Sasportes v. M/V Sol de Copacabana

• Decision Date: 16 October 1978
• Docket Number: No. 76-2577,STAR-KIST,76-2577
• Citation: 581 F.2d 1204
• Parties: Julien Andre SASPORTES, Plaintiff, v. M/V SOL DE COPACABANA, her engines etc. and Navexport, S.A., Defendant, Banco De Credito Industrial, S.A., Plaintiff.FOODS, INC., a Foreign Corp., Plaintiff-Appellant, v. M/V SOL DE COPACABANA, her engines, tackle, boilers appurtenances, etc., Defendants, Banco De Credito Industrial, S.A., Plaintiff-Appellee. BANCO DE CREDITO INDUSTRIAL, S.A., Plaintiff, v. M/V SOL DE COPACABANA, her engines, tackle, etc. and Navexport, S.A., Defendant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1204

581 F.2d 1204

Julien Andre SASPORTES, Plaintiff, v. M/V SOL DE COPACABANA, her engines etc. and Navexport, S.A., Defendant, Banco De Credito Industrial, S.A., Plaintiff.

STAR-KIST FOODS, INC., a Foreign Corp., Plaintiff-Appellant, v. M/V SOL DE COPACABANA, her engines, tackle, boilers

appurtenances, etc., Defendants,

Banco De Credito Industrial, S.A., Plaintiff-Appellee.

BANCO DE CREDITO INDUSTRIAL, S.A., Plaintiff, v. M/V SOL DE COPACABANA, her engines, tackle, etc. and Navexport, S.A., Defendant.

No. 76-2577.

United States Court of Appeals Fifth Circuit.

Oct. 16, 1978.

James H. Roussel, New Orleans, La., Roger W. Rosendahl, Robert E. Coppolla, Los Angeles, Cal., for plaintiff.

Carlos Arosemena, Panama, T. C. W. Ellis, New Orleans, La., for defendant.

Appeal from the United States District Court for the District of the Canal Zone.

Before COWEN, ^* Senior Judge and GOLDBERG and AINSWORTH, Circuit Judges.

GOLDBERG, Circuit Judge:

The M/V Sol de Copacabana was a Spanish tuna-fishing vessel owned by the Spanish corporation Navexport, S.A. It ran upon hard times and was caught in its creditors' nets and sold at judicial sale. Here two creditors compete for a portion of the proceeds of the sale. Appellee Banco de Credito Industrial, S.A., a Spanish corporation, holds a preferred ship mortgage against the Copacabana. Appellant Star-Kist Foods, Inc., claims to hold a maritime lien against the ship under the Federal Maritime Lien Act, 46 U.S.C. §§ 971-974, for advances it made to and on behalf of the vessel. Because the Copacabana is a foreign ship, the maritime lien at least to the extent it arose out of expenditures made in the United States would take priority over the preferred ship mortgage. See 46 U.S.C. § 951. But the district court below found that Star-Kist's relationship to Navexport, the Copacabana's owner, amounted to a joint venture. This would disqualify Star-Kist from being a maritime lienor and put it in a position inferior to Banco de Credito. Star-Kist appeals. We reverse.

Star-Kist Foods is, among other things, a tuna canning company. From December 26, 1971, through March 12, 1975, it repeatedly advanced money to the Copacabana and on its behalf. Of these expenses, $168,045.84 has not been repaid by Navexport and Star-Kist claims that amount plus interest, or $214,968.86. Meanwhile, on January 23, 1974, Navexport gave Banco de Credito a mortgage of approximately $2,488,100 on the Copacabana. On March 21, 1975, Julien Andre Sasportes, a creditor of Navexport who is not a party to this appeal, brought an action in the United States District Court for the Canal Zone. He sued Navexport In personam and the Copacabana In rem. On June 4, 1975, appellant Star-Kist brought suit in the same court, and on July 17 appellee Banco de Credito did likewise. That court entered default judgments against Navexport and the Copacabana. The Copacabana was sold at judicial sale on July 21, 1975, for $295,000. These proceeds were paid into the registry of the federal district court pending its decision on the order of priority among the creditors.

On April 21, 1976, that court held, Inter alia, ¹ that Banco de Credito's mortgage was a preferred ship mortgage under 46 U.S.C. § 951. Because the Copacabana was a foreign vessel, however, such mortgages are subordinate to "maritime liens for repairs, supplies . . . or other necessaries, performed or supplied in the United States." 46 U.S.C. § 951. Star-Kist asserted such a lien. The bulk of its advances were made in the United States and went to seamen for their wages and to the suppliers of necessaries, ² both of whom are entitled to maritime liens. See 46 U.S.C. § 971. ³ A creditor who advances money specifically for the purpose of discharging a maritime lien is subrogated to the lienor's rights. Crustacean Transportation Corp. v. Atalanta Trading Corp., 369 F.2d 656, 659-60 (5th Cir. 1969). See generally G. Gilmore and C. Black, The Law of Admiralty (1957) § 9-21. But an owner, part owner, or joint venturer cannot hold a maritime lien. See id., § 9-20 at 513; Fathom Expeditions, Inc., v. M/T Gavrion, 402 F.Supp. 390, 397 (M.D.Fla.1975); The Odysseus III, 77 F.Supp. 297, 298-99 (S.D.Fla.1948). The district court ruled that Star-Kist could not claim a maritime lien because it had been engaged in a "joint venture" with Navexport.

