U.S. Supreme Court The Lottawanna, 87 U.S. 20 Wall. 201 201 (1873)
87 U.S. (20 Wall.) 201
APPEAL FROM THE CIRCUIT COURT
FOR THE DISTRICT OF LOUISIANA
1. It is error and ground of reversal for a circuit court to affirm a decree in admiralty of the district court and at the same time dismiss the appeal.
2. Where claims on the proceeds in the registry of a vessel sold are not maritime liens, the district court cannot distribute those proceeds in payment of the claims if the owners of the vessel oppose such distribution.
3. A creditor by judgment in a state court of the owners of the vessel, even though he have a decree in personam also in the admiralty against them, cannot seize or attach on execution proceeds of the vessel in the registry of the admiralty.
4. Where an appeal is taken to the circuit court from the decree of the district court in a proceeding in rem, the property or its proceeds follows the cause into the former court.
In the year 1819, this Court, in The General Smith, [ Footnote 1 ] decided, as the profession has generally understood, that in respect to repairs or necessaries furnished to a ship in the port or state to which she belongs, no lien is implied unless it is recognized by the municipal law of the state, declaring the rule herein different from that where the repairs or necessaries are furnished to a foreign ship, in which case the general maritime law gives the party a lien on the ship itself for his security.
In view of this decision, most or all of the states enacted laws giving a lien for the protection of materialmen in such cases.
In the year 1833, in the case of The Planter (Peyroux v. Howard), [ Footnote 2 ] the converse of the rule in The General Smith was laid down, and process against a vessel in her home port was used and supported, the state law giving a lien in the case.
In 1844, this Court, acting in pursuance of acts of Congress which authorized it to adopt rules of practice in the courts of the United States in causes of admiralty and maritime jurisdiction [ Footnote 3 ] (and adhering to the practice declared as proper in the cases mentioned), adopted the following Rule of Practice:
" RULE XII"
"In all suits by materialmen for supplies, repairs, or other necessaries for a foreign ship or for a ship in a foreign port, the libellant may proceed against the ship and freight in rem or against the master and owner alone in personam, and the like proceeding in rem shall apply to cases of domestic ships, where by the local law a lien is given to materialmen for supplies, repairs, and other necessaries."
On the 1st of May, 1859, a new twelfth rule was adopted as a substitute for the one above given. It was thus:
" RULE XII"
"In all suits by materialmen for supplies or repairs or other necessaries for a foreign ship or for a ship in a foreign port, the libellant may proceed against the ship or freight in rem, or against the master or owner alone in personam, And the like proceedings in personam but not in rem shall apply in cases of domestic ships for supplies, repairs, or other necessaries."
The reasons for the substitution of this latter rule for the former one are stated by Taney, C.J., in the case of The Steamer St. Lawrence, [ Footnote 4 ] to have been that in some cases the state laws giving liens, and the constructions put on them by state courts, were found not to harmonize with the principles and rules of the maritime code, and embarrassed the federal courts in applying them.
With the case of The General Smith and others following it unreversed, and with the substituted twelfth rule in force, two sailors, on the 30th December, 1870, filed libels in the District Court at New Orleans against the steamer Lottawanna claiming wages. The libel alleged that the vessel when they shipped was in the port of New Orleans and was making voyages between that port and various ports and places on the Red River and its tributaries, and it was thus and inferentially to be gathered that New Orleans was the home port of the vessel.
By consent of the owners, the vessel was subsequently sold under an order of court, and the proceeds, $10,500, were brought into the registry.
In the meantime, about forty different persons intervened, claiming in the aggregate $35,000. Some were sailors, claiming wages. That their claims were a lien on the fund was conceded. But the majority of the claims (in amount $32,804) were for stores, materials for repairs, or for labor and supplies of different sorts furnished to the vessel in the port of New Orleans, the port which, as above said, was apparently her home port, though the fact that it was so was
nowhere distinctly asserted, nowhere in any way denied, and nowhere in any way proved.
