stipulated that the net balance of freight money and demurrage due the Mt. Shasta under the charter party was $30,555.55, which, with interest, appellee held itself bound to pay to the appellant 'or to whomsoever the court might hold to be entitled thereto.' In its final decree the court held the intervener entitled to this money, as above set forth.

Eight days after the filing of appellant's libel, the appellee filed a libel against the appellant (No. 1973 Civil) for $150,000 for damages caused by the unseaworthiness of the

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Mt. Shasta, preventing prosecution of the voyage with due diligence and dispatch. After full hearing, the court, on January 6, 1926, held the Mt. Shasta unseaworthy when the voyage was begun; that because of this unseaworthiness and failure of Fox & Co. and the Mt. Shasta Company to furnish funds requisite to coal her, etc., she was delayed beyond the time when she should have arrived, October 24, 1920, until February 19, 1921. The shipping board had furnished a marine engineer, as well as funds, for the completion of the voyage. There resulted an interlocutory decree, referring the case to an assessor, appointed on April 28, 1928.

The assessor filed two reports, which on November 14, 1930, were confirmed, and all of the appellant's exceptions overruled. On May 18, 1928, these libels, No. 1969 and No. 1973, were consolidated.

On April 25, 1927, the intervener had filed its intervening petition against the appellant and against the appellee in No. 1973, alleging loans, made in good faith upon the security of the assignment of the Mt. Shasta Steamship Company's charter party with the appellee, and without notice or knowledge of any claim by appellant against the freight money or any part thereof. It also alleges that the original charter party from appellant to the Mt. Shasta Steamship Company 'was not of public record anywhere and was not brought to the knowledge of your intervenor nor could nor did your intervenor have notice thereof'; that a balance of $62,500 was still due on its loans, and seeks payment thereof from the balance of freight money due...

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