The district court based this conclusion on two contracts which Star-Kist ⁴ and Navexport had signed. The first of these, dated October 17, 1971, required Star-Kist to buy and, with one exception, obligated Navexport to sell the Copacabana's entire catch at a price specified in the contract. The specified price was, roughly, either a price agreed upon between Star-Kist and a majority of United States tuna vessels or, if no agreement was reached, the market price. ⁵ The one exception was that if Navexport were able to obtain a higher price by selling the fish outside the United States, Star-Kist could compel Navexport to sell to it only by paying the contract price plus half the difference between the contract price and the higher foreign sale price. If Star-Kist were unwilling to pay the higher price, and Navexport made the sale elsewhere, Navexport would have to pay Star-Kist a penalty of half the difference between the two prices. The second contract went into effect on January 1, 1973. It was similar to the first contract in most respects. ⁶ Star-Kist argues that the district court erred when it held that these agreements created a joint venture.

Courts and commentators have identified several characteristics of joint ventures. The parties' intentions are important. Misco-United Supply, Inc., v. Petroleum Corp., 462 F.2d 75, 79 (5th Cir. 1972) (Tex. law). Joint ventures involve joint control or the joint right of control, See, e. g., Detachable Bit Co. v. Timken Roller Bearing Co., 133 F.2d 632, 635 (6th Cir. 1943), and joint proprietary interests in the subject matter of the venture, See, e. g., Swann v. Ashton, 330 F.2d 995, 996 (10th Cir. 1964) (Colo. law). Both venturers share in the profits, See, e. g., Beavers v. West Penn Power Co., 436 F.2d 869, 873 (3d Cir. 1971) (Pa. law), and both have a duty to share in the losses, See Pan American Airways, Inc., v. Quilez, 154 F.2d 496, 496 (5th Cir. 1946). But of course these elements cannot be applied mechanically. No one aspect of the relationship is decisive. See Hyman v. Regenstein, 258 F.2d 502, 513 (5th Cir. 1958), Cert. denied 359 U.S. 913, 79 S.Ct. 589, 3 L.Ed.2d 575 (1959). Many business dealings other than joint ventures might involve, for example, joint property holdings. And although a joint right of control is one of the elements, it is commonplace for one joint venturer to delegate control of operations entirely to the other, creating the appearance that there is no shared control. See, e. g. Shell Oil Co. v. Prestidge, 249 F.2d 413, 416 (9th Cir. 1957). On the other hand, large creditors may exert some control over a business even when they are unquestionably not joint venturers. Finally, the definition of "joint venture" will vary with the context. If we were deciding whether two parties are jointly liable in tort because they are joint venturers, ⁷ for example, we might well use a different definition from the one we should use here.

Joint venturers cannot hold maritime liens because they are not " strangers to the vessel," P.T. Perusahaan Pelayaran Samudera Trikora Lloyd v. Salzachtal, 373 F.Supp. 267, 275 (E.D.N.Y.1974), but rather occupy a position akin to that of the vessel's owner. Perhaps the best example of a joint venturer would be a party whose prospective gains resemble the owner's, who has the owner's prerogatives, and who might otherwise appear to investigating creditors to be a part owner. Such a party may, of course, have an In personam contract claim against the true owner. But when the seas get rough one who looks, thinks, acts, and profits like an owner cannot retreat to the relatively safe harbor of a maritime lienor, who of course has a claim against the ship itself.

Certain aspects of the dealings between Star-Kist and Navexport may suggest that Star-Kist was such a joint venturer. Their relationship lasted for some time and involved quite frequent dealings. Star-Kist advanced funds for a few other purposes besides the provision of necessaries. ⁸ More crucial features were lacking, however. First, we disagree with the district court's conclusion that Star-Kist participated in the Copacabana's profits in any important sense. Had the contract specified an unusually low price, for example, we might suspect some sort of profit sharing. But it is apparent that sales at the actual contract price the negotiated or market price would not as a general matter divide the ship's profits between Star-Kist and Navexport. The provisions allowing Star-Kist to compel the Copacabana's sale or (in the first contract) to extract a penalty are different. They did have the effect of sharing a portion of the Copacabana's profits the portion attributable to the extra revenue gained by selling above the contract price between Navexport and Star-Kist. But this is far from a general agreement to share profits. These provisions operated only when the Copacabana's catch could command a price higher than the contract price. Only a portion of the profits would have been shared in any event. Most importantly, these provisions seem clearly designed to serve another purpose than profit sharing; indeed if they were intended for that purpose they were very poorly designed. By contrast, they are the natural result of bargaining between a canner who wishes to ensure an adequate supply of fish at a reasonably predictable price, on the one hand, and a fishing company which wants a guaranteed market but also wants some flexibility to sell at a higher price if one is available. Similarly, Star-Kist apparently exerted no significant control over the Copacabana beyond that...