The Conveyor

• Citation: 147 F. 586
• Decision Date: 26 September 1906
• Docket Number: 475.
• Parties: THE CONVEYOR.
• Court: U.S. District Court — District of Indiana

147 F. 586

THE CONVEYOR.

No. 475.

United States District Court, D. Indiana.

September 26, 1906

Iglehart & Taylor, for libelant.

Posey &amp Chappell and Andrew J. Clark, for claimants.

ANDERSON District Judge.

The question raised by the exceptions of the respondents Semonin Farmers' Bank of Uniontown, Ky., and Englebright &amp Jenkins is whether, under the facts alleged in the supplemental and amended libel of Wallace, and the amended and supplemental intervening claims of various seamen and materialmen for wages and supplies, the $2,000 proceeds of an insurance policy on the steamboat now in the custody of the respondent Clark, should be applied by this court to the payment of the balance due on the claims for labor and supplies, after exhausting the fund in the registry of the court derived from the sale of the boat.

After setting up facts establishing the claim for wages, the libel alleges in substance that the steamboat Conveyor was an American vessel whose home port was Evansville, engaged in navigating the Ohio and Green rivers; that the boat was owned by the respondents Semonin and Ott; that prior to the filing of the libel the boat was sunk on the waters of the Kentucky shore of the Ohio river nearly opposite Evansville; that the boat was insured against perils of the river in a solvent insurance company for $4,500, and the loss upon said boat, exclusive of the value of the wreck, was adjusted at the sum of $2,000, which sum was paid by the insurance company to the owners of the boat, Semonin and Ott, who thereupon paid the same to the respondent Andrew J. Clark, pursuant to the terms of an agreement hereinafter referred to. At the time the wreck occurred, the respondents Englebright & Jenkins held a mortgage on the boat for the sum of about $800; and the respondent Farmers' Bank of Uniontown, Kentucky, held a mortgage on said boat for the sum of $1,500; each of said mortgages contained a printed covenant on the part of the owners of the boat that they would insure said boat in a solvent insurance company to be selected and approved by the mortgagee; the policy was made payable to the owners of the boat, and had never been assigned to either of the mortgagees, but at the time the wreck occurred the policy was in the possession of the respondent Farmers' Bank of Uniontown, Ky., who claimed to hold the same as collateral for its loan. It is then alleged that at the time the wreck occurred a controversy arose between the claimants, the mortgagees, and the owners of the boat as to how the insurance money ought to be paid, held and applied; that upon a conference between all the parties in interest it was believed that the wreck of said boat could be raised and economically repaired and its debts paid; that for the purpose of making an effort to raise said boat and repair the same, and to discharge the admiralty liens, and liens for wages, labor, and supplies done and furnished to said boat, as the same are set out in the libel and intervening libels--

'It was then and there agreed by and between the holders of both of said mortgages and said owners of said boat, and the holders of said liens against said vessel, that whatever steps were necessary to be done should be done to procure the payment of the amount of said policy, as the same was or should be finally adjusted and agreed upon, and that when the check issued and paid by the said insurance company upon said loss, * * * should be delivered, the same should be cashed and delivered to and placed in the hands of the respondent Andrew J. Clark, who should hold the same for the uses and purposes following to wit:

'First, to pay the expenses of raising said boat, which were then estimated at $400, which was in fact the expense subsequently incurred for the raising of said boat; second, to pay all of said maritime, labor and supply liens against said boat; third, to repair said boat; and, fourth, the balance remaining, after the payment of the items hereinbefore set out, should be delivered to the said mortgagees.' It is then alleged that pursuant to said agreement the $2,000 insurance money was paid to the owners Semonin and Ott who delivered same to the respondent Clark; that one Robert Hornbrook was employed by the respondent Clark to raise the boat for the agreed price of $400; that the boat was raised by said Hornbrook and brought into the port of Evansville, and thereafter the libel and the intervening claims were filed. It is also alleged that at the time of the filing of the libel by Wallace, suit was pending in the superior court of Vanderburgh county by Englebright & Jenkins for the foreclosure of their mortgage and the respondents Semonin and Ott and Andrew J. Clark were made defendants; that the Farmers' Bank of Uniontown, Ky., intervened in said suit, each of said mortgages claiming that it is entitled to the fund in the hands of said Clark; that said suit is still pending . On November 15, 1905, the libelant filed his petition for the sale of said boat, the terms of which were consented to by the owners of the boat, Semonin and Ott, and by the respondents Clark and Farmers' Bank of Uniontown, Ky., and thereupon an interlocutory order of sale was made by the court, and J. W. Wartmann was appointed special master to make said sale. Among other terms and conditions of said order of sale was the following:

