982 F.2d 765 (2nd Cir. 1992), 247, Itel Containers Intern. Corp. v. Atlanttrafik Exp. Service Ltd.

Docket Nº:247, Docket 92-7464.
Citation:982 F.2d 765
Party Name:ITEL CONTAINERS INTERNATIONAL CORPORATION, Flexi-Van Leasing Inc., Cross-County Leasing Ltd., now named Textainer, Inc. and Textainer Special Equipment Ltd., Plaintiffs-Appellees, v. ATLANTTRAFIK EXPRESS SERVICE LTD., Sea Containers Ltd., Seaco Services Ltd., Sea Containers Australia Ltd., Seaco Inc., Sea Containers America Inc., Defendants, M/V TA
Case Date:December 14, 1992
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 765

982 F.2d 765 (2nd Cir. 1992)

ITEL CONTAINERS INTERNATIONAL CORPORATION, Flexi-Van Leasing

Inc., Cross-County Leasing Ltd., now named

Textainer, Inc. and Textainer Special

Equipment Ltd., Plaintiffs-Appellees,

v.

ATLANTTRAFIK EXPRESS SERVICE LTD., Sea Containers Ltd.,

Seaco Services Ltd., Sea Containers Australia

Ltd., Seaco Inc., Sea Containers America

Inc., Defendants,

M/V TAVARA, AES Express, AES Challenge, Nagara and Cavara,

their engines, boilers, tackle, freights, etc., in rem, and

Nagara Ltd., Nagara Tam Ltd., Contender I Ltd., Strider I

Ltd., and Strider IV Ltd., Defendants-Appellants.

No. 247, Docket 92-7464.

United States Court of Appeals, Second Circuit

December 14, 1992

Argued Sept. 23, 1992.

Beth Jacob, New York City (Jonathan F. Mack, Carter, Ledyard & Milburn, New

Page 766

York City, of counsel), for defendants-appellants.

Alfred E. Yudes, Jr., New York City (Cristina Perez, Watson, Farley & Williams, New York City, of counsel), for plaintiff-appellee Itel Containers Intern. Corp.

Michael D. Wilson, New York City (Victor P. Corso, Kirlin, Campbell & Keating, New York City, of counsel), for plaintiffs-appellees Textainer Inc. and Textainer Special Equipment Ltd.

Institute of Intern. Container Lessors, Ltd., Bedford, NY (Edward A. Wooley, Bedford, NY, Kieron F. Quinn, F. Paul Bland, Jr., Quinn, Ward and Kershaw, Baltimore, MD, of counsel) submitted a brief as amicus curiae.

Before: VAN GRAAFEILAND, WINTER and MAHONEY, Circuit Judges.

VAN GRAAFEILAND, Circuit Judge:

Defendants in rem, M/V Tavara, M/V AES Challenge, M/V Nagara and M/V Cavara, and intervening owners, Nagara Tam Ltd., Strider IV Ltd., Nagara Ltd. and Contender I Ltd., appeal from that part of a judgment of the United States District Court for the Southern District of New York (Carter, J.) which sustains maritime lien claims of plaintiffs, Itel Containers International Corporation, Textainer, Inc. and Textainer Special Equipment Ltd. For the reasons that follow, we reverse.

Because the pertinent facts have been discussed in detail in our opinion on a prior appeal, 909 F.2d 698 (2d Cir.1990), and lower court opinions cited therein, a brief factual summary will suffice for present purposes. In 1984, Atlanttrafik Express Service Ltd. ("AES") was formed to operate a container shipping line. The vessels it used, the defendants in rem in this case, were owned by the intervenors-defendants and were chartered to AES. To conduct its operations, AES leased shipping containers from several commercial container lessors, including plaintiffs. Consistent with industry practice, the containers were delivered in bulk and were not designated for use on any particular ship. Also, consistent with industry practice, AES leased up to three times as many containers as it could carry on its ships at any given time. The decisions as to which ships would receive particular containers for transport were made solely by AES.

AES was not a successful venture and ceased operations in early 1986. Thereafter, plaintiffs gave AES notice of default under the container leases, demanded return of their equipment, commenced an action against AES for breach of their leases, and asserted in rem claims against the ships. Plaintiffs later added in personam claims against Sea Containers Ltd. and certain of its affiliates, alleging a joint venture or principal-agent relationship between Sea Containers Ltd. and AES.

