Marine Fuel Supply & Towing, Inc. v. M/V Ken Lucky

Decision Date14 March 1989
Docket NumberNo. 87-3841,87-3841
Citation869 F.2d 473
PartiesMARINE FUEL SUPPLY & TOWING, INC., a foreign corporation, Plaintiff-Appellant, v. The M/V KEN LUCKY, and her appurtenances, Defendant-Appellee.
CourtU.S. Court of Appeals — Ninth Circuit

Gordon T. Carey, Jr., Portland, Or., for plaintiff-appellant.

Kim Jefferies, Wood, Tatum, Mosser, Brooke & Landis, Portland, Or., for defendant-appellee.

Appeal from the United States District Court for the District of Oregon.

Before HUG, FLETCHER and NELSON, Circuit Judges.

NELSON, Circuit Judge:

Marine Fuel Supply & Towing, Inc. ("Marine Fuel") appeals the district court's refusal

to grant Marine Fuel a maritime lien on the M/V KEN LUCKY ("Ken Lucky") pursuant to 46 U.S.C.App. Secs. 971-75 (1982). The district court exercised jurisdiction pursuant to 28 U.S.C. Sec. 1333 and we have jurisdiction pursuant to 28 U.S.C. Sec. 1291. We reverse.

BACKGROUND

Ken Hieng Navigation Company S.A. ("Ken Hieng") owns the Ken Lucky. During the time Marine Fuel alleges the lien arose, Ken Hieng had time chartered the vessel to Compaigne Continental Paris ("Continental Grain"). A time charter entails a division of responsibilities between the owner and charterer. Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268, 278, 60 S.Ct. 937, 942, 84 L.Ed. 1197 (1940) ("Signal Oil "). Continental Grain in turn subchartered the vessel to Bulkferts, Inc. ("Bulkferts"). Both charter agreements contained "no lien" clauses, which prohibited maritime liens asserted by suppliers against the vessel.

When the Ken Lucky reached Tampa, Florida, in September 1984, it needed bunker fuel. To arrange for the supplies, Bulkferts' managing agent, Eurostem Maritime Limited ("Eurostem"), contacted Brook Oil Ltd. ("Brook"). Brook then instructed Gray Bunkering Services ("Gray") to place the order for the Ken Lucky's supplies with Marine Fuel. Marine Fuel asked Gray for assurances about payment before delivery of the bunkers. In response, Gray sent a telex on September 3, 1984 notifying Marine Fuel that it had been "nominated by the owner" of the Ken Lucky to supply the vessel. Ken Lucky's local (husbanding) agent arranged for delivery of the supplies. On September 6, 1984, Marine Fuel supplied the Ken Lucky with bunkers worth $223,480.10. The master of the Ken Lucky, appointed by the owner, approved the acceptance of the supplies by the vessel's chief engineer. Marine Fuel billed Gray for the bunkers, referencing Brook's account. Marine Fuel unsuccessfully sought payment from Brook, which was forced into receivership in October of 1984.

Marine Fuel arrested the Ken Lucky in Portland, Oregon. Ken Lucky posted cash as security for Marine Fuel's claim, which counsel for the parties deposited in a Portland bank. The district court refused to grant Marine Fuel a maritime lien. 1 The cross appeal has been dismissed. Marine Fuel timely appealed.

STANDARD OF REVIEW

We review the district court's findings of fact under the clearly erroneous standard, including the predominantly factual inquiry of whether a person was authorized by the owner to order the supplies. Farwest Steel Corp. v. Barge Sea-Span, 769 F.2d 620, 623 (9th Cir.1985) ("Farwest I "). However, we review the district court's statutory construction de novo, Mobil Sales & Supply Corp. v. Panamax Venus, 804 F.2d 541, 542 (9th Cir.1986), and retain power to correct any legal misunderstandings of the district court. Brock v. Mr. W

Fireworks, Inc., 814 F.2d 1042, 1044-45 (5th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 286, 98 L.Ed.2d 246 (1987).

