International Terminal Operating Co. v. SS VALMAS

• Decision Date: 13 March 1967
• Docket Number: No. 10779.,10779.
• Citation: 375 F.2d 586
• Parties: INTERNATIONAL TERMINAL OPERATING COMPANY, Inc., Appellant, v. SS VALMAS, her engines, boilers, etc., Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

375 F.2d 586 (1967)

INTERNATIONAL TERMINAL OPERATING COMPANY, Inc., Appellant, v. SS VALMAS, her engines, boilers, etc., Appellee.

No. 10779.

United States Court of Appeals Fourth Circuit.

Argued January 11, 1967.

Decided March 13, 1967.

Edward B. Hayes, Chicago, Ill. (Robbert W. Williams, Baltimore, Md., Lord, Bissell & Brook, Chicago, Ill., and Ober, Williams & Grimes, Baltimore, Md., on brief), for appellant.

Robert D. Klages, New York City (John G. Poles, Poles, Tublin & Patestides, New York City, and Weinberg & Green, Baltimore, Md., on brief), for appellee.

Before HAYNSWORTH, Chief Judge, SOBELOFF, Circuit Judge, and RUSSELL, District Judge.

SOBELOFF, Circuit Judge:

On this appeal we are called upon to decide whether libelant, International Terminal Operating Co., Inc., supplier of stevedoring services to the Greek vessel S.S. VALMAS, which was under subcharter to Enterprise Marine Co., is entitled to a maritime lien. The answer turns on a construction of certain provisions in the time charter party, dated June 23, 1964, between Compagne Naviere, the owner, and Alltransport, Inc., as charterer, and in the subcharter party, dated August 10, 1964, between Alltransport and Enterprise.

International Terminal Operating Co., Inc., was employed by Enterprise, under a contract executed on May 27, 1964, to perform general stevedoring services on vessels owned, operated, controlled or chartered by Enterprise.¹ Pursuant to this contract, the stevedore unloaded cargo from the S.S. VALMAS when she was in Chicago under the management of Enterprise. In order to recover unpaid charges of $25,959 plus interest for the services supplied, the stevedore filed a libel in rem against the vessel. Both the owner and the time charterer claimed the vessel, and moved for summary judgment on the ground that by virtue of paragraph 18 of the time charter party and paragraph 17 of the subcharter party, Enterprise had no authority — and in fact was forbidden — to incur a maritime lien.² The libelant also moved for summary judgment, on the ground that nothing in either of the charters, correctly interpreted, prohibited Enterprise from incurring a lien on the vessel.

It is beyond dispute that absent the clauses in question, a lien would arise, since the Federal Maritime Lien Act, pertinent portions of which are set out in the margin,³ provides that the supplier of "necessaries" shall be entitled to a lien on the vessel to which the "necessaries" are furnished.⁴

If inspection of a charter party would have shown that the charterer had no authority to bind the ship, a supplier of "necessaries" is charged by section 973 with knowledge of the provisions of the charter party forbidding the creation of a lien.⁵ In the present case it is agreed that the stevedore did not seek to inspect the ship's papers, although they were readily available upon request, and thus failed to exercise the "reasonable diligence" required by section 973. Despite this failure, however, if the questioned documents do not deprive Enterprise of authority to permit a lien on the vessel, the stevedore is still entitled to a lien.⁶

The District Court ruled that paragraph 18 of the time charter party prevented Alltransport from incurring a lien, but that the prohibition did not extend to Enterprise as the subcharterer. The court nevertheless dismissed the libel on the theory that paragraph 17 of the subcharter party prevented the creation of a lien by Enterprise. From the summary judgment libelant appeals.

We agree with the District Court's holding that the stevedore is not entitled to a lien, although we reach this result by a somewhat different route.

The case principally relied upon by the vessel to prevent the attachment of a maritime lien, Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268, 280, 60 S.Ct. 937, 943, 84 L.Ed. 1197, (1940), held that to have this effect, the charter party must "provide therein that the creation of maritime liens is prohibited." In Signal Oil, the time charterers had agreed to "provide and pay for" fuel oil supplies. The Supreme Court held that this phrase was not adequate to prevent the creation of a lien for necessaries ordered by the charterer. The Court implied that to bar a lien, it would be necessary to include a provision similar to that considered in United States v. Carver, 260 U.S. 482, 43 S.Ct. 181, 67 L.Ed. 361 (1923): that charterers "will not suffer nor permit to be continued any lien * * *."

