Obrecht v. Vinyard

The Chancellor. The first question discussed by the United States District Attorney was whether the order of the District Court of the United States for the District of Maryland ordering that the two vessels be delivered to the United States can be reviewed in this Court, the complainant and other lienors having alleged that they had no notice or knowledge of the order, or of an application therefor, until long after the order had been made and the-vessels removed to Delaware, and therefore that the order was entirely ex parte. The theory of the United States Attorney is that the order cannot be attacked collaterally, and that the complainants and other lienors here are concluded thereby. Assuming that they could not attack here the power, or even the right of the Federal Court to make that order, the simple answer to his contention is that they are not doing so here. No decision has heretofore been made anywhere as to the rights of •the lienors to have and enforce their rights as against the vessels and as against any claim of the United States. They were given leave to file their claims in the Maryland state courts, and no right was given to the United States to contest them. They filed and recorded their liens, and, as alleged, acquired valid liens on the vessels, and whether any claim or interest of the United States in the vessels was subject thereto, or burdened therewith, was not there determined. All that happened was that the Federal Court in Maryland, after permitting the liens on the vessels to be filed and recorded, allowed the United States' to take the vessels and remove them from its territorial jurisdiction without notice to the lienors, and without protecting in any way the liens, as' might have been done. The fact that this was so done could not be construed as a denial of the right of the lienors to pursue their remedies against the vessels elsewhere, and to think otherwise would be to impugn the fairness of that Court. If, therefore, the lienors have a right to follow the vessels here and in this Court enforce their liens, there is no adjudication denying that right, — 356 — and to grant such right in this cause here would not be reviewing any order "of the Federal Court in Maryland. The second question discussed was, as stated by the United States District Attorney, whether the liens claimed by the complainants, if any were acquired, could be enforced against the possession of the United States. It was not questioned that the complainants and other lienors who have intervened and filed cross bills were entitled to liens under the laws of Maryland, and by filing and recording them did actually acquire in Maryland liens against the two vessels. It is asserted by the lienors, and there is no contention to the contrary, that the State court and not the Federal Court was the proper forum in which to enforce the liens created by the State statute for materials furnished in the construction of a vessel, it not being an admiralty case. The Winnebago, 205 U. S. 354, 27 Sup. Ct. 509, 51 L. Ed. 836. It was contended by the complainants, without the contrary being urged or shown, that a boat lien created by one State may be enforced by the courts in another State where the vessel is found, and that the removal of the vessel from the original jurisdiction did not defeat the lien. This was so decided in American Trust Co. v. W. & A. Fletcher, etc., Co., 173 Fed. 471, 97 C. C. A. 477, in which the lien for building a vessel given by the statute of New Jersey, where the vessel was built, was-enforced in Maine. But without deciding these questions, which are really not raised by the plea, the real question to be decided is whether the lienors can now enforce their claims against the vessels. Beyond question the liens of the complainant and others could have been enforced against the vessels prior to the delivery of possession thereof to the United States by the United States Court in Maryland. It is not necessary to go outside the case of U. S. v. Ansonia, etc., Co., 218 U. S. 452, 31 Sup. Ct. 49, 54 L. Ed. 1107, for authority to decide this branch of the case. In that case the Trigg Company had contracted with the United States to build three vessels, Benyuard, Mohawk and Galveston, for lump sums for each vessel. While the vessels were still under construction a bill was filed by creditors asserting liens for supplies — 357 — under the Virginia statute, a receiver was appointed for the Trigg Company on account of its insolvency and the receiver took possession of the vessels. A stipulation was then filed by the United States under the same statute as here, and the vessels were taken from the possession of the Virginia receiver. The question was whether the liens under the Virginia statute were superior to any claim or lien of the United States. It was held as to the Benyuard that the title thereto passed to the United States because the agreement with the builder provided that the parts as paid for should become the sole property of the United States, and thereby the builder was divested of any title to or in the vessel; and, therefore, the liens under the State law could not fasten on the vessel as property of the United States. “The Benyuard, as fast as constructed, became one of the instrumentalities of the Government, intended for public use, and could not be seized under State laws to answer the claim of a private person, however meritorious. ’ ’ But-the contrary was held as to the other two vessels because the contracts contained no such provision as to the passing of title on partial payments in the progress of the work, as was found in the contract for building the Benyuard. Furthermore, in the contract as to the Mohawk a lien was reserved to the United States for all moneys advanced on account of construction, and this provision was inserted pursuant to a joint resolution of Congress authorizing it in all such contracts. It was held to be a contract and not a státutory lien and gave the United States no rights as to the vessel superior to that of the lienors under the Virginia statute. The same principles were applied to the third vessel, the Galveston, as to which there was no provision for taking title, though it was provided that on certain conditions the title should vest in the United States as collateral security. In this cited case, then, the distinction is sharply drawn between the effect of contracts wherein it was agreed that title to the vessel should pass from the builder prior to the completion of the vessel. The Court made the question of the title of the United States the pivotal consideration, and in effect held that if at the time the right of the material men to a lien on a vessel accrued, the title to the vessel, or to any materials which went into the construction thereof, was in the United States pursuant to a contract with — 358 — the builder, the liens given by a state statute to such material men could not validly attach; otherwise they could. The case of Briggs v. A Light Boat, 11 Allen (Mass.) 157, relied on by the United States District Attorney, is probably not inconsistent with the Ansonia Case, for the Court there distinctly said: "When these suits were begun, the vessels, though the petitioners had an interest in them by way of lien, were the lawful property of the United States, and in their possession.” In that case, therefore, title as well as possession was in the United States. If on the other hand there be an inconsistency between the cases, the decision of the Supreme Court of the United States should be and is given greater weight than that of the State court in determining the right of the United States. In the case in this Court there was no agreement transferring title by partial payments, and there is no feature of the contract which gives to the United States any greater rights or prior or superior remedies over the material men than those given them by the Maryland statute. In further support of this position the general principle is that the builder of a vessel is not deprived of his property therein by payments made as the work progresses, unless it be so agreed upon in the contract. This was decided by the Court of Errors and Appeals of Delaware in Hall v. Green, 1 Houst. 