Among the interveners claiming a share of the fund for supplies furnished to the vessel in the port of New Orleans were two firms, Wilson & Co. and Chaffee & Brother, the former claiming $3,091 and the latter $10,896.
None of the interveners alleged in direct terms that they had any maritime lien on the vessel or its proceeds or prayed for process to enforce such a lien, though the libels of some of them contained a prayer that the court would decree the payment of the intervener's claim with privilege on the vessel or its proceeds.
There was also a firm, Bell & Kennett, who claimed the whole fund in the registry. This firm had had something to do with the vessel and had sued its owners and got judgment against them in one of the state courts of Louisiana, the Sixth District Court for the Parish of Orleans. On this judgment they issued execution and attached the funds in the registry of the district court. They also had decrees in personam against the owners in the admiralty.
A report of a commissioner appointed by the district court to report distribution showed, that after deducting costs of the marshal, registrar &c.;,
The net proceeds of sale in the registry were . . . . . $9,405
That the sailors' wages (the only admitted admiralty
liens) amounted to. . . . . . . . . . . . . . . . . . 2,629
Leaving a balance of. . . . . . . . . . . . . . . . . . $6,776
The question was to whom was this balance to be paid? Bell & Kennett claimed the whole of it under their attachment in execution.
Wilson & Co., Chaffee & Brother, and the other interveners at New Orleans, for supplies furnished in that port, opposed this claim, and -- asserting that, on an account justly taken between the said Bell & Kennett and the owners of the vessel, it would appear that the former were indebted to the owners, and not the owners to them -- were not willing even that Bell & Kennett should come pari passu on the fund; much less that they should sweep it all away.
The commissioner divided the sum ratably between all the interveners, including with them Bell & Kennett. The owners opposing this, he made a second report remarking that the only admiralty liens in the case were the claims for sailors' wages (which had now been paid), and that the claims of Wilson & Co., Chaffee & Brother, and the other interveners were not such liens; that though where the owners did not oppose such distribution, a fund in the registry might properly be distributed to materialmen &c.;, claimants on it for supplies furnished to the ship, who yet had no admiralty lien in rem, yet that it could not be so distributed if the owners did oppose the distribution, this principle being settled by the cases of The Maitland, [ Footnote 5 ] and The Neptune, [ Footnote 6 ] and not departed from except in the case of remnants unclaimed by the owner. The commissioner concluded, therefore, that nothing could be done but pay the fund either to the owners or to the sheriff of the Parish of Orleans to answer his execution and attaching process, and this last he recommended as the more just disposition of the money.
Upon the case coming before the district court on exceptions to this report, that court, December, 1871, decreed that the interveners mentioned by the commissioner should be dismissed and that the fund should be paid, as the commissioner had suggested, to the sheriff to answer the process issued in the suit of Bell & Kennett against the owners.
From this decree of the district court the interveners took the case to the circuit court, and moved in the district court that the money in the registry there should be transferred to the registry of the circuit court. This motion the district court denied, and the moneys were paid over to Bell & Kennett. In the circuit court, objection was made, as also it had been made before, to the regularity of the appeal on account of some matters of form. The circuit court affirmed the judgment of the district court, but at the same time dismissed the appeal.
From this decree Wilson & Co. and Chaffee & Brother brought the case here by appeal; Bell & Kennett being the appellees.
Reference has been made in the opening part of this statement of the case, to the decision in the case of The General Smith, decided A.D. 1819, and other cases; and to the two different twelfth rules in admiralty.
