United States v. SS Lucie Schulte

• Citation: 343 F.2d 897
• Decision Date: 06 April 1965
• Docket Number: No. 251,Docket 29110.,251
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Parties: UNITED STATES of America, Libellant-Appellee, v. The S.S. LUCIE SCHULTE, her engines, boilers, etc. and Three Bays Lines, Inc., Respondents, Schulte & Bruns, Claimant-Appellant.

343 F.2d 897 (1965)

UNITED STATES of America, Libellant-Appellee, v. The S.S. LUCIE SCHULTE, her engines, boilers, etc. and Three Bays Lines, Inc., Respondents, Schulte & Bruns, Claimant-Appellant.

No. 251, Docket 29110.

United States Court of Appeals Second Circuit.

Argued December 15, 1964.

Decided April 6, 1965.

Nicholas J. Healy and Nicholas J. Healy, Jr., New York City (Healy, Baillie & Burke, New York City), for appellant.

Robert V. Zener, Washington, D. C. (John W. Douglas, Asst. Atty. Gen., Robert M. Morgenthau, U. S. Atty., Morton Hollander, Washington, D. C., Attorney), for appellee.

Before FRIENDLY, HAYS and MARSHALL, Circuit Judges.

FRIENDLY, Circuit Judge.

This libel, tried on a stipulation of facts and exhibits before the late Judge Dawson, 227 F.Supp. 583 (1964), raises questions, seemingly not yet settled by authority, on the old subject of maritime liens.

On two occasions in 1957, Schulte & Bruns, a German partnership owning the Lucie Schulte, time-chartered her to Three Bays Corporation, Ltd. of Nassau, Bahamas. The charters on a standard form (designated "Government Form, approved by the New York Produce Exchange") contained a provision that

"Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the owners in the vessel."

On three occasions during the charter periods the United States, acting through the Navy's Military Sea Transportation Service and the Transportation Office, Patrick Air Force Base, made shipments on the Lucie Schulte from Port Canaveral, Florida, to installations in the British West Indies. The bills of lading, standard Government forms, designated the "transportation company" as "Three Bays Line (MS MV Lucie Schulte)," and were signed by an officer or agent of Three Bays Lines, Inc., apparently a branch of the charterer organized as a Florida corporation. Under a "conference tariff concurrence" filed with the Federal Maritime Board by Three Bays pursuant to 46 U.S.C. § 817, the charges on the Government's shipments were limited to those specified in the Leeward & Windward Islands & Guianas Conference Southbound Freight Tariff No. 6. Freight was demanded by Three Bays Lines, Inc., and paid by the Government at dates ranging from three weeks to four months after the respective deliveries. Although the vouchers certified "that the rates charged are not in excess of the lowest net rates available for the Government, based on tariffs effective at the date of service," the amounts paid exceeded such rates by $4,288.86. Some three and a half years later the Government brought this libel to recover that amount from the ship in rem and Three Bays Lines, Inc., in personam; the latter was not served and apparently is insolvent.

The alternative defenses relied on by the claimant-owner were that the overcharges had been made after cessation of the "union of ship and cargo," see Krauss Bros. Lumber Co. v. Dimon S.S. Corp., 290 U.S. 117, 121, 125, 54 S.Ct. 105, 78 L.Ed. 216 (1933), and that under the circumstances the "prohibition of lien" clause of the charter barred the Government's assertion of a lien for overpayments exacted by a time-charterer. Agreeing with Judge Dawson's rejection of the first defense, we think he was mistaken in overruling the second.

