THE THOMASTON

• Decision Date: 27 April 1928
• Docket Number: No. 1986.,1986.
• Citation: 26 F.2d 279
• Parties: THE THOMASTON.
• Court: U.S. District Court — District of Maryland

26 F.2d 279 (1928)

THE THOMASTON.

No. 1986.

District Court, D. Maryland.

April 27, 1928.

Amos W. W. Woodcock, U. S. Atty., of Baltimore, Md.

John H. Skeen, of Baltimore, Md., for claimants.

WILLIAM C. COLEMAN, District Judge.

The question presented for determination is the priority between the United States government and innocent maritime lien claimants with respect to the proceeds of sale of the schooner Thomaston, which was libeled and forfeited by the government under Revised Statutes, § 3450 (26 USCA §§ 1181, 1182; Comp. St. § 6352), the vessel having been engaged in smuggling liquor into the country in violation of the revenue laws; that is, whether the forfeiture of a vessel under this section is absolute and in derogation of all liens, or whether the claims of innocent maritime lienors survive such forfeiture.

The validity of the forfeiture and sale of the vessel has not been questioned. Further, it is admitted that all of the claims are properly within the class of claims for repairs and supplies contemplated by general maritime law and by the provisions of the Merchant Marine Act of June 5, 1920 (41 Stat. 988). That part of section 3450, under which the vessel was forfeited and sold, provides as follows:

"Whenever any goods or commodities for or in respect whereof any tax is or shall be imposed, or any materials, utensils, or vessels proper or intended to be made use of for or in the making of such goods or commodities are removed, or are deposited or concealed in any place, with intent to defraud the United States of such tax or any part thereof, all such goods and commodities, and all such materials, utensils, and vessels, respectively, shall be forfeited; and in every such case all the casks, vessels, cases, or other packages whatsoever, containing, or which shall have contained, such goods or commodities, respectively, and every vessel, boat, cart, carriage, or other conveyance whatsoever, and all horses or other animals, and all things used in the removal or for the deposit or concealment thereof, respectively, shall be forfeited. * * *"

The matter was referred to a special commissioner to determine, first, the nature and amount of the claims of the various intervening petitioners, and also their right, if any, to share in the proceeds of the sale of the vessel, and the nature and priority of the respective claims as against each other and as against the claim of the United States. The special commissioner found that the rights of the petitioners had not been affected by guilty knowledge or inexcusable laches; that thus being innocent maritime lien claimants, asserting their liens in due season, the forfeiture of the vessel did not destroy or depose such liens; and that the claims of all of the petitioners should be satisfied, without interest, out of the proceeds of the sale of the vessel.

The government has excepted to the report of the special commissioner and contends that lienors, whether innocent or not, cannot recover when a vessel has been thus forfeited under Revised Statutes, § 3450. The government does not appear now to be making any serious contention of either guilty knowledge or laches on the part of the lienors, but seeks a review of the findings of the special commissioner that the forfeiture of the vessel does not destroy the maritime liens of prior innocent claimants.

The court is of the opinion that the finding of the special commissioner is correct. Because of the importance of the principle underlying this case; of the fact that this is the first time, apparently, that a court has been called upon to decide this precise question, and also because of the thorough study which the special commissioner has given to it, as evidenced by his report, and the clear, succinct manner in which he has therein set forth his conclusions and his reasons therefor, the court adopts his report, in toto, with an exception respecting the allowance of interest, and incorporates it herein:

"On April 3, 1925, the marshal sold the schooner Thomaston at public sale and realized thereby the net sum of $2,799.60, to be deposited to the credit of the Treasurer of the United States. His return was filed May 1, 1925. The sale so reported was in pursuance of the court's decree of condemnation and sale, entered March 21, 1925, upon the government's libel of information, filed February 16, 1925, claiming forfeiture of the vessel under section 3450 of the Revised Statutes of the United States.

"On April 3, 1925, the Atlantic City, N. J., Fisheries Company, Inc., Moncrief's Machine Shop, Joseph A. Wilson and Hurley Booye, copartners trading as Cape May Fisheries, Inc., and John C. Smith and C. W. Edwards, copartners trading as Smith-Edwards Machine Shop, filed their joint intervening petition claiming maritime liens against the Thomaston, for supplies and repairs furnished to her prior to her seizure, and praying payment out of the proceeds of her sale. As special commissioner, I am instructed to determine and report upon the following questions:

"(a) The nature and amount of the claims of the intervening petitioners.

