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Hennessy v. J. W. Hennessy Inc.

March 21, 1932

THE J. W. HENNESSY; DALZELL TOWING CO., INC.,
v.
J. W. HENNESSY, INC. (TWO CASES)



Appeal from the District Court of the United States for the Southern District of New York.

Author: Hand

Before MANTON, AUGUSTUS N. HAND, and CHASE, Circuit Judges.

AUGUSTUS N. HAND, Circuit Judge.

These are appeals from two libels brought by the Dalzell Company against a dredge and some barges belonging to J. W. Hennessy, Inc., for towage services. This floating equipment had been chartered by the owner, J. W. Hennessy, Inc., to the Charles Contracting Company by a demise charter. By the terms of the charter, the charterer had the exclusive use, control, possession, and operation of the equipment and agreed "at its own expense" to "operate, man, furnish all the fuel, supplies, labor, and all costs necessary to operate the same." There was no clause in the charter that the charterer had no right or authority to pledge the credit of the vessels or to impose any liens upon them.

The treasurer of the towing company was introduced to the president of the Charles Contracting Company by the Brooklyn National Bank. Mr. Dalzell, the treasurer of the towing company, inquired of the bank as to the credit of the charterer, and was informed that it was first class. While Dalzell disclaimed knowing anything about the ownership of the equipment, he conceded that he made no inquiry. The towage services were performed, and the towing company sent repeated bills to the Charles Contracting Company for its services at the agreed rate, which were not paid. There was posted on the dredge, in the pilot house and engine room, a sign stating that J. W. Hennessy, Inc., was the owner of the dredge and would not be responsible for "the payment of material, labor or other expenses of any nature whatsoever, unless authorized by an official order signed by the secretary-treasurer of this corporation." The dredge was also enrolled in the name of J. W. Hennessy, Inc.

The towage was from Ft. Pond Bay to Cold Spring Harbor, Long Island. It was performed by a tug of the Newtown Creek Towing Company which Dalzell procured and paid for doing the job. Dalzell testified that he did not know that J. W. Hennessy, Inc., had anything to do with the dredge or barges until about sixty days after the towage services had been performed. The towage was ordered by the Charles Contracting Company, the charterer of the dredge and barges, and not by the master of any of them.

After the charterer had failed to pay for the towage services for some eight months, in spite of repeated demands, the towing company filed two libels, one against the dredge and the second against the two barges belonging to J. W. Hennessy, Inc. The latter interposed an answer alleging that the services were not furnished upon the credit of the vessels but solely for the account of the charterer, who had no right to pledge the credit of the vessels, and that the libelant at the time it rendered the services to the vessel knew or could, by the exercise of reasonable diligence, have known the terms of the charter party.

The District Judge found that the libelant company made no inquiry as to who was the owner of the dredge and equipment, but presumed when it was making the contract for towage that Charles Contracting Company was the owner because Mr. Charles, who made the arrangement, referred to the dredge and equipment as "his." The District Judge also found that libelant did not know until within forty-five to sixty days from the completion of the towage service that some one other than the Charles Contracting Company was the owner of the dredge and equipment. He dismissed the libels upon the ground that by the exercise of reasonable diligence the libelant could have ascertained that the vessels were under charter party and could have learned the terms of that agreement.

The lien asserted is based on the Merchant Marine Act of 1920 (§ 30).

Subsection P provides that: "Any person furnishing * * * towage, * * * to any vessel, * * * upon the order of the owner of such vessel, or of a person authorized by the owner, shall have a maritime lien on the vessel, which may be enforced by suit in rem, and it shall not be necessary to allege or prove that credit was given to the vessel." (46 USCA § 971)

Subsection Q provides that: "The following persons shall be presumed to have authority from the owner to procure * * * towage, * * * for the vessel: The managing owner, * * * master, or any person to whom the management of the vessel at the port of supply is intrusted. * * *" (46 USCA § 972)

Subsection R provides that: "The officers and agents of a vessel specified in subsection Q, shall be taken to include such officers and agents when appointed by a charterer, by an owner pro hac vice, or by an agreed purchaser in possession of the vessel; but nothing in this section shall be construed to confer a lien when the furnisher knew, or by exercise of reasonable diligence could have ascertained, that because of the terms of a charter party, agreement for sale of the vessel, or for any other reason, the person ordering the repairs, supplies, or other necessaries was without authority to bind the vessel therefor." 46 USCA § 973.

The J. W. Hennessy, Inc., contends that, as the charter of its floating equipment provided that the charterer was obliged at its own expense to operate the vessels and to pay all expenses, it had no authority to pledge the credit of the vessels or to impose any liens thereon, and that the libelant knew of the charter and was chargeable with notice of its terms. The libelant argues that it had no such notice.

We can hardly agree that the proof did not indicate that the libelant was aware that the charterers were not owners of the vessels, although the trial judge found that libelant's treasurer, Dalzell, "did not know until from 45 to 60 days after the towage service that some one other than the Charles Contracting Co., Inc., was the owner of the dredge." Dalzell admitted that the telephone number of J. W. Hennessy, Inc., was given to him at the time of the negotiations for the towing contract, and Charles, the president of the charterer, testified that he informed Dalzell during these negotiations that the dredge was owned by J. W. Hennessy, Inc., and was held on a bare boat charter and that he, on that occasion, gave Dalzell the telephone number of the office of J. W. Hennessy, Inc. The trial judge did not refer to this testimony in his opinion or suggest that it was unworthy of credit. In fact he found that the telephone number of the owner of the vessels was given to Dalzell by Charles. In these circumstances, we think it must be said that the libelant received notice that the vessels were ...


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