United States v. Carver, 260 U.S. 482 (1923)

U.S. Supreme Court

United States v. Carver, 260 U.S. 482 (1923) United States v. Carver

No. 402

Argued December 6, 1922

Decided January 2, 1923

260 U.S. 482

CERTIFICATE FROM THE CIRCUIT COURT OF APPEALS

FOR THE SECOND CIRCUIT

Syllabus

1. Under the Maritime Lien and Ship Mortgage Acts, June 23, 1910, c. 373, 36 Stat. 604; June 5, 1920, c. 250, § 30, 41 Stat. 1000, 1005, no lien arises for supplies furnished a chartered vessel where the charter forbids it and where the materialman, by reasonably diligent investigation, could have ascertained there was a charter and gained knowledge of its terms. P. 260 U. S. 489.

2. A charter party provided that the charterer would not "suffer nor permit to be continued any lien . . . which has or might have priority over the title and interest of the owner," and that, in any event, within fifteen days, the charterer would provide for the satisfaction or discharge of every claim that might have such priority, or cause the vessel to be discharged from such lien, in any event, within fifteen days after it was imposed. Held that the charterer was under a primary obligation not to suffer any lien to be imposed. P. 260 U. S. 489.

Questions certified by the circuit court of appeals, arising upon an appeal from a judgment of the district court in admiralty upholding a claim of right to a maritime lien in a suit in personam brought against the United States and the receiver of a ship corporation under the Suits in Admiralty Act.

Page 260 U. S. 487

MR. JUSTICE HOLMES delivered the opinion of the Court.

This is a libel in personam against the United States and the receiver of State Steamship Corporation, a company of the State of Delaware, bankrupt, to charge the United States for supplies furnished to the steamships Clio and Morganza. Act of March 9, 1920, c. 95, 41 Stat. 525. The United States owned the vessels, but they were in the possession of the corporation under charters by which the corporation was to pay all costs and expenses incident to the use and operation of the vessels, and

"will not suffer nor permit to be continued any lien, incumbrance,

Page 260 U. S. 488

or charge which might have priority over the title and interest of the owner in said vessel."

It was stipulated further that, in any event, within fifteen days, the charterer would make adequate provision for the satisfaction or discharge of every claim that might have priority over the title, &c., or would cause such vessel to be discharged from such lien, in any event, within fifteen days after it was imposed. Supplies or necessities were furnished to the Clio upon the orders of the corporation's port captain, who was charged with the duty of procuring them. The libellants did not know any facts tending to show that the corporation did not own the vessel, and, so far as appears, made no inquiry or effort to sustain what the facts might be. The case of the Morganza is similar except that, before furnishing some of the supplies, the libellants' agent, who dealt with the corporation, knew facts putting the libellants upon inquiry, but preferred to avoid making it. The liability of the corporation is admitted. That of the vessels is asserted under the Act of June 23, 1910, c. 373, 36 St. 604, and the Ship Mortgage Act, being § 30 of the Merchant Marine Act, 1920; Act of June 5, 1920, c. 250, § 30, subsections P. Q, and R, 41 Stat. 988, 1000, 1005.

The questions certified are whether a maritime lien would have arisen against (1) the Clio or (2) the Morganza if they had been privately owned; (3) if yes, whether the United States is liable for the amount of what would have been the lien, and (4) whether the United States is liable for the personal indebtedness of the State Steamship Corporation for supplies in respect of which no maritime lien would have arisen if the vessel had been privately owned.

We take up first questions 1 and 2. The Act of 1910, by which the transactions with the Clio were governed, after enlarging the right to a maritime lien and providing who shall be presumed to have authority for the owner to

Page 260 U. S. 489

procure supplies for the vessel, qualifies the whole in § 3 as follows:

"but nothing in this Act shall be construed to confer a lien when the furnisher knew, or by the exercise of reasonable diligence could have ascertained, that, because of the terms of a charter party, agreement for the sale of the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor."

We regard these words as too plain for argument. They do not allow the materialman to rest upon presumptions until he is put upon inquiry, they call upon him to inquire. To ascertain is to find out by investigation. If, by investigation with reasonable diligence, the materialman could have found out that the vessel was under charter, he was chargeable with notice that there was a charter; if, in the same way, he could have found out its terms, he was chargeable with notice of its terms. In this case, it would seem that there would have been no difficulty in finding out both. The Ship Mortgage Act of 1920 repeats the words of the Act of 1910.

But it is said that the charter party, if known, would have shown that the master, at least, if not the agent who ordered the supplies, had authority to impose a lien, since the charter party contemplated the possibility of one being created, and provided for its removal. The South Coast, 251 U. S. 519, is cited as establishing the position. But there is a sufficient difference in the language employed there and here to bring about a different result. In The South Coast, the contract went no farther than to agree to discharge liens within a month. Here, the primary undertaking was that "the charterers will not suffer nor permit to be continued any lien," etc. We read this as meaning will not suffer any lien nor permit the same to be continued. Naturally there are provisions for the removal of the lien if in spite of the primary undertaking one is imposed or claimed. But the primary undertaking

Page 260 U. S. 490

is that a lien shall not be imposed. We are of opinion that the libellants got no lien upon the Clio, and a fortiori that the Morganza was free. The denial of a writ of certiorari imports no expression of opinion upon the merits of the case, as the bar has been told many times. Therefore it is unnecessary to consider whether the libellants' argument is supported by the decisions to which they refer. The Yankee, sub nom. Rivers & Harbors Imp. Co. v. Latta, 243 U.S. 649; The Oceana, sub nom. Morse Dry Dock & Repair Co. v. Conron Bors. Co., 245 U.S. 656.

As the libellants disclaim the contention that the United States is liable even if the vessels would not have been subject to a lien it is unnecessary to answer the fourth question. It is enough that the first and second are answered, No.

Answer to questions 1 and 2, No.