North Coast Stevedoring Co. v. United States

• Decision Date: 07 March 1927
• Docket Number: No. 4831.,4831.
• Citation: 17 F.2d 874
• Parties: NORTH COAST STEVEDORING CO. et al. v. UNITED STATES et al.
• Court: U.S. Court of Appeals — Ninth Circuit

17 F.2d 874 (1927)

NORTH COAST STEVEDORING CO. et al. v. UNITED STATES et al.

No. 4831.

Circuit Court of Appeals, Ninth Circuit.

March 7, 1927.

Frank A. Huffer, William H. Hayden, and Gerald H. Bucey, all of Seattle, Wash., for appellants.

Thos. P. Revelle, U. S. Atty., and Chas. E. Allen, Dist. Counsel, U. S. Ship. Bd., both of Seattle, Wash., and Arthur M. Boal, Admiralty Counsel, and F. R. Conway, Asst. Admiralty Counsel, U. S. Ship. Bd., both of Washington, D. C., for appellees.

Before GILBERT, RUDKIN, and DIETRICH, Circuit Judges.

RUDKIN, Circuit Judge.

By intervening libel the appellant asserted a maritime lien in the court below on the steamship "Henry S. Grove" for stevedoring services performed in loading and discharging cargo at different ports in the state of Washington. At the time the services were so performed the vessel was operated by, and in the possession of, the Atlantic Gulf & Pacific Steamship Corporation, under a contract of conditional sale executed by the United States, represented by the United States Shipping Board, and the United States Shiping Board Emergency Fleet Corporation. The lien was asserted by virtue of subsections P, Q, and R, § 30, of the Merchant Marine Act of 1920 (41 Stat. 1005 Comp. St. §§ 8146¼ooo-8146¼pp). These subsections provide, in substance, that any person furnishing repairs, supplies, towage, use of dry dock or marine railway, 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 a suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel. Subsection R further provides that nothing therein contained shall be construed to confer a lien when the furnisher knew, or by the exercise of reasonable diligence could have ascertained, that, because of the terms of a charter party, agreement for the sale of the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor.

The agreement for the sale of the vessel in question contained provisions that the buyer should not suffer to be continued any lien or charge having priority to or preference over the title of the seller in the vessel; that the buyer should carry a properly certified copy of the agreement with the ship's papers, and take such other appropriate steps designated to it by the seller from time to time as would give notice to the world that the buyer had no right, power, or authority to suffer or permit to be imposed upon or against the vessel any liens or claims which might be deemed superior to or a charge against the interest of the seller, and other provisions not deemed material, in view of the fact that similar provisions have been so often construed by the courts of other jurisdictions.

The appellees resisted the claim of lien upon the ground that the appellant knew, or by the exercise of reasonable diligence could have ascertained, that, because of the terms of the agreement for the sale of the vessel, the buyer was without authority to bind the vessel for stevedoring services, while the appellant contended that the agreement for the sale of the vessel did not in terms provide that the buyer was without authority to so bind the vessel, and that, if it did so provide, the appellant did not know, and could not by the exercise of reasonable diligence have ascertained, that the agreement of sale contained any such prohibition.

The court below dismissed the intervening libel, and from that part of the decree the present appeal is prosecuted.

Two questions are thus presented for consideration: First, did the agreement for the sale of the vessel provide in terms that the person ordering the stevedoring services was without authority to bind the vessel; and, second, did the appellant know, or by the exercise of reasonable diligence could it have ascertained, that the person ordering the services was without such authority.

While the prohibition against incurring liens is not as explicit as it might be, yet, when the agreement is construed as a whole, it leaves no doubt in the mind that it was the purpose and intent of the seller to protect the vessel against claims and liens that would have priority to, or preference over, the title of the government. Such has been the construction uniformly placed on similar contracts in other jurisdictions. Standard Oil Co. v. United States (C. C. A.) 1 F.(2d) 961; Frey & Son v. United States (C. C. A.) 1 F.(2d) 963; P. H. Gill & Sons Forge & Mach. Wks. v. United States (C. C. A.) 1 F.(2d) 964; The Liberator (C. C. A.) 5 F. (2d) 585; United States v. Robins Dry Dock & Repair Co. (C. C. A.) 13 F.(2d) 808. See, also, United States v. Carver, 260 U. S. 482, 43 S. Ct. 181, 67 L. Ed. 361.

The only inquiry made by the appellant was of the agent or local manager at Seattle and the Pacific Coast manager at San Francisco. These parties knew nothing about the terms of the contract of sale, or the ownership of the vessel, and made no representation as to either. The manager of the appellant testified that he asked the agent at Seattle if he knew the conditions under which the Atlantic, Gulf & Pacific Steamship Company had purchased the "Henry S. Grove" and other vessels, from the Shipping Board, or if he knew anything about the contracts with the Shipping Board, and he answered that he did not. The Pacific Coast manager testified that, prior to the rendition of the services in question, the...