'That said steamboat Conveyor, her tackle, apparel, and furniture, and machinery, be sold * * * for cash for not less than $500, exclusive of any liens on said boat for the raising of her to be ascertained by the master. * * * Said property shall be sold discharged from all liens which shall be transferred to the fund arising from such sale and this order shall be without prejudice to the right of libelant, or any intervening libelant, to assert in this proceeding any claim to the insurance money alleged in the libel to be in the custody of the defendant, Andrew J. Clark.'

In compliance with said order of sale, and after due notice, the boat was sold by the special master to Robert Hornbrook for the sum of $900 cash; and, on December 19, 1905, the master filed his report of sale, which was duly approved by the court. The report of sale contains among other things, the following:

'That said property sold for $900 which amount was a compliance with the order of sale aforesaid, which required said property to bring not less than $500, exclusive of costs of raising said boat to be ascertained by the master. That I ascertained and fixed the cost of such raising in the sum of $400 which was made under an agreement between A. J. Clark and Robert Hornbrook, and thereupon the said sum of $900 was paid to me in cash, and I issued a certificate of purchase to the said Robert Hornbrook, as purchaser, for said sum, subject to the approval of this court, and in said certificate of purchase stated that the said cost of raising said vessel, $400 should be protected out of the proceeds of said sale, but without prejudice to the right of the libelant in said cause to claim that said cost of raising said boat should be paid out of the insurance money in the hands of A. J. Clark. Any controversy in relation thereto to be determined by this court.'

It is then alleged in the supplemental and amended libel that, after the sale of said boat, and after the payment of the $900 proceeds into the registry of the court, 'by inadvertance, and without any knowledge on the part of said libelant, or his counsel, the said sum of $400 has been paid to the said Robert Hornbrook out of the proceeds of the sale of said vessel' instead of requiring him to wait until the question whether the sum should be paid out of the insurance money was determined by this court. The supplemental and amended libel contains the prayer, among other things, that the respondent Andrew J. Clark may be required to pay the said insurance money into the registry of this court, and that the claims of all liens set out in the libels and intervening libels be declared to be prior to the claim of the said several mortgages, in and to the said insurance money, etc. The claims for wages aggregate $536.24; for supplies and materials furnished, $674.96; and the claim of Robert Hornbrook for raising the boat, $400; and for caretaking etc., up to the time of the sale, $130.50; making the grand total of all claims filed, $1,741.70.

It is contended by the libelant that under the facts pleaded the $2,000 insurance money, by agreement of the parties in interest, stands in lieu of the boat to the extent of being liable for the payment in full of the balance due on the claims for labor, supplies and raising the boat, after applying thereto the $900 realized from the sale of the wreck. On the other hand it is claimed by the respondents that the agreement was not executed, since it was found impracticable to repair the boat, and that, therefore, the claim of Hornbrook in the sum of $400 for raising the boat was rightfully paid from the proceeds of sale as a salvage claim prior in equity to the liens of the seamen and materialmen for wages and supplies; that the admiralty court has no jurisdiction to foreclose mortgages, therefore it is without jurisdiction to administer the fund of $2,000 insurance money since the policy was under the terms of the two mortgages issued for the exclusive benefit of the mortgagees and owners; and that the suit pending in the superior court of Vanderburgh county, to which the respondent Clark is a defendant, is a complete bar to any proceedings in admiralty seeking to subject the insurance money to the payment of maritime liens.

It is well settled that liens on a vessel under maritime or state laws have priority over mortgages. The Josephine Spangler (D.C.) 9 F. 773; The Guiding Star (D.C.) 9...