Lake Charles Steve v. Prof Vladimir Popov ( 2000 )

REVISED, JANUARY 24,2000
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
____________________
No. 98-30983
____________________
LAKE CHARLES STEVEDORES, INC
Plaintiff - Appellant
v.
PROFESSOR VLADIMIR POPOV MV, in rem
Defendant - Appellee
_________________________________________________________________
Appeal from the United States District Court
for the Eastern District of Louisiana
_________________________________________________________________
December 23, 1999
Before KING, Chief Judge, and SMITH and STEWART, Circuit Judges.
KING, Chief Judge:
Plaintiff-Appellant Lake Charles Stevedores, Inc. appeals
the district court’s dismissal of its in rem proceeding against
Defendant-Appellee, the Professor Vladimir Popov M/V, arguing
that the court erred in determining that the stevedores had no
maritime lien. We affirm.
I. FACTS AND PROCEDURAL BACKGROUND
As is often the situation in transactions involving the
shipping of goods, a number of different parties were at least
indirectly involved in the transaction at the heart of this case.
Terms of the initially contemplated transaction were defined in
January, 1997, when ED&F Man Sugar, Inc. (“Man Sugar”), a
subsidiary of ED&F Man, Inc., agreed to purchase from Broussard
Rice Mill, Inc. (“Broussard”) 5000 metric tons of rice at $18.40
c.w.t. (price F.O.B. mill), for delivery some time between the
last half of February and the first half of March. The purchase
agreement indicates that the final contract price would include
the cost of the bags to contain the rice, of freight from the
mill to the dock, of unloading the trucks, and of stowing and
trimming (i.e., stevedoring services). Adding the cost of these
items to the base price for the rice alone ($18.40 c.w.t.) yields
an anticipated final price of $20.05 c.w.t. The sale of 5000
tons of rice, under the same terms, was confirmed in a document
Broussard sent to Man Sugar on February 3, 1997.
In part because Man Sugar could not secure a vessel by mid-
February, delivery could not occur when originally expected. The
contract was amended on March 24, 1997 to provide for 4600
(rather than 5000) tons of rice at $20.05 c.w.t., delivery F.O.B.
vessel sometime in early April. The contract price again
included stevedoring, with no change in the $.90 c.w.t. cost.
Man Sugar also agreed to make progress payments of $19.15 c.w.t.
when loads of 1500 tons reached the dock in order to prevent
Broussard from having to carry the costs associated with delay in
delivery. The balance ($.90 c.w.t.) was due when full and
complete shipping documents were presented.
Man Sugar was able to gain access to the Professor Vladimir
Popov M/V (the “Vessel”) in March 1997. Savannah Chartering
2
Ltd., the disponent owner of the Vessel, had time chartered the
Vessel to Marine Trading, Ltd. (“Marine Trading”) in June 1996.
The charter party between Savannah Chartering and Marine Trading
provided that
[t]he Captain (although appointed by the Owners), shall be
under the orders and direction of the Charterers as regards
employment and agency; and Charterers are to load, stow and
trim, and secure the cargo at their expense under the
supervision of the Captain, who is to sign bills of lading
for the cargo as presented, in conformity with the mate’s or
talley clerk’s receipts.1
In a document dated March 20, 1997, Marine Trading voyage
chartered the Vessel to Sugar Chartering, Inc., another
subsidiary of ED&F Man. The charter party provided that
stevedores were to be employed by Sugar Chartering. Sugar
Chartering subchartered the Vessel to Man Sugar.
On April 24, 1997, freight forwarder Mary Reid of Reid &
Company (“Reid”), acting on behalf of Broussard, asked Lake
Charles Stevedores, Inc. (“LCS”) to submit a bid for loading the
rice. At the time Reid contacted LCS, it was told it would be
working for Broussard. Reid also obtained an “all inclusive” bid
from another stevedoring concern in the area. In order to assist
in comparing the bids, Reid asked LCS to submit an all-inclusive
bid. Although the first bid LCS submitted to Reid was copied to
Broussard, the second bid was not. LCS’ second bid noted that
the vessel’s gear would be used unless it was slow, in which case
LCS’ shore gear would be used at LCS’ expense. Broussard awarded
1
Under a rider clause, charterers, subcharterers, or their
agents could sign bills of lading for and on behalf of the Master
in conformity with the Mate’s receipt.
3
the contract to load the Vessel to LCS. Reid relayed this
information to LCS. LCS had often worked for Broussard in the
past, generally unloading its trucks at the docks, but also
loading ships under prior F.O.B. contracts.
During April, Broussard delivered the rice to the docks.
After receiving confirmation that loads of rice had been
delivered, Man Sugar made payments as per the parties’ agreement.
Lake City Steamship Agency (“LCSA”), a division within LCS, was
hired by Marine Chartering, an agent of Marine Trading, to act as
vessel agent. In this capacity, LCSA was responsible for
coordinating the Vessel’s movement in and out of port and meeting
its requirements while in port. LCSA prepared the Notice of
Readiness, indicating that the Vessel was in port and ready to be
loaded, and transmitted it to Reid, who was also the local agent
for Man Sugar, on April 30, 1997.
