Globe Iron-Works Co. v. Huron Transp. Co.

LURTON, Circuit Judge, after malting the foregoing statement of facts, delivered the opinion of the court. The appellant, who was the complainant below, asserts a lien upon the John B. Ketcham, 2d, upon the facts already stated, by virtue of section 5880 of the Revised Statutes of Ohio, which is as follows: “Any steamboat or other water craft navigating the waters within or bordering upon this'state, shall be liable, and such liability shall be a lien thereon, for all debts contracted on account 1 hereof by the master, owner, steward, consignee or other agent, for materials, supplies or labor in the building, repairing, furnishing or equipping of the same, or for insurance or due for wharf-age, and also for damages arising out of any contract for the transportation of goods or persons or for injuries done to persons or property by such craft, or for any damage or injury done by the captain, mate or other officer thereof, or by any person under the order or sanction of either of them, to any person who is a passenger or hand on such steamboat, or other water craft at the time of the inflicting of such damage or injury.” The right to enforce the lien thus acquired under the Ohio statutes in a Michigan court is claimed under chapter 285, How. Ann. St. Mich. One section (8278) of that chapter is in these words: “In cases where, by the general maritime law or laws of any other of the United States, now or hereafter to be passed, liens similar to those provided for in this act shall have been created against water-craft, the same may be enforced under the proceedings established by this act in like manner as if they accrued in tills state, and chattel mortgages upon such water-craft, or other interest therein held in such other states, under the la.ws thereof, may be enforced hereunder against surplus proceeds, in like manner as if held in this state under its la.ws.” That the lien secured by the Ohio statute is a lien similar to those provided for by chapter 285, How. Ann. St, and may therefore be enforced under the procedure established by that chapter, has been expressly decided. Globe Iron-Works Co. v. The John B. Ketcham, 2d, 100 Mich. 583, 59 N. W. 247. The primary question is this: Did the Globe Iron-Works Company acquire a lien under the Ohio statute, above set out, for the price of the boiler and- attachments sold to Bills & Koch, and used in the construction of the John B. Ketcham, 2d? The answer must depend upon the relation which the purchasers bore to that vessel while in process of construction. When the contract was made by Bills & Koch with the Globe Company, and when the boiler, etc., were unloaded on the dock of the Craig Shipbuilding Company, the vessel, for which the Globe Company knew they were intended and designed', was yet on the stocks. The statute gives the lien only in favor of “debts contracted on account” of the vessel, “by the master, owner, steward, consignee, or other agent.” Confessedly, Bills & Koch were neither the “master,” “steward,” nor “consignee” of the vessel. The contention is that they were the “owners,” a,nd that for this reason the statutory lien attached, if, as was the case, the articles were designed and intended for this particular, vessel. — 876 — The learned trial judge found, upon the law and facts, that Bills & Koch were not the owners when this machinery was bought or delivered, nor until long after the vessel was delivered to them by the contractors. The rightness of'this conclusion depends mainly upon the construction of the contract under which the vessel was being built for Bills & Koch as ultimate owners. That contract has been set out in full. It provides for a complete vessel. The contractors agreed to furnish all materials (the engine, boilers, etc., excepted), and to complete the ship in every particular, and deliver same May Í, 1892, certain contingencies excepted. Bills & Koch were to furnish, as needed, the engines, boilers, and attachments, and to pay $60,000 in money. The payments were to be made as follows: $5,080, April 1, 1892; $10,000, August 15, 1892; $12,500,. August 15, 1893; $12,500, August 15, 1894; and $10,000, October 15, 1895. The contract does not in terms provide that the general property shall pass to Bills & Koch before completion and delivery of the vessel, and if under it the incomplete vessel passed to them it must be because such an intention is to be implied from the fact that a particular vessel was to be built for them, for which they were to furnish the engine and boilers, and upon which they were to make a payment in advance of completion and delivery. The general rule is that where one contracts for the building or making of a chattel, not existing in specie at the time, no property vests in the purchaser during the progress of the work, nor until the thing is finished and delivered. Butterworth v. McKinly, 11 Humph. 206; Mucklow v. Mangles, 1 Taunt. 