In different cases coming here about eight years ago, [ Footnote 7 ]especially in The Moses Taylor and in The Hine v. Trevor -- this Court decided that the grant of admiralty jurisdiction given by the Judiciary Act to federal courts is exclusive, that state statutes which attempt to confer on state courts a remedy for marine contracts or torts by proceedings strictly in rem, are void. And on the 6th of May, 1872, after the present suit was brought, the twelfth rule of 1859, itself an amendment of the rule of 1844, was thus amended anew:
"In all suits by materialmen for supplies or repairs or other necessaries, the libellant may proceed against the ship and freight in rem, or against the master or owner alone in personam. "
The twenty-sixth rule in admiralty (having no connection, however, with any of the preceding matters, but yet adverted to in the argument), says:
"In suits in rem, the party claiming the property shall verify his claim on oath or solemn affirmation, stating that the claimant by whom or on whose behalf the claim is made is the true and bona fide owner, and that no other person is the owner thereof. "
MR. JUSTICE CLIFFORD delivered the opinion of the Court.
Complicated as the record is, it will be impossible to state the questions presented for decision in a manner to be understood without referring to the original proceedings in the district court, as the suit, when it was commenced, was a libel in rem filed by two mariners, J. D. Cox and J. N. Geren, against the steamboat Lottawanna, her tackle, apparel, machinery, and furniture, in a cause of subtraction of wages, civil and maritime.
Prior to the institution of the suit, the allegation is that the steamer had been engaged in commerce and navigation between the port of New Orleans and various other ports and places on Red River and its tributaries, and that the libellants, during that period, were duly employed by the master as the pilots of the steamer, and that they continued in that employment for the respective periods and at the monthly wages specified in the libel. They also allege that they faithfully performed their respective duties, as such pilots, and that there is due to them the respective sums charged in the schedule exhibited in the record. Wherefore they pray for process against the steamer &c.;, and that she may be condemned and sold to pay their respective claims.
Pursuant to the prayer of the libel, a warrant was issued,
and the return of the marshal shows that he seized the steamer and that he published a monition, citing and admonishing the owners, and all others claiming any right, title, or interest in the steamer, to appear, on a day therein named, at the district court and show cause, if any they have, why the prayer of the libel should not be granted. Subsequently, on the same day, the libellants filed a petition in the district court, representing that the steamer was expensive to keep and perishable and prayed for an order that she might be sold.
On the same day also, Moses Morgan filed an affidavit in the case stating that he owned three-fourths of the steamer and that he had no objection that she should be sold, and the record shows that the court immediately passed an order that the steamer be sold by the marshal, he giving legal notice of the sale, and that the proceeds be deposited in the registry, subject to the further order of the court. Nothing is exhibited to show that there was any irregularity in the sale, and it appears that the proceeds, amounting to ten thousand five hundred dollars, were deposited in the registry of the court.
Before the other owner of the steamer, Philip Work, appeared, seventeen libels of intervention were filed in the court against the proceeds of the sale of the steamer, embracing some forty interveners, with claims for wages as mariners and claims for materials for repairs and for stores and supplies and for money loaned for the steamer or for the individual owners and to pay for debts contracted by the master or owners for repairs and supplies during a period of two or more years.
On the fourth of February, 1871, more than a month after the original libel was filed, Philip Work appeared and filed a claim that he was the owner of the other undivided fourth part of the steamer, and he excepted to all of the libels of intervention except the one filed by the mariners, being the libel of intervention first named in the record, and upon three grounds, and prayed that the interventions might be dismissed:
(1) Because the court was without jurisdiction,
ratione materiae, of the matters alleged in the several libels.
(2) Because the court was without jurisdiction to entertain the interventions or to adjudicate thereon for the reason that all of the owners of the steamer, at the date of the several causes of action set forth, were citizens of that state and resided in the City of New Orleans, at which port the steamer was registered and enrolled.
(3) Because the respective interveners did not, on filing their libels, give stipulations with sureties to abide the final decree rendered in the case and to pay costs, as required by the rules in admiralty proceedings.
Intervention was subsequently claimed by other parties, and other directions were given which it becomes important to notice in order to have a full view of all the material proceedings in the district court.
Libels in personam were also filed by the appellees and by John Chaffee and Charles Chaffee, who are the last-named appellants. By the transcript, it appears that the libel of the appellees was filed on the sixth of February, 1871, and that the libel of the said appellants was filed on the following day. Service of the original monition was made January first, 1871, and on the seventh of February succeeding the court passed an order that the delay allowed by law having expired, and, no answer having been filed, that all persons interested in the property seized be pronounced in contumacy and default, and that the libel in the principal case be adjudged and taken pro confesso.