LCS loaded the Vessel on May 1, May 2, and May 5, 1997. The
Vessel’s mate or master signed LCS’ Activity Sheets2 and Mate’s
Receipt. A clean bill of lading was signed by LCSA for the
Vessel’s master. When it received the required shipping
documents from Reid, Man Sugar made its final payment, in the
amount of $90,761.78, to Broussard. This amount was described as
stevedoring expenses in Man Sugar’s accounts. LCS sent an
invoice to Broussard, but to no other entity, for the stevedoring
services rendered. Although Broussard charged Man Sugar $18 per
short ton of cargo for stevedoring services (or $.90 c.w.t.), LCS
2
Activity sheets, necessary to issue a Mate’s Receipt,
described the work performed each day.
4
charged Broussard only $14 per short ton, yielding a total bill
of $65,395.07. The difference in price was attributed by the
district court to Broussard’s acceptance of risk of loss due to
weather conditions or other contingencies.
LCS had never had difficulty collecting on its accounts with
Broussard. However, in this instance, the bill from LCS remained
unpaid. On September 30, 1997, after LCS learned that Broussard
had been put into receivership, LCS had the Vessel arrested in
order to secure payment for the stevedoring services. ED&F Man
and Sugar Chartering each filed claim for the Vessel.
The Vessel’s claimants and LCS filed motions for summary
judgment, each of which was denied. The case was tried without a
jury on July 28, 1998. The district court held that LCS was not
entitled to a lien because there was no contract between LCS and
the charterers, there was no evidence that Broussard was the
owner’s or a charterer’s agent, and the owner’s or charterer’s
knowledge that LCS was apparently the stevedoring concern hired
by Broussard to load the rice was insufficient to create a lien.
LCS timely appeals.
II. STANDARD OF REVIEW
Because we face an admiralty case tried without a jury, we
review the district court’s legal conclusions de novo. See Nerco
Oil & Gas, Inc. v. Otto Candies, Inc., 74 F.3d 667, 668 (5th Cir.
1996). The district court’s factual findings are reviewed under
the clearly erroneous standard. See Fed. R. Civ. P. 52(a);
Nerco, 74 F.3d at 668. The clearly erroneous standard of review
5
does not apply to factual findings made under an erroneous view
of controlling legal principles. See Delta S.S. Lines, Inc. v.
Avondale Shipyards, Inc., 747 F.2d 995, 1000 (5th Cir. 1984).
III. DOES LCS HAVE A MARITIME LIEN?
The purpose of maritime liens is “to enable a vessel to
obtain supplies or repairs necessary to her continued operation
by giving a temporary underlying pledge of the vessel which will
hold until payment can be made or more formal security given.”
Southern Coal & Coke Co. v. F. Grauds Kugniecibas (“The
Everosa”), 93 F.2d 732, 735 (1st Cir. 1938); see also Piedmont &
George’s Creek Coal Co. v. Seaboard Fisheries Co., 254 U.S. 1, 9
(1920) (“Since she is usually absent from the home port, remote
from the residence of her owners and without any large amount of
money, it is essential that she should be self-reliant – that she
should be able to obtain upon her own account needed repairs and
supplies.”); A.L. Veverica v. Drill Barge Buccaneer No. 7, 488
F.2d 880, 883 (5th Cir. 1974) (“The very purpose of maritime
liens is to encourage necessary services to ships whose owners
are unable to make contemporaneous payment.”).3 They are largely
3
Although credit to the vessel remains a fundamental
concept underlying the maritime lien, see Equilease Corp. v. M/V
Sampson, 793 F.2d 598, 605 (5th Cir. 1986) (“Equilease II”), it
is no longer the case that a claimant providing necessaries on
the order of one with authority to procure them must prove that
credit was given the vessel in order to establish a lien. See
§ 31342(a)(3); Piedmont & George’s Creek Coal Co. v. Seaboard
Fisheries Co., 254 U.S. 1, 12 (1920) (“The act relieves the
libelant of the burden of proving that credit was given to the
ship when necessaries are furnished to her upon order of the
owner . . . .”).
6
statutorily created. See In re Admiralty Lines, Ltd., 280 F.
Supp. 601, 604-05 (E.D. La. 1968) (“[A]dmiralty law has long ago
ceased to create new liens. The only liens recognized today are
those created by statute and those historically recognized in
maritime law.”). Thus, in order to resolve the issues raised in
this case, we must look to the Maritime Commercial Instruments
and Liens Act (“MCILA”), 46 U.S.C. § 31301 et seq., which defines
the circumstances under which a party is entitled to a maritime
lien.
In brief, the MCILA states that a person providing
necessaries to a vessel on the order of the owner or a person
authorized by the owner has a maritime lien on the vessel, see
§ 31342(a),4 unless the provider of the necessaries has waived
its right to the lien. See § 31305. Section 31341(a) lists
entities presumed to have authority to procure necessaries: (1)
the owner; (2) the master; (3) a person entrusted with the
management of the vessel at the port of supply; or (4) an officer
or agent appointed by the owner, a charterer, an owner pro hac
vice, or an agreed buyer in possession of the vessel. An element
common to these entities is that they may be presumed to have
4
Under § 31342(a),
Except as provided in subsection (b) of this section, a
person providing necessaries to a vessel on the order
of the owner or a person authorized by the owner–
(1) has a maritime lien on the vessel;
(2) may bring a civil action in rem to enforce the
lien; and
(3) is not required to allege or prove in the action
that credit was given to the vessel.
46 U.S.C. § 31342(a).
7
authority to procure necessaries on the vessel’s account. Cf.
Ferromet Resources v. Chemoil Corp., 5 F.3d 902, 904 (5th Cir.
