Marshall Co v. the President Arthur

• Decision Date: 20 May 1929
• Docket Number: No. 272,272
• Citation: 73 L.Ed. 846,49 S.Ct. 420,279 U.S. 564
• Parties: W. A. MARSHALL & CO., Inc., v. THE PRESIDENT ARTHUR
• Court: U.S. Supreme Court

279 U.S. 564

49 S.Ct. 420

73 L.Ed. 846

W. A. MARSHALL & CO., Inc.,

v THE PRESIDENT ARTHUR.

No. 272.

Argued Feb. 27, 1929.

Decided May 20, 1929.

Mr. George Wright Hinckley, of New York City, for petitioner.

Messrs. John M. Woolsey and Samuel D. Stein, both of New York City, for respondent Mr. Justice SANFORD delivered the opinion of the Court.

In May, 1925, W. A. Marshall & Co., Inc., filed a libel in admiralty in the federal District Court for Southern New York against the Steamship 'President Arthur,' asserting a maritime lien thereon for an unpaid balance of the purchase price of bunker coal furnished by it on the request of the owner to and for the use of the steamship. The owner, the American Palestine Line, Inc., answered as claimant, denying that the Company had a lien on the steamship and alleging that the entire purchase price had been paid in accordance with the contract of sale.

At the hearing the District Court held, on the evidence, that the Company had no lien on the vessel, and dismissed the libel. 22 F.(2d) 584. This decree was affirmed by the Circuit Court of Appeals. 25 F.(2d) 648.

The evidence-which is undisputed-shows that when the negotiations were entered into for the coal the Line wished to pay for it on longer terms than were usually granted, and that the Company, after investigating the standing of the Line, not believing that it was financially responsible, and wanting additional security, required the Line to give trade acceptances endorsed by responsible and acceptable persons; with the purpose that, if needed at any time, the money could be obtained by discounting the acceptances, thus endorsed, prior to their maturity.

Thereupon, in February and March, 1925, the parties entered into two written contracts for the coal. Each of these provided that the Company should sell and the Line, as owner of the steamship, should buy, at a specitied price, a designated amount of coal 'to be used as bunker coal for' the steamship, and to be delivered on specified dates. Each provided that the Line should 'pay for the said coal as follows: By delivering' to the Company two trade acceptances, dated the date of the delivery of the coal, due March 10 and May 8, respectively, and 'endorsed by Jacob Wacht, Jacob S. Strahl and Joseph W. Gottlieb.' Neither contract referred to any lien on the vessel; and each recited that 'The entire contract between the parties is stated above and there is no outside condition, warranty, agreement, or understanding.' At the foot of each contract the persons named as endorsers also signed an agreement reciting that 'In consideration of the execution of the foregoing contract' and the delivery of the coal to the Line and of one dollar, they jointly and severally agreed to endorse the trade acceptances described in the contract.

Without the consideration of such endorsements, it was shown, the Company would not have sold the Line the coal.

The coal called for by the contracts was delivered to the steamship. The purchase price amounted to $21,736.16. For this the Line gave the Company its two trade acceptances endorsed by the three designated persons; these being consolidations of the four acceptances required by the two contracts. The acceptance for $11,794.54, first maturing, was duly paid. The acceptance for $9,382.62, maturing later, was not paid and was protested. This was the amount of the balance for which the Company claimed a lien.

After filing the libel, the Company also brought a civil action upon the unpaid acceptance in a state court, against the endorsers only. This is still pending and undetermined.

The questions presented here are: whether under the contracts the Company waived the maritime lien which it would otherwise have had on the steamship to secure the payment of the purchase price; and, if not, whether the delivery of the endorsed acceptances constituted under the contracts payments of the purchase price which extinguished the lien.

1. As to the first of these questions it is necessary to consider the provisions of the Maritime Lien Act of 1910,¹ relating to liens for necessaries, which were re-enacted in the Ship Mortgage Act of 1920.² Subsec. P of the latter Act provides that: 'Any person furnishing repairs, supplies, * * * or other necessaries, to any vessel, whether foreign or domestic, upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel.' Subsec. § provides that: 'Nothing in this section shall be construed to prevent the furnisher of repairs, supplies, * * * or other necessaries, * * * from waiving his right to a lien, * * * at any time, by agreement or otherwise. * * *'³

Prior to the Act of 1910 it had been settled that by the maritime law as administered in this country a lien was given for necessaries furnished a vessel in a port of a foreign country or state upon the credit of such vessel; but that no such lien was given for necessaries furnished in the home port or state. The Roanoke, 189 U. S. 185, 193, 23 S. Ct. 491, 47 L. Ed. 770.

The purpose of the Act of 1910, as shown by the Reports of the Committees of Congress, was to do away with this 'artificial distinction' and 'the doctrine that, when the owner of a vessel contracts in person for necessaries or is present in the port when they are ordered, it is presumed that the materialman did not intend to rely upon the credit of the vessel, and that hence, no lien arises'; and 'to substitute a single federal statute for the state statutes in so far as they confer liens for repairs, supplies and other necessaries.' Piedmont & George's Creek Coal Co. v. Seaboard Fisheries Co., 254 U. S. 1, 11, 41 S. Ct. 1, 4 (65 L. Ed. 97). To this end the Act gave a maritime lien on any vessel, whether foreign or domestic, for necessaries furnished on the order of the owner or his authorized agent, and relieved the libellant from the necessity of alleging or proving that credit was given to the vessel. The Committee reports show, however, that it was not intended to make any other change in the general principles of the existing law of maritime liens, Piedmont Coal Co. v. Seaboard Fisheries Co., supra, p. 11 (41 S. Ct. 1); and the specific provision that the Act should not be construed as preventing the furnisher of the necessaries from waiving his right to a lien, 'by agreement or otherwise,' indicates clearly, we think, that it was not intended to change the principles of the maritime law in respect thereto. That an express renunciation of the lien is not essential, is plain.

We need not enter here into the general field of the waiver of maritime liens. Such liens differ in their character and are not equally favored-the lien for necessaries, which is a secret one, being stricti juris, Piedmont Coal Co. v. Seaboard Fisheries Co., supra, 12 (41 S. Ct.). It suffices to say that we think the principles applicable to the question whether the lien was waived...