After a bench trial, the district court found in defendants' favor and dismissed plaintiffs' complaints. 725 F.Supp. 1303. On appeal, this court affirmed dismissal of the in personam claims but remanded the case for findings of fact and conclusions of law as to the maritime lien claims, as required by Fed.R.Civ.P. 52(a). 909 F.2d at 704.

On remand, the trial court sustained the maritime lien claims of Itel, Textainer and Textainer Special Equipment. 781 F.Supp. 975. Because it was impossible to ascertain which containers were used on board which ships, the court determined the amount of the lien on each ship by apportioning total damages among the ships based on their respective cargo capacities. Id. at 986. This appeal is from the judgment that followed.

DISCUSSION

A maritime lien is:

a special property right in the vessel, arising in favor of the creditor by operation of law as security for a debt or claim. The lien arises when the debt arises, and grants the creditor the right to appropriate the vessel, have it sold, and be repaid the debt from the proceeds.

Equilease Corp. v. M/V Sampson, 793 F.2d 598, 602 (5th Cir.) (en banc), cert. denied, 479 U.S. 984, 107 S.Ct. 570, 93 L.Ed.2d 575 (1986). Under United States law as it existed at all relevant times in this

Page 767

case, a maritime lien exists in favor of "[a]ny person furnishing repairs, supplies, towage, use of dry dock or marine railway, or other necessaries, to any vessel." 46 U.S.C. § 971 (1982). 1

Defendants contend that under this statute maritime liens cannot be claimed for supplies furnished simply to fleet owners and that supplies are furnished to vessels within the meaning of section 971 only when they are either provided directly to or are earmarked for specific vessels. Defendants argue that plaintiffs furnished containers to AES, not to the ships, and that it was AES who furnished the containers to the individual ships. We agree.

The seminal Supreme Court case on this issue is Piedmont & Georges Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 41 S.Ct. 1, 65 L.Ed. 97 (1920), in which the Court held that a supplier of coal to both a fish oil factory and a fleet of ships had no maritime lien against the ships. Justice Brandeis, writing for the Court, held that there was no lien because there was:

no understanding when the contract was made, or when the coal was delivered by the libelant, that any part of it was for any particular vessel or even for the vessels then composing the fleet. And it was clearly understood that the purchasing corporation would apply part of the coal to a non-maritime use.

Id. at 13, 41 S.Ct. at 4.

In Gilmore &...