319; Wood v. Bell, 5 El. & Bl. 772. There are certain exceptions to this general rule, the most specific of which is known as the rule in Woods v. Russell, 5 Barn. & Ald. 942, as interpreted in the later case of Clarke v. Spence, 4 Adol. & E. 448. In Woods v. Russell the shipbuilder had contracted with the defendant to build a ship for him and complete her in April, 1819. The defendant agreed to pay for her in four installments, — one when the keel was laid, the second at the light plank, and the third and fourth when the ship was launched. The ship was measured,- with the builder’s privity, while yet unfinished, in order that defendant might get her registered in his name, and the builder signed the certificate necessary for her registry, and the ship was registered in defendant’s name on the 28th of June, and he paid the third installment. On the previous March the defendant appointed a master, who superintended her building, and who chartered her on.June 16th for a voyage, with the shipbuilder’s consent, June the 30th the builder committed an act of bankruptcy, and the assignees in bankruptcy brought an action of trover against the defendant, who had taken possession before completion, but after the act of bankruptcy. It was held, on these facts, that the general property in the ship had passed to the defendant from the time of registration in defendant’s name with the builder’s, consent. In Clarke v. Spence, cited above, the contest was between the assignees of a bankrupt shipbuilder named Brunton and the plaintiff. In February, 1832, Brunton had agreed to build a ship for a — 877 — specified price, according to certain specifications, and under the superintendence of an agent appointed by the plaintiff. One installment was to be paid when the ship was rammed, a second when timbered, a third when decked, a fourth when launched, and the residue in four and six months thereafter. After the vessel had been rammed and timbered, and two installments of the price paid, and a part of the third installment paid in advance, Brunton became a bankrupt, having received in all £1,002. 11s., and the frame of the vessel was then worth £1,691. 13s. 7d. The title was held to have passed to the plaintiff. The court held that certain passages in the opinion in Woods v. Russell were “founded on the notion that provision for the payment regulated by particular stages of the work is made in the contract with a view to give the purchaser the security of certain portions of the work for the money he is to pay, and is equivalent to an express provision that, on the payment of the first installment, the general property in so much of the vessel as is then constructed shall vest in the purchaser.” To bring a case within the exceptions to the general rule, it is necessary to show that the intention of the parties was that the general property should pass to the purchaser at some stage of the building. Thus, in Laidler v. Burlinson, 2 Mees. & W. 602, Lord Abinger said: “There is no occasion to qualify the doctrine laid down in Woods v. Russell or Clarke v. Spence. I consider the principle which those cases establish to be that a man may purchase a ship as it is in progress of building, and, by the terms employed there, the contract was of that character; a superintendent was employed, and money paid at particular stages.” In Wood v. Bell, 5 El. & Bl. 772, Lord Campbell, C. J.. after stating the general rule in respect to the sale of a chattel to be constructed, said: “But these general rules are both and equally founded on the presumed intention of the parties. If, in the first, there are attendant circumstances from which the intention may be inferred that the property shall pass in the incomplete and growing chattel as the manufacture of it proceeds, or even in ascertained materials from which it is to be carried to perfection, that intention will be effectuated; and equally, in the latter, if it appear that the parties intended to postpone the transfer of the property till the payment of the price or the performance o'f any other condition, such intention will foe upheld in the courts of law.” “This principle,” he added, “we believe to be well settled;” and, referring to the cases of Woods v. Russell, Clarke v. Spence, Laidler v. Burlinson, and others, cited in argument, he remarked that “previous decisions, therefore, axe mainly useful as serving to guide our judgment in estimating the weight of circumstances as evidence of intention”; and concluded by saying: “Still it must be remembered, after all, that what we have to determine is a question of fact, namely, what, upon a careful consideration of all the circumstances, we believe to have been the contract into which the parties have entered.” The fact that the purchase price is to be paid ip installments, having relationship to the progress of the work, has not been generally — 878 — accepted by American courts as conclusive evidence of an intent that the general property in the incomplete chattel should pass to the purchaser. Benj. Sales, § 398 et seq.; Clarkson v. Stevens, 106 U. S. 505-515, 1 Sup. Ct. 200, 27 L. Ed. 139; Andrews v. Durant, 11 N. Y. 35; Williams v. Jackman, 16 Gray, 514; Green v. Hall, 1 Houst. 