"Admiralty Lien Priority Dispute"
"Admiralty Lien Priority Dispute"
1
13 S.Ct. 498
37 L.Ed. 345
THE J. E. RUMBELL.
No. 1,117.
March 6, 1893.
Statement by Mr. Justice GRAY: This was a certificate from the circuit court of
appeals for the seventh circuit, under the act of March 3, 1891, c. 517, 6, (26 St.
828,) of a question upon which it desired the instruction of this court in an admiralty
appeal. The case, as stated in the certificate, was as follows:
On August 15, 1891, under a writ of venditioni exponas from the district
court of the United States for the northern district of Illinois, in admiralty,
the propeller J. E. Rumbell was sold by the marshal for the sum of
$1,850, and the proceeds were paid into the registry of the court.
On August 21, 1891, F. August Reich and August Reich, partners under
the name of F. A. Reich & Son, former owners of the vessel, who had
sold and delivered her to Michael C. Hayes on April 23, 1891, filed a
petition against those proceeds, claiming the sum of $3,000 and interest,
due upon notes given to them by Hayes for the purchase money, and
secured by mortgage of the vessel, executed by Hayes to them on the day
of the sale, and recorded on the same day in the office of the collector of
customs of the port of Chicago, the residence of the owner, and the home
port of the vessel, under section 4192 of the Revised Statutes of the
United States. In that mortgage it was provided that if at any time there
should be any default of payment, or if the mortgagees should deem
themselves in danger of losing any part of the debt by delaying its
collection until the time limited for its payment, or if the mortgagor
should suffer the vessel to run in debt beyond the sum of $150, the
mortgagees might immediately take possession of the vessel, and, after 10
days' notice to the mortgagor, sell her to satisfy the mortgage debt. The
petition of the mortgagees alleged that each of these contingencies had
happened.
On September 16, 1891, George C. Finney and others filed a petition
against said proceeds for sums due to the petitioners severally, and
amounting in all to $1,108.56, for ship chandler's supplies, engineer's
supplies, groceries, provisions, fuel, lumber, and repairs, bought for and
furnished to the vessel at the port of Chicago since the recording of the
mortgage, and used for the benefit of the vessel, and alleged to have been
reasonable and proper to be furnished and done; and also for the sum of
$220, due to Patrick Bowe, one of these petitioners, for services as master
of the vessel since the recording of the mortgage; 'for which supplies,
repairs, and services' (the certificate stated) 'there was a lien upon the said
vessel under the laws of the state of Illinois.'
The district court found and adjudged that the sums claimed in each
petition were due to the petitioners respectively; that in the distribution of
the proceeds the claim of the mortgagees, Reich & Son, should have
priority over that of the other petitioners, Finney and others; and that the
entire proceeds of the sale of the vessel, amounting (after payment of
seamen's wages and preferred claims for towage and salvage) to
$1,105.59, should be paid to the mortgagees.
Finney and others appealed to the circuit court of appeals, which certified
to this court the following question: 'Whether a claim arising upon a
vessel mortgage is to be preferred to the claim for supplies and necessaries
furnished to a vessel in its home port in the state of Illinois subsequently to
the date of the recording of the mortgage.'
C. E. Kremer, for Finney and others.
Chas. E. Pope, for Reich and others.
[Argument of Counsel from pages 3-9 intentionally omitted]
Mr. Justice GRAY, after stating the facts in the foregoing language,
delivered the opinion of the court.
By the admiralty law, maritime liens or privileges for necessary advances made
or supplies furnished to keep a vessel fit for sea take precedence of all prior
claims upon her, unless for seamen's wages or salvage. It is upon this ground,
that such advances or supplies, made or furnished in good faith to the master in
a foreign port, are preferred to a prior mortgage, or to a forfeiture to the United
States for a precedent violation of the navigation laws. The St. Jago de Cuba, 9
Wheat. 409, 416; The Emily Souder, 17 Wall. 666, 672.
In The St. Jago de Cuba, Mr. Justice Johnson, in delivering judgment, and
speaking of the lien of material men and other implied liens under maritime
contracts, said: 'The whole object of giving admiralty process and priority of
payment to privileged creditors is to furnish wings and legs to' the vessel 'to get
back for the benefit of all concerned; that is, to complete her voyage.' 'In every
case the last lien given will supersede the preceding. The last bottomry bond
will ride over all that precede it, and an abandonment to a salvor will supersede
every prior claim. The vessel must get on. This is the consideration which
controls every other; and not only the vessel, but even the cargo, is sub modo
subjected to this necessity.' 9 Wheat. 416.
