The A. R. Dunlap

| D. Mass. | Jul 15, 1869

LOWELL, District Judge.

This brig was owned in Nova Scotia, and the libellants, who reside in New York, present a bill for the disbursements, as they are called, of the brig, furnished by them at New York upon the request of the master, and for a certain other sum of money lent to him, as is presently more fully set forth.

The first part of the case has brought into discussion, as usual, the decision of Pratt v. Reed, 19 How. [60 U. S.] 359. That case has been understood to decide that a material-man, in order to maintain his lien, must bring himself within the rule applied to a lender on bottomry, and show not only that the supplies were necessary for the ship, or appeared to be so, but that the master had not, or appeared not to have, funds of the owner in hand to pay for them, and also that the owner had no personal credit on which they could be procured at the place where they were furnished: The Sarah Starr, [Case No. 12,354;] The Sea Lark, [Id. 12,579;] The James Guy, [Id. 7,195;] The Neversink, [Id. 10,132, Id. 10,133.] Accordingly, the main issue in all these cases of late years has been whether the owner had such credit, and judges have been somewhat astute in ascertaining in each particular case that he had not. My own opinion has been guided by those above cited, and I have followed the course of inquiry pointed out in them. A more careful scrutiny of the leading case has brought me to doubt whether it professes to lay down any such principle.

It must be remembered that material-men have often nothing to do with credit at all, any more than other mechanics. If a shipwright puts a new spar into a foreign ship, he expects payment when his work is done. He cannot exact it beforehand, because his labor is furnished from day to day, and the amount is neither liquidated nor due until the last day’s work is done. If the master then neglects or refuses to pay him, he brings his libel. It is mere mockery to tell him that the owner is a man of good credit. That is only one more reason why his bill should be paid. The mechanic cannot transmute the owner’s credit into money, and the master will not. It is for this reason .that he brings his suit, and it is altogether a novel answer to a suit that the person liable to pay is able but unwilling to do so. Such an answer as that, of course, merely amounts ■to telling the creditor to seek redress at the home of the debtor, which is what he never contracted to do. It was to save him from this necessity, which in most cases would be a total denial of justice,- that the lien of material-men was established throughout the mercantile world; and it is for this reason, probably, that in England and America it is confined to foreign vessels. The contracts of material-men are not really maritime, at least many of them are not; they are, in their reason and origin, much more like those of an unpaid vendor than like an ordinary maritime lien. In England the lien has always existed, though for nearly two centuries it was in a state of suspended animation, because the superior courts would not enforce it, nor permit the admiralty courts to do so. The statute 3 & 4 Yict. c. 65, § 6, gave the court of admiralty jurisdiction of suits for necessaries furnished to foreign vessels in English ports, and thereupon the liens became operative, although there is not a word in the statute * about liens; and the court has ever since enforced these well-known maritime liens, and every decision of that court which upholds such a lien is necessarily a decision upon the general maritime law of liens, as well as upon the statute. Now, in the numerous and important cases which have been reported in that court on this subject since that statute was passed, no one has appeared bold enough to argue that the credit of the owner, has any ■ thing to do with the matter; and it is safe to say that no one ever will take that point, because one main purpose of the act was to save material-men the inconvenience of being obliged to resort to the foreign owner to recover a just debt payable at their own home and not at his. Laws are made for the enforcement of contracts according to their terms against persons in good or bad credit. If the mechanic, in the case supposed, had made inquiry and found that the owner was in good credit, what then? Is he therefore not to put in the spar until he is paid a sum as yet uncertain, contrary to all sense and-usage? This-example-merely illustrates the reason and principle out of which the lien of material-men has grown. The same law applies to the ship-chandler who has agreed with the master for cash on delivery, but whom the master has cheated of his cash after receiving his goods. That the owner has credit, or even that the master has funds, only makes his position the stronger. He asks for his fair dividend of the funds according to his contract. Nor is it any answer to him that by the law of some states and countries he may attach the ship in a common-law action, and hold it aá security for his debt. The jurisdiction of the common-law courts is not exclusive. It is no defence to a libel that the libellant has a remedy at common law. And if it were, this remedy is often delusive; for the attachment in most of the cases which Have come under my notice would amount to nothing, because the class of vessels that come here from the British provinces are almost always mortgaged for more than they are worth in this market, and the mortgage takes precedence of the attachment. The remedy is not adequate; besides, it exists equally whether the owner’s credit is go’dd or bad. It is a mode of enforcing payment of comparatively recent origin, of limited use, and by no means calculated to supersede the old admiralty remedy. I cannot suppose, therefore, that the decision of Pratt v. Reed, 119 How. (60 U. S.) 359] was intended to apply to material-men who have given no credit at all.