506; West Jersey R. Co. v. Trenton Car Works Co., 32 N. J. Law, 517; Elliott v. Edwards, 35 N. J. Law, 265. Butterworth v. McKinly, 11 Humph. 206, has been cited as approving the arbitrary rule of intention supposed to be established by Woods v. Russell. An examination of the case will show that this is a misinterpretation of the effect of Judge Totten’s opinion. Clark-son v. Stevens, cited above, involved a contract between the United States and a shipbuilder, where the builder was to furnish the materials and labor, and to receive a sum, payable in installments, as the work progressed. After a review of many of the English and American cases, Justice Matthews said: “The courts of this country have not adopted any arbitrary rule of construction as controlling such agreements, but consider the question of intent open in every case, to be determined upon the terms of the contract and the circumstances attending the transaction. 1 Pars. Shipp. & Adm. 63. And such seems to us to be the true principle. Accordingly, we are of opinion that the fact that advances were made out of the purchase money, according to' the contract, for the cost of the work as it progressed, and that the government was authorized to require the presence of an agent to join in certifying to the accounts, are not conclusive evidence of an intent that the property in the ship should vest in the United States prior to final delivery.” The contract under which the vessel in question was being constructed for Bills & Koch did not provide for payments of the purchase price as the work progressed, and did not provide for any superintendence by the purchaser during construction. But ¡¡>5,000 of the price was to be paid in advance of completion and delivery, and that payment was without any regard to the proportion of the work then done. In the fact that the advance payment did not relate to the progress of the work on the vessel, the case is plainly taken out of the doctrine of Woods v. Russell and Clarke v. Spence, and is in accord with Williams v. Jackman, 16 Gray, 514-518. The fact that the engine and boilers were supplied by the purchaser, and worked into the steamer by the builder, does not alter the case. Whether we consider the furnishing .of those articles as payment of part of the price of a completéd steamer, or as the property of the buyer and put into the ship by the builder, the general property in the ship would remain in the builder, and the articles, if so attached as to become parts-of the ship, would pass to the owner of the ship. The case in that respect is like that of the West Jersey R. Co. v. Trenton Car Works Co., 34 N. J. Law, 517, where the purchaser of certain cars furnished the plush which was worked into the seats of cars built for the buyer. This was held not to pass the title in the cars to the buyer. The. view we have taken leads to the conclusion that Bills & Koch were not the owners of the vessel, either when the boiler and attachments were bought or when delivered in. the shipyard of the Craig Shipbuilding Company, and could not, therefore, incumber the vessel with any lien, — 879 — under the Ohio statute. They boro no such relation to the ship or its builders as constituted them either the owners of the ship or the agents of the contracting builders. The case of The Etna v. Treat, 15 Ohio, 585-589, is much in point, as it arose under the Ohio statute here involved. Trent contracted to build two canal boats for Standart, Griffiths & Co. for a specific price. Standart, Griffith & Co. were to furnish such materials out of their store as should be needed in course of construction, and pay $500 on delivery of the boats, and the balance as the boats earned the money. The hardware needed was furnished, and a small sum in money was paid when the boats were delivered. Without completing the payments for the boats, Standart, Griffith & Co. sold them for cash to a purchaser who had notice that they had not been paid for. Treat, the builder, sought to enforce a lien against the boats for the balance due him under the Ohio statute here involved. The court held that Treat continued to be the owner of the boats until he made delivery to Standart, Griffith & Co. Upon this subject the Ohio supreme court said: “Treat had contracted to build her and deliver her at a particular time. Before the delivery she was, undoubtedly, Ms property. lie was the owner and had the absolute control of her. He might have broken her up at any moment, and a sale and transfer by him to- any stranger would have vested in that stranger a valid legal title. If transferred without notice of the contract between him and Standart, Griffith & Co., the purchasers would have had a perfect title to the