Kane v. Motor Vessel Leda

• Decision Date: 27 October 1972
• Docket Number: Civ. A. No. 70-313.
• Citation: 355 F. Supp. 796
• Parties: Charles B. KANE d/b/a Kane's Diesel & Truck Repair, Plaintiff, v. MOTOR VESSEL LEDA, her engines, her boiler, furniture, gear, tackle and apparel, in rem and Leda Towing Company, Inc. in personam, Defendants.
• Court: U.S. District Court — Eastern District of Louisiana

355 F. Supp. 796

Charles B. KANE d/b/a Kane's Diesel & Truck Repair, Plaintiff, v. MOTOR VESSEL LEDA, her engines, her boiler, furniture, gear, tackle and apparel, in rem and Leda Towing Company, Inc. in personam, Defendants.

Civ. A. No. 70-313.

United States District Court, E. D. Louisiana, New Orleans Division.

March 14, 1972.

Second Hearing October 27, 1972.

Louis R. Koerner, Jr., New Orleans, La., for plaintiff.

Rene S. Paysse, New Orleans, La., for defendants.

ALVIN B. RUBIN, District Judge:

I. FACTS

On October 31, 1969, Leda Towing Company, Inc. ("Leda") and Joseph J. Poirier ("Poirier") executed two documents with reference to the Motor Vessel LEDA. One purported to be a bareboat charter; the other purported to be an option to purchase. The two documents, read together as they must be, since they were executed simultaneously, resembled an agreement of the kind commonly called a lease-purchase contract. The 60 monthly payments, denominated rental, amounted to the full price of the vessel, and if Poirier, the lessee, performed the so-called lease, he would acquire ownership of the LEDA.

Shortly before this transaction, Charles Kane ("Kane"), who was in the diesel repair business, had begun to repair one of the two engines on the vessel, a GMC V-12. The repairs were completed early in November, and, despite the fact that Kane had given an estimate that the repairs would cost $1,500, he rendered a bill for $5,047.33. In oral findings of fact, the court has determined that Leda never agreed to pay more than the $1,500 originally agreed on, and that this sum has been paid. Leon and David Vial, Leda's incorporators and majority shareholders, never agreed to pay anything personally.

Sometime later, Poirier advised Kane that he was having problems with the V-12 engine, and Kane sent a mechanic aboard to attempt to remedy the problem. Leon Vial knew of the difficulty, spoke to Kane, and urged him to take care of it, under the impression that the problem was being caused by faulty work on the repair job. In fact the engine had been worn out before it was repaired, and needed to be replaced. This should have been evident when the repair work was done, and the repairs should not have been undertaken. But, after the repairs were completed, as the result of the engine's age, the engine threw a rod and was damaged beyond further repair.

The LEDA had two engines, the GMC V-12 and a Waukesha engine. The Waukesha also needed repairs and Leda authorized Poirier and Kane to take parts for it from an extra Waukesha engine on Leda's property. When the GMC V-12 threw a rod, and it became necessary to replace it, Poirier decided also to replace the Waukesha engine with a new V-12. He told Leon Vial of his plans, and Vial responded, "Fine, but it's none of my business. You pay for it," or words to that effect.

The Waukesha was replaced by a V-12, leaving the LEDA with two new V-12's, both of which thereafter functioned satisfactorily. American Marine Corp., through Westside Auto Supply, furnished the basic parts for the new engines at a price of $23,283.92. The additional parts were supplied by Kane through other suppliers, their costs totalling $1,381.66. Kane's bill for services in installation was $4,200 and this was a reasonable sum.¹

II. PERSONAL CONTRACTUAL LIABILITY OF POIRIER AND LEDA

As Poirier contracted for the installation of the engines and received what he bargained for, he is clearly liable for these sums. To determine whether there is any liability on Leda's part, it is necessary to examine the document captioned "Bareboat Charter Party." It provides "that repair of all engines, gear, and equipment necessary or proper upon delivery of the vessel to CHARTERERS shall be deemed chargeable to causes antedating delivery of vessel to CHARTERERS, unless OWNER and CHARTERERS agree otherwise, and the cost involved shall be for the account of OWNER. . . ." Par. 3b. Since the engines were in fact defective when the M/V LEDA was delivered to Poirier, it seems clear that he would have had an action against Leda Towing Company for the expense of their repair. But this would not create liability by Leda Towing directly to the supplier. Leda Towing did not contract with Kane; Kane was not a third party beneficiary of the Leda Towing-Poirier contract (nor, in Louisiana terms, did that agreement contain a stipulation pour autri). Hence, though there may be a debt from Leda Towing to Poirier, Leda is not liable to Kane.