(1) Supporting its first defense, the owner relies on policy arguments against maritime liens, summed up in the oft-quoted statement that the lien "is a secret one which may operate to the prejudice of general creditors and purchasers without notice and is therefore stricti juris and cannot be extended by construction, analogy or inference." Osaka Shosen Kaisha v. Pacific Export Lumber Co., 260 U.S. 490, 499, 43 S.Ct. 172, 174, 67 L.Ed. 364 (1923), paraphrasing The Yankee Blade, 19 How. 82, 89, 60 U.S. 82, 89, 15 L.Ed. 554 (1857). But neither such general considerations nor the decision in Pacific Export, applying to a portion of cargo not yet loaded the settled rule that a lien does not arise from an unjustified refusal to accept the goods for shipment, The Saturnus, 250 F. 407, 3 A.L.R. 1187 (2 Cir.), cert. denied, 247 U.S. 521, 38 S.Ct. 583, 62 L.Ed. 1247 (1918), see Gilmore & Black, Admiralty § 9-22 (1957), would support a distinction impossible to justify on any ground of logic or of policy. The Krauss Bros. case overrode an attempted distinction far more tenable than that asserted here — namely, between a refusal to deliver unless the excessive charges were paid, amounting to a threat of conversion, and a demand for such charges simpliciter, giving rise to liability in contract or quasi-contract. Once that barrier has been crossed, it would be altogether irrational to have the existence of a lien turn on whether the demand was made, or the payment received, while the goods were on the ship, on a pier in the ship's control, or later. That the high financial responsibility — or the complicated accounting procedures — of a particular shipper may induce or require the carrier to defer demand and payment is irrelevant to the recognition of a lien in favor of the shipper, the "vice" of which is as great when payment is made earlier as when made later.

The loss of the carrier's possessory lien on the goods on the latters' delivery is similarly irrelevant. "Mutuality" is no more appealing in this branch of the law than elsewhere, see Cardozo, The Growth of the Law 14-16 (1924); Zdanok v. Glidden Co., 327 F.2d 944, 954-955 (2 Cir.), cert. denied, 377 U.S. 934, 84 S.Ct. 1338, 12 L.Ed.2d 298 (1964), and it would be unreasonable to spell out from the mere fact of delivery and receipt an agreement by the shipper to forego any lien to which it would be entitled in the absence of such a release. Indeed, Krauss Bros. itself sufficiently settles this point. Although that case was decided on the pleadings, which do not disclose whether payments were simultaneous with the various deliveries or a short time thereafter, 290 U.S. at 120, 54 S.Ct. 105, no one seemed to think anything turned on this, the important point pressed by the ship and rejected by the Supreme Court being that excessive payment was not demanded as a condition of delivery. See Judge L. Hand's analysis of the decision in Sword Line, Inc. v. United States, 228 F.2d 344, 346 (2 Cir. 1955), aff'd on rehearing, 230 F.2d 75 (2 Cir.), aff'd, 351 U.S. 976, 76 S.Ct. 1047, 100 L.Ed. 1493 (1956). Moreover, the Supreme Court's opinion approved, 290 U.S. at 124, 54 S.Ct. 105, Judge Hough's decision in The Oceano, 148 F. 131 (S.D.N.Y.1906), recognizing a lien for an overpayment by a charterer's agent, apparently made some days after the "union" of charter-party and vessel had ended. We thus cannot give the statement of Mr. Justice Stone, 290 U.S. at 125, 54 S.Ct. at 107 — "the overpayment, made as the cargo was unloaded, occurred while the union of ship and cargo continued, and the liability asserted was determined by events contemporaneous with that union" — enough weight to tilt the scales in the owner's favor; context suggests that the opinion was stressing factual similarity with prior cases and not fixing the outer limits of the lien. Only a paragraph later Mr. Justice Stone declared that "it is only the obligations of ship and cargo under the contract of affreightment which are to be characterized as mutual and reciprocal, not the liens which result from the breach of those obligations." 290 U.S. at 125-126, 54 S.Ct. at 108.

(2) It is well settled that an owner who has entrusted his vessel to a charterer, whether on a time or a bare boat basis, cannot escape maritime liens for non-consensual transactions, such as tort claims of a sort that could not also be enforced in contract, and statutory penalties. The Barnstable, 181 U.S. 464, 467-468, 21 S.Ct. 684, 45 L.Ed. 954 (1901). But it had been held even earlier that it is "a just and reasonable implication of law that the general owner assents to the creation of liens binding upon his interest in the vessel, as security for the performance of contracts of affreightment made in the course of the lawful employment of the vessel." The Schooner Freeman v. Buckingham, 18 How. 182, 190, 59 U.S. 182, 190, 15 L.Ed. 341 (1856). Although this statement was made in a case where an owner had relinquished control to a proposed purchaser, there could be no sound reason for declining to apply the same principle to a charter, and decisions expressly have so applied it. The Euripides, 52 F. 161 (S.D.N.Y.1892), modified on other grounds, 71 F. 728 (2 Cir. 1896); see The Wilmington, 48 F. 566, 568 (D.Md. 1880); Price, Maritime Liens 146 (1940).

The serious questions...