1993) (“The ship’s master or other person, such as a charterer,
to whom the vessel is entrusted is presumed to have authority to
purchase necessaries to the credit of the vessel.”).5 The
presumption created in § 31341 is not conclusive, see Marine
5
That § 31342(a) and § 31341(a) refer to authority to
procure necessaries on the vessel’s account is also reflected in
the law the MCILA replaced in 1988, the Federal Maritime Lien
Act, 46 U.S.C. § 971 et seq., and in the 1971 amendments to that
Act. Under the pre-1971 version of § 973 of the Federal Maritime
Lien Act,
[t]he officers and agents of a vessel specified in
section 972, 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 chapter 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.
(emphasis added). The 1971 amendments eliminated all language
after the semicolon in order to remove from suppliers the
obligation to investigate whether the entity ordering necessaries
was, in fact, with authority to bind the vessel. See Atlantic &
Gulf Stevedores, Inc. v. M/V Grand Loyalty, 608 F.2d 197, 201
(5th Cir. 1979). This created a statutory presumption that
certain entities (those listed in § 972 and the remaining portion
of § 973) had authority to bind the vessel. The MCILA maintains
that presumption, with the entities now all listed in § 31341(a).
Although the 1971 amendments made it easier for suppliers of
necessaries to obtain liens, see id., they did not alter the
definition of “authority.” Cf. Jan C. Uiterwyk Co. v. MV Mare
Arabico, 459 F. Supp. 1325, 1329 (D. Md. 1978) (noting that the
1971 amendments to the Federal Maritime Lien Act did not
eliminate the requirement that necessaries be procured by an
entity with authority to do so). The definition of authority was
also not changed when the MCILA was enacted. See H.R. REP. NO.
100-918, reprinted in 1988 U.S.C.C.A.N. 6108, 6129, 6141 (noting
that no substantive change from prior law is intended in enacting
the MCILA).
8
Coatings v. United States, 932 F.2d 1370, 1376 (11th Cir. 1991),
and thus can be rebutted by, for example, a showing that the
provider of necessaries had actual knowledge of a no-lien clause
that prevented the entity ordering those necessaries from binding
the vessel. See Belcher Oil Co. v. M/V Gardenia, 766 F.2d 1508,
1512 (11th Cir. 1985); Gulf Oil Trading Co. v. M/V Caribe Mar,
757 F.2d 743, 749 (5th Cir. 1985). As a result, a supplier of
necessaries ordered by a § 31341(a) entity subject to a no-lien
clause not made known to the supplier has a maritime lien.
It is undisputed that stevedoring services are necessaries,
and that LCS provided those services. The case thus raises two
basic issues. The first issue is whether “the person who placed
the order had authority to do so, either real, apparent, or
statutorily presumed,” i.e., whether LCS has a maritime lien.
Belcher Co. v. M/V Maratha Mariner, 724 F.2d 1161, 1164 (5th Cir.
1984); see also Atlantic & Gulf Stevedores, Inc. v. M/V Grand
Loyalty, 608 F.2d 197, 202 (5th Cir. 1979) (“Authorization,
actual or fairly presumed, given prior to or during rendition of
services, or ratified subsequent to rendition will suffice.”).
If LCS had a maritime lien, the second issue we must address is
whether LCS waived its right to that lien.
LCS takes issue with both the findings of fact and the
conclusions of law underlying the district court’s determination
that it was not entitled to a lien. LCS states that the findings
of fact are clearly erroneous, and also argues that the standard
applied to find that LCS relied only on Broussard’s credit was
improper. Further, LCS argues that, contrary to the district
9
court’s determination, it obtained a valid maritime lien because
(1) Broussard had actual authority from the Vessel’s owners; (2)
Broussard had apparent authority; (3) the services it supplied
were ratified by the master; and (4) it did not forgo its lien.
A. Authority - Real, Apparent, or Statutorily Presumed
The parties stipulated that Broussard made the final
selection of LCS as the company to load the bagged rice onto the
Vessel. If Broussard had authority to act on behalf of the
Vessel when it employed LCS, then LCS has a maritime lien. See
§ 31342(a). Citing Jan C. Uiterwyk Co. v. MV Mare Arabico, 459
F. Supp. 1325 (D. Md. 1978), in support, LCS points to the nature
of services supplied to argue that Broussard had actual authority
from the Vessel’s owners or charterers to engage LCS to supply
stevedoring services. LCS notes that the Jan C. Uiterwyk court
specifically recognized that “[a]rrangements for these
[stevedoring] services must be made by the ship’s master or
someone authorized by him”, 459 F. Supp. at 1330, and that “[i]t
is hardly the responsibility of a mere shipper to arrange for
services necessary for a vessel to enter a port, to receive cargo
and to leave the port.” Id. at 1331. LCS traces the line of
authority from the charter to Marine Trading to the charter to
Sugar Chartering, noting that the authority to employ stevedores
was passed on at each stage. LCS continues this line of
reasoning to conclude that Broussard was authorized by the
Vessel’s owners to employ stevedores to board and load the Vessel
because the authority could come from nowhere else. A similar
10
“nature of service” argument is made in support of LCS’
contention that Broussard had apparent authority to hire the
stevedores.6 Broussard is also argued to have been entrusted
with the management of the Vessel at the port of supply because
it employed LCS, a stevedoring concern. Further, LCS contends
that Broussard was able to, and did authorize the use of the
Vessel’s gears when it accepted LCS’ bid, which indicated that
the Vessel’s equipment could be used. In addition, LCS points to
the legislative history of the 1971 amendments to the Federal
Maritime Lien Act, 46 U.S.C. § 971 et seq., as supporting the
notion that stevedores can presume that they have a lien when
they supply services to a vessel.
