Northwestern Fuel Co. v. Dunkley-Williams Co.
| Decision Date | 05 October 1909 |
| Docket Number | 1,529. |
| Citation | 174 F. 121 |
| Parties | NORTHWESTERN FUEL CO. v. DUNKLEY-WILLIAMS CO. |
| Court | U.S. Court of Appeals — Seventh Circuit |
The appellee, owner of the steamer Petoskey, chartered her to the Chicago Transportation Company from May 1, 1906, until December 10, 1906, for a consideration of $5,000. The charter party provided that second party thereto should pay promptly all of the running expenses of the steamer, and not permit her to be under debts constituting a lien upon her for more than $1,000 at any time. It further provided that for a breach of said last-named covenant, or any other of the conditions of the charter party, appellee might at once take possession of the Petoskey, operate her for the account of the second party thereto, holding second party liable for the amount of the excess of the consideration reserved over and above what might be realized from her earnings. It was further thereby provided that at the expiration of the charter party the steamer should be returned in as good condition, less ordinary wear, etc., as when received, and that at the time of such return she 'shall be free and clear of all liens and incumbrances whatsoever created by the party of the second part, or its agents or employes, for which the said party of the second part was to be liable, or which it was to bear. ' It was also provided in said charter party that second party should save harmless appellee from expenses incurred in defending against liens and otherwise. The Chicago Transportation Company thereupon took possession of the Petoskey and engaged her, together with the steamer Peerless, in carrying passengers and freight between Chicago and Milwaukee, until October 10, 1906, when appellee took possession of her for breach of charter party. The indemnity bond required by the charter party was never furnished, though often asked for. At the time of the default liens to the amount of $1,500 had accrued. On May 23, 1906 Miles E. Barry, for the second party to the charter party signing himself 'V.P. and G.M.,' wrote appellant under letter head 'Chicago & Milwaukee Line,' asking for its best price on coal for the steamer Peerless and Petoskey; 'we to go to your dock after the coal. ' Appellant replied May 24, 1906, naming price and other information. On June 4, 1906, appellee mailed a letter to appellant, advising the latter of the charter party, of which letter appellant denies all knowledge. No further steps were taken, save that coal was delivered to the steamer from time to time at appellant's dock and charged to steamer Petoskey, and payments therefor were duly made on bills sent by appellant to 'steamer Petoskey, c/o Chicago & Milwaukee Line,' at the end of each month up to the month of August, 1906.
The libel was filed to recover for the deliveries of August, September, and up to October 15, 1906, amounting to the sum of $1,621.80. On hearing in the District Court the lien was disallowed for all coal delivered up to October 15, 1906, and sustained as to deliveries on that day, amounting to the sum of $75.75, with interest from November 15, 1906, amounting to $7.96, and costs, amounting to $83.80, from which order this appeal was taken. The errors assigned are: That the court erred in not allowing judgment to go for appellant for the whole amount claimed; that the court erred in holding that under the allegations of the libel and the evidence, respectively, appellant was chargeable with notice that the steamer was operated by the Chicago Transportation Company under charter; that the court erred in holding that the circumstances were such as to charge appellant with notice of the charter party; that the court erred in not holding that under the charter party, even conceding notice to appellant that by the terms thereof the charterer was not authorized to pledge the vessel for supplies to the amount of $1,000, yet under the circumstances the steamer was liable to appellant to the amount of at least $1,000.
A. E. Boyesen, for appellant.
Charles E. Kremer, for appellee.
Before GROSSCUP, BAKER, and KOHLSAAT, Circuit Judges.
KOHLSAAT Circuit Judge (after stating the facts as above).
The test of liability herein is conclusively stated by the Supreme Court in the case of The Valencia, 165 U.S. 264, 17 Sup.Ct. 323, 41 L.Ed. 710, as follows, viz.:
'One furnishing supplies or making repairs on the order simply of a person or corporation acquiring the control or possession of a vessel under such a charter party cannot acquire a maritime lien, if the circumstances attending the transaction put him on inquiry as to the existence and terms of such charter party, but he failed to make inquiry, and chose to act on a mere belief that the vessel would be liable for his claim.'