III. LIEN AGAINST THE M/V LEDA

It is necessary to look at the agreement between Poirier and Leda to determine whether the claim by Kane constitutes a lien on the vessel. The legal principles that apply to the problem are well settled. Despite protestations of its antiquity, the maritime lien was created judicially in the 19th century. Gilmore and Black, The Law of Admiralty, p. 484. It afforded a device whereby those who supplied services and supplies of various kinds to vessels might obtain security for the debts due them. Gilmore and Black, supra, § 9-19, pp. 510-519.

As the lien was formed and molded by the jurisprudence, problems arose in a number of areas: these included the question of the kind of services or supplies that would be assured lien protection, which is not an issue here, and what parties had the authority to order those services. Except for the early question whether the supplies or services were furnished on the owner's credit or the credit of the vessel, there were relatively few problems when the owner himself or the master whom he had placed in charge of the vessel ordered the services or supplies. However one of the functions of the lien was to provide security in at least some instances where there was no personal liability on the owner's part. Gilmore and Black, supra, pp. 488-507.

The early history of the lien has been traced elsewhere. Hebert, The Origin and Nature of Maritime Liens, 4 Tul.L. Rev. 381 (1930). In 1910, the Federal Maritime Lien Act was adopted. Although it does not deal comprehensively with all maritime liens, it does set the course to be followed with respect to furnishers of repairs, supplies and other necessaries. (Engines are clearly necessaries, hence governed by the Act.)

Others have examined the history of the Act, and its later modification, and have discussed its scope comprehensively. Gilmore and Black, supra, pp. 537-568. Smith, The New Federal Statute Relating to Liens on Vessels, 24 Harv. L.Rev. 182 (1910). Insofar as the present problem is concerned, the Act sets clear criteria for determination. Repairs and necessaries furnished on the order of a charterer create a lien unless "the furnisher knew, or by exercise of reasonable diligence could have ascertained, that because of the terms of a charter party. . . . the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor." 46 U.S.C. § 973.

While the Act made a number of changes in the law applicable to maritime liens, Griffin, The Federal Maritime Lien Act, 1924, 37 Harv.L.Rev. 15, the changes were limited in scope. 1 Benedict on Admiralty § 88, p. 272. The provision quoted above is "merely declaratory of the general maritime law, as set forth in numerous cases decided before the statute,—notably in The Kate 1896, 164 U.S. 458 (17 S.Ct. 135, 41 L. Ed. 512) and The Valencia 1897, 165 U.S. 264 (17 S.Ct. 323, 41 L.Ed. 710)." The Federal Maritime Lien Act, supra at p. 33.

After the statute was enacted, differences in interpretation of the duty of the furnisher to inquire were put at rest by the decision in United States v. Carver, 1923, 260 U.S. 482, 43 S.Ct. 181, 67 L.Ed. 361. The Court there said in words applicable here:

"We regard these words as too plain for argument. They do not allow the materialman to rest upon presumptions until he is put upon inquiry, they call upon him to inquire. To ascertain is to find out by investigation. If by investigation with reasonable diligence the material man (sic) could have found out that the vessel was under charter, he was chargeable with notice that there was a charter; if in the same way he could have found out its terms he was chargeable with notice of its terms. In this case it would seem that there would have been no difficulty in finding out both." 260 U.S. at 489, 43 S.Ct. at 182.

See also, Tampa Ship Repair and Dry Dock Co. v. Esso Export Corp., 5 Cir. 1956, 237 F.2d 506; American Marine Corp. v. Towboat Z-Fourteen, W.D.La. 1961, 214 F.Supp. 849.

But the supplier who furnishes to the actual owner has a lien whether or not he makes inquiry, because the owner in all cases has authority to bind his own vessel. The Bergen, 9 Cir.1933, 64 F.2d 877. Hence the initial quasi-nosological issue is whether Poirier was owner or charterer of the vessel. The classification problem becomes complex because, historically, charters are maritime contracts, interpreted by admiralty courts, Morewood v. Enequist, 1860, 64 U.S. (23 How.) 491, 16 L.Ed. 516; see 1 Benedict on Admiralty § 66, and cases cited therein, while contracts for the sale of a vessel have been held non-maritime. The Ada, 2nd Cir.1918, 250 F. 194; Grand Banks Fishing Co. v. Styron, D.Me.1953, 114 F.Supp. 1. Generally, whether or not an agreement passes title to a vessel is to be determined by state law. See First National Bank & Trust Co. of Vicksburg, Miss. v. The Seneca, E.D.La.1960, 179 F.Supp. 847.

Is the agreement between Poirier and Leda, construed as a charter, effective to preclude the imposition of liens? That it is sufficient under the Maritime Lien Act, 46 U.S.C. § 971 et seq. to bar imposition of liens by a charterer there can be no doubt: the charter specifically forbids the imposition of liens and requires notice to that effect to be given. Paragraph 10c of the agreement requires the Charterer to "post under clear glass or plastic at a noticeable place in the pilothouse of the towboat" and to show "to all persons making...