THE DEFIANCE
| Decision Date | 15 November 1924 |
| Citation | 3 F.2d 48 |
| Court | U.S. District Court — Eastern District of North Carolina |
| Parties | THE DEFIANCE. |
Aydlett & Simpson, of Elizabeth City, N. C., for Fairbanks, Morse & Co., Inc.
Winfield A. Worth, of Elizabeth City, N. C., for People's Commercial & Savings Bank.
John Henry Skeen, of Baltimore, Md., for Walter C. Finch.
GRONER, District Judge (sitting for CONNOR, District Judge).
On the 5th of April, 1923, libelant filed its libel against the motor vessel Defiance. Sundry intervening libels were thereafter filed, and on the 15th day of May, 1923, an order of sale was entered, the vessel sold, and the proceeds deposited in court to await the final determination of the cause. A reference was made to a special master, who reported the liens and the order of their priority, and a decree was entered, by agreement of parties, confirming the report as to sundry of the interveners, and payment of their claims has been heretofore made; leaving for determination only the claims of the libelant, Fairbanks, Morse & Co., Walter G. Finch, the People's Commercial & Savings Bank, and F. J. Carpenter, the fund remaining in the registry of the court being insufficient to pay all of these claims in full.
Mrs. Fannie P. Willis was the owner of the Defiance, an auxiliary sailing vessel of under 200 tons burden. Her husband, E. M. Willis, was the vessel's master. The People's Commercial & Savings Bank, hereinafter referred to as the "bank," is the holder of a mortgage on the vessel of date September 15, 1921. Fairbanks, Morse & Co., hereinafter referred to as "Fairbanks," claims a lien for a marine engine furnished to the vessel. Carpenter is the holder of one of the notes originally given on account of the deferred purchase price of the Fairbanks engine; and Finch is the holder of a note made by Capt. Willis and his wife, originally for the sum of $500, but reduced to $400. The main contest is between the bank and Fairbanks. If the latter is entitled to a maritime lien, it is conceded it will have priority over the bank's claim and will absorb the entire fund.
The bank insists that Fairbanks is not entitled to a lien, on the ground that the sale of the engine was upon the credit of the owner, exclusively, and not upon the credit of the boat.
The facts are these: In August, 1922, Willis, master of the Defiance, went to the office of Fairbanks, in Baltimore, for the purpose of purchasing a new engine to be installed in the Defiance; the one then in use having proved unsatisfactory. He was, apparently, without funds, and at his request the agent of Fairbanks joined him in a visit to Washington for a conference with the president of the bank in an effort to induce the latter to advance the necessary money to make the purchase, or to release the bank's then existing mortgage and create a new mortgage in which the bank's debt and the price of the engine would be combined, with a division of the notes. This effort resulted in failure, and subsequently and within a few days Capt. Willis, having raised the sum of $1,500, $500 of which was furnished by the intervener, Finch, arranged with Fairbanks for the purchase of the engine on a basis of $1,500 in cash and the balance in twelve notes, eleven of them for $429.16 each, payable monthly, and one for $500, payable in ninety days; and on August 24th, when the purchase and sale was consummated, a written contract was entered into between Capt. Willis and his wife on the one hand and Fairbanks on the other, which was as follows:
Then followed a description of the engine and parts, after which were lines to be filled in, in order to show the delivery point, which were left blank, and a guaranty of the workmanship; after which the contract provided as follows:
"We propose to furnish the property as specified herein for the sum of seven thousand, one hundred, fifty dollars ($7,150.00), to be paid at the company's office shown herein as follows:
$1,500.00 cash with order.
The conditions were that the title and ownership of the machinery should remain in the company until final payment. The company retained the right to discount or transfer the notes; the title or right of possession in or to the machinery to pass thereby to the holder of the notes. In the event of default in the payment of any of the notes when due, the whole amount should immediately become due, as a result of which the company should have a right to take possession of the machinery and sell the same and after satisfying its debt to pay over any balance remaining to the purchaser. There were also provisions providing that the machinery should retain its character of personal property, however affixed or attached to any building or structure, and a provision requiring the purchaser to indemnify against fire, etc. In conclusion, the contract provides in express terms as follows:
"It is expressly understood this proposal made in duplicate contains all agreements pertaining to property herein specified, there being no verbal understanding whatsoever, and when signed by purchaser and approved by an executive officer or local manager of Fairbanks, Morse & Co. becomes a contract binding parties hereto."
The contract was approved by an executive officer of Fairbanks, and accepted by Fannie P. Willis and E. M. Willis.
It will be observed from the above that the contract was one of that character generally known as a conditional sale contract or reserved title contract, and that it nowhere contained any suggestion or mention of the use to which the engine was to be put. Read by itself, the contract was a sale to the Willises without reference to the vessel. Delivery, actual as well as that agreed in the contract, was to be f. o. b. cars, Baltimore, although the vessel was at that time in the waters of Elizabeth City, N. C.; and if that were all there would, of course, be nothing on which a lien against the vessel could reasonably be asserted. The notes, however, which were given at the time the contract was executed, were on a printed form, and just above the signatures of the makers contained the following provision:
"It is expressly understood and agreed that the acceptance of this note by the payees shall not and does not in any manner or form waive or affect the maritime lien which the payees now have or may hereafter have against any boat or any other water craft of the makers within the admiralty jurisdiction of the federal courts."
And, in further support of its claim for a lien, Fairbanks introduced, over the objection of counsel for the bank, the testimony of...
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