Transoceanic Terminal Corp. v. Midland Overseas Shipping Corp.

267 F. Supp. 179, 1967 U.S. Dist. LEXIS 8915
CourtDistrict Court, N.D. Illinois
DecidedApril 25, 1967
DocketNo. 67 C 7
StatusPublished

This text of 267 F. Supp. 179 (Transoceanic Terminal Corp. v. Midland Overseas Shipping Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Transoceanic Terminal Corp. v. Midland Overseas Shipping Corp., 267 F. Supp. 179, 1967 U.S. Dist. LEXIS 8915 (N.D. Ill. 1967).

Opinion

MEMORANDUM OPINION

WILL, District Judge.

Plaintiff, Transoceanic Terminal Corporation, is a stevedoring company which performed services for the Midland Overseas Shipping Corporation, a time-charterer of the motor vessel Barbara, for which it claims $81,344.46. Midland is unfortunately bankrupt. Complaint was filed against Midland, M/V Barbara, and eight other vessels, for the total sum of $110,419.94, on January 5, 1967, in Ohio, and transferred here. The charges asserted against M/V Barbara are for three loading periods: (1) 5/19/66-5/21/66, for $3,992.93; (2) 7/20/66-7/23/66, [180]*180for $32,812.93, and (3) 9/27/66-9/29/66, for $44,538.60. The complaint also sets forth the specific charges and dates as to the other vessels. Only the Barbara has been served to date.

M/V Barbara on March 15, 1967, filed a motion for summary judgment, supported by affidavits and a brief, which assert that her owner is Tore Ulff, a Swedish corporation, and she sails under the Swedish flag. The master of the vessel, Kjell Kristoffersson’s affidavit, is filed in support of the motion for summary judgment. It establishes that the vessel was under a time charter dated December 9, 1965, to Midland, from whom the captain received his written instructions. The time-charter was kept on the bridge and was always available for inspection by persons concerned with it and who requested to do so. All arrangements for the loading and unloading of the cargo were handled by the time-charterer, Midland, or agents it designated.

Among other provisions, the time charter, Clause 18, lines 112 and 113, prohibits the charterer from permitting a lien to accrue against the vessel. It states,

“Charterers will not suffer, nor permit to be continued, any lien or encumbrance incurred by them or their agents, which might have priority over the title and interest of the owners in the vessel.”

Further, defendant relies on the Maritime Lien Act, 46 U.S.C. § 973, which in applicable part provides,

“ * * * nothing in this chapter shall be construed to confer a lien when the furnisher knew, or by the exercise of reasonable diligence could have ascertained, that because of the terms of a charter party, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor.” (emphasis supplied)

Defendant urges that, since plaintiff admits it did not seek to learn whether the Barbara was under charter or the charter limitations on the incurring of liens against the vessel, plaintiff, as a matter of law, did not exercise reasonable diligence.

Plaintiff, in opposition to the motion for summary judgment, maintains that whether or not it exercised reasonable diligence is a question of fact, and the affidavit of Carl van Waning, general manager of plaintiff, asserts that it was not common knowledge and not a matter of general information that vessels, and in particular, the Barbara, operating under instructions from Midland, were time-chartered vessels and not owned by Midland. He avers that he personally believed the Barbara was owned by Midland, and in his contacts with Midland they referred to the Barbara as their vessel. Further, he states it is not the general practice of, nor would it be considered appropriate by the shipping industry, for stevedoring concerns to ask to see charter papers which might or might not be aboard vessels using their services; that in his experience of twenty years of stevedoring, affiant has never so inquired and knows of no instance where any other stevedoring concern has made such inquiry and that it is not common practice to do so.

Plaintiff argues that its services are maritime in nature and, other requirements of law being met, give rise to a lien against the vessel under the Federal Maritime Lien Act of 1910, as amended in 1920 (§§ 971-973). § 973 creates a presumption that any person to whom the management of the vessel at the port of supply is entrusted has authority from the owner to procure the repairs, supplies or other necessaries. Plaintiff maintains that, even conceding that the provisions of the charter could bar it, it is still a question of fact whether it exercised reasonable diligence to ascertain whether such a provision existed.

The Court concludes that the M/V Barbara’s motion for summary judgment should be granted. There is no genuine issue of fact. The affidavits show that the time charter of the vessel from its owner, Tore Ulff to Midland, was on board, and available upon proper [181]*181inquiry to anyone desiring to examine it. The answers to the interrogatories, as well as the affidavit of plaintiff’s general manager previously referred to, reveal that no such inquiry was made by plaintiff or anyone on its behalf. Had it been examined, it would have revealed that Midland had no authority to subject the vessel to a lien. The decisions of the Supreme Court of the United States, hereinafter cited and quoted, as well as a number of Court of Appeals’ decisions, have uniformly held that a furnisher of services obtains no lien if he could have ascertained by the exercise of reasonable diligence either that the person ordering the services was without authority to bind the vessel or that the vessel was under charter, and, further, that the failure to investigate as to the existence of such authority or charter constitutes lack of reasonable diligence.

In Walsh Stevedoring Co., Inc. v. M/S Slagen, 361 F.2d 478 (CA 5, 1966), for example, the Court said, at p. 479:

“The only issue remaining is whether the libellant exercised that ‘reasonable diligence’ provided for by Para. 973, supra. The trial court found as a matter of fact that appellant made no inquiry or investigation to determine whether the vessel was under charter or to determine whether Westley had authority to bind the the vessel. The trial court was correct. Clearly, Westley was without authority to bind the vessel and this would have been learned by the appellant if it had made the reasonable diligent inquiry required under the Lien Act. Accordingly, the judgment of the District Court should be affirmed.” is nothing to call his attention to the fact of the charter’s existence and he may reasonably suppose that he is dealing with the owner.

In Gilmore and Black, The Law of Admiralty, pp. 566-567, it is said:

“Without discussion, the Signal Oil case approved Justice Holmes unwarranted suggestion in Carver that the materialman is always charged with notice of the contents of a charter (unless, hypothetically, he can show that even by inquiry he could not have found out about it) even though there
“By the Carver and Signal Oil cases the materialman is always charged with notice of a charter’s existence. This proposition seems to be the most clearly true where the services are furnished on the order of one who is in fact a charterer (even though the materialman may assume him to be the owner), emphasis supplied
“The materialman has a theoretical escape by showing that he did in fact use ‘reasonable diligence to ascertain’ the true facts but found nothing. The cases have not worked out any satisfactory explanation of just how thorough an inquiry ‘reasonable diligence’ demands.

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Bluebook (online)
267 F. Supp. 179, 1967 U.S. Dist. LEXIS 8915, Counsel Stack Legal Research, https://law.counselstack.com/opinion/transoceanic-terminal-corp-v-midland-overseas-shipping-corp-ilnd-1967.