Gulf Oil Trading Co., a Div. of Gulf Oil Co. v. M/V Caribe Mar

• Decision Date: 19 April 1985
• Docket Number: No. 84-4163,84-4163
• Citation: 757 F.2d 743
• Parties: GULF OIL TRADING COMPANY, A DIVISION OF GULF OIL CO., Plaintiff-Appellee Cross-Appellant, v. M/V CARIBE MAR (formerly M/V Fair Sky F), her engines, tackle, apparel, boilers, etc.), Defendant-Appellant Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 743

757 F.2d 743

1985 A.M.C. 2726

GULF OIL TRADING COMPANY, A DIVISION OF GULF OIL CO., Plaintiff-Appellee Cross-Appellant, v. M/V CARIBE MAR (formerly M/V Fair Sky F), her engines,

tackle, apparel, boilers, etc.),

Defendant-Appellant Cross-Appellee.

No. 84-4163.

United States Court of Appeals, Fifth Circuit.

April 19, 1985.

Bryan, Nelson, Allen, Schroeder & Cobb, Harry R. Allen, Gulfport, Miss., Joseph M. Allen, Jr., Gregory C. Buffalow, Mobile, Ala., for defendant-appellant cross-appellee.

White & Morse, George E. Morse, Gulfport, Miss., Burlingham, Underwood & Lord, Robert J. Zapf, New York City, for plaintiff-appellee cross-appellant.

Appeals from the United States District Court for the Southern District of Mississippi.

Before GARZA, POLITZ and DAVIS, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

Gulf Oil Trading Company (Gulf) supplied fuel oil to ships owned or chartered by Uiterwyk Corporation (Uiterwyk), a shipping corporation, from 1964 until at least January 11, 1982. This litigation stems from Uiterwyk's insolvency and resulting failure to pay for two deliveries of fuel made toward the end of that commercial relationship. A summary of the facts surrounding these deliveries follows.

I.

In December 1982, Gulf and Uiterwyk made an agreement for the delivery of 380 metric tons of fuel oil (known as "bunkers") to the M/V CARIBE MAR at the port of Houston, Texas. The CARIBE MAR was at that time operating under the terms of a time charter between its owner, Fairplay Caribe, Ltd. (Fairplay) and Uiterwyk. The charter agreement contained a "prohibition of lien" clause: "Charterers [Uiterwyk] will not suffer nor permit to be continued any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the owners in the vessel." The written confirmation with which Gulf responded to Uiterwyk's bunker order, however, contained a provision stating that delivery of the bunkers was subject to Gulf's "International Marine Fuel Oil and/or Marine Lubricants Contract and Price Schedule." Both the Marine Fuel Contract and the Prices Schedule contained a clause stating in essence that Gulf would retain a lien against a vessel for the purchase price of any fuel used by the vessel. ¹

Gulf hired National Marine Service, Inc., (National) an independent barging service operating in the Port of Houston, to deliver the bunkers to the CARIBE MAR. On December 4, 1982, the barge carrying the bunkers was brought alongside the CARIBE MAR. At that point the master of the CARIBE MAR hand-delivered to the barge captain on the fuel delivery receipt notice that the vessel was chartered and that the charter contained a prohibition of lien clause. Some dispute then developed over the technical specifications of the bunkers, which was eventually resolved after extended consultations among the master and chief engineer of the CARIBE MAR, representatives of Uiterwyk, and Gulf representatives. The prohibition of lien clause was not brought to the attention of the Gulf personnel during these consultations. Two days following the delivery of the bunkers at Houston a letter containing notice identical to that given the barge master was delivered to Gulf.

On about December 22, 1982, Uiterwyk contracted with Gulf for the delivery of bunkers to the CARIBE MAR at Ceuta, Spanish Morocco. This was, of course, after they had received documents from Uiterwyk advising them of the prohibition of lien clause. The bunkers were loaded on the ship at Ceuta about January 11, 1983.

Uiterwyk did not pay for either the Houston or the Ceuta delivery. On May 13, 1983, Gulf had the CARIBE MAR seized at Gulfport, Mississippi pursuant to an in rem proceeding brought to secure payment for the bunkers. Following a bench trial, the district court held that Gulf had a valid maritime lien for the Houston delivery, but not for the January delivery in Ceuta. In this appeal, Fairplay urges that the district court erred in: (1) allowing Gulf to recover on the lien for the Houston delivery, and (2) denying Fairplay leave to assert a claim for price discrimination under the Robinson/Patman Act. ² Gulf has cross-appealed, asserting that the district court erred in: (1) finding that Gulf was without a valid maritime lien on the CARIBE MAR for the Ceuta delivery; and (2) denying Gulf leave to amend to state an in personam claim against Fairplay for the Ceuta delivery. We conclude that the trial court did not err with respect to any of the points raised by the appeal or the cross appeal, and therefore affirm.

II.

A.

For the sake of logical development, we first address Gulf's contention that it had a valid maritime lien for the Ceuta delivery. In essence, Gulf's contention is that a 1971 amendment to the Maritime Lien Act, 46 U.S.C. Sec. 971 et seq., was intended to prevent a prohibition of lien clause in a charter party from ever operating to deprive a supplier of necessaries to a vessel of a maritime lien on the vessel. This question has not been explicitly addressed by this circuit, although in TTT Stevedores of Texas, Inc. v. M/V JAGAT VIJETA, 696 F.2d 1135 (5th Cir.1983), the court assumed that actual knowledge would bar a lien. In Lake Union Drydock Co. v. M/V POLAR VIKING, 446 F.Supp. 1286 (W.D.Wash.1978), the sole district court case which has come to light dealing directly with this problem, ³ the district court concluded in a thoughtful opinion that actual knowledge of a prohibition of lien clause would operate to bar the lien. From our own review of the 1971 amendment to the Lien Act and its legislative history, we agree and conclude that Gulf's construction of the effect of the 1971 amendment goes considerably beyond what Congress intended.

The practice of granting a supplier of necessaries a lien on the vessel supplied is a venerable one. E.g., THE GENERAL SMITH, 17 U.S. (4 Wheat.) 438, 4 L.Ed. 609 (1819). Prior to 1910, however, such a lien was hardly a certainty for the supplier of necessaries, since the law was shot through with exceptions. ⁴ In 1910, Congress enacted the Federal Maritime Lien Act, a concise piece of legislation intended to bring a degree of uniformity to the area of maritime liens. ⁵ Section 971 of the Lien Act provides:

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. Sec. 971.

Section 972 of the Act further provides:

The following 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 intrusted. No person tortiously or unlawfully in possession or charge of a vessel shall have authority to bind the vessel.

46 U.S.C. Sec. 972.

The lien granted by Sec. 971 and the presumption granted by Sec. 972 were a boon for the materialman, but in practice much of their utility was nullified by section 973 as it read prior to the 1971 amendment:

The officers and agents of a vessel specified in [section 972] 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; but 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.

46 U.S.C. Sec. 973 (amended 1971).

The duty of inquiry imposed by section 973 eventually became, through expansive judicial construction, a substantial hurdle for the materialman. The materialman was, in almost all cases, under a duty to ascertain the authority of the individual ordering supplies for a ship to incur liens on the vessel. ⁶ The practical effect of this duty was to allow the vessel owner, by insertion of a prohibition of lien clause in a charter party, to frequently deny any lien to the materialman regardless of the materialman's lack of actual knowledge of the clause.

In 1971, reacting to concerns that the difficulty of obtaining a lien was causing crippling losses to stevedoring contractors and others supplying services and goods to vessels, Congress amended section 973 of the Lien Act by deleting the language imposing on the materialman a duty of inquiry. The 1971 amendment deleted the words "but 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 the charter party ... the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel." ⁷ Gulf's argument is premised on the 1971 amendment's deletion of the language negating a lien when the furnisher of necessaries "knew" of a lack of authority, which leaves no indication on the face of the statute that knowledge will bar a lien. Thus, Gulf argues, the 1971 amendments were intended to render prohibition of lien clauses completely ineffectual, regardless of any knowledge possessed by the materialman. Gulf contends that the result in the POLAR VIKING case is contrary to the "clear, absolute language of the statute."

The language of the statute is actually not all that clear and absolute. Section 971 of the Lien Act grants a lien if necessaries are ordered by the owner "or a person authorized by the owner." Section 972 states a presumption that...