Long Island Tankers Corporation v. SS KAIMANA

• Decision Date: 09 February 1967
• Docket Number: No. 28019,28094,28223,28026,28107,28019
• Citation: 265 F. Supp. 723
• Court: U.S. District Court — Northern District of California
• Parties: LONG ISLAND TANKERS CORPORATION, a corporation, Libelant, and John A. Cross et al., Libelants in Intervention, v. S. S. KAIMANA, her engines, etc., et al., Respondents.

265 F. Supp. 723

LONG ISLAND TANKERS CORPORATION, a corporation, Libelant, and John A. Cross et al., Libelants in Intervention, v. S. S. KAIMANA, her engines, etc., et al., Respondents.

Nos. 28019, 28026, 28094, 28107, 28223, Admiralty No. 28019.

United States District Court N. D. California.

February 9, 1967.

John Hays and George L. Waddell of Dorr, Cooper & Hays, San Francisco, Cal., for libelant in No. 28019 and for respondent in Nos. 28094, 28107 and 28026.

John Paul Jennings of Jennings, Gartland & Tilly and Richard Ernst, San Francisco, Cal., and Marvin C. Taylor, Washington, D. C., for libelants in intervention in Nos. 28019 and 28026 and for libelants in Nos. 28094, 28107 and 28223.

Harold L. Witsman and John F. Meadows, U. S. Admiralty and Shipping Section (West Coast Office) and Cecil F. Poole, U. S. Atty., San Francisco, Cal., for respondent in No. 28223.

MEMORANDUM OF DECISION

SWEIGERT, District Judge.

This is a consolidation of five separate libels in rem involving claims by the trustees of certain so-called vacation, pension and welfare trusts against each of five vessels—SS Lanikai, SS Alaska Bear (now owned by Pacific Far East Line, Inc.), SS Kaimana, SS Lanakila (upon which Pacific Far East Line, Inc., is holder of preferred ship mortgages) and SS Coast Progress (upon which the United States is holder of a preferred ship mortgage).

The Court has jurisdiction of the parties and subject matter under U.S.Const. art. III, § 2; 28 U.S.C. § 1331(a); and 46 U.S.C. §§ 951, 953.

The cases are presently before the Court for decision after trial upon a "Stipulation as to Certain Facts and Other Matters" and certain testimony and exhibits introduced at trial. The evidence introduced at trial was largely explanatory of the provisions of the collective bargaining agreements governing the trusts.

Under the provisions of these collective bargaining agreements between Pacific Maritime Association, representing steamship companies and various maritime unions, representing sea-going personnel, certain vacation, pension and welfare trusts were established and placed under the administration of trustees equally divided between persons designated by Pacific Maritime Association and persons designated by the unions.

The collective bargaining agreements provide for the payment of vacation pay, pensions and welfare benefits by the trustees to designated beneficiaries. These beneficiaries include not only the various sea-going personnel but also shore-based union officials, instructors at schools for seamen, shore-based workmen repairing and maintaining cargo vans and personnel administering the trusts herein.

The collective bargaining agreements also provide the method of financing such benefits. Under the agreements the steamship companies are obligated to make contributions to the trustees of the various trusts through the Pacific Maritime Association. These contributions are based upon the number of days of work performed for each steamship company by covered employees and the job classification of the particular employee.

The libels in rem here involved are based upon claims by the trustees against Coastwise Line and Dorama, Inc., both steamship companies bound by the collective bargaining agreement, for contributions due and owing to the trustees as a result of the operation by Coastwise Line of each of the five vessels herein and the operation by Dorama, Inc., of three of them. During these operations work was performed for these steamship companies by sea-going personnel covered by the collective bargaining agreement.

Coastwise, however, failed to pay its contributions for voyages which terminated during the period of February 1959 through February 23, 1960, and is now insolvent.

Dorama failed to pay its contributions for voyages terminating during the period of June 23, 1959, through February 25, 1960, and is now insolvent.

The basic issue involved in all five proceedings is whether the trustee's claims for the contributions which became due and owing from Coastwise Line and from Dorama, Inc., can be asserted as maritime liens and, if so, whether they are entitled to "preferred" maritime lien priority against said vessels as "wages of the crew of the vessel" within the meaning of 46 U.S.C. § 953.

Section 953 of Title 46 is part of Chapter 25 of Title 46 dealing with ship mortgages and known as the Ship Mortgage Act, 41 Stat. 1000-1006 (1920), 46 U.S. C. §§ 911-984 (1964).

