Phillips v. Houston Nat. Bank, Houston, Tex., 9019.

• Decision Date: 17 January 1940
• Docket Number: No. 9019.,9019.
• Citation: Phillips v. Houston Nat. Bank, Houston, Tex., 108 F.2d 934 (5th Cir. 1940)
• Parties: PHILLIPS v. HOUSTON NAT. BANK, HOUSTON, TEX. In re GULFSTATES S. S. CO., Inc.
• Court: U.S. Court of Appeals — Fifth Circuit

108 F.2d 934 (1940)

PHILLIPS v. HOUSTON NAT. BANK, HOUSTON, TEX. In re GULFSTATES S. S. CO., Inc.

No. 9019.

Circuit Court of Appeals, Fifth Circuit.

January 17, 1940.

J. C. Hutcheson, III., of Houston, Tex., for appellant.

A. Milton Vance and Meyer C. Wagner, both of Houston, Tex., for appellee.

Before FOSTER, SIBLEY, and McCORD, Circuit Judges.

SIBLEY, Circuit Judge.

H. A. Phillips, as trustee in bankruptcy of Gulfstates Steamship Company, complains by this appeal that the referee, in allowing a claim against the bankrupt's estate of Houston National Bank for approximately $40,000, wrongly gave the claim a lien on a fund of $15,000 in the hands of the trustee which arose from the settlement of a charter party which the bankrupt held at the date of bankruptcy on a vessel owned by Anglo-Canadian Shipping Company. The district judge approved the referee's findings of fact and his conclusions of law.

The main facts found are that the bankrupt was engaged in chartering vessels, getting cargoes for them, and seeking profits from the freights earned. On Feb. 5, 1937, the charter party in question was executed on the vessel Beljeanne, the vessel to be delivered at an English port, and charterer to pay for fuel oil used thereafter. The vessel was delivered accordingly on June 20, 1937, and from the proceeds of a loan of $40,000 made by the Houston National Bank on June 15 for the purpose, the charterer paid $3,703 for fuel oil and $15,000 advance charter hire till July 25. The vessel then sailed for the port of Houston, where a cargo of scrap steel and iron was in contemplation to be carried to Japan. The note given the Bank for the $40,000 stated on its face that as security there had been delivered and pledged "Assignment of freight M/S Beljeanne". Accompanying the note was a lengthy formal document which recited the charter party on the Beljeanne, and to secure the indebtedness to the Bank it "transferred and assigned to the Bank, its successor or assigns, all freights charges and monies of any kind or character collected by or accruing to, or which may hereafter be collected by or accrue to the charterer by virtue of said charter party and the rights acquired by the charterer thereunder, and by virtue of any freight or cargo carried by said vessel upon the voyage contracted for." The accruing liens on freight and cargo were also assigned. If a cargo was not provided by charterer or on failure otherwise to comply with the charter obligations, the Bank was given the option but was under no obligation to assume to carry out the charter party itself. The president of the charterer was named a trustee to collect and pay over to the Bank the "monies assigned hereby." On July 3, 1937, the charterer contracted for the cargo, to be shipped at Houston. On July 10, 1937, occurred the bankruptcy of the charterer, and Phillips became receiver and later trustee. Although the charter hire was paid to July 25 the ship's owners did not wish her to enter the jurisdiction of the bankruptcy court and become entangled there, and negotiations were undertaken on July 13. The bankruptcy court had not the means to carry out the charter. The receiver approached the Bank to see if it would advance necessary additional funds, estimated to be about $35,000 or $40,000, and it declined. The plan then was evolved that the vessel should be released to the owners on their repaying $15,000, and the cargo contract should be cancelled, leaving the way open for the owners to take their vessel and contract anew for the cargo. This was done under orders of the bankruptcy court on July 14, and the $15,000 was paid into court. The referee found, the judge approved, and there is evidence to support their finding, that the Bank agreed to the settlement with the vessel's owners but would fight out its rights in the $15,000 before the referee. As above stated the referee and judge held the Bank should be given a lien on this fund.

We agree. The assignment of the charter party was not a transfer of the entire contract to the Bank...