3
In the Yankee Blade, 19 How. 82, 89, 90, Mr. Justice Grier, speaking for this
court, said: 'The maritime privilege or lien is adopted from the civil law, and
imports a tacit hypothecation of the subject of it. It is a jus in re, without actual
possession, or any right of possession. It accompanies the property into the
hands of a bona fide purchaser. It can be executed and divested only by a
proceeding in rem. This sort of proceeding against personal property is
unknown to the common law, and is peculiar to the process of courts of
admiralty. The foreign and other attachments of property in the state courts,
though by analogy loosely termed 'proceedings in rem,' are evidently not within
the category.' 'These principles will be found stated, and fully vindicated by
authority, in the cases of The Young Mechanic, 2 Curt. 404, and The Kiersage,
Id. 421.'
Both the decisions of Mr. Justice Curtis, thus referred to, depended on a statute
of Maine, giving in general terms a lien upon a vessel for labor performed or
materials furnished in her construction or repair, without undertaking to fix the
comparative precedence of such liens.
In The Young Mechanic, after elaborate discussion of the nature of such a lien,
it was held to be a jus in re,a right of property in the thing itself,existing
independently of possession; 'an appropriation made by the law of a particular
thing as security for a debt or claim; the law creating an incumbrance thereon,
and vesting in the creditor what we term a special property in the thing, which
subsists from the moment when the debt or claim arises, and accompanies the
thing even into the hands of a purchaser.' 'Though tacitly created by the law,
and to be executed only by the aid of a court of justice, and resulting in a
judicial sale, it is as really a property in the thing, as the right of a pledgee, or
the lien of a bailee for work,' and is not 'only a privilege to arrest the vessel for
the debt, which, ofitself, constitutes no incumbrance on the vessel, and
becomes such only by virtue of an actual attachment.' 2 Curt. 406, 410, 412.
In The Kiersage, Mr. Justice Curtis held that the lien for labor and materials in
the home port had precedence over a prior mortgage; and, after observing that,
as he had held in The Young Mechanic, this lien 'was, in substance, a tacit
hypothecation of the vessel, as security for the debt.' 'a jus in re, constituting an
incumbrance on the property by operation of law,' he added: 'And there can be
no doubt that it takes effect wholly irrespective of the state of the title to the
vessel. Whether the vessel belongs to one or more persons,whether the title
has been so divided that one is a special and another a general owner,and
however it may be incumbered, the law gives the lien on the thing. The
mortgagees can have no claim to be preferred over the lienholder because of
their priority in time, for their interest in the vessel is as much subject to the
statute lien as the interest of any other party. It is not in the power of the owner
by his voluntary act to withdraw any part of the title from the operation of the
lien. If he could, he might altogether defeat it.' 2 Curt. 422, 423.
7
It was assumed in each of those cases that a lien given by the local law for
building a ship stood on the same ground as a lien under the same law for
repairing her. It has since been decided, and is now settled, that 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 it, given by local statute, is not
a maritime lien, and cannot, therefore, be enforced in admiralty. The Jefferson,
20 How. 393; The Capitol, 22 How. 129; Edwards v. Elliott, 21 Wall. 532. That
fact, however, does not affect the strength of the reasoning or the justness of the
conclusions of Mr. Justice Curtis as regards liens for repairs and supplies, and,
in relation to such liens, his view has been generally accepted in the admiralty
courts of the United States.
'A maritime lien, unlike a lien at common law, may,' said Mr. Justice Field,
speaking for this court, 'exist without possession of the thing upon which it is
asserted, either actual or constructive. It confers, however, upon its holder such
a right in the thing that he may subject it to condemnation and sale to satisfy his
claim for damages.' 'The only object of the proceedings in rem is to make this
right, where it exists, available,to carry it into effect. It subserves no other
purpose.' The Rock Island Bridge, 6 Wall. 213, 215. And in The Lottawanna,
Mr. Justice Bradley, speaking of a lien given by a statute of Louisiana for
repairs and supplies, said: 'A lien is a right of property, and not a mere matter of
procedure.' 21 Wall. 558, 579.
