The Theodore Perry
Opinion of the Court
Most of the questions relative to admiralty jurisdiction and the marshaling of liens, have been so-frequently discussed, and the conclusions reached so • diametrically opposed to each other, that I feel reluctant to add another to the mass of adjudications which have served hitherto less to settle the law than to impair, in the minds of the profession, the value of all judicial precedents. As two lawyers can rarely be found to agree upon questions touching at all upon admiralty jurisdiction, it is hopeless for an inferior court to attempt to establish a precedent; it can only follow, as nearly as possible, the latest adjudications of the supreme court, decreeing whatever seems just in the particular case.
The first and most important question at issue relates to the relative priority of the claim of the Detroit Dry Dock Company and the mortgage of Hugh Coyne. A lien enforceable in this court is claimed to exist in favor of the dry dock company, by virtue of section 6648 of the compiled laws of this, state, which enacts that “every water craft
Although the point was not made upon the argument. 1 see no reason to doubt that the lien created by this act attaches when the supplies are furnished. In the case of Germain v. The Indiana, 11 Ill. 535, it was held that, under the water craft law of Illinois, which provided that the vessel “should be liable for all debts,” &e., “and that no creditor should be allowed to enforce the lien created under provisions of this chapter. unless,” &c„ that the act created a lien which attached the moment the liability was incurred. A different construction was given to the act of 1857 [Laws (Ill.) 1857, p. 52], in the case of Williamson v. Hogan, 46 Ill. 518. and The Montauk v. Walker, 47 Ill. 335. But these cases were expressly overruled by that of The Great West, No. 2, 57 Ill. 168, in which the court held, under a similar statute, that the lien was created by force of the statute, and not by virtue of the levy and seizure upon the attachment. Under the former water craft law of this state which provided that the vessel “should be liable,” &c., it was held in the case of Robinson v. The Red Jacket. 1 Mich. 171, that no lien was created until attachment. Following the case of The Huron v. Simmons, 11 Ohio, 458, and Jones v. The Commerce, 14 Ohio, 408, that a lien was created by the Wisconsin statute was decided in the case of McRoberts v. The Henry Clay, 17 Wis. 101, and by the New Xork statute in the case of Veltman v. Thompson, 3 N. Y. 438. This latter statute provided that whenever a debt amounting to fifty dollars or upwards, should be contracted in the manner therein specified, such debt should be a lien. I think a distinction may be taken between cases where the statute declares the vessel “shall be liable” and those which declare they “shall be subject to a lien.” In the one class the lien may be properly said to arise from the seizure, in the other from the contract itself. I see no reason in this case why a lien did not arise in favor of the dry dock company from the time the repairs were put upon the schooner, which it was at liberty to enforce, at any time, by proper proceedings in this court
It is not disputed that the mortgage to Coyne, recorded under the act of congress, also created a lien, notwithstanding it was a mortgage of indemnity. But it is insisted that Coyne had notice of the claim of the dry dock company, and that its lien as against him was not waived, and did not become stale by its failure to institute proceedings within the year provided by section 6690. The testimony ou this point is somewhat conflicting, but I think there is sufficient to show that Coyne is chargeable with notice of the claim of the dry dock company. He admits himself, that he was informed by Stewart sometime during the summer preceding his mortgage, that the dry dock company had repaired his vessel, and that its claim was unpaid. Stewart himself swears specifically that Coyne knew of the claim; that he told him of it as soon as the repairs had been put upon the vessel; that he thought the bill was high, and had frequently talked it over with him; that he told him the amount was thirty-three hundred dollars, and that he mentioned the matter to him two or three times, once in Mr. Parson’s office. I see no reason to discredit this testimony. Indeed, I can hardly believe that Coyne, occupying the somewhat confidential relation of endorser to Stewart, and depending upon this vessel for his security. should not have had knowledge of this incumbrance, and taken his mortgage in contemplation of it. I must hold, therefore, that he is chargeable with notice, and does not stand in the position of a bona fide purchaser.
