Payne v. SS Tropic Breeze

• Decision Date: 11 March 1970
• Docket Number: No. 7313.,7313.
• Parties: Richard A. PAYNE et al., Plaintiffs, v. SS TROPIC BREEZE, her engines, boilers, furniture, apparel, appliances, appurtenances, equipment, etc., Defendant, and National Western Life Insurance Company, Intervenor-Appellant, and Apostolos Samadjopoulos, Intervenor-Appellee.
• Court: U.S. Court of Appeals — First Circuit

423 F.2d 236 (1970)

Richard A. PAYNE et al., Plaintiffs, v. SS TROPIC BREEZE, her engines, boilers, furniture, apparel, appliances, appurtenances, equipment, etc., Defendant, and National Western Life Insurance Company, Intervenor-Appellant, and Apostolos Samadjopoulos, Intervenor-Appellee.

No. 7313.

United States Court of Appeals, First Circuit.

March 11, 1970.

Richard C. Lewis, Miami Beach, Fla., for appellant.

Gustavo A. Gelpi, San Juan, P. R., with whom Harvey B. Nachman and Nachman, Feldstein, Laffitte & Smith, San Juan, P. R., were on brief, for Apostolos Samadjopoulos, appellee.

Before ALDRICH, Chief Judge, McENTEE and COFFIN, Circuit Judges.

McENTEE, Circuit Judge.

The SS TROPIC BREEZE, a vessel of Liberian registry, was libeled in rem in Puerto Rico by members of its crew asserting claims for wages. The Master, the present appellee, was permitted to intervene by the district court¹ in order to assert various claims against the vessel.² The owners of the vessel did not appear and the court ordered the sale of the ship. At that point, National Western Life Insurance Company (hereinafter National), an intervenor and assignee of a mortgage on the vessel, entered into a stipulation with the other claimants postponing the sale, agreeing to satisfy all claims which the court found had priority over its mortgage, and undertaking to pay into court funds sufficient to cover the Marshal's expenses and the crew's wage and penalty claims. The district court held that all of the Master's claims were superior to the mortgage and entered judgment against National for $10,944.85, plus interest.³ National appeals.

Before dealing with the merits, we must dispose of the Master's contention that National waived its right to appeal when it entered into the stipulation postponing the sale. The language of the stipulation relied upon as constituting the waiver is as follows:

"Intervenor National Western Life Insurance Company heerby agrees to deposit into the Registry of the Court the aggregate amount of all such other claims that the Court may find as having priority over the claim filed, as mortgagee, by said Intervenor, such deposit to be made within five (5) days after the Court\'s determination."

The Master contends that the undertaking to deposit the aggregate of prior claims within five days of the court's determination, without any mention of a delay pending appeal, indicates an intention that no appeal be taken. He draws support for this reading from a subsequent paragraph of the stipulation which explicitly noted that one of the intervenors, not a party to this appeal, signed without prejudice to an appeal from the order of sale, pending at the time of the agreement.

Assuming that an agreement to waive an appeal is enforceable,⁴ we cannot agree that this stipulation constitutes such an agreement. To begin with, the language relied upon does not speak directly to the subject of appeals. It merely provides that the money be paid into court. No provision calling for the immediate distribution of the funds to the claimants is included. Therefore, there is nothing in the quoted paragraph, standing alone, to support the Master's reading. The presence of the paragraph reserving rights under a pending appeal by another intervenor does not alter our conclusion. The appeal referred to in that instance was pending at the time the stipulation was agreed to. There is no reason to infer that appeals on other issues, as to which there had been no rulings at the time, were intended to be waived. The intention to waive the right to appeal must appear clearly from the stipulation.⁵ That condition is not satisfied here.

This brings us to the merits. We pause, however, to deal with the issue of the law governing priorities among maritime liens and mortgages.

In casting their argument on this point in traditional choice-of-law terms, the parties seem to have misapprehended the nature of the question. The Ship Mortgage Act⁶ establishes the relative priorities of foreign ship mortgages and other maritime liens. It is axiomatic that Congress has the power "to condition access to our ports by foreign-owned vessels upon submission" to our law, substantive and procedural. Lauritzen v. Larsen, 345 U.S. 571, 592, 73 S.Ct. 921, 933, 97 L.Ed. 1254 (1953). The crux of the matter, then, is whether Congress so intended the priority provisions of the Ship Mortgage Act. We conclude that it did.