In the admiralty and maritime law of the United States, as declared and
established by the decisions of this court, the following propositions are no
longer doubtful:
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enforced in admiralty. The General Smith, 4 Wheat. 438, 443; The St. Jago de
Cuba, 9 Wheat. 409, 417; The Virgin, 8 Pet. 538, 550; The Laura, 19 How. 22;
The Grapeshot, 9 Wall. 129; The Lulu, 10 Wall. 192; The Kalorama, Id. 204.
11
Second. For repairs or supplies in the home port of the vessel no lien exists or
can be enforced in admiralty, under the general law, independently of local
statute. The General Smith, and The St. Jago de Cuba, above cited; The
Lottawanna, 21 Wall. 558; The Edith, 94 U. S. 518.
12
13
Fourth. This lien, in the nature of a maritime lien, and to be enforced by process
in the nature of admiralty process, is within the exclusive jurisdiction of the
courts of the United States sitting in admiralty. The Moses Taylor, 4 Wall. 411;
The Hine, Id. 555; The Belfast, 7 Wall. 624; The Lottawanna, 21 Wall. 558,
580; Johnson v. Elevator Co., 119 U. S. 388, 397, 7 Sup. Ct. Rep. 254.
14
15
The settled rules of jurisdiction and practice on this subject were stated by Mr.
Justice Bradley in The Lottawanna as follows: 'So long as congress does not
interpose to regulate the subject, the rights of material men furnishing
necessaries to a vessel in her home port may be regulated in each state by state
legislation. State laws, it is true, cannot exclude the contract for furnishing such
By the Revised Statutes of Illinois of 1874, (chapter 12, 1,) every sailing
vessel, steamboat, or other water craft of above five tons burden, used or
intended to be used in navigating the waters of the state, or used in trade and
commerce between ports and places within the state, or having her home port in
the state, 'shall be subject to a lien thereon' for all debts contracted by her owner
or master on account of supplies and provisions furnished for her use, or of
work done or services rendered on board of her 'by any seaman, master, or other
employe thereof,' or 'of work done or materials furnished by mechanics,
tradesmen, or others in or about the building, repairing, fitting, furnishing, or
equipping such craft,' and also for sums due for wharfage, towage, or the like,
or upon contracts of affreightment, and damages for injuries to persons or
property. By sections 3, 4, the lien may be enforced by a petition filed in a
court of record in the county where the vessel is found, within five years, but
cannot be enforced 'as against or to the prejudice of any other creditor or
subsequent incumbrancer or bona fide purchaser,' unless the petition is filed
within nine months after the debt accrues or becomes due. By sections 5-8,
upon the filing of the petition and of a bond from the petitioner to the owner of
the vessel to prosecute the suit with effect, or, in case of failure to do so, to pay
all costs and damages caused to the owner or other persons interested in the
vessel by the wrongful suing out of the attachment, a writ of attachment is to
issue to the sheriff to seize and keep the vessel. By sections 10, 11, notice is to
be given to the owners in person, and by publication to all other persons
interested, and they may intervene to protect their interests. By sections 15-17
the vessel may be delivered up to the owner, or to any other person interested,
upon his giving bond, or making a deposit of money. By section 19 the owner
and other claimants are to file answers. By sections 21-27, upon judgment for
the petitioner, the vessel, if remaining in custody, is to be sold by the sheriff,
and the proceeds (deducting certain costs) are to be applied, first, to the wages
due to seamen, including the master, for certain periods, and then to all other
claims, filed before the distribution, on which judgment has been rendered in
favor of the claimant, and to any balance due to seamen; and any remmant is to
be appliedFirst, to all other liens enforceable under the statute before
It thus appears that for all supplies or provisions furnished for the use of a
vessel, or for work done and materials furnished in repairing her, in her home
port, the statute gives a lien upon the vessel, to be enforced by proceedings in
rem, analogous to such proceedings in admiralty.
18
In the present case, the district court has found and adjudged that the sums
claimed by the appellants for supplies, repairs, and services were due to them;
and the circuit court of appeals has stated in its certificate that for these
supplies, repairs, and services there was a lien upon the vessel under the laws of
the state of Illinois, and has certified to this court the single question 'whether a
claim arising upon a vessel mortgage is to be preferred to the claim for supplies
and necessaries furnished to a vessel in its home port in the state of Illinois
subsequently to the date of the recording of the mortgage.'