The MCILA identifies in § 31341(a) the entities that can be
statutorily presumed to have authority to procure necessaries on
the vessel’s account. The presumption created in § 31341 is not
a function of the services supplied – both § 31341 and § 31342
speak in terms of necessaries without further distinction.7
Unless Broussard is one of the entities listed in § 31341(a), the
6
LCS also asserts that Reid had apparent authority to
obtain stevedoring services, that Reid awarded the contract to
LCS, and that she was a person entrusted with the management of
the vessel at the port of supply, see § 31341(a), given her
capacity as Man Sugar’s local agent. Because we find no
indication in the record that the district court’s finding that
LCS at all relevant times knew it was hired solely by Broussard
is clearly erroneous, we must reject these arguments.
7
The MCILA separates stevedoring services from others in
§ 31301(5), which provides that a “preferred maritime lien” is
one “(A) arising before a preferred mortgage was filed under
section 31321 of this title . . . (C) for wages of a stevedore
when employed directly by a person listed in section 31341 of
this title.” This provision is not applicable to the instant
case.
11
statute does not allow for a presumption that it had authority to
procure the necessaries on the ship’s account simply because the
necessaries provided were stevedoring services.
We must therefore undertake to determine whether Broussard
qualifies as any of the entities listed in § 31341(a). Broussard
is clearly not the owner of the Vessel, or its master. It is
also not “a person entrusted with the management of the vessel at
the port of supply.” § 31341(a)(3); see also Dampskibsselskabet
Dannebrog v. Signal Oil & Gas Co., 310 U.S. 268, 279-80 (1940)
(describing management as “a broader term connoting direction and
control for the purposes for which the vessel is used” and
finding a charterer to have been entrusted with the management of
the vessel). In Atlantic & Gulf Stevedores, we found a chief
officer to be a person to whom management of the vessel was
entrusted, based on his position within the command hierarchy,
his duties, which specifically included the direction and control
of loading and unloading, and historic practice. See 608 F.2d at
200. There are no such indicators here. This was Man Sugar’s
first purchase of rice from Broussard. Broussard was
contractually obligated to undertake the steps necessary to get
the specified quantity of rice onto the Vessel. It was not
entrusted with the management of the Vessel at the port of
supply.
Whether Broussard is an agent appointed by Man Sugar, as
subcharterer, is a somewhat closer question. In interpreting
whether Broussard is an agent, we look to general principles of
agency law, see Marine Fuel Supply & Towing, Inc. v. M/V Ken
12
Lucky, 869 F.2d 473, 477 (9th Cir. 1989); Cactus Pipe & Supply
Co. v. M/V Montmartre, 756 F.2d 1103, 1111 (5th Cir. 1985); Esso
Int’l, Inc. v. The SS Captain John, 443 F.2d 1144, 1146 (5th Cir.
1971), and consider “the roles of the parties in the
transactions.” Marine Fuel Supply, 869 F.2d at 477. Unless the
district court’s findings regarding the existence of an agency
relationship are clearly erroneous, we must accept those
findings. See Equilease v. M/V Sampson, 756 F.2d 357, 363 (5th
Cir. 1985) (“Equilease I”) (en banc) (“The existence of any
agency relationship is a question of fact which should not be
reversed on appeal unless it is clearly erroneous.”)(citing
Strachan Shipping Co. v. Dresser Indus., Inc., 701 F.2d 483, 487
(5th Cir. 1983)).
We assume that Man Sugar had authority to employ stevedores
on the Vessel’s account.8 It is clear from the contract between
Man Sugar and Broussard that Broussard was not given express
authority to employ stevedores on behalf of the Vessel. The
sales contract makes no reference to Broussard’s acting as Man
Sugar’s agent.
Given the terms of the sales contract and the parties’
actions under that contract, Broussard also did not have implied
authority to procure stevedoring services on the Vessel’s
8
The terms of the subcharter between Sugar Chartering and
Man Sugar do not include language expressly pertaining to
procuring stevedoring services. Under § 31341(a), however, Man
Sugar would be presumed to have authority to procure such
services on the Vessel’s account. See Marine Fuel Supply, 869
F.2d at 476 n.3 (noting that a subcharterer is treated as a
charterer for purposes of the Maritime Lien Act).
13
account.9 Because the contract provided for delivery F.O.B.
vessel,10 title to the rice was to stay with Broussard until
loading was completed. Broussard was therefore responsible for
loading its, not Man Sugar’s, rice. The sales contract also set
the cost for stevedoring services at $.90 c.w.t., with no
allowance for delays or other contingencies. Cf. South Carolina
State Ports Auth. v. M/V Tyson Lykes, 67 F.3d 59, 61 (4th Cir.
1995) (finding no agency relationship where subcontractor billed
only the contractor, there was no contract between the
subcontractor and the charterer, and under the agreement between
the charterer and the general contractor, the charterer was to
pay the contractor on a flat “pick-rate,” i.e., per container,
9
Much of LCS’ argument in support of its contention that
Broussard had “authority” to employ stevedores appears to rest on
the assumption that because Broussard was able to employ an
independent stevedoring concern, Broussard had the authority to
employ stevedores on the Vessel’s account. LCS argues that,
given the circumstances, Broussard and Man Sugar anticipated that
Broussard would employ an independent stevedoring concern and
thus that Broussard had the authority under the sales contract to
do so. We do not consider the ability to employ LCS as
synonymous with the authority to employ LCS on the Vessel’s
account. See note 5 supra. Moreover, we view the expectation
that Broussard would use an independent concern to load the rice
as insufficient to grant to Broussard the authority to hire
stevedores on the Vessel’s account, and therefore reject the
approach apparently taken in Riedel Envtl. Servs., Inc. v. M/V
Tula, 1987 A.M.C. 2378 (S.D. Ala. 1987). See discussion of
general contractor and middle-man cases infra.
