Frey & Son v. United States
| Decision Date | 29 September 1924 |
| Docket Number | No. 2194.,2194. |
| Parties | FREY & SON, Inc., v. UNITED STATES et al. |
| Court | U.S. Court of Appeals — Fourth Circuit |
Wendell D. Allen, of Baltimore, Md. (J. Purdon Wright, of Baltimore, Md., on the brief), for appellant.
Frederick R. Conway, Admiralty Atty. U. S. Shipping Board, of Washington, D. C. (A. W. W. Woodcock, U. S. Atty., of Baltimore, Md., on the brief), for appellees.
Before WOODS and WADDILL, Circuit Judges, and SMITH, District Judge.
The steamship West Haven, registered in the office of the collector of customs at Newport News as the property of the United States, was delivered to the Atlantic, Gulf & Pacific Steamship Corporation by the United States Shipping Board Emergency Fleet Corporation under a conditional contract of sale dated January 19, 1921. The contract provided that, when the purchaser should pay one-half the purchase price and perform other covenants mentioned, the seller would execute a bill of sale; the purchaser giving a mortgage for the remainder of the purchase price.
The purchaser defaulted, and on August 12, 1922, the United States in proper proceeding caused the vessel to be seized by the marshal. On August 15, 1922, the Atlantic, Gulf & Pacific Steamship Corporation was adjudged bankrupt. On September 18, 1922, Frey & Son, Inc., filed this libel for supplies furnished the vessel on the order of the Atlantic, Gulf & Pacific Steamship Corporation while that corporation was operating it. The question is whether the libelant acquired a charge for supplies against the United States.
The libelant was informed by the conditional purchaser of the existence of the contract with the Shipping Board. According to the testimony, Frey & Son, Inc., furnished the supplies relying on the statement of the purchaser that the Shipping Board had only a mortgage, and that the value of the vessel over the unpaid purchase money was ample to secure payment, and on the assurance of its counsel that it would have a lien for supplies superior to the claim of the United States. Libelant did not seek information from the Shipping Board and made no effort to see the contract of sale. Evidently this was not the "reasonable diligence" to ascertain the terms of the contract of sale required by the statute.
The point is pressed that the following provision of the contract of sale did not forbid a lien for supplies, but, on the contrary, contemplated that such a lien might be created, which the purchaser undertook to remove within 15 days:
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