Was the lien of the dry dock company waived by taking the mortgage of June 7th, 1875, from William and Hannah Stewart, upon the real estate of the latter, together with the bond of William Stewart for the payment of his claim? While, without explanation, a waiver might be presumed from taking a distinct collateral security. it was held by the circuit judge in the Case of Hurst [Case No. 6,925], that the
Under the facts exhibited in this case, which is entitled to priority of payment, the material man for the repairs furnished in the home-port, or the mortgagee? As a general rule, I should say without hesitation, the material man should rank a subsequent mortgagee. He has put repairs upon the ship which have largely added to its value in the hands of the mortgagee, and it is no more than just that the latter should take It with the burden thus imposed upon it. Indeed, if the material man has any lien at all, it would be grossly unjust to permit it to be defeated by a mortgage placed upon the ship the next day, possibly for the very purpose of preferring some other creditor and defrauding him. Again, the work done by him either adds to the value of the vessel, or puts her in a condition for the work she is about to engage in, while the •mortgage may be given for a consideration wholly unconnected with the vessel. In this light I regard the lien as, prima facie, much more meritorious than the mortgage. I lay no stress whatever upon ■ the fact that the lien is created by the state law, while the mortgage is recorded under the act of congress. Mortgages upon vessels were valid long before the recording act was passed, although filed under state laws. The act was not designed to add a particle to their value as security, except so far as it might incidentally do so in providing a convenient place for recording them, and making .the record notice to subsequent purchasers and incumbrancers. The case of White’s Bank v. Smith, 7 Wall. [74 U. S.] 646, merely held that a mortgage recorded under the act of congress was notice to subsequent purchasers, though not filed or recorded under the state law, making all mortgages of chattels constructive notice only when recorded in the town in which the mortgagor resided. This view of the relative priority- of the material man and mortgagee was apparently taken by the learned judge of the Western district, in the case of The St. Joseph [Case No. 12,229], and again in The Alice Getty [Id. 193], in which he held that material men, having liens by local laws, have priority even over prior mortgagees. Although a different view was taken by Judges Drummond and Blodgett in the cases of The Grace Greenwood [Id. 5,652], The Skylark [Id. 12,928], and The Kate Hinehman [Cases Nos. 7,620, 7,621], there is nothing in these opinions which necessarily conflicts with the position here assumed, as the mortgages in all these cases were prior in date to the lien of the material men. In Scott’s Cases [Case No. 12,522], the mortgages also ranked the lien of the material man in point of time, and were accorded priority solely upon that ground. But whatever be the rule in the Seventh circuit, I think a decided preponderance of authority accords a preference to a domestic material man, at least as against a subsequent mortgagee. See The Wm. T. Graves [Id. 17,758], decided by Wallace. J.; The Bradich Johnson [Id. 1,770]; The Alice Getty [supra]; Francis v. The Harrison [Case No. 5,038]; The Granite State [Id. 5,687]; Donnell v. The Starlight. 103 Mass. 227; The Norfolk, Case No. 10,297. The law of this state, under which the material man is entitled to a lien, in express terms accords him priority over mortgages both prior and subsequent. Com. Laws, §§ 6678, 6679. I hold, therefore, the lien of the dry dock company is entitled to rank that of the mortgagee.
Further objection is made by the counsel for the mortgagee, that the lien in this case cannot be enforced because the bond and mortgage have not been surrendered or delivered up by the libelants or tendered in court. Relying upon the cases of The St. Lawrence, 1 Black [66 U. S.] 532; Andrews v. Wall, 3 How. [44 U. S.] 573; Ramsey v. Allegre, 12 Wheat. [25 U. S.] 611; and The Eclipse [Case No. 4,268], — where a promissory note has been given for a claim, which is also a lien, and the maker of the note insists upon the objection, undoubtedly the court should require the note to be surrendered before the lien is enforced, for otherwise the maker might be compelled to pay it again to the innocent holder. But I apprehend this rule does not apply where the security given is collateral, and the objection is not taken by the owner or the person who gives the security. It is entirely immaterial, so far as this mortgagee is concerned, whether this security be surrendered or not; he eannot be prejudiced by its remaining outstanding, and I think he has no right to insist upon its cancellation.
It is apparently conceded in the argument in this case that if, in the meantime, the mortgagee had given up any securities, or had been in any way placed in a worse position, this might be a complete answer, but that the burden of proving this was upon him. It might not always be easy to prove this; for example, suppose a vessel worth twenty thousand dollars incumbered, first by the claim of a material man to the extent of ten thousand dollars, and secondly, by a mortgage of the same amount put upon her a month afterwards. By arrangement between the material man and the owner the credit is extended, and the lien kept alive for five years; and although no positive change of circumstances may have taken place, except such as are inherent in the property, and which might be difficult to prove, the vessel has graudually depreciated to one-half its former value, perhaps the mortgagee may have postponed a foreclosure upon the very theory that, although the property was greatly depreciated, older claims had been paid off, and thus his security kept up to its full value; yet it might be very difficult to prove that such depreciation had taken place. In the case under consideration, in all probability the schooner has depreciated more than the amount of Mayes’ bill, so that the mortgagee is in fact a loser by his failure to enforce it at the opening of navigation, and yet it would be utterly impossible to show such depreciation in dollars and cents. In the case of The Hercules [Case No. 6,400] ■ it was held by this court that where a claim accrued in the summer, and the vessel changed hands the following January, the claim should be enforced as soon as possible after the opening of navigation, and the libel, being filed in September, the claim was held to be stale, although it did not appear distinctly or clearly that the purchaser had been injured by any delay occurring after the first of June. I think he may rest upon the assurance that tacit liens must be enforced during the current season, or as soon as possible after the commencement of the next season, and is not bound
For the same reason the claim of Smith has also become stale. So far as the case of the insurance company is concerned, it is practically determined by the ruling in the case of The Dolphin [Cases Nos. 3,973, 3,974].
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