19
It must be assumed, therefore, for the purpose of deciding this question, that all
the claims of the appellants for supplies and repairs were contracted under such
circumstances that a lien upon the vessel for their payment existed under the
statute of Illinois, and should be enforced in admiralty by the courts of the
United States against the proceeds of the vessel, unless the mortgagees are
entitled to priority in the distribution.
20
21
The appellees rely on section 4192 of the Revised Statutes of the United States,
which substantially re-enacts the act of July 29, 1850, c. 27, 1, (9 St. 440,)
and is as follows: 'No bill of sale, mortgage, hypothecation, or conveyance of
any vessel or part of any vessel of the United States shall be valid against any
person other than the grantor or mortgagor, his heirs and devisees, and persons
having actual notice thereof, unless such bill of sale, mortgage, hypothecation,
or conveyance is recorded in the office of the collector of the customs where
such vessel is registered or enrolled. The lien by bottomry on any vessel created
during her voyage by a loan of money or materials necessary to repair or enable
her to prosecute a voyage shall not, however, lose its priority, or be in any way
affected by the provisions of this section.'
22
The appellees contend that no lien created by the legislature of a state can
override a prior mortgage recorded under this act of congress.
23
But that enactment is a mere registry act, intended to prevent mortgages and
other conveyances of vessels from having any effect (which they might have
had before) against persons other than the grantor or mortgagor, and those
claiming under him, or having actual notice thereof, unless recorded as therein
provided. Bank v. Smith, 7 Wall. 646; Aldrich v. Aetna Co., 8 Wall 491. It
manifests no intention to confer upon the mortgagee any new right, or to make
the mortgage a maritime contract, or the lien created thereby a maritime lien, or
in any way to interfere with maritime contracts or liens, or with the jurisdiction
and procedure in admiralty. The only mention of any other lien on the vessel is
of a bottomry bond, in the latter part of the section, originally inserted in the
form of a proviso, and with the obvious purpose of precluding the possibllity of
construing such a bond to be an hypothecation, within the meaning of the
previous clause, and therefore required to be recorded. And, as was well
observed in The William T. Graves, 14 Blatchf. 189, 195, by Judge Johnson: 'If
this proviso be construed to mean that such a lien only is out of the purview of
the statute, and that all other liens are postponed to that of a mortgagee, then
the claims of salvors, and all those having other strictly maritime liens, would
be thus postponed, to the subversion of the whole principle upon which efficacy
is given to such claims, and the overthrow of the best-settled and most salutary
principles of the maritime law. Indeed, any principle upon which this statute
can be expounded to give such a priority to a recorded mortgage would also
extend to bills of sale and other conveyances recorded under the same law, and
thus practically overthrow the whole scheme of maritime law upon the subject
of maritime liens.'
24
In The Lottawanna, the mortgage was preferred to the claim of the material
men in the home port only because the latter had not recorded their lien as
required by the law of the state to make it valid; and it was clearly implied in
the opinion of the court, delivered by Mr. Justice Bradley, as well as distinctly
asserted in the dissenting opinion of Mr. Justice Clifford, that their lien, if
valid, would take precedence of the mortgage. 21 Wall. 578, 579, 582, 608.
And, as already stated at the outset of this opinion, the same rule was laid down
in the opinion of Mr. Justice Curtis in The Kiersage, 2 Curt. 421, approved by
this court in The Yankee Blade, 19 How. 82.
25
The appellees rely on a line of cases in the courts of the United States held in
Illinois, beginning with a decision of Judge Drummond in 1869, and upon
similar cases in the supreme court of the state, as establishing, as a rule of
property, that a mortgage takes precedence of a lien for supplies afterwards
furnished to a vessel in her home port under the statute of Illinois. The Grace
Greenwood, (1869,) 2 Biss. 131; The Skylark, (1870,) Id. 251; The Kate
Hinchman, (1875,) 6 Biss. 367, and (1876,) 7 Biss. 238; The Great West No. 2
v. Oberndorf, (1870,) 57 Ill. 168; The Hilton v. Miller, (1871,) 62 Ill. 230.
26
27
Moreover, the rule preferring the lien for repairs or supplies in a home port to a
prior mortgage was recognized, even in the seventh circuit, by Judge Dyer, in
the district court of the United States for the eastern district of Wisconsin, in
1874, in The J. A. Travis, 7 Chi. Leg. N. 275; and it appears to prevail in every
other judicial circuit of the United States.
