The Frank G. Fowler

• Decision Date: 16 May 1881
• Citation: 8 F. 331
• Parties: THE FRANK G. FOWLER, etc. (Two Cases.
• Court: U.S. District Court — Southern District of New York

8 F. 331

THE FRANK G. FOWLER, etc. (Two Cases.

United States District Court, S.D. New York.

May 16, 1881

Carpenter & Mosher, for libellants, Conway and others.

W Mynderse, for libellant, the Phoenix Insurance Company.

CHOATE D.J.

In both of these cases the steam-tug Frank G. Fowler has been condemned to satisfy the claims of the libellants. They are both cases of tort, or damage caused to the tow by faults of navigation on the part of the tug. In the case of Conway the cause of action grew out of the negligence and improper navigation of the tug on the sixth of November, 1880. In the case of the Phoenix Insurance Company it grew out of similar act of negligence on the twenty-fifth of November, 1880. The Phoenix Insurance Company filed its libel December 23, 1880. Conway and others filed their December 24, 1880. Processes of attachment were issued upon the same, dated as of the dates of the libel, respectively, and they were served by the marshal on the twenty-fourth of December. There is nothing in the marshal's returns or in evidence aliunde to show that either process was in fact served before the other. The tug has been released on an appraisement, and the deposit in court in the two cases of her appraised value-- $4,500. The Phoenix Insurance Company has obtained a report of the commissioner in its favor for $6,383.33 damages. This report has been confirmed nisi and no exceptions have been filed. The libellant now applies for a final decree. The libellants Conway et al. having an interlocutory decree in their favor and a reference to compute their damage, have not yet obtained a report of the commissioner, but their libel claims damages to the amount of $2,266.91, and they now resist the entering of a final decree in favor of the Phoenix Insurance Company which would absorb the whole fund in court, claiming that they are entitled to a priority of payment, and that the final decree in the case of the Phoenix Insurance Company should be only for such part of the fund as will remain after satisfaction of their damages. The Phoenix Insurance Company on the other hand, claim that they are entitled to a priority in payment over the libellants Conway and others.

The question of the proper order of payment of claims of the same class which constitute maritime liens against vessels has been the subject of much discussion, and there is considerable diversity in the practice in different districts. The case which seems to have settled the rule in this district, as between material men, is the case of The Triumph, decided by Judge Betts in 1841, (reported in 2 Blatchf. 433, note.) He there held that where the fund was insufficient to pay all the claims the libellants were entitled to be paid in the order in which the warrants of arrest were served on the vessel. That learned judge appears to have based this decision, partly at least, on the nature of a maritime lien as defined by him. Thus, he says:

'The meaning and efficacy of a maritime lien is that it renders the property liable to the claim without a previous judgment, or decree of the court, sequestrating or condemning it, or establishing the demand as at common law, and the action in rem carries it into effect. Ingraham v. Phillips, 1 Day, 117; Barber v. Minturn, Id. 136. Thus the appropriation of the res to that end becomes absolute and exclusive, on suit brought, unless superseded by some pledge or lien of paramount order; and it accordingly results, from the nature of the right and the proceedings to enforce it, that the first action which seizes the property is entitled to hold it, as against all other claims of no higher character. Clerke's Praxis, tit. 44; Hall's Adm. Pr. 89; People v. Judges of New York, 1 Wend. 39. The lien, so termed, is in reality only a privilege to arrest the vessel for the debt, which of itself constitutes no encumbrance on the vessel, and becomes such only by virtue of an actual attachment. Hall's Adm. Pr. tit. 44; Abbott on Shipping, part 2, c. 3, 142; 3 Kent's Com. 169, 170; People v. Judges of New York, 1 Wend. 39. Applying these principles to the case before the court, the prosecuting creditors (except seamen suing for wages) are to be satisfied in the order in which the warrants of arrest were served on the property, whether the vessel in kind or her proceeds in court. Each action, with its appropriate costs, comes upon the fund according to the period of its commencement.'

