THE PRESIDENT ARTHUR

• Decision Date: 09 April 1928
• Docket Number: No. 233.,233.
• Citation: 25 F.2d 648
• Parties: THE PRESIDENT ARTHUR.
• Court: U.S. Court of Appeals — Second Circuit

25 F.2d 648 (1928)

THE PRESIDENT ARTHUR.

No. 233.

Circuit Court of Appeals, Second Circuit.

April 9, 1928.

George Wright Hinckley, of New York City, for appellant.

Lampke & Stein, of New York City (Chauncey E. Treadwell, of New York City, of counsel), for appellee.

Saul S. Myers, John M. Woolsey, and Joseph K. Guerin, all of New York City, amici curiÊ.

Before MANTON, L. HAND, and AUGUSTUS N. HAND, Circuit Judges.

MANTON, Circuit Judge.

In March, 1925, appellant supplied bunker coal to the President Arthur and seeks to enforce a lien for a balance unpaid. It is not denied that the coal was supplied, but it is contended by the appellee that the coal was supplied pursuant to written contract providing for payment on delivery by giving a trade acceptance indorsed by three individuals, and it is asserted that by reason thereof no maritime lien exists against the vessel. The contract provided:

"The buyer will pay for the said coal as follows:

"(1) By delivering to the seller a trade acceptance drawn by it in favor of the seller, dated the date of the delivery of the coal, due March 10, 1925, covering railroad freight of $2.79 a gross ton, which acceptance is to be indorsed by Jacob Wacht, Jacob S. Strahl, and Joseph W. Gottlieb.

"(2) A trade acceptance drawn by the buyer in favor of the seller, dated on the same day, due May 8, 1925, covering the balance of the purchase price, to wit, $2.31 a gross ton, representing the coal, harbor barge freight and insurance on coal while in barges, which acceptance is also to be indorsed by the said Jacob Wacht, Jacob S. Strahl, and Joseph W. Gottlieb.

"The entire contract between the parties is stated above, and there is no outside condition, warranty, agreement, or understanding."

After the signature on the contract, it is provided:

"In consideration of the execution of the foregoing contract, and of the delivery of said coal by the seller to the buyer, and in consideration of one dollar ($1.00) paid to each of the undersigned, the receipt of which is hereby acknowledged, we jointly and severally agree to indorse the said trade acceptances described in the foregoing contract between the seller and the buyer."

On February 15, 1925, the appellant's sales manager testified that they looked into the financial standing of the owners of the vessel and came to the conclusion that they did not like the account and wanted to get trade acceptances in order "to get the money at any time they wanted — in fact to discount that paper." And he said, "We were not satisfied with the credit of the American-Palestine Line." He wrote appellee on February 16th that they wanted trade acceptances to be indorsed by three responsible persons acceptable to them. He testified further that they did not consider the Palestine Line financially responsible, and insisted upon the indorsement so that they could discount the paper "in case we need it at any time." It is significant that the agreement provides that the indorsements were made by these individuals as part of the consideration of the sale of the coal, and it was sworn in an affidavit that, without the consideration of such indorsements, the appellant would never have sold the coal to the American-Palestine Line. There was "no outside condition, warranty, agreement or understanding." Thus it appears that the credit of the ship was not accepted by the appellant, but, by the contract of the parties, trade acceptances with three indorsers were insisted upon, and everything for which the appellant had contracted was given in payment. Cash was not contracted for, but payment other than cash was accepted. It was, as said by Chief Justice Taney in Phelps v. The Camilla, Taney 400, Fed. Cas. No. 11073 (Md. 1838):

"If the party does not choose to rely on the contract which the maritime law implies in such cases, but takes an express written contract, he must rely on the contract he makes for himself, and cannot, upon a change of circumstances, resort to the securities upon which, in the absence of any special agreement, the law presumes that he relied; and if he takes a note or bill of exchange, or any other personal engagement, for the payment of the debt, he is presumed to rely on this personal security, and to waive his lien, unless he stipulates that the liability of the vessel shall still continue."