10
LCS uses this fact to argue that Broussard was given
authority to hire stevedores. That the final contract price
would include costs of loading the rice onto the Vessel, however,
was a term of the agreement reached in January, 1997, before Man
Sugar had access to a ship, let alone the Vessel. Although the
contract was amended after Man Sugar became the subcharterer to
the Vessel, the F.O.B. delivery term was not among the terms
altered. Under these circumstances, it is difficult to find that
the F.O.B. terms are responsible for transferring the requisite
authority from Man Sugar to Broussard.
14
basis). Broussard thus agreed to shoulder the risk that actual
stevedoring costs may have been greater than the amount owed by
Man Sugar.11
The crux of LCS’ “nature of services” argument appears to be
that because stevedores must board a vessel in order to supply
their services, authority to hire LCS must have passed from the
Vessel’s owners through all intermediate parties to Broussard.
We must reject this argument. Man Sugar may have granted
Broussard, and by extension, its employees, and its
subcontractors permission to board. However, this does not
translate to authority to employ stevedores on the Vessel’s
account. On brief, LCS characterizes the F.O.B. terms as Man
Sugar’s allocating to Broussard the responsibility for choosing,
and paying, a stevedoring concern. There is no suggestion in the
record that Man Sugar retained any control over Broussard’s
selection of stevedores, or over the price Broussard was to pay
for actual stevedoring services rendered. Neither Broussard nor
Reid approached Man Sugar with the stevedoring bids before LCS
was selected. Cf. id. (“[I]t has not been shown that a court has
found an agency relationship between an operator and a stevedore
in the absence of contractual provisions or clear evidence of
control and supervision by the operator.”). In short, the
11
For an example of a contractor incurring substantially
greater costs than initially anticipated when the agreement
between the contractor and the vessel’s charterers was reached,
see Cresent City Marine, Inc. v. M/V Nunki, 20 F.3d 665 (5th Cir.
1994). In that case, the contractor was paid $27,644.64 by the
charterer, but was billed for $80,768.66 by the subcontractors.
Id. at 667.
15
district court did not err in concluding that Broussard was not
the Vessel’s agent.
LCS also argues that Broussard had apparent authority to
procure stevedoring services. Because LCS testified that it did
not know the identity of the company to which Broussard was
supplying rice, but did know that a company separate from
Broussard was involved in the transaction, Broussard’s purported
principal was partially disclosed. A partially disclosed
principal may be liable if its actions before LCS led LCS
reasonably to believe that Broussard was acting as its agent.
See Cactus Pipe, 756 F.2d at 1111 (“Apparent authority is created
as to a third person by conduct of the principal which,
reasonably interpreted, causes the third person to believe that
the principal consents to the act done on his behalf by the
person purporting to act for him.”); Restatement (Second) of
Agency, § 159 cmt. e (1958) (“There may be apparent authority in
the case of a partially disclosed principal. This is created
where, by means of a document or other thing, the principal
manifests that the agent is to act for whoever made the
manifestation.”); Restatement (Second) of Agency § 8 cmt. c
(“Apparent authority exists only to the extent that it is
reasonable for the third person dealing with the agent to believe
that the agent is authorized.”). We must therefore assess
whether the owner, Marine Trading, Sugar Chartering, or Man Sugar
undertook actions that caused LCS reasonably to believe that
Broussard was its agent.
The record shows limited contact between LCS and the
16
Vessel’s owner or charterers. LCS testified it did not know who
owned the rice when it was loaded, and that no one told LCS that
Broussard had the authority to commit another entity to the
payment of stevedoring services. LCS sent invoices only to
Broussard, and did not pursue alternate means of payment until
after it learned Broussard went into receivership. The parties
stipulated that prior to commencement of stevedoring services,
the master provided instructions to LCS as to how the stevedoring
was to be performed. The record contains a May 1 document signed
by the Captain of the Vessel regarding the shoes the stevedores
were to wear, their use of metal hooks, and what was to be done
with damaged bags of rice. The crew opened and closed the
Vessel’s hatches for the stevedores. The mate or the master of
the ship signed LCS’ Activity Sheets and the Mate’s Receipt. An
agent of Marine Trading signed the bill of lading. Based on this
evidence, the district court’s finding that LCS had no reason to
believe, and did not in fact believe that Broussard was acting on
the Vessel owner’s order when it retained LCS to load the rice
was not clearly erroneous.
An important feature of the instant case is the absence of a
contract between Man Sugar (or Sugar Chartering) and LCS. This
is not an unusual set of circumstances facing a supplier of
necessaries. There are two lines of cases that deal with such
circumstances: the general contractor/subcontractor line, see,
e.g., Galehead, Inc. v. M/V Anglia, 183 F.3d 1242 (11th Cir.