On the thirteenth of the same month, the court entered a decree in favor of the libellants as follows: that J. D. Cox recover the sum of one thousand three hundred and six dollars and that J. N. Geren, the other libellant, recover the sum of six hundred and seventy-four dollars and twenty-eight cents, from which decree neither the libellants nor the owners of the steamer have ever appealed.
On the third of March, 1871, subsequent to the said decree, Jesse K. Bell filed a libel of intervention, claiming the sum of two thousand two hundred dollars, as paid by him on two claims for fuel furnished to the steamer by the persons
named in the libel. Leave was granted to the applicant to file the libel, and on the same day the court passed an order that the cause be referred to a commissioner to report upon a tableau of distribution, and to classify the various claims according to law, giving all parties a right to take further evidence before the commissioner.
Since that time, further libels of intervention have been filed as follows, to-wit, one by J. Sharp McDonald on the eighteenth of the same month for five hundred and forty boxes of coal; another by Thomas Onley & Co. on the thirty-first of the same month for services, the account being approved by the master and by the mate, and one other by Christian & Hyatt on the second of May in the same year for stationery furnished for the use of the steamer.
Besides the libel filed by the two pilots, a libel in rem was also filed by the mate against the steamer, on the thirtieth of December, 1870, for the balance due him for wages, and the record shows that the court, on the tenth of February next after the commencement of the suit, entered a decree in his favor for the amount claimed and taxable costs.
Morgan and Work failed to answer the suit in personam of Kennett & Bell against them, and the court, on the twentieth of November, 1871, passed an order that the libel be taken pro confesso and that a decree be entered in favor of the libellants, and three days later it was ordered that the suit be consolidated with the record in the original suit in rem against the steamer.
Different proceedings took place in the suit in personam commenced by Chaffee & Brother, as Joseph Morgan appeared on the same day and confessed judgment in favor of the libellants for the sum of ten thousand eight hundred and ninety-six dollars and fifty-six cents, with eight percent interest from the twenty-third of January preceding. Judgment was accordingly rendered in their favor against Morgan for that amount. Work made default, and a decree dated June 1, 1871, was entered against him for the same amount in favor of the same libellants.
Report in due form was made by the commissioner on
the fourth of May in the same year. He decided that none of the creditors, presenting claims for repairs and supplies, had any right to libel the steamer in her home port, and recommended that the proceeds in the registry of the court be distributed as follows: first, that all legal costs be paid in full; secondly, that all claims of the seamen for wages be paid in full; thirdly, that all claims for labor, supplies, and materials for repairs, be paid pro rata, according to the schedule of claims annexed to the report.
Exceptions of various kinds were filed to the report of the commissioner:
(1) That certain claims were allowed which were not due from the owners of the steamer, or were, in whole or in part, improperly classified as claims for stores or for supplies and repairs.
(2) That the schedule improperly includes claims not having any maritime lien on the steamer or the proceeds in the registry of the court, nor entitled to any preference by attachment or otherwise.
(3) That the compensation charged by the commissioner is excessive.
Pending the hearing of the exceptions to the report of the commissioner, the court passed an order that the claims for costs and the claims of the seamen for wages should be paid, and it appears that the order was promptly carried into effect, but the residue of the report was finally referred back to the commissioner for further proceedings. In the meantime, the appellees here, having obtained judgment against the owners of the steamer in their suit in personam, sued out a garnishee process from the Sixth District Court of the state, and attempted to attach the proceeds as money in the hands of the clerk of the district court. All parties were again heard by the commissioner, and, on the fourth of June following, he made a supplemental report. In his second report he decided that where there is a maritime lien upon the vessel, the lien will attach to the proceeds in case the vessel is sold and the proceeds are paid into the registry of the court, but where there is no maritime lien upon the vessel, that the proceeds should not be distributed, if the owners make opposition to the application, unless the applicants
prove that they have some legal or equitable interest in the subject matter and, the commissioner being of the opinion that the interveners had no maritime lien, reported that the proceeds remaining in the registry of the court could not be distributed for their benefit in this case and recommended that the court order either that the proceeds be paid over to the owners of the steamer or to the sheriff who seized the same in the hands of the clerk, acting as registrar under the garnishee process.