28
It has been upheld in the first circuit, by Mr. Justice Curtis, in The Kiersage,
(1855,) 2 Curt. 421, already cited, and by Judge Lowell in The Island City,
(1869,) 1 Low. 375, 379; in the second circuit, by Judge Wallace, and by Judge
Johnson on appeal, in The William T. Graves. (1876,) 8 Ben. 568, and (1877,)
14 Blatchf. 189; in the third circuit, by Judge McCandless, and by Mr. Justice
Grier on appeal, in The Collier, (1861,) 2 Pittsb. R. 304, 318, 320, and by Judge
Acheson in The Venture, (1885,) 26 Fed. Rep. 285; and in the fourth circuit, by
Judge Hughes, in The Raleigh, (1876,) 2 Hughes, 44, and by Judge Seymour in
Clyde v. Transportation Co., (1888,) 36 Fed. Rep. 501. In The Marcelia Ann,
(1887,) 34 Fed. Rep. 142, Judge Bond gave priority to the mortgage, because
the statute of Maryland expressly so provided.
29
In the fifth circuit, Mr. Justice Woods, then circuit judge, while admitting that
29
In the fifth circuit, Mr. Justice Woods, then circuit judge, while admitting that
the lien of a mortgage duly recorded was inferior to all strictly maritime liens,
yet held that it was superior to any subsequent lien for supplies in the home
port, given by the legislation of a state. The John T. Moore, (1877,) 3 Woods,
61; The Bradish Johnson, (1878,) Id. 582. His ruling was followed by Judge
Hill, who had previously decided otherwise in The Emma, (1876,) 3 Cent. Law
J. 285; and, with much doubt of its soundness, by Judge Pardee. The Josephine
Spangler, (1881,) 9 Fed. Rep. 773, and 11 Fed. Rep. 440; The De Smet, (1881,)
10 Fed. Rep. 483. But in a very recent case, Mr. Justice Lamar, upon full
consideration, and with the concurrence of Judge Pardee, overruled those
decisions in a clear and convincing opinion. The Madrid, (1889,) 40 Fed. Rep.
677.
30
In the sixth circuit, Judge Sherman, siting in bankruptcy, held that a mortgage
must be preferred to a subsequent lien for supplies under a state statute. Scott's
Case, (1869,) 1 Abb. (U. S.) 336. But the opposite rule has since been
recognized as clearly established in admiralty in that circuit by decisions of
Judge Withey in The St. Joseph, (1869,) Brown, Adm. 202, and The Alice
Getty, (1877,) 2 Flip. 18; of Judge Hammond in The Illinois, (1879,) 2 Flip.
383, 433; of Mr. Justice Brown, then district judge, in The City of Tawas,
(1880,) 3 Fed. Rep. 170; of Judge Swing in The Guiding Star, (1881,) 9 Fed.
Rep. 521, and of Mr. Justice Mattews and Judge Baxter in the same case on
appeal, (1883,) 18 Fed. Rep. 263, 269.
31
The decisions in the eighth circuit, by Judge Thayer in The Wyoming, (1888,)
35 Fed. Rep. 548, and in the ninth circuit, by Judge Hoffman in The Harrison,
(1870,) 1 Sawy. 353, and The Hiawatha, (1878,) 5 Sawy. 160, and by Judge
Deady in The Canada, (1881,) 7 Sawy. 173, are to the same effect.
32
the proceeds in the registry after all maritime liens have been satisfied.
33
It would seem to follow that any priority given by the statute of a state, or by
decisions at common law or in equity, is immaterial; and that the admiralty
courts of the United States, enforcing the lien because it is maritime in its
nature, arising upon a maritime contract, must give it the rank to which it is
entitled by the principles of the maritime and admiralty law.
34
As was forcibly said by Mr. Justice Matthews in The Guiding Star, above cited:
'In enforcing the statutory lien in maritime causes, admiralty courts do not
adopt the statute itself, or the construction placed upon it by courts of common
law or of equity, when they apply it. Everything required by the statute as a
condition on which the lien arises and vests must, of course, be regarded by
courts of admiralty, for they can only act in enforcing a lien when the statute
has, according to its terms, conferred it; but beyond that the statute, as such,
does not furnish the rule for governing the decision of the cause in admiralty as
between conflicting claims and liens. The maritime law treats the lien, because
conferred upon a maritime contract by the statute, as if it had been conferred by
itself, and consequently upon the same footing as all maritime liens; the order
of payment between them being determinable upon its own principles.' 18 Fed.
Rep. 268.
35
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