Saint John Marine Co. v. U.S.

• Decision Date: 05 August 1996
• Docket Number: No. 1317,D,1317
• Citation: 92 F.3d 39
• Parties: SAINT JOHN MARINE CO., Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant. ocket 95-6247.
• Court: U.S. Court of Appeals — Second Circuit

Page 39

92 F.3d 39

1996 A.M.C. 2894

SAINT JOHN MARINE CO., Plaintiff-Appellee, v. UNITED STATES of America, Defendant-Appellant.

No. 1317, Docket 95-6247.

United States Court of Appeals Second Circuit.

Argued April 4, 1996.

Decided Aug. 5, 1996.

Jack S. Rockafellow, United States Department of Justice, New York City (Frank W. Hunger, Assistant Attorney General, Mary Jo White, United States Attorney, Janis G. Schulmeisters, Attorney in Charge, Torts Branch, Civil Division, United States Department of Justice, New York City, of counsel), for Defendant-Appellant.

John C. Koster, New York City (Catherine N. Niarchos, Healy & Baillie, New York City, of counsel), for Plaintiff-Appellee.

Before WINTER, JACOBS, and CABRANES, Circuit Judges.

JACOBS, Circuit Judge:

Plaintiff Saint John Marine Co., owner of the vessel M/V Saint John, entered into a time charter party with Afram Lines (International) Inc., which in turn entered into a subvoyage charter party with the Agency for International Development, an agency of the United States Government. The time charter party included a common provision that secures the charter hire by giving the shipowner a lien on the subfreights owed to Afram. It is stipulated that the shipowner gave notice to the Government that Afram had failed to pay an amount due on the charter hire and that the shipowner had a contractual lien on subfreights that the Government had not yet paid over to Afram. The Government has not disputed that a private party in its shoes would be liable to Saint John Marine. The question presented The Government appeals from a final judgment entered by the United States District Court for the Southern District of New York (Kram, J.) in favor of Saint John Marine. Although we agree with the Government that the Anti-Assignment Act applies to claims asserted under the SIAA, we affirm the judgment on the ground that the Anti-Assignment Act does not affect assignments effected by operation of law.

is whether, in these circumstances, the shipowner can enforce its contractual lien against the Government. The Government argues that the lien operates as an assignment of a claim against the Government and is therefore rendered unenforceable by the Assignment of Claims Act, 31 U.S.C. § 3727 (the "Anti-Assignment Act"). Saint John Marine argues that the Anti-Assignment Act does not affect claims asserted (as this claim is asserted) under the Suits in Admiralty Act ("SIAA"), 46 U.S.C.App. §§ 741-752.

BACKGROUND

A. Facts.

This case was submitted for trial on a set of stipulated facts. With certain interpolations, the facts set forth here are drawn virtually word for word from that stipulation.

Saint John Marine, a private Greek corporation, is the owner of the M/V Saint John, a general cargo vessel. Saint John Marine time chartered the vessel to Afram Lines (International) Inc. ("Afram"), a private corporation, on September 21, 1990. The terms of the time charter at clause 18 included a provision for Saint John Marine's lien on subfreights as follows: ¹

That the Owners shall have a lien upon all cargos, and all subfreights and subhires for any amounts due under the charter, including general average contributions and the Charterers to have a lien on the ship for all monies paid in advance and not earned, and any overpaid hire or excess deposit to be returned at once.

(Emphasis added.)

Also on September 21, 1990, the vessel was subvoyage chartered by Afram to the Agency for International Development ("AID"), which is an agency of the United States Government. While on time charter to Afram and on subvoyage charter to AID, the vessel loaded cargo at Lake Charles and New Orleans, Louisiana and at Houston, Texas for discharge at Larnica, Cyprus and at Amman, Jordan. The Saint John carried a bulk cargo of rice, flour and vegetable oil owned by the United States Government.

On November 28, 1990, AID arranged to pay subfreights due under the subvoyage charter party by authorizing the United States Treasury to pay Afram via Den norske Bank the amount of $1,860,324.09. Within the following two days, the Treasury transferred the subfreights to Den norske Bank for credit to Afram.