Seasonable exceptions were filed to the report by many of the interveners opposed in interest to its conclusions, including the last-named appellants. Due notice having been given, the parties were heard and the court entered a decree that all the interventions in the cause, founded on claims which are not liens in admiralty, be dismissed at the cost of the respective parties. All such parties, including the last-named appellants here, claimed an appeal to the circuit court, and the record shows that the appeal in their behalf was duly allowed, and that they filed an appeal bond, executed to the owners of the steamer and the appellees in this Court. Certain other interveners also petitioned for an appeal, and the court passed an order granting it without requiring any additional bond, in consequence of which omission the present appellees, on the twentieth of December following, moved the district court to set aside and dismiss the last-named appeal, and the record shows that the court, on the twenty-fifth of January following, granted the motion and vacated and annulled the appeal.
Seamen's wages and costs having been paid, the interveners whose appeal was allowed moved the court on the eleventh of January, 1872, that the fund in the registry of the court be transferred to the circuit court, which motion was for a time held under advisement. During that period, the district court, on the sixth of February following, entered a decree that the proceeds in the registry of the court be applied first, to the satisfaction of the judgment of the present appellees against the owners of the steamer, and
second, that the balance, if any, be paid over to Chaffee & Brother, seizing creditors, next in rank.
Application for an appeal by Chaffee & Brother was made on the following day, and on the twenty-sixth of the same month, the court overruled the motion to transfer the fund into the circuit court and the last-named motion for an appeal and ordered that the fund be paid over as directed in the order previously given upon that subject. Chaffee & Brother, however, were among the petitioners for the appeal which was previously allowed by the court, and their names appear in the bond which was filed to prosecute the appeal, but they were libellants in personam, and not strictly interveners in the original suit prosecuted in rem by the two pilots.
Copies of all the material orders, directions, and proceedings in the original suit and in the several suits of Allen v. Steamer, Kennett & Bell v. Owners, and Chaffee & Brother v. Owners, were sent to the circuit court under the certificate of the clerk of the district court, together with copies of all documents filed and of the minutes of all the evidence introduced in those several cases, and the case was entered in the circuit court, on the twenty-ninth of May, 1872, under the title of J. D. Cox v. Steamer, which is the title of the original suit in the district court, from which no appeal was ever taken either by the libellants or the owners.
Appearance was entered by Kennett & Bell, and they moved to dismiss the appeal for the following reasons:
(1) Because the appeal was discharged in the district court, which is not sustained by the record.
(2) Because the bond filed is irregular and not such as the law requires, and the circuit court, having affirmed the decree of the district court, granted the motion to dismiss.
Immediate application for an appeal to this Court was made by the present appellants, which was allowed by the circuit court, and the petitioners gave bond with surety to the present appellees et als. to pay all such damages as they
may recover against the appellants in case it should be decided that the appeal was wrongfully obtained.
Irrespective of the question whether the appeal is regular or irregular, it is quite clear that the decree of the circuit court must be reversed, as one part of it is repugnant to another part. Plainly, if the appeal was regular, it was error to dismiss it, and if it was so irregular that it became the duty of the court to dismiss it, the circuit court had no jurisdiction to affirms the decree of the district court. Cases of admiralty and maritime jurisdiction where the matter in dispute, exclusive of costs, exceeds the sum or value of fifty dollars may be removed from the district court into the circuit court by appeal, and the provision is that such appeals shall be subject to the same rules, regulations, and restrictions as are prescribed by law in case of writs of error. [ Footnote 8 ] Jurisdiction in such cases is given to the appellate court by the appeal or writ of error, as the case may be, which ceases to exist, even if regular, when the appeal or writ of error is dismissed, or if not regular in essential particulars, then jurisdiction does not attach for the purpose of affirming the decree upon the merits. [ Footnote 9 ] Argument to support these conclusions is not necessary, as they are self-evident, but inasmuch as the case must be remanded for a new hearing, it becomes necessary to examine some of the questions which the anomalous proceedings present for consideration.
