THE AS SHERMAN

• Decision Date: 07 November 1930
• Citation: 51 F.2d 782
• Parties: THE A. S. SHERMAN.
• Court: U.S. District Court — Northern District of New York

51 F.2d 782 (1930)

THE A. S. SHERMAN.

District Court, N. D. New York.

November 7, 1930.

George E. O'Connor, of Waterford, N. Y., for libelant.

James Farrell, of Troy, N. Y., for respondent.

COOPER, District Judge.

This is a libel filed May 2, 1928, against the steam tug A. S. Sherman for coal delivered to it at Waterford, N. Y., in September, October, and November, 1927.

On July 16, 1927, the tug was chartered by its owners under a bare boat charter to the Independent Barge Canal Towing Company of Buffalo for the season of 1927 which ended about December 20th. The charter was brief and simple and required the charterer to pay all operating expenses and to furnish all fuel, supplies, wages of crew, etc.

The word "lien" was not mentioned in the charter, and there were no words therein forbidding the charterer from procuring necessaries on the credit of the tug.

Captain Herman Frantz, a half owner of the tug, was employed by the charterers as captain or master at a wage independent of the charter hire.

At or about the time of the charter, Captain Frantz told Frank M. Crane, the president of the libelant, the Peck Coal Company of Cohoes, N. Y., with whom he was well acquainted and had had many business transactions, that he had chartered the tug as a bare boat to the Independent Towing Company, and that he (Frantz) was employed by the charterer as captain of the tug. Frantz further said that the Peck Company was to coal the tug and send the bills therefor to the charterer at its main office at Buffalo. No further inquiry about the charter was ever made by Crane.

Crane testified that he told Frantz that he would only sell the coal on the credit of the tug. This Frantz flatly denies. Eighteen deliveries of coal were made to the tug between July 16th and November 25th. The bills were all sent to the charterer, and no bills were sent to the owners.

The charterers paid for eight deliveries of coal on July 16, 21, 26, August 2, 4, 6, 9, and 19.

For coal delivered on ten occasions after August no payment has been made and libel is for the value of these ten deliveries made on September 1, 5, 9, 19, 26, October 6, 22, November 1, 17, 25, amounting to $1,114.75.

It is undisputed that coal in the amount specified in the libel was actually delivered to the tug, that the price indicated in the libel is the agreed or market price, that such price remains unpaid, and that the coal was necessary to the operation of the tug.

The Peck Coal Company furnished coal to other tugs operated by the Independent Company prior to and after July 16th, but whether on the credit of the boats or the charterer does not appear by the evidence, but the bills were likewise sent to the charterer and all amounts paid therefor were paid by the charterer as far as appears by the record.

There is a sharp issue of fact as to whether these 18 deliveries of coal were made on the order of Captain Frantz, the master of the tug, or of Frank H. Godfrey, the agent of the charterer at Waterford, who was in charge of the movement of this and other tugs of the charterer and one of whose duties was to procure fuel and supplies for the tugs. Crane and his bookkeeper, Miss Anna A. O'Connor, testify that Captain Frantz personally ordered all the coal, usually over the telephone. Godfrey, no longer in the employ of the charterer, which because of financial difficulties ceased business in 1927, who was also well known to Crane, testified that he personally ordered the coal over the phone, except possibly on one or two occasions when he believes his wife ordered it. His wife was not sworn. Frantz testified positively that he ordered no coal after the charter was entered into, and that he frequently heard Godfrey order the coal over the phone.

Slips were made out in triplicate with each delivery of coal. Two accompanied the load. One was signed by the person in charge of the boat and returned to the coal office. One was delivered with the coal to the person in charge of the tug, and the third slip remained in the coal office. Most of the signed delivery slips were signed by Captain Frantz himself. All of the signed slips for delivery of coal in July and August bore the words "Tug Sherman and owners." None of the signed delivery slips dated after August originally bore the words "and owners," but contained merely the words "Tug Sherman." After the return of the signed delivery slips to the coal office, Crane added the words "and owners" on the signed slips for September 1, 5, 9, 18, 26, and October 6. But these words "and owners" were not on the duplicate slips delivered with the coal to the tug, and, of course, never came to the attention of claimants. Crane went to a hospital October 16, 1927, and had no further personal connection with any of the transactions.