Prior to 1920 ship mortgages were not entitled to enforcement by maritime liens and were subordinate to all of the many maritime liens a ship might incur. See Bogart v. The John Jay, 17 How. 399, 58 U.S. 399, 15 L.Ed. 95 (1854). For this reason they came to be "practically worthless" as security instruments. See Detroit Trust Co. v. The Barlum, 293 U.S. 21, 39, 55 S.Ct. 31, 79 L.Ed. 176 (1934). The Congress, in order to provide for the promotion and maintenance of the American merchant marine, enacted this Ship Mortgage Act to make private investment and credit in the shipping industry more attractive and also to protect the United States as one of the principal sources of credit for ship financing. See Gilmore and Black, The Law of Admiralty 571 (1957). This was accomplished by placing ship mortgages upon a stronger security basis.

The Ship Mortgage Act provides that mortgages which comply with the conditions enumerated in 46 U.S.C. § 922 shall be called "preferred mortgages" and as such entitled to the preferred status given by 46 U.S.C. § 953. See 46 U.S.C. § 922(a), (b).

Section 953 of the Act provides that in any foreclosure and sale of a ship in admiralty, all preexisting lien claims in the vessel shall be held terminated and shall thereafter attach to the proceeds of the sale except that a "preferred mortgage lien" shall have priority over all such claims except "preferred maritime liens" and expenses, fees and costs allowed by the Court.

Section 953(a) provides that the term "preferred maritime lien," as used in the chapter, means (1) a lien arising prior in time to the recording of a preferred mortgage or (2) a lien for damages arising out of tort, for wages of a stevedore when employed directly by the owner, operator, master, ship's husband or agent of the vessel, "for wages of the crew of the vessel" for general average and for salvage. The Ship Mortgage Act does not further define the term "wages of the crew of the vessel."

A threshold question is whether Congress intended by the phrase "wages of the crew of the vessel" as used in Section 953, to include all seamen's lien claims for compensation for maritime service or intended only a more limited kind of seamen's maritime lien claim. The trustees contend that Congress intended to protect the traditional seaman's wage lien claims and did so by providing that "wages of the crew of the vessel" have priority over preferred ship mortgages.

Admiralty courts have not limited the seaman's lien claim to those for ordinary wages. On the contrary, the Courts have recognized the seaman's lien claim for compensation for maritime services regardless of the form of the compensation provided only that the claim is reducible to money. See Harden v. Gordon, 11 Fed.Cas. p. 480, No. 6,047 (C.C.Me.1823). From the earliest period of maritime commerce the test in admiralty courts for determining whether there is a seaman's wage lien has been: Has a maritime service been performed? If such service has been performed, then whatever constitutes the compensation for the service, if reducible to money, may be enforced by a maritime lien against the vessel upon which those services were performed.

In Gayner v. The New Orleans, 54 F. Supp. 25 (N.D.Cal.1944) the Court (Goodman, J.) allowed seamen's wage liens for dismissal cash benefits due ferry-boat employees under their collective bargaining agreements as a result of the abandonment of ferry-boat service in San Francisco Bay. The Court rejected the contention of the respondent that the ferry-boat company and not the vessel was responsible for the payment of such benefits under the collective bargaining contract and that the benefits were not in their nature such wages or compensation as entitled a seaman to a maritime lien, stating at 27: "* * * that the fullest protection to seamen for all maritime services has always been the policy of the Admiralty."

In The Great Canton, 299 F. 953 (E.D. N.Y.1924) the Court rejected a contention that the seaman's entitlement to one month's wages for improper discharge under 46 U.S.C. § 594 and for two days' pay for each and every day wages are withheld after a specified period under 46 U.S.C. § 596 is against the master or owner and not a lien against the vessel. Going back to the early case of Sheppard v. Taylor, 5 Pet. 674, 709-710, 8 L.Ed. 269 (1831), wherein Justice Story wrote of the remedies of seamen against the vessel, the Court upheld the seamen's maritime lien for this statutory compensation. See also The Osceola, 189 U.S. 158, 23 S.Ct. 483, 47 L.Ed. 760 (1903) (seaman's wage lien upheld for maintenance and cure resulting from a seaman falling sick in the service of the ship) and Lakos v. Saliaris (The Leonidas), 116 F.2d 440 (4th Cir. 1940) (seaman's wage lien upheld for extra compensation for hazardous maritime service in a war zone).

For purposes of decision in this case, but without deciding the question, the Court will assume that the phrase "wages of the crew of the vessel", as used in § 953, was intended to include the traditionally broad seaman's lien claim and to give all such lien claims priority over ship mortgages.

The remaining and basic question is whether the claim for the contributions here involved constitutes seamen's claims for compensation for maritime services in the broad traditional sense.

In each of the cases above mentioned, the compensation in question had become due to the seamen and the only question was whether the form of the compensation was such...