The clause in Carver is substantially identical with paragraph 18 of the time charter party in the case before us, except that the latter includes the phrase "incurred by them or their agents."⁷ Although the District Court held that paragraph 18 barred the creation of a lien by the charterers, it declared that because of this phrase, the provision was sufficient only to prohibit liens incurred by the time charterers "or their agents," and that the prohibition did not extend to the subcharterer.⁸ We find this view unpersuasive; we read the words "or their agents" as words of emphasis, not of limitation. They imply no narrowing, but instead underscore the broad generality of the prohibition against liens.

Although the time charter contains a clause permitting the charterer to sublet the vessel during the life of the time charter party, it explicitly provides that the charterers are to remain "responsible for the fulfillment of this Charter Party." The charterer could not "grant to the sub-charterer rights beyond those which he has under his original charter from the owner * * *." Poor, Charter Parties & Ocean Bills of Lading § 20 (4th ed. 1954). Thus the subcharterer stands in the shoes of the charterer, and a subcharter party between Alltransport and Enterprise would incorporate by implication the terms of the time charter. It is difficult to square the exaction from the original charterer of the agreement prohibiting the creation of a lien with the notion that it was a matter of indifference if the subcharter should create a lien exposing the vessel to the very risk stipulated against. It would take very compelling language indeed to justify reading the time charter party as forbidding the charterer to suffer a lien against the vessel, yet tolerating its creation by any unknown subcharterer. The prohibition against permitting a lien is aimed not only at the charterer and his agents, but against permitting a lien by a subcharterer.

Alltransport, in accordance with maritime practice,⁹ is described in the subcharter party as the "Time-chartered Owner of the motor-vessel VALMAS." Had the stevedore complied with the command of section 973 and inspected the ship's papers, it would have been put on notice of the existence of a prior charter party. Inspection of that document would have disclosed that Alltransport could not permit a lien to be created, and therefore could not grant Enterprise authority to do so. If Alltransport had purported to confer such authority, it clearly would have breached the terms of the time charter party. The stevedore, or other supplier of the vessel, reading the subcharter party and the time charter party to which attention was thereby directed, could hardly be misled into thinking that these documents left it the protection of a lien.

We find support for this view in Ocean Cargo Lines, Ltd. v. North Atlantic Marine Co., 227 F.Supp. 872 (S.D.N.Y. 1964), where a supplier of fuel oil sought to avoid the effect of a prohibition of lien clause in a time charter by arguing that since the voyage charter between charterer and subcharterer contained no prohibition of lien clause, the supplier was not barred from enforcing its lien. The District Court pointed out, however, that section 973 of the Federal Maritime Lien Act refers to a prohibition of lien by "the terms of a charter party." (Emphasis in Judge Feinberg's opinion.) The court therefore declared that

so long as a prohibition of lien is contained in any charter under which a vessel is operated at the time supplies are furnished to the vessel, a would be lienor is bound to exercise "reasonable diligence" in inquiring whether the supplies are ordered by the owner or by one having authority to bind the vessel.

227 F.Supp. at 878. (Emphasis in original.)

We leave open, as unnecessary to a decision here, the question whether, standing alone, the language of section 17 of the subcharter party, providing that cargo was to be loaded "free of risk and expense to the vessel" constitutes a sufficient bar to the creation of a lien, as our District Court thought, or is insufficient, as Judge Wisdom thought in addressing himself to identical language in Cooper Stevedoring of Louisiana, Inc. v. Pappadakis, 363 F.2d 352 (5th Cir. July 18, 1966).¹⁰ For the disposition of the present case, it is enough that the charter party and the subcharter party together, which were available on board the vessel and knowledge of the contents of which is attributable to the stevedore, conveyed ample notice that the lien was unauthorized.

The judgment of the District Court is

Affirmed.

1 Appellees — the owner and the time charterer — argue that this prior, general contract indicates that the stevedore did not rely on the credit of the vessel, since at the time the contract was made, the S. S. VALMAS had not yet been subchartered to Enterprise. We find no merit in this contention, however. In Dampskibsselskabet Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268, 60 S.Ct. 937, 84 L.Ed. 1197 (1...