While the vessel was on time charter to Afram and on subvoyage charter to AID, Afram failed to pay Saint John Marine amounts due under the Saint John/Afram time charter party totalling $76,415.68. On December 19, 1990, a firm called ConsultMarine, acting as consultant for Saint John Marine with respect to the time charter party, placed AID on notice by telex of Afram's failure to pay amounts due under the Saint John Marine/Afram time charter, and of Saint John Marine's lien on subfreights. The telex, which was received by AID on December 19, 1990, stated in part:

Unfortunately, Afram ha[s] failed to pay to Owners monies amounting to USD 76,415.68. Owners are therefore obliged to exercise their rights of lien in respect of and over all and any freights or subfreights including any sums that may still be payable by you. You are therefore hereby requested and directed to refrain from making any payment of such monies, but, rather, to hold these to the account of AID responded by telex that same day:

the Owners. Should you ignore this notice and make payment I must advise that you will be at risk of having to make such payment twice.

A.I.D. has already approved and processed for payment to Afram International Inc. all freight vouchers or money owed them under this voyage.

(Emphasis added.) Since it appeared from this response that payment to Afram could still be stopped, ConsultMarine sent a further telex to AID on December 20, 1990:

[I]f funds have not yet actually been remitted then any payment arrangements should immediately be frozen as any payment effected after y[ou]r receipt of notice of lien would be in breach of that notice and you would be at risk of having to pay twice.

AID responded to ConsultMarine's December 20 telex by a telex of January 25, 1991:

As advised 19 Dec all freight due Afram Lines had been paid by A.I.D. as of that date.

AID's telex of January 25, 1991 was in error. All subfreights due Afram from AID had not been paid as of "19 Dec"; a second subfreights payment of $213,270 was paid by AID to Afram under the subvoyage charter party more than a week after AID had received the notice of lien. After receipt of ConsultMarine's telex, AID made no attempt to stop the payment of subfreights to Afram, and, on December 31, 1990, authorized the Treasury to pay to Afram the second subfreights installment of $213,270. Within two days of that authorization, the Treasury transferred the subfreights to Den norske Bank for further credit to Afram.

The $76,415.68 due Saint John Marine from Afram under the time charter party remained unpaid, and became the subject of this litigation. With the exception of the December 19, 1990 ConsultMarine telex, there is no evidence that, prior to December 31, 1990, AID was aware of the terms of the charter party between Saint John Marine and Afram. In its communications to AID, ConsultMarine represented that it acted on behalf of the vessel "owners," but at no time did ConsultMarine name Saint John Marine.

There was no provision in the Afram/AID subvoyage charter party with respect to the assignability of the subfreights payable by AID to Afram upon delivery of the government-owned cargo.

B. Litigation.

On July 17, 1991, Saint John Marine commenced this action against the Government, seeking $76,415.68, plus interest from December 19, 1990. ² The Government moved to dismiss on several procedural and jurisdictional grounds. In a memorandum opinion and order dated June 22, 1994, the district court denied the Government's motion, as follows.

First, the Government argued that the United States never consented to be sued on this claim because (1) Saint John Marine is seeking to "arrest" the Government's subfreight payments; (2) the subfreight payments for this purpose stand in the place of cargo; and (3) the SIAA provides in part that "no cargo owned or possessed by the United States ... shall ..., in view of the provision herein made for a libel in personam, be subject to arrest or seizure by judicial process in the United States or its possessions." 46 U.S.C.App. § 741. The district court held that the Saint John Marine claim is asserted in personam and may be presented against the United States under the provision of the SIAA that permits "any appropriate nonjury proceeding in personam" against the United States where such a suit could be asserted against the private owner or operator of a vessel or against the private owner or possessor of cargo. 46 U.S.C.App. § 742. The Government does not renew this argument on appeal. However, since this issue potentially affects jurisdiction, we address it below.

Second, the Government characterized this claim as in effect a garnishment that, as we held in Chilean Line Inc. v. United States, 344 F.2d 757, 762 (2d Cir.1965), cannot be asserted under the SIAA. The district court held that the lien asserted by Saint John The district court rejected as well the Government's third argument, that the claim was barred by the discretionary function exception expressed in the language of the Federal Tort Claims Act (the "FTCA"), 28 U.S.C. §§ 1346(b), 2671-2680, and incorporated into the SIAA, see In Re Joint Eastern & Southern Dists. Asbestos Litig., 891 F.2d 31, 35 (2d Cir.1989). The district court held that this exception applies solely to tort claims and does not insulate the Government's decision to disregard Saint John Marine's notice of lien. The Government has not raised this issue on appeal.

Marine constitutes an assignment rather than a garnishment.

Fourth, the Government challenged the venue of the suit, relying on a provision of the SIAA that sets venue in the district in which any plaintiff resides or has its principal place of business in the United States, or in which the vessel or cargo in rem is...