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43 practice notes
  • 196 B.R. 913 (Bkrtcy.S.D.N.Y. 1996), 95-B-40385, Petitions of Laitasalo
    • United States
    • Federal Cases United States Bankruptcy Courts Second Circuit
    • June 20, 1996
    ...other's alter ego. Itel Containers Int'l Corp. v. Atlanttrafik Exp. Serv. Ltd., 909 F.2d 698, 703 (2d Cir.1990), rev'd on other grounds, 982 F.2d 765 (2d Cir.1992) (quoting, Gartner v. Snyder, 607 F.2d 582, 586 (2d Cir.1979)); Farkar Co., 583 F.2d 68, 70 (2d Cir.1978) (a finding of fraud wa......
  • 164 B.R. 616 (S.D.Ind. 1994), 93-775, Western Bulk Carriers (Australia) Pty., Ltd. v. P.S. Intern., Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Southern District of Indiana
    • February 14, 1994
    ...the judgment by condemnation and sale of the ship." Similarly, in Itel Containers Intern. Corp. v. Atlanttrafik Exp. Service Ltd., 982 F.2d 765, 766, 1993 A.M.C. 609 (2d Cir.1992), the court stated that a maritime lien a special property right in the vessel, arising in favor of the cre......
  • 101 F.Supp.3d 238 (E.D.N.Y. 2015), 11-CV-4139 (ADS)(AYS), Bank of West v. Sailing Yacht Serendipity
    • United States
    • Federal Cases United States District Courts 2nd Circuit Eastern District of New York
    • April 24, 2015
    ...this procedure, the court can direct the judicial sale of the vessel. See Itel Containers Int'l Corp. v. Atlanttrafik Exp. Serv. Ltd., 982 F.2d 765, 768 (2d Cir. 1992) (" [T]he maritime lien is for the benefit of both the ship and its creditors . . . . '[I]t gives the creditor a specia......
  • 872 F.Supp. 262 (E.D.Va. 1994), Civ. A. 494cv148, Newport News Shipbuilding and Dry Dock Co. v. S.S. Independence
    • United States
    • Federal Cases United States District Courts 4th Circuit Eastern District of Virginia
    • December 13, 1994
    ...Mission Exploration, 668 F.2d 811, 814 (5th Cir. 1982); but see Itel Containers International Corp. v. Atlanttrafik Express Service Ltd., 982 F.2d 765, 768 (2d Cir. 1992) ("As a general rule, maritime liens are disfavored by the law."). The party attacking the lien under a waiver ......
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41 cases
  • 196 B.R. 913 (Bkrtcy.S.D.N.Y. 1996), 95-B-40385, Petitions of Laitasalo
    • United States
    • Federal Cases United States Bankruptcy Courts Second Circuit
    • June 20, 1996
    ...other's alter ego. Itel Containers Int'l Corp. v. Atlanttrafik Exp. Serv. Ltd., 909 F.2d 698, 703 (2d Cir.1990), rev'd on other grounds, 982 F.2d 765 (2d Cir.1992) (quoting, Gartner v. Snyder, 607 F.2d 582, 586 (2d Cir.1979)); Farkar Co., 583 F.2d 68, 70 (2d Cir.1978) (a finding of fraud wa......
  • 164 B.R. 616 (S.D.Ind. 1994), 93-775, Western Bulk Carriers (Australia) Pty., Ltd. v. P.S. Intern., Inc.
    • United States
    • Federal Cases United States District Courts 7th Circuit Southern District of Indiana
    • February 14, 1994
    ...the judgment by condemnation and sale of the ship." Similarly, in Itel Containers Intern. Corp. v. Atlanttrafik Exp. Service Ltd., 982 F.2d 765, 766, 1993 A.M.C. 609 (2d Cir.1992), the court stated that a maritime lien a special property right in the vessel, arising in favor of the cre......
  • 101 F.Supp.3d 238 (E.D.N.Y. 2015), 11-CV-4139 (ADS)(AYS), Bank of West v. Sailing Yacht Serendipity
    • United States
    • Federal Cases United States District Courts 2nd Circuit Eastern District of New York
    • April 24, 2015
    ...this procedure, the court can direct the judicial sale of the vessel. See Itel Containers Int'l Corp. v. Atlanttrafik Exp. Serv. Ltd., 982 F.2d 765, 768 (2d Cir. 1992) (" [T]he maritime lien is for the benefit of both the ship and its creditors . . . . '[I]t gives the creditor a specia......
  • 872 F.Supp. 262 (E.D.Va. 1994), Civ. A. 494cv148, Newport News Shipbuilding and Dry Dock Co. v. S.S. Independence
    • United States
    • Federal Cases United States District Courts 4th Circuit Eastern District of Virginia
    • December 13, 1994
    ...Mission Exploration, 668 F.2d 811, 814 (5th Cir. 1982); but see Itel Containers International Corp. v. Atlanttrafik Express Service Ltd., 982 F.2d 765, 768 (2d Cir. 1992) ("As a general rule, maritime liens are disfavored by the law."). The party attacking the lien under a waiver ......
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2 firm's commentaries
  • Explicit Designation of Vessels Key for Suppliers Navigating CIMLA
    • United States
    • LexBlog United States
    • February 1, 2019
    ...leased in bulk and not earmarked for use on board the M/V SARAMACCA”); Itel Containers Int’l Corp. v. Atlanttrafik Express Serv. Ltd., 982 F.2d 765, 769 (2d Cir. 1992) (The container supplier “did not ‘furnish’ the containers ‘to any vessel’” as required by CIMLA). The most effective way to......
  • Explicit Designation of Vessels Key for Suppliers Navigating CIMLA
    • United States
    • JD Supra United States
    • February 4, 2019
    ...leased in bulk and not earmarked for use on board the M/V SARAMACCA”); Itel Containers Int’l Corp. v. Atlanttrafik Express Serv. Ltd., 982 F.2d 765, 769 (2d Cir. 1992) (The container supplier “did not ‘furnish’ the containers ‘to any vessel’” as required by ...