Most of the claims of the interveners were for stores, materials for repairs, or for labor and supplies furnished to the steamer, either at the request of the master or at the request of one or both of the owners, in the home port of the vessel. More than half a century ago, this Court decided, in The General Smith, [ Footnote 10 ] that where repairs and supplies are furnished to a ship in her home port or in a port of the state to which the ship belongs, that no maritime lien is implied, nor any other lien unless it is given by the local law by which the rights of the parties in such a case is altogether governed.
Where necessary repairs have been made or necessary supplies furnished to a foreign ship or to a ship in a port of a state to which the ship does not belong, the general maritime law, as all agree, gives the party a lien on the ship itself for his security, which may be enforced in the admiralty by a proceeding in rem; but the Court decided in the case before mentioned that as to such repairs and supplies furnished to a ship in her home port or in a port of the state to which the ship belongs, the case is governed by the local law, and that no lien arises unless given by the local law. All the federal courts were governed by those rules for years, and little or no difficulty arose in practice, as most or all of the states enacted laws giving a lien for the protection of materialmen in such cases, and this Court adopted a rule authorizing a proceeding in rem against domestic ships "where, by the local law, a lien was given to secure the payment of contracts in such cases for supplies, repairs, or other necessaries." Since that time, however, that rule has been repealed and a new one adopted in its place which does not authorize a proceeding in rem except where there is a claim founded on a maritime lien against a foreign ship or against a ship in a foreign port or the port of a state other than that to which the ship belongs. [ Footnote 11 ] Attempts were made by the states to obviate the embarrassment which grew out of the repeal of that rule, and the adoption of the new rule withdrawing the use of the process in rem from the district courts to enforce the payment of claims for repairs and supplies furnished to domestic ships, but this Court decided in several cases that the state legislatures could not create a maritime lien, nor could they confer jurisdiction upon a state court to enforce such a lien by a suit or proceeding in rem as practiced in the admiralty courts. [ Footnote 12 ]
Much embarrassment has existed ever since the old twelfth admiralty rule was repealed, as the new rule makes no provision to enforce the payment of contracts for repairs and supplies furnished to domestic ships, except by a libel in personam. Repeated judicial attempts have been made to overcome the difficulty, none of which have proved satisfactory, because they failed to provide a remedy in the admiralty by a proceeding in rem. Inconveniences of the kind have been felt for a long time, until the bench and the bar have come to doubt whether the decision that a maritime lien does not arise in a contract for repairs and supplies furnished to a domestic ship is correct, as it is clear that the contract is a maritime contract, just as plainly as the contract to furnish such repairs and supplies to a foreign ship or to a domestic ship in the port of a state other than that to which the ship belongs. [ Footnote 13 ] Such a remedy is not given even in the latter case unless the repairs and supplies were furnished on the credit of the ship, and it is difficult to see why the same remedy may not be given in the former case if the repairs and supplies were obtained by the master on the same terms. [ Footnote 14 ] These and many other considerations have had the effect to create serious doubts as to the correctness of the decision made more than fifty years ago, [ Footnote 15 ] that a maritime lien does not arise in such a case.
Expressions, however, to the same effect are found in other opinions of this Court, and inasmuch as the question is not satisfactorily put in issue in the pleadings in this case, and does not appear to have been directly presented to the circuit court by either party, the Court here is not inclined to enter more fully into the consideration of it at the present time.