Although this decision, and the reasoning on which it is founded, especially the remarks quoted above, received the approval of Mr. Justice Nelson in The Globe, 2 Blatchf. 433, (1852,) this rule, as to the order of payment among material men, has been disapproved by other admiralty courts, and it has been held that the claims of material men intervening before a final decree are to be paid without reference to the dates of their attachments, in the inverse order of their creation, without distinction, however, or preference between those concurrently engaged in fitting the vessel for a particular voyage. The America, 6 Law Rep. (N.S.) 264; The Paragon, 1 Lare, 322; The Fanny, 2 Low 508; The Brig Omer, 2 Hughes 96; The E. A. Barnard, 2 F. 719. The reason given for this inverse order of payment is the same that controls in the case of successive bottomry bonds and claims for salvage, that the latest benefit to the ship is a benefit to all parties having a prior encumbrance thereon, including material men who have given her earlier credit. This rule is insisted upon in these cases as one founded in the necessity of commerce, which gives the ship to her entire value, in case of necessity, whoever may be interested in her, as security to the material man giving credit to her under those circumstances which, by the maritime law, create a lien. It is a singular circumstance that, in the case of The Globe, Judge Nelson apparently makes this very consideration a reason for giving priority to the material man making the first attachment, although it would not seem to be a reason for adopting such a rule of procedure. Thus he says:

'It has been argued that this maritime lien for supplies and material furnished at a foreign port is an abiding claim and adheres to the vessel, and may be enforced over all claims of a like nature subsequently accruing in the course of her employment. I cannot assent to this position. On the contrary, I am satisfied that the true rule upon the subject is that, in respect to maritime liens of this description, the party first instituting legal proceedings, for the purpose of enforcing his claim against the vessel, is entitled to satisfaction out of the proceeds of her sale. Upon any other view the vessel would afford no reasonable security to the merchant in making the advances or furnishing the necessary supplies, as, for aught he could know, the existing claims against her might exceed her value. It is apparent that to give this maritime lien the efficacy claimed would greatly embarrass and obstruct the commerce and navigation of the country. It would deprive the master in distant ports of the means of meeting the exigencies of the service, because the vessel would furnish no adequate security for the necessary supplies or repairs.'

The learned judge then cites with approval Judge Betts' definition of a maritime lien, as an additional ground for giving the preference to the first attachment. I think, therefore, it must be conceded that at least one of the grounds upon which Judge Nelson approved this rule of priority in the case of material men has no application whatever to cases of successive claims founded in tort; as, for instance, claims for damages by collision or negligence. In these cases the creditors acquiring a lien are such in invitum. There is no credit given to the vessel. There is no consideration of the necessities of commerce requiring the security of the whole value of the vessel as a pledge for a benefit conferred upon the faith of it, to influence the determination of the question of priority. As to the other ground on which this rule of priority is based,-- the nature of a maritime lien,-- in fact the sole ground on which the case of The Triumph appears to proceed, it must also be conceded that later cases of the highest authority in this country and in England have held 'the meaning and efficacy of a maritime lien' to be something very different from a 'privilege to arrest the vessel for the debt which, of itself, constitutes no encumbrance on the vessel, and becomes such only by virtue of an actual attachment' as it is defined in the case of The Triumph.

Thus, in the case of The Bold Buccleugh, 7 Mo.P.C. 284,-- a case twice argued,-- the court says:

'A maritime lien does not include or require possession. The word is used in maritime law not in the strict legal sense in which we understand it in courts of common law, in which case there could be no lien where there was no possession, actual or constructive, but to express as if by analogy the nature of claims, which neither presuppose nor originate in possession. This was well understood in the civil law, by which there might be a pledge with possession and a hypothecation without possession, and by which in either case the right travelled with the thing into whosesoever possession it came. Having its origin in this rule of the civil law, a maritime lien

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