This rule has not been departed from by authoritative decisions. See Segrist v. Crabtree, 131 U. S. 287, 9 S. Ct. 687, 33 L. Ed. 125; McMurray v. Brown, 91 U. S. 257, 23 L. Ed. 321; N. Y. & Cuba S. S. Co. v. Texas Co. (C. C. A.) 282 F. 221; Atlas S. S. Co. v. Colombian Land Co. (2 C. C. A.) 102 F. 358.

The Merchant Marine Act of 1920 (46 USCA ß 974; Comp. St. ß 8146ºppp) provides that:

"Nothing in this section shall be construed to prevent the furnisher of repairs, supplies, towage, use of dry dock or marine railway, or other necessaries, or the mortgagee, from waiving his right to a lien, or in the case of a preferred mortgage lien, to the preferred status of such lien, at any time, by agreement or otherwise."

To support a lien, the act (46 USCA ß 971; Comp. St. ß 8146ºooo) provides "it shall not be necessary to allege or prove that credit was given to the vessel." Nothing in the act bars proof that whatever was furnished was furnished on the mere credit of the owner or third party and in no sense upon the credit of the ship. Ely v. Murray (C. C. A.) 200 F. 368. A lien does not exist where the supplies are furnished on the mere credit of the owner. The Cora P. White (D. C.) 243 F. 246. There is a marked distinction between the effect of taking a note for an obligation which already existed, and agreeing in a contract which referred to an obligation hereafter to arise, that the payment of that obligation must be made by promissory note. The trade acceptance, assuming a default in payment, permitted the appellant to sue the indorsers. This it did.

The maritime lien is not to be given a broad legal interpretation, nor is it to be extended by construction, analogy, or inference. Osaka Shosen Kaisha v. Pacific Export Lumber Co., 260 U. S. 490, 43 S. Ct. 172, 67 L. Ed. 364; Piedmont Coal Co. v. Seaboard Fisheries Co., 254 U. S. 1, 12, 41 S. Ct. 1, 65 L. Ed. 97. Where parties agree to an express contract as to payment, the contract becomes extinguished by full performance and so it is impossible that either party should have any claim against the other arising out of the contract. No lien can exist in favor of the materialman when he receives in payment that for which he stipulated when the contract was made.

In The Bird of Paradise, 5 Wall. 545, 18 L. Ed. 662, referred to by appellant, a lien was asserted for freight. That lien differs from a maritime lien for repairs because a ship is bound to the cargo until delivery or tender of delivery and equally is the cargo bound to the ship for the payment of freight. The freight contract provided that it should be paid in Liverpool on unloading and right delivery of the cargo. Construing the clauses of the bill of lading together, it was clear that the charterer was not obliged to pay the freight until tender of delivery. While the charterer did give the first acceptance, he failed in business, and the acceptance was dishonored before the arrival of the ship, and he never gave or tendered the second acceptance mentioned in the charter party. It was held that the lien remained. The court stated that the freight lien "stands upon the same ground with the lien of the carrier on land, and arises from the right of the shipowner to retain the possession of the goods until the freight is paid, and is lost by an unconditional delivery to the consignee." And that the freight lien "may be modified, or it may be excluded, or displaced by direct words, or by the insertion of some stipulation wholly incompatible or irreconcilable with the existence of such a right." Requiring the appellee to procure indorsements of three separate individuals was such a stipulation as is referred to in the language quoted, and the appellant relied solely upon the indorsements and not on the maritime lien, for it refused to sell until it had the agreed indorsements.

Decree affirmed.

L. HAND, Circuit Judge (dissenting).

There are two questions at issue — first, whether the acceptances were a payment; if not, whether their receipt by the libelant was a "waiver" (of) "his right to a lien * * * by agreement or otherwise." If the claimant had not been a party to the acceptances, it may be assumed that they would have been a payment. Atlas S. S. Co. v. Colombian Land Co., 102 F. 358 (C. C. A. 2); N. Y. & Cuba S. S. Co. v. Texas Co., 282 F. 221 (C. C. A. 2); Hall v. Stevens, 116 N. Y. 201, 22 N. E. 374, 5 L. R. A. 802. If, on the other hand, it had agreed only to...