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Bassis v. Universal Line

decided: June 8, 1973.


Kaufman, Chief Judge, and Breitenstein*fn* and Mansfield, Circuit Judges. Mansfield, Circuit Judge (dissenting).

Author: Breitenstein

BREITENSTEIN, Circuit Judge.

We have here another episode in the woeful tale of the S.S. CARIBIA. For prior installments see Bassis v. S.S. CARIBIA, E.D.N.Y., 309 F. Supp. 989, and Bassis v. Universal Line, S.A., 2 Cir., 436 F.2d 64. The present dispute relates to wharfage charges of the City of New York and the issue is City's right to have the reasonable cost of wharfage taxed as administrative expense. The appeal by City is from the district court's denial of its claim. No libellant has appeared in this appeal. The marshal seeks a determination of whether the City's claim is an administrative expense. Jurisdiction lies under 28 U.S.C. § 1292(a)(3); see also In re Wills Lines, 2 Cir., 227 F.2d 509, 510, cert. denied 351 U.S. 917, 76 S. Ct. 709, 100 L. Ed. 1450.

The 32,000-ton passenger liner CARIBIA, owned by Universal Line, S.A., was arrested by the United States Marshal for the Eastern District of New York on April 21, 1969, under a warrant of attachment. Later at the behest of other creditors successive arrests were made and the various actions consolidated. The peregrinations of CARIBIA around New York harbor must be noted.

1 -- Arrested at Todd shipyards.

2 -- Moved to a Gravesend Bay anchorage under a June 13, 1969, court order.

3 -- Moved to 33rd Street pier under a July 22, 1969, court order.

4 -- Moved to an anchorage under a May 13, 1970, court order.

5 -- Moved on an unstated date in the summer of 1970 to pier 86 without court order or permission of City.

6 -- Moved to pier 56 on June 1, 1971, under a May 27, 1971, court order recognizing an agreement between Owner and City.

The 33rd Street pier and piers 86 and 56 are all City facilities. A dispute to be noted later arose between Owner and City over the use of pier 86. This dispute was resolved by a settlement agreement dated October 30, 1970, but apparently not executed by City until December 3, 1970. We are concerned with City's claim for pier 86 wharfage between December 4, 1970, when City says the vessel should have been moved to pier 56 under the settlement agreement and June 1, 1971, when it was so moved. The City claim does not cover any wharfage at pier 56. So far as the record shows, those charges have been paid by Owner to City.

On December 13, 1971, City made demand on the marshal for payment of wharfage charges at pier 86 for the period noted above, amounting to $250 a day for 180 days, or a total of $45,000, as an administrative expense under 28 U.S.C. § 1921 and Rule E(4)(b), (d), and (e) of the Admiralty Rules. The demand was refused. City then moved on February 10, 1972, for an order that (1) the marshal pay the reasonable value of the wharfage, and (2) plaintiffs be required to deposit "such costs on a prorata basis," or (3) "such expense be taxed as costs * * * and that the ship be sold to pay such expenses." The court, on October 31, 1972, denied the motion holding that City had dealt with Owner and, hence, was not entitled to recover wharfage charges as an administrative expense under 28 U.S.C. § 1921. This appeal followed.

At all pertinent times the vessel had been and, so far as the record shows, now is in custodia legis, and has not been sold. The law as to whether custodial claimants have priority over precustodial claimants asserting liens "has reached a high point of confusion." Gilmore and Black, The Law of Admiralty, p. 497.

City relies on New York Dock Company v. S.S. Poznan, 274 U.S. 117, 47 S. Ct. 482, 71 L. Ed. 955, which concerned a custodial claim for wharfage when there had been no authorizing court order. Poznan recognizes the rule that "there can be no maritime lien for services furnished a vessel while in custodia legis." 274 U.S. at 120, 47 S. Ct. at 484. The district court had denied a petition to remove the vessel from the custodial claimant's wharf. The Supreme Court commented that the denial was with the consent or knowledge of the libellant and those united in interest, who "appear to have acquiesced" in the denial. 274 U.S. at 122, 47 S. Ct. 482. The Court said that the custodial charges were for the common benefit and "in equity and good conscience, should be satisfied before the libellants may enjoy the fruits of their liens." 274 U.S. at 122, 47 S. Ct. at 484.

Owner counters with Larsen v. New York Dock Co., 2 Cir., 166 F.2d 687, which also involved a preferential claim for wharfage of a ship in custodia legis. Two periods were in question. The court found that during the first the dock company "relied solely" on the credit of the libellant which caused the ship to be moved to the wharf of the custodial claimant and during the second period it did not. After observing that the decision in Poznan rested on the doctrine of unjust enrichment, see 166 F.2d at 689, and particularly n.2, the court cited as authority Restatement of the Law, Restitution, § 110, p. 455, which states that "A person who has conferred a benefit upon another as the performance of a contract with a third person is not entitled to restitution from the other merely because of the failure of performance by the third person." Thus, although New York Dock Co. may have conferred a benefit upon the parties claiming an interest in the ship, the court held that its arrangements with a specific party for payment of its wharfage claims precluded reliance upon the Poznan doctrine for recovery when this source proved unavailing. Accordingly, wharfage claims for the first period were denied. As for the second period, when there was no reliance, the court held that "its claim for wharfage . . . comes within the ruling in Poznan," 166 F.2d at 689, and allowed the claim to be taxed as an administrative expense.

The present state of the law appears to be that under Poznan, wharfage claims arising while a ship is in custodia legis may be allowed a preference over pre-custodial claimants, by means of taxation as an administrative expense, on the basis of "equity and good conscience." No preference will be allowed under Larsen, however, where the custodial claimant relied not on the fund represented by the ship but on the credit of the party which caused the wharfage to be incurred. As stated in Gilmore and Black, The Law of Admiralty, p. 497, the result is that those furnishing custodial services to a ship in custodia legis "are gambling on a wholly unpredictable result unless they take the precaution of having their services authorized in advance by an order of the custodial court."

With this background, we turn to the pertinent facts and court orders. The June 13, 1969, order permitting the removal of CARIBIA from the Todd pier to Gravesend Bay anchorage provided that the wharfage claims would be borne by Owner and would not be an administrative expense and that the vessel must be kept within the Eastern or Southern districts of New York. The transfer to the 33rd Street pier was under an order conditioned upon payment by Owner of all expenses and payment of 30-days wharfage in advance. The advance payment was made and wharfage was paid for two more ...

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