1999); Cresent City Marine, Inc. v. M/V Nunki, 20 F.3d 665 (5th
Cir. 1994); Port of Portland v. M/V Paralla, 892 F.2d 825 (9th
17
Cir. 1989), Integral Control Sys. Corp. v. Consolidated Edison
Co., 990 F. Supp. 295 (S.D.N.Y. 1998); South Carolina State Ports
Auth. v. M/V Tyson Lykes, 837 F. Supp. 1357 (D.S.C. 1993), aff’d,
67 F.3d 59 (4th Cir. 1995), and the principal/agent, or middle-
man, line of cases, see Marine Fuel Supply & Towing, Inc. v. M/V
Ken Lucky, 869 F.2d 473 (9th Cir. 1989); Tramp Oil & Marine, Ltd.
v. M/V “Mermaid I”, 805 F.2d 42 (1st Cir. 1986); Belcher Co. v.
M/V Maratha Mariner, 724 F.2d 1161 (5th Cir. 1984).
Under the general contractor line, the general contractor
supplying necessaries on the order of an entity with authority to
bind the vessel has a maritime lien. See Galehead, 183 F.3d at
1245 (holding that contractor had lien and could recover for
services performed by subcontractors); Gulf Oil Trading, 757 F.2d
at 750-51 (finding general contractor who hired subcontractor to
supply barge service had lien prior to having actual notice of a
no-lien clause); Ceres Marine Terminals, Inc. v. M/V Harmen
Oldendorff, 913 F. Supp. 919, 923 (D. Md. 1995) (holding that
contractor had lien and could recover amounts attributable to
services actually performed by subcontractors). However,
subcontractors hired by those general contractors are generally
not entitled to assert a lien on their own behalf, unless it can
be shown that an entity authorized to bind the ship controlled
the selection of the subcontractor and/or its performance. See,
e.g., South Carolina State Ports Auth., 67 F.3d at 61; Port of
Portland, 892 F.2d at 828; Farwest Steel Corp. v. Barge Sea-Span
241, 828 F.2d 522, 526 (9th Cir. 1987). But see Skandinaviska-
Enskilda Banken v. C.L.C. Marine Servs., Ltd. (In re SeaEscape
18
Cruises, Ltd.), 172 B.R. 1002, 1008 (S.D. Fla. 1994) (finding
subcontractor had a lien without analyzing authority of
contractor); Riedel Envtl. Servs., Inc. v. M/V Tula, 1987 A.M.C.
2378 (S.D. Ala. 1987) (holding plaintiff, a subcontractor, had
made out a prima facie case showing it was entitled to a lien in
part because contractor was impliedly authorized to use
subcontractors). Under the middle-man line of cases, despite
what can be a large number of intermediaries, the ultimate
supplier of the necessaries may obtain a maritime lien under
certain circumstances. See, e.g., Marine Fuel Supply, 869 F.2d
at 477.
LCS argues strenuously that LCS, not Broussard, is a general
contractor, and that Broussard is a middle-man. The sales
contract between Man Sugar and Broussard merely allocated to
Broussard the responsibility for identifying and paying the
stevedores. The primary distinguishing characteristic between a
general contractor and a middle-man that LCS identifies is that a
general contractor can be expected to supply the necessary
itself, whereas a middle-man is not expected to do so. According
to LCS, because Broussard, as a rice mill, could not be expected
to supply stevedoring services itself, it was a middle-man and
not entitled to a lien. Instead, LCS, as the actual supplier of
the necessaries, has the lien.
A review of the so-called middle-man cases does not reveal,
contrary to what LCS suggests, that the actual deliverer of
necessaries to the vessel is the entity entitled to a lien in
every instance. For example, the court in Exxon Corp. v. Central
19
Gulf Lines, Inc., 780 F. Supp. 191 (S.D.N.Y. 1991), taking note
of the Supreme Court’s view of the circumstances of the case, see
Exxon Corp. v. Central Gulf Lines, Inc., 500 U.S. 603, 612-13
(1991), held that the party contractually obligated to supply the
fuel (Exxon) was entitled to a lien, despite the fact that it had
caused another supplier to actually deliver the ordered fuel to
the vessel. See 780 F. Supp. at 194.
A similar result was obtained in A/S Dan-Bunkering Ltd. v.
M/V Zamet, 945 F. Supp. 1576 (S.D. Ga. 1996). Dan-Bunkering,
which had a contract with the charterer to supply the
necessaries, contacted a broker, which in turn caused two other
independent firms to deliver the necessaries to the vessel. The
court found that Dan-Bunkering was entitled to a lien. Id. at
1579. Moreover, although the parties viewed the two firms
actually delivering the necessaries as entitled to the lien, the
court thought it “conceivable” that this was not the case, citing
Bonanni Ship Supply, Inc. v. United States, 959 F.2d 1558, 1565
(11th Cir. 1992), a “general contractor” case, in support. Id.
Under general contractor cases, the actual deliverer of
necessaries often is not entitled to a lien. See, e.g.,
Galehead, 183 F.3d at 1245 (“[A]lthough Polygon did not
physically supply the bunkers, a party need not be the physical
supplier or deliverer to have ‘provided’ necessaries under the
statute.”).
In two of the cases LCS cites in support of its middle-man
argument, the court suggested that the actual deliverers of the
necessaries would be entitled to liens. See Tramp Oil & Marine,
20
805 F.2d at 44 (“No one disputes that Exxon and Colonial, as
direct suppliers to the Mermaid, would be entitled to a maritime
lien.”); Belcher, 724 F.2d at 1163 (“Thus, when Belcher supplied
fuel to the [vessel], a maritime lien may have arisen by
operation of law . . . .”); id. at 1164 (“If American law had
been applicable when the vessel was attached in the Netherlands,
the supplier of fuel would have had a lien on the vessel . . .