boat, — one that nothing could have affected save the debts which Treat, himself had contracted, as owner, for supplies, etc., furnished in building the Etna. For those debts the boat was liable, and a Iransfer by Treat to any person, or under any eircumsianees, without nolice of those debts, or the assent expressly or tacitly given by them, would not have prevented Standart, Griffith & Co., or the hands that labored upon the boat in assisting to build her, from attaching and selling her, under the statute, to satisfy their claims. The object of the aci was to provide a remedy for those who otherwise might be defrauded, hindered, or delayed in collecting their just claims, and to save them the inconvenience of seeking out the owners, and subjecting them to the payment of the debts contracted by their authority. Looking to this object and to the facts of the case, and all difficully about the law or its application vanishes. Treat could not recover. His claim was not for a debt contracted for labor, supplies, or materials in the building of the boat. A debt cannot exist without a debtor and a creditor. It is something which grows out of a contract, and to every eoniract there must be two parties; the contractor, who is to be bound by it, and the conlractee, to whom ho is bound. Treat could not contract with himself to furnish himself materials for his own boat, any more than he could sue himself for breaking such a contract. Both ideas are absurd, one not more so than the other. His claim, then, is simply a claim for tlie price due upon the sale and delivery of the boat, and does not come within the letter or spirit of the statute.” The doctrine of this case was approved in Treat v. The Etna, 16 Ohio, 276, and Webster v. The Andes, 18 Ohio, 187. In the latter case the facts were that Lewis and Beardsley contracted for the construction of a brig of certain dimensions, for which they agreed to pay $21 per ton, custom-house measurement. The contract provided that Lewis and Beardsley might, as the wo-rk progressed, ‘‘pay in materials for building said vessel, or by paying for [sic] secure for same, at said Lewis and Beardsley’s option, not exceeding an amount which shall be $2,000 less than the whole vessel — 880 — shall amount to; but may, if required by said Arnold, equal that amount; * * * the remaining $2,000 to be paid in six and fifteen months after delivery.” K; was further agreed "that said vessel, frame, and materials shall remain in the possession of said Lewis '& Beardsley as fast as got out or put together, as a guaranty that the said vessel shall be built and finished as above,” and that Arnold, the builder, should have a lien after completion and delivery to secure the aforesaid balance of $2,000. The suit was by a laborer who had been employed' by a contractor under Arnold, the builder, to enforce a lien under the Ohio water craft lien law now here involved, against the vessel after it had been paid for and delivered to the purchasers, Lewis and Beardsley. The Ohio court held: First, that Lewis and Beardsley, by the building contract, in order to secure their advancements, had "stipulated for the ownership and possession of the vessel from the laying of the keel upwards”; that thereby Lewis and Beardsley had “brought themselves most clearly within the meaning of the statute, as the owners of the Andes, when the labor was performed by the plaintiff.” Second, that the plaintiff was entitled to a lien under the statute, having performed work upon the vessel at the instance of those at the time in the rightful control thereof. In other words, the court found that under .the building contract the purchasers contracted for the ownership and possession from the laying of the keel up, and that the builder was in control of the construction as the mere agent of the owner, and might therefore charge the vessel with a lien for work and iabor done on the vessel. The conclusion was clearly right upon the facts, but the case has no bearing here, because Bills & Koch were not the owners, and were not in possession through the Craig Company or otherwise. The defendant in error has insisted that the contract here involved is a maritime contract, of which the admiralty courts of the United States have exclusive jurisdiction. The contract between the appellant and Bills & Koch was for the construction of machinery for a vessel in course of construction, and before it was launched. Such a contract is a nonmaritime contract, and liens arising under state laws out of such contracts may be enforced in state courts. In The J. E. Rumbell, 148 U. S. 1-11, 13 Sup. Ct 498, 37 L. Ed. 345, it is said: “It is now settled tliat a contract for building a ship, being a contract made on land, and to be performed on land, is not a maritime contract, and that a lien to secure, given by local statute, is not a maritime lien, and cannot, therefore, be enforced in admiralty.” There is no error, and the judgment is affirmed.