It appears that libelant delivered the coal under the impression that the vessel would be liable therefor in any case. This accounts for its lack of diligence in making investigation as to the facts. The credit was not given to protect the owner's interest in the steamer, but that of parties for the time being operating the boat. Therefore the question for the court to pass upon is whether libelant had actual knowledge, or was chargeable with knowledge, of the charter party between appellee and the Chicago Transportation Company. The term 'Chicago & Milwaukee Line' seems to have been merely descriptive of the class of traffic the Petoskey was engaged in, and did not constitute a name. This was of itself a circumstance calculated to raise inquiry. Any effort on the part of libelant to ascertain why the owner of the steamer should operate under such a phrase would have resulted in the discovery of the charter party and its terms. Nothing short of fatuous confidence in the liability of the steamer for supplies under all conditions can explain the failure to make investigation. Moreover, appellee introduces evidence to the effect that notice of the charter party was mailed to libelant. The latter denies receiving any such letter. While this may not be conclusive proof of notice as against libelant, it relieves appellee from all suspicion of negligence in the premises, if any would otherwise attach. That no evidence is adduced as to notice to other furnishers of supplies is not persuasive, since the item of coal would be the first to be looked after. We deem it clearly shown that whatever negligence there was in the premises was that of libelant.
The attempt to construe the language of the charter party so as to give libelant the benefit of the clause prohibiting liens to accumulate in excess of $1,000 we deem without merit. Appellee was entitled under the agreement to receive the Petoskey free of all liens. The $1,000 clause served its mission when it placed it within the power of appellee to enforce the forfeiture clause. It was evidently placed in the charter party for the benefit of appellee, and not for the solace of those furnishing supplies without reasonable investigation as to responsibility. It is difficult to understand how an owner could protect himself against parties furnishing supplies without using due diligence to ascertain the facts, unless it be required that he do as appellant suggests: Paint a notice upon the vessel-- a method which does not commend itself to our judgment. This opinion is not at variance with that of Judge Putnam in the case of The Surprise, 129 F. 873, 64 C.C.A. 309, since here we find that libelant was put upon notice of the charter party.
The finding of the District Court is affirmed.
NOTE.-- The following is the opinion of Quarles, District Judge, in the court below:
QUARLES, District Judge. This is a libel of the steamer Petoskey to recover for coal furnished to said steamer by said libelant at Milwaukee, a foreign port, between the 6th day of August and the 16th day of October, 1906. There is no dispute that the coal was furnished and that the prices charged therefor were reasonable.
It appears that on the 21st day of April, 1906, a charter party was entered into between Dunkley-Williams Company, of Chicago, the owner and present claimant of the steamer Petoskey, and the Chicago Transportation Company, of Chicago, Ill., whereby the latter chartered the steamer from May 1, 1906, to December 10, 1906. By the seventh section of the charter party it was provided that during the life of the charter party the charterer 'shall promptly pay all of the running and operating expenses of the steamer, and shall not permit her to incur debts for amounts constituting a lien upon her for more than a thousand dollars at any one time. ' It was also provided that at the end of the season the steamer should be returned to the owners free and clear of all liens, and that the owners should be saved harmless from any costs or expenses. The charterer operated the steamer, together with the steamer Peerless, under the designation 'Chicago & Milwaukee Line.' This line was operated between Chicago and Milwaukee until October 9th, when the owners resumed possession of the steamer Petoskey, owing to the default of the charterer. The charter party provided for a bond of indemnity to protect the owners and the same was frequently demanded, but never given. The charterers defaulted, and the steamer was subject to $1,500 of liens when returned to the owners.
The evidence shows that the steamer Petoskey came to the dock of the libelant at Milwaukee on the 11th day of May, 1906, and applied for coal to enable her to make her regular trip to Chicago. There was no agreement for any lien on the vessel nor any definite agreement of any kind. Mr. Graham, the city agent of libelant at Milwaukee, was...
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