Two factors are determinative of this result. The Act and its history leaves little room for doubt that Congress intended to have the Act apply to all foreclosures of foreign ship mortgages in American courts.⁷ Moreover, such a reading of the statute is entirely consistent with general principles of maritime law — an important consideration under Lauritzen — because priorities among maritime liens have traditionally been regarded as governed by the law of the forum.⁸ We therefore see no obstacle to the application of the Act in this case.

The structure of the Ship Mortgage Act is as follows: a mortgage which meets certain statutory criteria⁹ is deemed a "preferred mortgage" and constitutes a lien upon the vessel, enforceable in rem, and superior to all claims against the vessel except "preferred maritime liens," expenses and fees allowed, and costs taxed by the court. 46 U.S.C. §§ 951, 953(b) (1964). A "preferred maritime lien," insofar as is relevant to this case, is "a lien * * * for wages of the crew of the vessel, * * *" 46 U.S.C. § 953(a) (2) (1964). In addition, the Foreign Ship Mortgage Act subordinates a mortgage on a foreign vessel to "maritime liens for repairs, supplies, towage, use of drydock or maritime railway, or other necessaries, performed or supplied in the United States." 46 U.S.C. § 951, cl. 2 (1964). In order to prevail, therefore, the Master must bring each of his claims within one of three categories: (1) a lien "for wages of the crew of the vessel"; (2) "expenses and fees allowed and costs taxed by the court"; or (3) a lien "for repairs, supplies, * * * or other necessaries, performed or supplied in the United States." We deal with the claims seriatim.

Post-Arrest Expenses

Following the arrest of the vessel, the Master gave the crew $300 from his own funds to buy food, spent an additional $364.20 for airplane fare to enable a number of his crew members to fly to Baltimore, Maryland, to take up other employment, and travelled to New York, with the court's approval, to seek funds from the owners, at a cost of $150. The district court held that the Master's claims for reimbursement for the cost of food and crew member transportation had priority over all other claims, as expenses while the ship was in custodia legis, and allowed the travel expense claim as well. Those rulings were plainly correct.

Expenditures while a ship is in custodia legis do not give rise to maritime liens. However, the Supreme Court has held that a district court, sitting in admiralty, has the equitable power to give priority to claims arising from the administration of property within the court's jurisdiction.¹⁰ This rule is plainly consistent with 46 U.S.C. § 953(b) (2) (1964).¹¹

Travel Expenses

The Master also claims $150 for the expense incurred by him in travelling to New York in his first attempt to secure funds from the owner, which took place prior to the seizure of the vessel. In order to prevail on this item, all that need be shown is that the travel expenses were "other necessaries" under § 951,¹² as the Master's authority to subject the vessel to such a lien is not in dispute.¹³

In this connection, it is helpful to consider the background of the lien for necessaries in the general maritime law, as it antedated the passage of the statutory provisions in question by many years. The basic rationale has been well stated as follows:

"It is usually for the advantage of all parties having an interest in a ship, whether such interest be in the nature of ownership or security, that she should be actively engaged in commerce and not left to rot in port. But to continue in active employment she must have supplies and services. To obtain them she must have credit. Admiralty law in most countries secures this for her by implying a maritime lien in favor of those who furnish such necessaries * * *." Note, What Law Governs Maritime Liens, supra n. 8, at 356-57; accord, The J. E. Rumbell, 148 U.S. 1, 13 S.Ct. 498, 37 L.Ed. 345 (1893). The St. Jago de Cuba, 22 U.S. (9 Wheat.) 409, 6 L.Ed. 122 (1824)

In 1910, Congress passed the Federal Maritime Lien Act, 46 U.S.C. §§ 971-975 (1964), which conferred a maritime lien for "repairs, supplies, * * * or other necessaries * * *." — precisely the same language later employed in § 951. In construing that Act, courts often limited "other necessaries" to items ejusdem generis the preceding specific objects of liens — repairs, supplies, et cetera.¹⁴ Over the years, however, the construction of "other necessaries" has broadened to the point where, according to one commentator, it includes almost any goods or services which are convenient or useful to the vessel.¹⁵

We think that a broad interpretation is more consistent with the purpose of the Act than the earlier, narrow approach. The principal concern is to keep the ship active, thereby facilitating the flow of commerce and protecting the interests of the owners and secured parties. The determination of what items constitute "other necessaries" must be made in light of this consideration. The appropriate test, therefore, is whether the goods or services in question were necessary to the continued operation of the vessel.

Measured by this standard, the Master's trip to secure funds, in the circumstances of this case, must be deemed a necessary. The TROPIC BREEZE was under an imminent threat of being arrested on the libel of its crew. An arrest promised to, and in fact did, terminate the voyage and jeopardize both the owner's and mortgagee's interests....