.”). However, it was not necessary for these courts to consider
whether Exxon, Colonial, or Belcher had a maritime lien under
U.S. law, and thus we need not consider ourselves bound by these
statements. Cf. Cresent City Marine, 20 F.3d at 670 (noting that
language from Belcher relied on by party was dicta).
In the final case cited by LCS, Marine Fuel Supply & Towing,
Inc. v. M/V Ken Lucky, 869 F.2d 473 (9th Cir. 1989), a
subcharterer’s managing agent, acting on the subcharterer’s
orders and instructions, contacted a firm it was authorized to
order fuel through,, which in turn instructed another firm to
place the order for the vessel’s supplies with Marine Fuel.
Marine Fuel was subsequently notified that it had been nominated
by the vessel’s owner to supply the vessel. It was also notified
of the identity of the vessel’s husbanding agent, which arranged
for delivery of the necessaries. Marine Fuel supplied the fuel,
which the master of the vessel accepted. The court found that
the order originated from the subcharterer, who had authority to
bind the vessel, and that, under the circumstances, Marine Fuel
was entitled to a lien. With the exception of the master’s
acceptance of the necessaries, LCS can point to no similar
21
circumstances here.
We are persuaded by our review of these cases that it is not
whether an intermediary can be expected to supply the necessaries
itself that distinguishes instances in which the actual suppliers
have liens, but it is rather the nature of the relationship
between each pair of entities that are involved in the
transaction at issue (e.g., agent vs. independent contractor).
We view the facts of the instant case as more akin to those in
which general contractors have been engaged to supply a service
and have called upon other firms to assist them in meeting their
contractual obligations. Had Broussard not delivered the rice in
accordance with the sales contract’s terms, it would have been
liable for breach. As noted above, Man Sugar retained no control
over the selection of a stevedoring concern, and Broussard
accepted all the risk associated with the occurrence of events
that would increase the costs of stevedoring services beyond what
the sales contract provided. Simply put, Broussard was obligated
to provide for the delivery of rice onto the Vessel, but was not
authorized to act on behalf of Man Sugar in procuring stevedoring
services.
Whether a contractor could be expected to hire
subcontractors has been considered in assessing whether the
subcontractors have liens. See Galehead, 183 F.3d at 1246
(noting that contractor was seemingly capable of performing under
its agreement without resort to subcontractors); Stevens
Technical Services, Inc. v. United States, 913 F.2d 1521, 1534
(11th Cir. 1990) (noting that the owner knew contractor was
22
incapable of doing the work itself). However, decisions have
generally not suggested that such an expectation is sufficient to
grant the requisite authority. The Stevens court, for example,
also noted that the contract with the general contractor listed
the subcontractor, the general contractor refused to take
responsibility for subcontractor’s work, and that the vessel’s
operators dealt with subcontractor representatives in discussing,
testing, and inspecting the subcontractor’s work. See id. at
1534-35. Other courts have seemingly ignored evidence suggesting
that the vessel’s owners or charterers were aware that a
subcontractor would be used, see, e.g., Cresent City Marine, 20
F.3d at 668, and even that a particular subcontractor would most
likely be used. See, e.g., South Carolina State Ports Auth., 67
F.3d at 60 (noting that the subcontractor was the only entity
that possessed the equipment necessary to perform the work); Port
of Portland, 892 F.2d at 828 (“The most the Port has shown is the
fact that it was most likely, even perhaps rather certain, that
Northwest would choose the facilities of the Port when it did its
work.”).
In keeping with the notion that subcontractors may acquire
liens where the vessel’s owners retain control over their
selection and/or performance,12 the Ninth and Second Circuits
12
The connection to principal/agent concepts is clear.
This has been the connection for some time. See The Juniata, 277
F. 438, 440 (D. Md. 1922) (“The cases in which a so-called
subcontractor has been held entitled to a lien or a right in the
nature of a lien against the ship appear all to have been cases
in which, upon the facts, it was possible reasonably to hold that
he was not a subcontractor at all, but had an agreement with the
owner, made through the contractor as the owner’s agent . . .
23
require that an entity with authority to bind the vessel direct
that the general contractor hire a particular subcontractor in
order for that subcontractor to be entitled to a lien. See Port
of Portland, 892 F.2d at 828; Farwest, 828 F.2d at 526; Integral
Control Sys., 990 F. Supp. at 301. In other cases in which
subcontractors have been found to be entitled to a lien, those
subcontractors were identified and accepted by the vessel’s owner
or charterer prior to performance. See Stevens, 913 F.2d at
1525, 1534; Turecamo of Savannah, Inc. v. United States, 824 F.
Supp. 1069, 1072 (S.D. Ga. 1993). Owner involvement in
directing, testing, and/or inspecting subcontractor performance
has also been cited in support of finding a lien in favor of a
subcontractor. See Stevens, 913 F.2d at 1535; cf. Marine
Coatings, 932 F.2d at 1375 n.9 (listing operator’s inspecting
subcontractor work and giving provisional and final acceptance to
work performed by the subcontractor among evidence that supported
court’s conclusion that a genuine issue of fact existed regarding
general contractor’s authority to bind the vessel). Based on
these cases, we agree with the district court that LCS has not
shown it was entitled to a lien under the circumstances presented
here.