DISCUSSION
I. AUTHORIZATION OF THE SUPPLY ORDER

Marine Fuel contends that Brook, the bunker broker, had presumed authority under the Federal Maritime Lien Act (the Act) 2 from Bulkferts and Eurostem, the subcharterer and its managing agent, to incur a lien on behalf of the Ken Lucky. The district court found that because no agency relationship existed between Bulkferts and Brook, no presumed authority under the Act was established. Marine Fuel contends that Brook had implied authority from Bulkferts or the ship's owner to incur the lien. Alternatively, Marine Fuel argues that Bulkferts, as a person authorized under section 971 or 972, had presumed authority under the Act to order fuel and to incur a lien against the vessel. The district court concluded that the charter agreements' no lien clauses prevented Brook from acting pursuant to implied authority to incur a lien.

Appellant argues that the defendants' admission that Marine Fuel sold marine fuel and bunkers to Bulkferts should be admitted and considered by this court. We agree. No motion or ruling concerning withdrawal of an admission was made by appellees. Cf. 999 v. C.I.T. Corp., 776 F.2d 866 (9th Cir.1985) (district court did not abuse its discretion in denying motion to withdraw admission). Thus, the fact is deemed admitted and conclusively established pursuant to Fed.R.Civ.P. 36(b). The district court did not exercise its discretion to permit withdrawal under Fed.R.Civ.P. 36(b); therefore, the admission must stand.

A. The Federal Maritime Lien Act

"The federal Maritime Lien Act grants a maritime lien to any person 1) furnishing repairs, supplies, or other necessaries 2) to any vessel 3) 'upon the order of the owner of such vessel, or of a person authorized by the owner.' " Farwest I, 769 F.2d at 623 (quoting 46 U.S.C.App. Sec. 971). The parties agree that Marine Fuel furnished necessaries to the Ken Lucky. Ken Lucky admits that Bulkferts was in possession and control of the vessel during the time it docked in Tampa. Thus, Bulkferts qualifies as an authorized person under section 972 because it was the "person to whom the management of the vessel at the port of supply [was] intrusted." 3

The district court based its refusal to find an agency relationship between Bulkferts and Brook on two propositions: 1) that Brook was an independent corporation; and 2) that Brook was a back-to-back trader. Marine Fuel argues that Brook can be an independent corporation and still have acted as Bulkferts' agent in the disputed transaction. See Protective Ins. Co. v. Coleman, 144 Ill.App.3d 682, 98 Ill.Dec 914, 923, 494 N.E.2d 1241, 1250 (1986); Restatement (Second) Agency Sec. 14 (1958). We look to principles of agency to interpret the Act's references to agents. Cactus Pipe & Supply Co. v. M/V Montmartre, 756 F.2d 1103, 1111 (5th Cir.1985). We examine the roles of the parties in the transactions at issue to determine if a person has presumed authority under the Act. See, e.g., Farwest I, 769 F.2d at 623-24; Farwest Steel Corp. v. Barge Sea-Span, 828 F.2d 522, 525-26 (9th Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 1594, 99 L.Ed.2d 909 (1988) ("Farwest II ").

The parties agree that the order originated from Bulkferts. Thus, we need not reach the question whether the district court's conclusion that Brook was not Bulkfert's agent is erroneous because appellees have already admitted that the fuel and bunkers were sold to Bulkferts. We conclude that Marine Fuel need not establish agency between Brook and Bulkferts to fall within the scope of one entitled to a maritime lien under the Act.

Ken Lucky concedes that Bulkferts was authorized to bind the vessel. It is clear that Eurostem, as managing agent for Bulkferts, did order the fuel and it is also clear that Marine Fuel delivered the fuel to the vessel. Section 971 states that any person furnishing supplies or other necessaries to a vessel "upon" the order of a person authorized to bind the vessel shall be entitled to lien. It is clear that Eurostem, as managing agent for Bulkferts, ordered the fuel, and it is also clear that Marine Fuel delivered the fuel to the vessel. Bulkferts had statutory authority to order the fuel under section 972 and it did so. Marine Fuel delivered the fuel to the vessel after Bulkferts ordered it. Thus, this case can be easily distinguished from the situation present in Farwest II.