546, 71 Am. Dec. 96. It is urgently insisted by the United States District Attorney, however, that the liens of the complainants and other intervenors, if they have acquired any, could not be enforced against the possession of the United States, and he quite frankly urges that they may have a right, but no remedy. A sovereign cannot be sued without its consent, and the Federal statute permitting such suits does not apply to a suit in the State court. But there is no general principle that a lien established against a vessel being built for the United States cannot while it is still in the possession of the builder for completion, and before it had become the property of the United States, be enforced against the vessel in the court of a state wherein the vessel is found, and no case so holding has been cited or found. The case most relied on, Briggs v. A Light Boat, 11 Allen (Mass.) 157, does not so hold, and was a — 359 — different case. There the United States was a defendant, the title to the vessels had vested in the United States, and possession of the vessels had been taken by the United States for use for the purposes for which they were built. The decision was based on the title and possession which the United States had to the vessels, and under such circumstances the lienor was denied a right to enforce his lien when to do so would necessarily under the laws of Massachusetts bring in the United States ás a party defendant by notice deemed equivalent in legal effect to a process. This case decides, according to the court in The Davis, 10 Wall. 15, 19 L. Ed. 875, also cited as U. S. v. Douglas, that proceedings in rem to enforce a lien against property of the United States are only forbidden in cases where in order to sustain the proceedings the possession of the United States must be invaded under process of the court. None of these features, prominent in Briggs v. A Light Boat, 11 Allen (Mass.) 157, are present-in the case under consideration. The title to the two tug boats was not in the United States, but in the Maryland builder, or its receiver, or trustee in bankruptcy, and they were all made parties defendant. No transfer of title, which clearly was originally in the Maryland builder, was made by the District Court of the United States for the District of Maryland, for that Court simply delivered to the United States possession of the incompleted boats, and the property therein must have remained in the builder and passed to its trustee in bankruptcy. The United States received from the Maryland court nothing more than possession of the vessels, and took that possession as it would have taken title if it had been awarded, namely, subject to the liens. Furthermore, there is no indication of an intention of the Maryland court to affect these liens, and to suggest such an intention is to charge that court with having deprived the lienors of rights which they had then acquired with the knowledge and by authority of that court against the vessels, even ;as against the United States. At the time the bill in this case was filed the vessels were surely in the custody and control of Vinyard, not as an offi :cr, servant or agent of the United States, but as a builder to complete their construction. This was a delivery to him of possession, — 360 — as well as control, and the process in this pending case was served without bringing the sheriff who served it into collision with any officer of the government, or with any person making use of the vessels in the service of the government. A decision of the United States Supreme Court bearing directly on this principle and establishing it is The Davis, supra. There cotton belonging to the United States was put aboard a privately owned vessel to be transported from one port to another and delivered to an officer of the United States. A lien for salvage service rendered during the voyage was enforced, the physical as distinct from the constructive possession being in the Master of the vessel for the purpose of the voyage. After stating the rule that a lien, even for salvage, “can only be enforced by the courts in-a proceeding which does not need a process against the United States, and which does not require that property shall be taken out of the possession of the United States,” the Court at page 20 of 10 Wall. (19 L. Ed. 875) said: “We are therefore compelled to inquire into the special circumstances of this case to ascertain whether the cotton, which was the subject of salvage, can be brought within the jurisdiction of the court without violating the principle we have stated. * * * But what shall constitute a possession which, in reference to this matter, protects the goods from the process of the court. The possession which would do this must be an actual possession and not that mere constructive possession which is very often implied by reason of ownership under circumstances favorable to such implication. We are speaking now of a possession which can only be changed under process of the court by bringing the officer of the court into collission with the officer of the Government, if the latter should choose to resist. The possession of the Government can only exist through some of its officers, using that phrase in the sense of any person charged on behalf of the Government with the control of the property, coupled with its actual possession. This, we think, is a sufficiently liberal definition of the possession of property by the Government to prevent any unseemly conflict between the court and the other departments of the Government, and which is consistent with the principle which exempts the Government from suit and its possession from disturbance by virtue of judicial process.” Applying these principles to the facts before it, the Court said: “The possession of the master * * * was not the possession of the United States. He was in no sense an officer of the Government. He was acting for himself, under a contract which placed the property in his possession and exclusive control for the voyage.” — 361 — Even if it be a salvage case, and therefore given special favor, this case is sufficient authority to sustain the jurisdiction of this Court, even though the United States had expended money on the vessels, which were still incomplete and not fit for the purpose for which they were being built, and had not in fact been used for such purpose. The possession of the United States was not invaded in a way deemed inconsistent with its sovereignty. The case in this Court- cannot be distinguished from that above cited, and Vinyard so far as possession was concerned was in the same position as the master of the vessel. Nothing in the contract made by Vinyard with the United States for completing the tug boats has been pointed out as showing that Vinyard’s relation to the vessels was other than stated above. It is clear, then, that there is no invasion of the rights of the United States as sovereign by the taking possession of said vessels by the receiver appointed in this cause, and the plea will be overruled.