If the material-man has given credit, he must show that the master had not, or appeared not to have, funds of the owner in hand wherewith to pay for them; because it is an elementary principle of the law of agency that the agent cannot pledge his principal’s credit when he has, with the knowledge of the creditor, funds of the principal to apply to the immediate payment of the debt. Not that the law of lien depends always upon that of agency, but in this instance it does. But when this is shown, when it appears that the supplies were necessary and that a credit was necessary, the common law pledges the credit of the owner, and the maritime law that of the vessel; just as it does to a seaman or a shipper of goods, neither more nor less. Of course, it is a valid defence to an asserted lien to aver and prove that the personal credit of the owner, and that only, was pledged; just as it would be to a suit by a shipper of goods, and might be even to a seaman’s libel under some very peculiar circumstances. But it is no defence to say that the personal credit of the owner would have been sufficient, when in fact it was not relied on.

The lender on bottomry stands on a wholly different foundation. He is agreeing for a credit to be liquidated at the home of the ship-owner; and he must, furnish that credit at the lowest market rate. As he has agreed to be paid at the home of the owner, and as a solvent owner can be compelled to pay his debts at home, the law says - that the lender shall not charge the unusual, and often almost ruinous, marine interest which is allowable in bottomry, if the money can be obtained at the usual' rates and on the personal credit of the owner. This is the reason, and the only reason, that the rule in question has been adopted in bot-tomry law. The very foundation of the right of the master to borrow on bottomry in one class of cases is, that he must pay the material-men whose contract entitles them to payment in the foreign country, and who have a charge on the ship. But the doctrine of the owner’s personal credit does not apply to them, for the reasons I have stated, and for those given by Judge Sprague in The Sarah Starr, [Case No. 12,-354,] cited above, to which I refer.

If then the case of Pratt v. Reed [supra] is to be understood as Judge Sprague and other district judges have -understood it, the law is not only new, but it creates this anomaly: that if one of our vessels is repaired or supplied in the British provinces, and a suit is brought in this court by the material-men, my only inquiry must be whether the materials were furnished, and were necessary; but if the case is reversed, the parties remaining the same, and our merchants have supplied the foreign vessel, I must superadd an inquiry, which the creditors did not concern themselves with, whether the ship-owner in the provinces was a man of good commercial standing in his parish. This is not equality nor reciprocity, nor is it sound maritime law. I shall therefore, perhaps, find it my duty to cause such a case to be reviewed by the circuit court whenever the facts render it necessary, for I confess to grave doubts notwithstanding the opinions to the contrary, including my own as expressed on former occasions, whether the supreme court intended to decide anything more than that when a credit was given it must be shown that a credit was necessary. It is, perhaps, more probable that they overlooked for the moment the distinction between bottomry -loans and the debts due material-men, than that they intended to establish a strict analogy between them in this respect.