In Farwest II, we affirmed the district court's finding that the general contractor did not qualify as an "authorized person" to bind the vessel under Sec. 972. Id. at 525-26. We distinguished between the general contractor's responsibility for vessel repairs and one who has broad management powers to qualify as a person "intrusted" with management of the vessel under Sec. 972, relying on a line of cases in which courts "have uniformly held that the general repair contractor was not endowed with sufficient 'management' authority to support a section 971 lien." Id. at 526. However, no restrictive repair contract line of cases governs the issue here. Further, no specific instruction was given in Farwest, as Bulkferts gave here, authorizing Eurostem to order the bunkers through Brook.

In Farwest, the steel was ordered by a contractor repairing the vessel. No one with authority to lien the vessel originated the order. Here Bulkferts, which clearly possessed the statutory authority to bind the vessel, ordered and received the bunkers and fuel. Thus, we are not confronted with a Farwest II situation, where a person who never had authority originated the order.

B. Statutory Authority to Bind the Vessel Under Section 972

Ken Lucky also concedes that the master of the Ken Lucky, appointed by the owner, accepted the supplies. Ken Lucky contends that the master had no authority to accept the supplies and incur a lien against the vessel because of the no lien clauses in the charter agreements. However, such reasoning contradicts the language of Sec. 972, which states that a ship's master has presumed authority to incur a lien. See Atlantic & Gulf Stevedores, Inc. v. M/V Grand Loyalty, 608 F.2d 197, 200 (5th Cir.1979) (chief officer who ordered services possessed management powers envisioned by Act and thus had presumed authority as well as actual authority to incur lien).

A claimant's dealings with an intermediary at the...

To continue reading

Request your trial
32 cases
  • Valero Mktg. & Supply Co. v. Sun
    • United States
    • United States District Courts. 5th Circuit. United States District Court (Eastern District of Louisiana)
    • December 28, 2015
    ...that it contends is directly on point and clearly establishes that Valero possesses a maritime lien that may be enforced here.35 In Marine Fuel Supply& Towing, Inc. v. M/V Ken Lucky , Valero contends, the vessel's sub-charterer Bulkferts, through its managing agent Eurostem, ordered bunker......
  • Sing Fuels Pte Ltd. v. M/V Lila Shanghai (IMO 9541318)
    • United States
    • United States Courts of Appeals. United States Court of Appeals (4th Circuit)
    • July 1, 2022
    ...knew of [the broker]").In a final attempt to procure its maritime lien, Sing Fuels heavily relies on Marine Fuel Supply & Towing, Inc. v. M/V Ken Lucky , 869 F.2d 473 (9th Cir. 1988), but that case is readily distinguishable. In M/V Ken Lucky , the Ninth Circuit held that a physical supplie......
  • Cianbro Corp. v. George H. Dean, Inc.
    • United States
    • United States Courts of Appeals. United States Court of Appeals (1st Circuit)
    • February 22, 2010
    ...See Lake Charles Stevedores, Inc. v. Professor Vladimir Popov M/V, 199 F.3d 220, 228-29 (5th Cir.1999); Marine Fuel Supply & Towing v. M/V KEN LUCKY, 869 F.2d 473 (9th Cir.1988). In Lake Charles Stevedores, the Fifth Circuit held that although a general contractor could assert a maritime li......
  • ING Bank N.V. v. Temara
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • August 24, 2016
    ...Careful examination of these cases, however, differentiates them from the instant case. For example, in Marine Fuel Supply & Towing, Inc. v. M/V Ken Lucky , 869 F.2d 473 (9th Cir.1988), the "chief engineer accepted the bunkers, acknowledging receipt," but he specifically did so "with the ap......
  • Request a trial to view additional results
1 books & journal articles

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT