(d) :Next come the' for i'ndelItnity against ,the suppHesto in New¥ork previous to"the: ,!fist Brazil; and also for indemnity against claims madeiagainsttheir' shipsitOl' 'cargo damage during the last vOJlage, by the fault of the compan'Y'Qriits employes, ",hether already paid by the,owJlel'S, or not; for aIlnwhich liabilitiest1ie owners have a lien under the stipulations (}t'th!e charter. Liens for the supplies furnishedi.a,t New York On;!the prior voyages, if the vessels should be held:therefor;and damalges to cargo on the current voyage, are,by all infel'Wr:irt rank to necessary supplies for the last voyage. But these liens are,' nevertheless, specific; 'and as such' they take precedence of "any ''Mere general hypothecation for moneys not aiding the partieutaI' vel!lselior voyage. Against anyl,such claims as are still pending and undetermined, the shipowners,' who, under the> provisions of the charters, would have liens on the freights for anything they were compelled to pay for the aoove causes, are entitled:tobe indemnified to the extent of the fund applicable thereto iii) cRSe:$uch claims are sustained, before the fund can be withdrawn:bY:l'lny other claimants of inferior rallk. Milburn v. Lloyd, 58 Fed.:608, (e) Whatever may remain of the 'freights of either ofilie chartered vessels after satisfying all the 'above described specific liens, should be:applied pro rata upon the 'ameullts remaining due and unpaid to Brown Bros. & Co., and to Miol Huntington and Pratt & Co. on their general liens, after all their specific liens on 'these freights, or on any other. freights or funds for' the saItte debts, have been exhausted. As: between' themselves, laee no'sufficient ground forgi'1ng a preference to either general lien',above the other. They. were in part concurren t in time; and each in:part overlapped the other; and both contributed alikerelllotely,' an(1 in the same general way indirectly, to the fundsin 'suit. ' Decrees nIay' be entered in. conformity herewith, with an order of reference, as<above stated, report the amounts due upon the various classes of claims abovespecifted.
THE THE SEGURANCA.
THE AD.VANCE. BROWN at al. v. THE ALLIANCA et'aI. (foor libels). HUNTINGTON v. THE SEGUUANCA AND FREIGH'l'S. ,HUNTINGTON et at. v. PROCEEDS OF)THE ADVANCEet '8.LiATLANTIC TRUST' CO. v. PRO-· CE;E;PS OF THES,EGURANCAetal;.GRAY, Receiver, v.SAME. (District
S. D.. NJw
1 ; ..1
Yo.r1,t. October 16, 1894.)
MARITIME LIENSMENT FOR FURTHER SECURlTY., ' .'.,
A steamship company in '.1'rewYork, in. order to obtain letters of credit to disbursetb:eir ships in Brazil, hypotllecated all freights, and agreed!
:< f[YPOTHECATION OF F:RlllIGHT8-AGREE.... '
to give "further security when required:" Held, thill the agreement for further security was too indefinite to constitute any lien on the vessels themselves, or their proceeds; and that no such lien could be allowed upon the inSUfficiency of the freights to pay the drafts drawn upon the letters of credit.
SAME - TUEASURER'S AUTHOlllTY TO PLEDGE VESSELS-DEALDlGS WITH THE OWNER ALUNE-i:)UBROGA'l'ION.
Upon a claim by the personal guarantors of letters of credit, that the treasurer of the steamship company, owner, had pledged both vessels and freight to them for their security: Held, upon conflicting evidence, (1) that the pledge was only proved as respects the freights, which the treasurer had been previously accustomed to pledge in writing for similar purposes; (2) the treasurer's authority to pledge the vessels, without thp action of the board of directors, questionable; (3) that as the dealings of the guarantors were wholly with the owner in New York, they had no direct implied lien upon the vessels for the moneys obtained by the sale of drafts drawn against the letters of credit in Brazil and applied to disburse the ships there in the absence of any agreement for such a lien; (4) for the same reason, and also because the mcmeys obtained on the drafts were the company's moneys, and because the purchasers of the drafts had no lien, the guarantors could have none by subrogation to any liens of material men in Brazil in the absence of any intent or contract to that effect in the original transaction. There being no liens arising out of the letters of credit, either general or specific, upon the vessels, or their proceeds: Held, that the mortgagee was entitled to the SUrplus after satisfying the maritime liens already decreed.
SAME-REMNANTS AND SURPLUS OF SALE-MORTGAGEE'S CLAIMS.
In Admiralty. Cary & Whitridge and W. P. Butler, for libelants John Crosby Brown and others. Benedict & Benedict and Maxwell Evarts, for C. P. Huntington and others. Carter & Ledyard, Mr. Baylies, and W. W. Goodrich, for petitioner Atlantic Trust Co., mortgagee. Stetson, Tracy, Jennings & Russell and Mr. Van Sinderen, for petitioner Henry Winthrop Gray, receiver of the United States & Brazil Mail S. S. Co. BROWN, District Judge. The steamships Advance, Allianca, Seguranca and Vigilancia were owned by the United States & Brazil Mail Steamship Company, and were run by that company between New York and ports in Brazil until the failure of the company in February, 1893. On March 18, 1893, the petitioner, Henry Winthrop Gray, was appointed by the supreme court of this state receiver of the company. All the above claims are based upon the same transactions as were presented by the same parties in the actions against the freights of the Kate and four other chartered steamers, tried at the same time herewith; and the general rules and the points decided in those cases will be applied in these. G3 Fed. 707. The Advance, the Allianca, and the Vigilancia all arrived in New York on their last voyage from Brazil on February 21, 1893; the Seguranca arrived on April 2d. The first three were attached by
the marshal onlibels for seamen's wages, soon after arrival; and afterwards, on March 18,1893, they were. attached under the three libels first abov¢ #amed. ,.'rJ;'he was attached on April 2d, immediately on arrival, un!ler the fourth above libel filed March 25th, as well as for wages. Under the libels for seamen's wages, the foUl' steamers have been sold; the Advance, the Allianca, and the Vigilancia on April 3,1893, realizing respectively $91,000, $83,'000, and $81,000; the Seguranca, on December 20, 1893, and realiz,ing $125,vUO. ,From these proceeds large sums have been paid out . upon the decrees for seamen's wages, and also other sums in partial payment of various decrees against the, steamers for repairs, materials and supplies, which have been admitted by the parties to constituteliens upon the vessels. Considerable sums, however, are still held in reserve and unpaid upon those decrees in order to meet the pro rata share of any possible sums found due by the decrees upon the libels and petitions above named, and some other claims. The mortgagee and the receiver claim whatever is not shown to constitute maritime liens superior to their rights. 1. The letters of credit issued by Brown Bros. & Co. to the steamship company were accompanied by the latter company's hypothecation of· "all the freights earned and to be earned;" but not by any hypothecation of the ships. The steamship company also at the same time agreed to give Brown Bros. & Co. any further security demanded; but the evidence does not show that any particular kind of security was named or asked for. Payment of the freights not being ma,de to Brown Bros. & Co. when demanded, a suit in equity was begrin by them against the company in the supreme court of the state, to enforce the. general hypothecation to them of the freights, including those of the four steamships above stated, a few days before their above libels were filed. .That COllrt has decided at general term that as' it .was a maritime cause in equity, that court had no jurisdiction of the action. Brown v. Gray, 70 Hun, 261, 24 61. . In behalf of Brown Bros: &00. it is now contended that the agreement to give further security on the demand thereof, and the nonpayment of the freights as pledged, together with the fact that the moneys drawn upon the drafts were designed, and at least in part used, for the purpose of paying the necessary disbursements of these vessels in Brazil, and to enable them to complete their voyages, create amarltime lien upon the vessels, in addition to the express hypothecation of the freights, at least to the extent that the moneys reahzedupon the drafts.were used in disbursing the ships at Brazilian ports. Our law does not sustaiti :this contention. The dealings being wholly with the owner, nO'. maritime liens can be upheld beyond what is expressly contracted for, or shown clearly to be within the common intent of the parties at the time the letters of credit were issued; and the evidence leaves no doubt that the only lien or hypothecation then contemplated was upon the freights. IIi the cases of Brown v. Freights ()If The Seguranca, 63 Ped. 733, tried at the same time with these cases, I have sustained this hypotheca-
tion of the freights to the extent admissible upon the facts in evidence. The agreement "to give further security" would have been as truly fulfilled by giving further personal security as by giving a further maritime lien. So indefinite an agreement does not constitute of itself any lien upon the vessels, nor even any equitable assignment or appropriation, such as might be recognized on a distribution of surplus moneys; nor does it extend the maritime lien beyond that specified and agreed upon at the time. These four libels claiming liens upon the vessels are therefore dismissed. 2. The claims of Huntington et aI. to the freights of the Seguranca, have been considered in the previous decisions in regard to the freights of the other steamers owned by the company. Their libel against the Seguranca, and their three petitions against the proceeds of the Advance, the Allianca, and the Vigilancia, all present the same question, which, under my previous decision in respect to the freights of the Kate, etc., depends upon whether in the negotiations leading to the guaranty of the letters of credit issued to the steamship company by Heidelbach, Ickelheimer & 00., there was any express pledge of the steamships, or any common understanding of such a pledge as the basis of the guaranty, such as I have found existed in respect to the freights. In the decision of the cases against the freights of the Kate, I have stated the main facts and circumstances, and here need to refer to them but briefly. Mr. Gates, who signed the first guaranty as attorney for Mr. Huntington, nowhere testifies to any other pledge than this, viz.: that "what money the ships earned was to apply in liquidation of the amount guarantied," and he testifies that the agreement upon the other letters of credit was the same. Mr. Babbige, the secretary and treasurer of the company, who alone eonducted the negotiations on the company's behalf, states no other pledge, or agreed appropriation, than of the freights to be earned, and a similar lien to that of Brown Bros. & 00., which was referred to in the negotiations. Mr. Huntington, indeed, states in general terms that he was "to have a lien on the freight list and the Ameri· ean ships;" that such was his "expectation" and "impression;" but he was unable to give any specific conversation with Mr. Babbige to that effect, and he apparently relied to a considerable extent on his supposed rights in furnishing supplies to vessels in foreign ports. His "impression" as regards a pledge of the ships not being confirmed by Mr. Gates or Mr. Babbige, I regard the evidence as insufficient to establish an express agreement or a "common understanding" that the vessels were hypothecated for these guar· anties. The testimony by Mr. Babbige of his "assurance" to them that the freights would take care of the drafts, repels the theory that he understood he was pledging the ships as well as the freights. I doubt, moreover, the legal authority of Mr. Babbige to pledge the vessels in this way. That was quite a different matter from a pledge of the freights alone, such as he had long been accustomed to make in obtaining letters of credit from Brown Bros. & Co. So far as appears, he had made no previous pledge of the vessels to
8ad there is no' eVidence that he had any authority:todo ,,AndealiDgin'the homeportsoi.n1pol'tant as a hypotbecation of all! thl'lfilhips of the line by an under officer to a superior officer of,the'.same' corporation,:in the absence of proved authority from ilie nlUst hold to bepritnafacie irregular, and not very likely' to have occurred;Rnd the making of such a pledge by Mr. Babbige I, cannot hold sufficiently proved, except upon more eel" tain and explicit evidence than is fOllIld in this case. Nor should such a pledge by his action alone be held competent or valid, I think, without some kind of:previous authority, or some subsequent or implied from preratification, by the company" vious usage, such as existed' in the· case of the freights. I find, therefore, that. there wasno:)lypothecationof the vessels by agreement, but onlyrof the freights. ·, 3; Counselhave strenuously contended, however, that withollt any expresscoritract Of understanding that the guarantors should be secured by alien or hypothecation, the mere furnishing of their money,ortheir credit, for the necessary disburseme;nts of these vessels in foreign ports,wollld give them by operation of law a maritime Uebthereforonthe vessels and on the freights of the voyage assisted; i. e., either a direct lien for the money itself, as a supply necessary for the voyage; or a lien indirectlYl, through subrogation 'to the liens of those whose claims for the supply of labor or materials were paid' by the moneys furnished. Many authorities are cited, and many passages from decisions are quoted giving color totbiis contention. But they all occur in cases where the facts are materially different from the present j' and the expressions are t6 be limited to the state of fa<)tS before the court In none of them were the dealings with the owner in the home port, and where; as here, an express agreement of a particular character waspl'oved. I cannot, for' several reasons, sustain the claim ofsubrQgation to liens of Brazilian material men, which was the only ground of lien originally set npby these claimants: No such liens have, in strictness, beenprO'\Ted jnon constat but that the circumstances may have negatived any liens at all iIi their favor. There is even some evidence that supports that possibility. But assuming that some or all of the .bills paid to disburse these ships in Brazil were liens in favor of the Brazilian material men, and assuming also that the transaction in New York was equivalent to a supply of moneys by !fr. Huntington,and Pratt & Co. to the company's superintendent in Brazil, in order to disburse the. ships there, and to enable them to complete their voyages, still the circumstances, and the negotiations in New York, strongly negative any intent at the time to loan money or credit on the security lof subrogated liens; and when that fact aPPears, any such. subroga,tion must be excluded. The negotiations show that the iiltent was to enable the superintendent in Brazil to prevent or to discharge not to preserve them. Huntington et a1. h:id no dealings with the lienol'S, as in The Cabot, Abb,iAdlli. 150, Fed. Cas. :&0. 2,277, nor with the masters or agents 6f vessels assisted; as in most of the other cases of
'Subrogation. . Theirdealingl'lwere exclusively with the owner com· pany in New York, the home port; and the prima facie presumption of a personal credif of the owner alone, applies as much againsJt an intended subrogation to foreign liens, as· against the acquisition ·of a primary and direct lien for the supply of the money itself. If the transaction had been with the master, and for the relief of a 'particular vessel; or if, being with the owner, the agreement with him, or the circumstances, had shown an intended subrogation as the basis of the loan, the subrogation should be upheld and enforced, .as a direct lien would be. Here the circumstances and the negotiations show what the basis of the guaranty was, viz., a lien, as I rhave found, upon the freights alone. No subrogation to Brazilian liens was mentioned or referred to in the negotiations with Mr. Babbige; and afterwards, no such attention was given either to the 'facts raising a lien if there was any in favor' of Brazilian material men, 01' to the evidence thereof, or to its preservation, or to the amount of such liens, as was to be expected had the least idea of :any such subrogation been entertained at the time when the guar· anties were given; The transaction, moreover, was not precisely equivalent to a loan -of money made by Mr. Huntington and Pratt & Co. at that time, 'or toa loan made in Brazil. It was, in fact, a loan of their credit only. The negotiations, the guaranty, and the final payment of the moneys by Huntington et al. about four months afterwards, were all in New York. The money to pay the bills in Brazil was raised by the superintendent there by the sale of drafts in Rio at 90 days' sight on London, although the company was able to procure the drafts only upon the credit of Mr. Huntington and Pratt & Co. as guarantors. With the moneys thus raised, the superintendent paid the bills of the different ships, and presumably discharged all liens for those bills, if there were any existing liens therefor. At that time Buntington and Pratt & Co. could not have had any lien by subrogation for the bills paid, without an agreement therefor; be-cause the company was the primary debtor for the moneys raised by the drafts, and Huntington and Pratt & Co. were only guarantors, or sureties; they had not, as yet, advanced any of these moneys to pay the ship's bills, and they might never pay anything on the drafts; either because the steamship company itself might have paid the drafts at maturity some four months afterwards, as it was primarily bound to do; or because the guarantors themselves might have failed to pay them upon the company's default. No lien, or subrogation to any lien, could be implied by law until they had advanced money to aid the ship. Nothing but a specific agreement with the owner could keep alive for purposes of subrogation such former liens, if there were any, for' bills which the company had thus paid with the proceeds of its own drafts; and there was no such agreement. Again, the money that paid the ship's bills was not the money of Huntington and Pratt & Co.; although their guaranty enabled the to procure it. It was the company's money, derived immediately from the persons who purchased the company's drafts in
It is certain that those purchasers had no lien, by subrogation qr.otherwise; because they did not buy the draftaon any credit of !thEtisJ,lip, or with reference to any liens to which they might be sub.roi§8;teq;so that aside from$ome contract between these parties, ,1 dot lOt perceive how Huntington and Pratt & Co., by the mere ,pay.II1etit of those purchased· drafts, as guarantors, three or four ,monthS'· afterwards, could acquire any lien by subrogation. Hard v. The Advance, 63 .Fed. 142. For the same reasons mostly, I cannot sustain any direct lien independently of the contract..The dealings here, asI ·hal'e said, were all with the steamship eompany,the owner, in New York, the homeipbrt. Neither Brown Bros. & Co" nor Huntington and Pratt & Co., had at any time any