Bills were sent to the charterer shortly after each shipment and each of these bills for delivery made in July and August contained the words "Tug Sherman and owners," but these bills never came to the attention of Captain Frantz or the other owner of the tug.

Some time in August, according to Crane, Frantz objected to the tug being held for the coal, but he signed the slip. Frantz does not deny objecting to the tug being held liable for the coal, but denies that he ever saw the words "and owners" on any slips.

About September 1, 1927 or shortly thereafter, perhaps September 6 or 7, Frantz and Crane had a further talk about the charterer's financial responsibility which has a bearing chiefly on the subject of waiver and is referred to under that subject.

The libelants sent statements to the charterers on the first of each month for coal supplied to the various tugs during the preceding month, among which were included the coal delivered to the Sherman. The bills for coal delivery on September 1, 5, and 18 contained the words "Tug Sherman and owners." All the remainder of the bills read "Tug Sherman" only. The monthly bills dated December 1, 1927 and January 1, 1928, contained a rubber stamp request for payment.

No further communications passed between the libelants and either the charterers or owners, and on May 2, 1928, the boat was taken under the libel and released on bond.

The claimant-respondent contends that no lien lies, for the reason that the coal was not ordered by the master of the tug, but by an agent of the charterer; that, even if ordered by the master, he had no authority to bind the vessel, and that, in any event, if any lien did arise, the libelant waived the lien and held only the charterer for the coal. The statute controlling here is found in sections 971-974, 46 USCA.

Section 971 declares that a maritime lien shall exist for necessaries furnished to the ship.

Sections 972 and 973 read as follows:

"§ 972. Persons authorized to procure repairs, supplies, and necessaries. The following persons shall be presumed to have authority from the owner to procure repairs, supplies, towage, use of dry dock or marine railway, and other necessaries for the vessel: The managing owner, ship's husband, master, or any person to whom the management of the vessel at the port of supply is intrusted. No person tortiously or unlawfully in possession or charge of a vessel shall have authority to bind the vessel.

"§ 973. Notice to person furnishing repairs, supplies, and necessaries. The officers and agents of a vessel specified in subsection Q,^* section 972, shall be taken to include such officers and agents when appointed by a charterer, by an owner pro hac vice, or by an agreed purchaser in possession of the vessel; but nothing in this chapter shall be construed to confer a lien when the furnisher knew, or by exercise of reasonable diligence could have ascertained, that because of the terms of a charter party, agreement for sale of the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor."

The libellant unquestionably knew that the tug Sherman was under charter to the Independent Towing Company. Having been told that it was a bare boat charter, and having made no further inquiry as to the terms thereof, it must be held that the libelant is bound by the terms of the charter, which he might have ascertained by due inquiry. U. S. v. Carver, 260 U. S. 482, 43 S. Ct. 181, 67 L. Ed. 361.

The primary question is whether, by the terms of the charter, the libelant had a maritime lien under the statute for the coal furnished to this tug, whether the coal was ordered by the master of the tug or by an agent of the charterer claimed to have the management of the tug in the port at which the coal was obtained and to be one of the ship's representatives named in sections 972 and 973 of the statute.

The charter provided that the charterer should procure coal and other supplies. There is no mention of lien in the charter and no prohibition against a lien and no provision for the removal of liens by the charterer. As far as the charter is concerned, the duty was on the charterer to procure and pay for the coal for the tug. If the charter provision that the charterer should furnish the coal is equivalent to a prohibition against the charterer doing anything by which a lien could be imposed on the tug or is equivalent to a withholding of power to bind the boat, the claimant must prevail. But if it is not such equivalent, the libelant should prevail unless it has waived the lien which is discussed later herein.

The authorities are not agreed on the application of the statute to such a charter as the one in suit. The better authorities, however, seem to hold that one who furnishes necessaries to the tug ordered by one of the persons named in the statute has a maritime lien on the boat unless the charter, by the terms of which he is bound, if he fails to make inquiry, definitely and affirmatively prohibits the authority of the charterer to procure necessaries upon the credit of the boat. The South Coast, 251...