"(b) The question of whether or not they have claims against the fund, and the nature and priority of said claims as against each other and as against the claim of the United States.

"I have heard all of the testimony which any of the parties desired to produce, and I have attentively considered the briefs and oral arguments of counsel. My conclusions are as follows:

"The petitioners do not contest the propriety of the forfeiture and sale. They contend, however, that their rights as innocent maritime lien claimants are superior to the rights of the United States arising out of the forfeiture, and therefore that their claims are payable out of the fund realized from the sale of the vessel.

"The government maintains, primarily, that the forfeiture of a vessel under section 3450 is `absolute' and in derogation of all liens; secondly, that, even if these liens have not been so abrogated, the petitioners cannot recover because they knew of the `illegal activities' of the vessel; and, thirdly, because petitioners have been guilty of laches in the prosecution of their several claims.

"I am satisfied from the testimony that all of the claims are legitimately within the category of `repairs and supplies' contemplated by the general maritime law and the provisions of the Merchant Marine Act of June 5, 1920. The district attorney is principally concerned with the question of the effect of the forfeiture. He stresses its absolute character, and desires to test the question. He has favored me with a full brief, as have counsel for the intervening petitioners. I have endeavored to respond by careful consideration of the authorities and arguments upon the question whether or not the Thomaston was forfeited subject to the maritime liens of the intervening petitioners.

"Supporting the affirmative of this question, the petitioners submit a line of authorities beginning with The St. Jago de Cuba, 9 Wheat. 409, 6 L. Ed. 122, and ending with The Eugenia Emilia (D. C.) 298 F. 340. It is unnecessary to refer to the intervening citations, because the principles enunciated by the Supreme Court in the case of The St. Jago de Cuba are those relied upon from first to last. It will be profitable to review that decision here.

"The vessel was built as an honest packet, but she fell into evil ways and eventuated as a slave runner, and she was libeled by the government and condemned and sold, with her cargo, as such. The claims of seamen and materialmen were interposed, giving rise, as between them and the government, to a question similar to that raised in this case; the difference being that the Thomaston has been forfeited and sold for smuggling. In the course of its opinion, the Supreme Court said:

"`The precedence of forfeiture has never been carried further than to overreach common-law contracts, entered into by the owner, and it would be unreasonable to extend them further. The whole object of giving admiralty process and priority of payment to privileged creditors is to furnish wings and legs to the forfeited hull, to get back, for the benefit of all concerned; that is, to complete her voyage. * * * The vessel must get on; this is the consideration that controls every other; and not only the vessel, but even the cargo, is sub modo subjected to this necessity.'

"Maintaining the negative of the question of whether or not the lien survives, the district attorney cites the following cases: The Cherokee (D. C.) 292 F. 212; The Ella (D. C.) 9 F.(2d) 411; U. S. v. One Ford Coupé, 272 U. S. 321, 47 S. Ct. 154, 71 L. Ed. 279, 47 A. L. R. 1044 (decided Nov. 22, 1926); U. S. v. One Saxon Automobile (C. C. A.) 257 F. 251; Goldsmith, Jr.,-Grant Co. v. U. S., 254 U. S. 505, 41 S. Ct. 189, 65 L. Ed. 376; also the following cases: Dobbins v. U. S., 96 U. S. 395, 24 L. Ed. 637; U. S. v. Stowell, 133 U. S. 1, 10 S. Ct. 244, 33 L. Ed. 555; U. S. v. One Black Horse (D. C.) 129 F. 167.

"The latter group are submitted as authorities for the proposition that, under forfeiture statutes, the guilt or innocence of the owner of forfeited property is immaterial. It is to be observed that none of the cases referred to by the government involves the claimant of a strictly maritime lien, and, so far as I have been informed, the courts have not yet been called upon to decide whether or not such a lien survives forfeiture under section 3450. I am of the opinion that it does.

"The lien of the `materialman,' as ancient as commerce itself, accrues by operation of the general maritime law against the vessel itself, as distinguished from the owner. Unlike the common-law lien of the mechanic, it is not related to possession, nor to contract with the owner, but flows from the nature of the transaction which provides a service essential to the vessel, giving rise to a lien which follows her into whosesoever hands she may go....