In this case the largest item of the ac- - count is for money furnished to the master, for which the libellants took a mortgage on 'his part of the vessel. This money was raised to relieve the vessel from an attachment in a court of common law, at the suit of a creditor of the remaining owners. There is no pretence that the debt, thus paid, was a charge on the vessel; and the libel-lants are driven to maintain that the master may always hypothecate his vessel to relieve her from any detention which interferes with the prosecution of his voyage, and- not only so,- but that such an hypothe-cation will be implied. The maritime law contains no such term as that. It is true, as I said before, that bottomry bonds have been upheld when they were given to relieve the vessel from debts which by the law -of the country where the vessel was lying would be a charge upon her, though they would not be such, or at least could not be enforced as such, at the home port. But I do not recollect that this doctrine has ever been applied to debts contracted before the last voyage. Even if it has, no law has •ever given to the master authority to hy-pothecate the ship for personal debts of the owners, unrelated to the ship or its navigation. By the law of New England, and in a modified form, by that of most of our States, personal property may be attached .and held as security for any debt of its owner. But there is no maritime lien on the property so attached, by reason of the attachment, nor does the fact of attachment give -an agent of the owner an authority which he would not otherwise have, to hypothecate it for payment of that debt. The master ■of a ship is an agent, whose duties and powers are well understood and defined. It is no part of his authority to hypothecate his ship for the general debts of the owner. Nor did he undertake to do so in this case. On the contrary, he gave a mortgage of his own share of the vessel, and an agreement that the ship should be consigned to the libel-lants, from time to time, till the freight should have paid the debt. This agreement :he did not fulfil, and the libellants must obtain their indemnity, if the mortgage proves insufiicieht, by such personal action as they may be able to maintain. For most of the items of that part of the account which were furnished before the vessel sailed on her last voyage, and which are shown in schedule B., there appears to be a lien. If it be material that the owners were not in good -credit, the attachment and mortgage show that they were unable to pay their debts, and were obliged to resort to extraordinary means to satisfy their creditors, even to pledging the property of their master. Un-der any construction of Pratt v. Reed, [supra,] the libellants could maintain this-* part of their case. They have been careful, prudent, and diligent. No doubt they relied largely on the freight for their security, but this does not exclude the conclusion that they also relied on the vessel. The cases cited by the libellants establish this point. Each item of schedule B. has been carefully scrutinized by counsel, and fully discussed. The general rule in this country is that the person who advances money to pay the debts which are liens on the ship has himself a lien for his reimbursement: Thomas v. Osborn, 19 How. [60 U. S.] 22; The Gustavia, [Case No. 5,876;] and this is now the law of England, with some refinements and distinctions not necessary to be here examined. Perhaps the rule has grown out of the doctrine of subrogation. But whether so or not, the lender of money has not usually any more ample remedy than the material-men themselves would have had. See Davis v. Child, [Id. 3,628.] It has been decided in several cases, that a stevedore has no lien on the ship: The Amstel, [Id. 339;] The Joseph Cunard, [Id. 7,535;] The S. G. Owens, [Id. 8,748.] The reason given by some of the learned judges, that the contract is not maritime, does not appear to be decisive, because the contracts of other material-men are no more so. The lien is for supplies and repairs to enable the vessel to perform her voyage, and only in that sense are they maritime. The other reason, that the cargo is a collateral matter and no part of the necessary equipment of the vessel itself, is more to the purpose, though not satisfactory, because a ship cannot be used to advantage without a cargo. But it is important to adhere to decided cases, and I shall follow these, though I doubt their correctness as applied to foreign vessels, and should be glad to have the point reviewed by the circuit court. In England, the stevedore may arrest the ship under the statute of Victoria: The Waban, cited 1 Pritch. Adm. Dig. 364. tit. “Material-Men,” 71. Advertising the vessel for charter has likewise been decided not to create a charge on the vessel. Pilot-age and towage are maritime services for which there was a lien on the vessel.

The mode in which the payments should be appropriated, has been discussed at the bar. Judge Sprague decided that when the creditor had two distinct debts, and money waj paid him generally without specific appropriation, it was his duty to apply it in the way most beneficial to the debtor, which, in that case, required an appropriation to extinguish a builder's lien: The Antarctic, [Case No. 479.] This rule does not apply to a running account, and require the creditor to satisfy first all those items for which he has no lien. To such an account the general rule applies, that, if there is no appropriation at the time, the law will apply the payments to the items, in the order of their dates. Applying this rule, a considerable part of schedule B. has been paid, if I understand the account. Those that remain, and for which there is a lien, on the principles above stated, can be recovered by the libel-lants, with costs. Interlocutory decree for the libellants.