dealings whatsoever with the vessels in Brazil;Jlor with the masters there; nor with the material men in Brazil;. nor even withthe agent or superintendent there. Nor did they even send or deliver anything whatever to anyone of these vessels, or to its master, in the foreign port, as was done. in the cited cases of'The Sarah J,Weed, 2 Low. 555, Fed. Cas. No. 12,350; The Agnes Bal'ton, 26 Fed. 542; The Chelmsford, 34 Fed. 399; The Bombay, 88Fed; 512; and The James Farrell, 36 Fed. 500,-to which reference has been made. In those cases it was the latter circumstance alone-the fact that the dealings of the lienors were not with: the owners only, but directly with the ships and masters as well; the fact that the lienors made delivery of the supplies directly to the ship and master in a foreign port-that permitted the inference.of a common intent to deal upon the credit 01 the ship, even though,the articles were sent and delivered to the ship on the owners' request Hel'e those circumstances do not exist; and the dealings being exclusively with the steamship company as owner, and in the home port, the well-settled presumption, in the absence of any reference to ship or freights as a basis of credit, would be that only .a personal credit of the owner was intended. In such cases a lien will be recognized when, and only when, sufficient affirmative evidence appears of a common intent to deal on the credit of the ship or freight. The James Guy, 1 Ben. 112, Fed. Cas. No. 7,195; Id.,5 Blatchf.r496, Fed. Cas. No. 7,196; Id., 9 Wall. 758; The Kalorama, 10 Wall. 204; The Patapsco, 13 Wall. 329; The Union Express, Brown, Ad,m. 538, Fed. Cas. No. 14,364; Thomas v. Osborn, 19 How. 22; The Ftaneis, 21 Fed. 715, 921; The Havana, 54 Fed. 201; The Stroma, 3 0.. C. A. 530, 53 Fed. 281, 283; The Kate, 56 Fed. 616. The transaction, as respects Huntington and Pratt & Co., was a loan, not of· their money, but of their credit, to the shipowners, to enable the latter· to raise money to disburse the ships on the strength of their guaranty, as in Nippert v. Williams, 42 Fed. 533. For this guaranty and loan of credit, they were entitled to just such liens as the agreement at the time of the negotiations gave them, and no more. For a loan of credit as guarantor only, upon a dealing exclusively with the owner, I find no principle or authority for recognizing any other maritime or equitable lien, either directly or by subrogation, beyond what their agreement gives; and that, in this case, was for a lien on the freights alone. The libel and petition
of Huntington and Pratt & Co. as respects the proceeds of the four vessels must, therefore, be also dismissed. The Atlantic Trust Company, as mortgagee, having a vested intereatin the vessels under the mortgage for $1,250,000, and its legal title having become absolute by the default in the mortgage before the receiver's appointment, is exclusively entitled, as I find, to the surplus proceeds of these vessels, as against the other claims set forth in the above libels and petitions; but subject to the payment of any other maritime liens already decreed, or which may be hereafter decreed in pending actions.
THE VIGILANCIA. THE SEGURANCA. HUNTINGTON et 0.1. v. FREIGHTS OF THE VIGILANCIA et 0.1. SAME v. THE SEGURANCA et 0.1. BROWN et 0.1. v. FREIGHTS 'rHE SEGURANCA et ai. ATLANTIC TRUST CO. v. SAME. GRAY, Receiver, v. SAME. (District Court, S. D. New York. October 16, 1894.) 1.
MARITIME LIEN-FREIGHTS-STATE COURT DEPOSITARy-CONFLICT--ATTACHMENT IN ADMIRALTY.
Where maritime freights were proceeded against In the state court in equity without jurisdiction, and were in the hands of a depositary: Held. that a· subsequent attachment in admiralty to enforce a maritime lien thereon was valid.
Ht'POTHECATION OF FREIGHTS-LETTERS OF CREDIT-MORTGAGEE-RECEIVER.
Upon facts and claims of the same general nature as in the caSe of Freights of the Kate, 63 Fed. 707, the same rules applied.
Brown and others. Carter & Ledyard, Mr. Baylies, and Mr. Goodrich, for petitioner Atlantic Trust mortgagee. Stetson, Tracy, Jennings & Russell and Mr. Van Sinderen, forpetitioner Henry Winthr-op Gray, receiver of U. S. & Brazil Mail S. S. Co. BROWN, District Judge. The libel first above named was filed on April 13, 1894, to enforce an alleged maritime lien upon the sum of about $30,000, on deposit in the Central Trust Company of this city, being the net freights earned by the steamships Advance, Allianca and Vigilancia on their last voyages respectively from Brazil to this port, all arriving on the same day, February 21, 1893. The steamers all belonged to the United States & Brazil Mail Steamship Company, and run in their sen-ice. That company failed on February 23, 1893. On March 18, 1893, the petitioner Gray was appointed receiver by the state court, and that appointment was made permanent on March 6, 1894.
In Admiralty. Liens upon freights. Benedict & Benedict, for libellant C. P. Huntington. Cary "& Whitridge and W. P. Butler, for petitioners John Crosby