Colonial Beach Co. v. Quemahoning Coal Co.

ROSE, District Judge. The Quemahoning Coal Company, Incorporated, and Coale & Co., referred to herein as the “supply men,” libeled the steamer St. John, belonging to the Colonial Beach Company, called the “owner,” for the price of sundry lots of bunker coals furnished the [1006] steamer upon the order of the person intrusted with her management at the port of supply, by the Baltimore & Southern Navigation Company, styled the “charterer,” then in possession of her, under a written agreement primarily of conditional sale, but which, in certain contingencies, was to be considered as a charter party, and by which the charterer promised not to incur any debts upon the credit of the steamer. It was in contemplation of both parties to the contract that the charterer should operate the vessel, and it was expressly provided that all proceeds from its operation should be applied first and immediately towards liquidating all operating expenses, pier rentals, necessary office expenses incident to the management of the vessel, and all debts and liabilities which would be a lien on the vessel; such debts and liabilities to be discharged in full as they arose, before the operating receipts were to be used for any other purpose. The charterer specifically promised not to incur any debts upon the credit of the vessel, and as required by the agreement deposited $10,-000 with a trust company to protect the owner against the consequence of any breach of its engagements, and subsequently, within the four months during which the vessel was in its possession, paid $45,000 on account of her purchase price of $90,000. Upon'the failure of the charterer to make further payment, the owner repossessed itself of the ship, and held both the sums mentioned, aggregating $55,000, as charter hire; -something which the terms of the contract authorized it to do. Nobody told Coale & Co., one of the supply men, that the person intrusted with the management of the St. John at the port of supply, was appointed by the charterer, and not by the owner, and Coale & Co. never asked any questions on the subject. The owner says that, in refraining from inquiry, Coale & Co. failed to exercise the reasonable diligence required by the proviso to the third section of the act of 1910 (Comp. St. § 7785). The Circuit Courts of Appeal for the Second, the Third, the Fifth, and the Ninth Circuits have held the law to be otherwise. The Oceana, 244 Fed. 80, 156 C. C. A. 508; The Yankee, 233 Fed. 926, 142 C. C. A. 593; The Yarmouth, 262 Fed. 254; The South Coast, 247 Fed. 89, 159 C. C. A. 302. We are of like mind. A supply man who knows nothing about a ship, other than it is a ship in possession of those who order supplies for her, may furnish them upon her credit, without making further inquiry, taking the chance — usually a remote one — that the possession of her was tortiously acquired. It is said that, whatever be true as to Coale & Co., the Quemahoning Coal Company, Inc., the other supply man, had been told that the ship was under charter. A witness so swears, but he is flatly contradicted by the agent of the supply man to whonp he says he gave the warning. Both men testified in the presence of the learned judge below. It may be he believed the one produced by the supply man rather than the other, who testified for the owner. As, however, he filed no opinion, it is possible that he may have based his decision in [1007] favor of the supply man upon other grounds. From our own examination of the record, we are persuaded that the version given by the agent of Coale & Co. is by far the more probable. The greater part of the coal was furnished in November, 1919. At that time those who had coal were sought by those who had need of it. They had no occasion to look for customers. It is scarcely conceivable that, under such conditions, the supply man would have knowingly bartered his coal for a lawsuit. It is easy to see how the vice president and manager of the charterer, who testified that he gave the information, may have been mistaken. He, at least in form, held the same positions contemporaneously with the owner, although he says that, while he was acting for the charterer, his connection with the owner was but nominal. However that may be, he knew all about their relations. It is one of the most common delusions of memory to suppose that we made clear to others what was, to us, a twice-told tale, when in fact we said nothing on the subject, or nothing that in any wise enlightened them. The Quemahoning Coal Company, Incorporated, must therefore be held equally with its fellow supply man to have been without notice that the St. John was under charter. It follows, from what has already been said, that each of them has a maritime lieu upon the ship for the value of the coal furnished, and the decree below was right. In so saying we do not wish to give the impression that we are of opinion that any other result would necessarily have followed, had either, or both, of the supply men known that the ship was under charter. We are not unmindful that in a number of well-considered cases it has been said that, if the supply man has notice that the ship is under charter, he is bound to inquire whether its terms forbid the charterer to pledge the credit of the-ship. But does such a holding give proper effect to the act of 1910? To say that notice of a charter puts a supply man upon inquiry is in effect to hold that there is no presumption that a charterer may charge the ship, but the statute says that precisely that presumption shall exist. The South Coast, 247 Fed. 89, 159 C. C. A. 302; The Yarmouth (C. C. A.) 262 Fed. 254. Affirmed.