It is possible that § 31341 allows entities other than those
listed to be proved to have authority to order necessaries on
behalf of the vessel. See Marine Coatings, 932 F.2d at 1376.
However, our respect for the principle of stricti juris prevents
.”).
24
us from holding that a supplier of rice that is party to an
F.O.B. vessel contract has been given the authority, by virtue of
that contract, to employ the stevedores on the Vessel’s account.
Cf. Atlantic & Gulf Stevedores, 608 F.2d at 200-01 (“[M]aritime
liens are to be strictly construed, i.e., they are not to be
lightly extended by construction, analogy, or inference . . .
.”); Integral Control Sys., 990 F. Supp. at 301 (assessing
whether the Eleventh Circuit’s approach in
contractor/subcontractor cases should be adopted, and deciding
against doing so given the Second Circuit’s commitment to a
stricti juris approach to maritime liens).
B. Ratification
LCS argues that the actions on the part of the master of the
Vessel operated to ratify its providing stevedoring services and
thereby to bind the Vessel. A large portion of its ratification
argument rests on the absence of any objection on the part of the
Vessel’s agents to LCS boarding the Vessel, and on its contention
that the Vessel’s awareness that LCS was supplying the
necessaries is sufficient under the MCILA to constitute
authorization. The evidence that LCS looks to as supporting its
ratification arguments includes: LCS was provided instructions
prior to loading the Vessel; the Vessel’s hatches were opened and
closed for the stevedores by the crew; the mate or the master of
the ship signed LCS’ Activity Sheets and the Mate’s Receipt; the
stevedores were allowed on board without objection; and they used
the Vessel’s gear; and the crew, not Broussard, supervised the
25
loading operation.
Much of this evidence reduces to a showing that the master
of the Vessel allowed LCS on board to perform stevedoring
services and accepted those services. Under the contract between
Man Sugar and Broussard, Broussard was obligated to deliver the
rice free-on-board the Vessel. Had the Vessel’s agents not
allowed the stevedores to load the rice, they would have
prevented Broussard from fulfilling its contractual obligations.
Under these circumstances, we are hesitant to declare that the
Vessel’s agents subjected the res to liability for stevedoring
services necessary to enable Broussard to deliver the rice as per
its agreement with Man Sugar.
As the district court noted, awareness on the part of the
Vessel’s agents that LCS was apparently the firm chosen by
Broussard to load the rice is insufficient under the MCILA to
constitute authorization. See Galehead, 183 F.3d at 1246 (“That
a charterer of a vessel becomes aware that some work performed
was by a party somewhere down the chain of contracting and re-
contracting does not give rise to a maritime lien.”); Port of
Portland, 892 F.2d at 828 (“It cannot be denied that [the
vessel’s owner] knew that [the general contractor] was using the
Port’s facilities, but that has never been held to be sufficient
to establish a lien.”). A holding that awareness that
necessaries are being supplied was sufficient, even though those
necessaries were procured by an entity without authority to bind
the vessel, would render the statute’s authority requirement
meaningless.
26
We must also reject LCS’ contention that acceptance of LCS’
services and the rice aboard ship provided the necessary
authorization to entitle it to a lien. It is a settled principle
of contract law that a contract requiring A to supply X to C is
satisfied if B, hired by A, provides X to C. See Galehead, 183
F.3d at 1245 (citing Restatement (Second) of Contracts § 318 cmt.
a, illus. 2, in support of its holding that a contractor provided
necessaries to a vessel when the contractor’s subcontractor
delivered fuel to the vessel). Under the circumstances here, the
delivery of the rice, though performed by LCS, is attributed to
Broussard. Acceptance of the rice on the part of the Vessel,
through signing of Activity Sheets and the Mate’s Receipt, was
therefore acceptance of Broussard’s rice and Broussard’s delivery
of that rice. See Galehead, 183 F.3d at 1245; Ceres Marine
Terminals, 913 F. Supp. at 923. As a result, we do not view the
activities on the part of the Vessel’s master and crew to
constitute ratification.
The cases LCS cites in support of its ratification argument
are distinguishable. In Yacht, Mary Jane v. Broward Marine,
Inc., 313 F.2d 516 (5th Cir. 1963), the “real” captain did not
object while work ordered by the “nominal” captain was going on.
The nominal captain had no actual authority to place orders. We
affirmed the lower court’s conclusion that this supported a
finding of implied authorization. Had the case been brought
under the Federal Maritime Lien Act, the nominal captain would no
doubt have been viewed as clothed with presumed authority to bind
the vessel, having been named the “master” and appointed by the
27
owner of the vessel. Cf. Port of Portland, 892 F.2d at 827
(citing Yacht, Mary Jane as an example of courts finding implied
authority in individuals listed in § 972). The Jan C. Uiterwyk
court found that the vessel’s charterer and master approved of
the use of JCU, a firm providing agency and terminal services,
authorized JCU firm to sign bills of lading on behalf of the
master and/or owner, and ordered services directly from JCU. LCS
can point to no similar actions on the part of the charterers,
the master, or the crew here.13
Because we find that the district court was correct in
holding LCS was not entitled to a maritime lien, we need not
consider the waiver issue.
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
dismissal of LCS’ in rem action against the Vessel.
13
Although a stevedoring concern was also a plaintiff in
this case, it may be argued that the finding that JCU was
accepted as ship’s agent was crucial to the stevedores being
entitled to a lien. JCU had either supplied, or procured, all of
the services at issue in the case. See Jan C. Uiterwyk, 459 F.
Supp. at 1327.
28