None of the interveners alleged in direct terms that they had a maritime lien upon the steamer or the proceeds in the
registry of the court. Many libels of intervention were filed subsequent to the sale of the steamer, and some of them contain a prayer that the court will decree the payment of the claim of the libellant, with privilege on the steamer or the proceeds, but in no case does the libellant allege in terms that the contract set forth in the libel constitutes a maritime lien upon the steamer or the proceeds in the registry of the court, nor does the libellant pray for process to enforce any such lien.
Doubtless the maritime lien is, in many cases, well described as a privilege in the thing, but the state law, which cannot be enforced in the admiralty, also gives materialmen a privilege or lien in such cases, and in view of that fact it may well be questioned whether the allegation in the libels is sufficient to apprise the owners of the specific nature of the interest which the libellants claim in the proceeds, as the rule of decision in the federal courts has been for many years that a maritime lien does not arise in such a case. Any person having an interest in the proceeds may intervene pro interesse suo, but he ought to allege enough to apprise the owner of the nature of the interest claimed. [ Footnote 16 ]
Most or all of the claims were referred to a commissioner to report a tableau of distribution, and no exception was taken to the order of the court appointing the commissioner. He decided that none of the claims except those for seamen's wages constituted a maritime lien, and none of the libellants excepted to the report upon that precise ground. On the contrary, they seem rather to have acquiesced in that part of the report, and in the view adopted by the district judge that it was competent for him to decree that the respective claims should be paid out of the proceeds in the registry of the court, irrespective of the question whether the claimants had or had not any maritime lien or other legal interest in the same. Such must, it would seem, have been the view of the district judge, as he ultimately
confirmed the report and directed the proceeds to be paid to two claimants, both of whom were libellants in personam and judgment creditors of the owners. By confirming the report, he decided that none of the libellants whose claims were for repairs and supplies had any maritime lien, but in the decree ordering the payment of the two claims he departed from the report of the commissioner, as the latter decided that inasmuch as opposition was made by the owners, the proceeds could not be distributed among the interveners who had no maritime liens. Apparently the district judge must have been of the opinion that the proceeds were subject to his order of distribution among the creditors of the owners or that the two claimants acquired some right or interest in the proceeds either by their judgments against the owners or by virtue of the proceedings under the garnishee process against the clerk as the registrar of the district court.
Beyond doubt, maritime liens upon the property sold by the order of the admiralty court follow the proceeds, but the proceeds arising from such a sale, if the title of the owner is unencumbered and not subject to any maritime lien of any kind belong to the owner, as the admiralty courts are not courts of bankruptcy or of insolvency, nor are they invested with any jurisdiction to distribute such property of the owner, any more than any other property belonging to him, among his creditors. Such proceeds, if unaffected by any lien, when all legal claims upon the fund are discharged, become by operation of law the absolute property of the owner. [ Footnote 17 ]
Subsequent to the seizure, any person may enter an appearance to protect any interest he may have in the property, or he may commence a second or subsequent suit to enforce any claim he may have against it, or he may take legal measures to prevent the release of the property under arrest, or to prevent the payment of the proceeds out of the
registry. [ Footnote 18 ] Defense may be made to a suit in rem by any person who has an interest in the thing seized; as for example, a mortgagee may appear and defend a salvage or wages suit, or the assignee of a bankrupt owner may appear and contest any claim against the property of the bankrupt, or underwriters, if they have accepted the abandonment, may also appear and defend against any claims adverse to their interest in the property, but a person who has merely a collateral interest in some question involved in the suit and has no actual concern in the subject matter of it, cannot be allowed to intervene in the proceedings. [ Footnote 19 ]
Where the property is already under arrest and a second or subsequent suit is instituted, it is not necessary to take out a second warrant of arrest, as a citation in rem is sufficient, instead of a warrant, commanding the marshal to cite all persons who have, or claim to have, any right, title, or interest in the property, to enter an appearance in the cause on or before the day therein named, the service of which is sufficient to protect the rights of the intervener. Notice to the owners in some form must be given in such cases, else the decree will not conclude the owners. [ Footnote 20 ]
Decided cases may be found which afford some support to the proposition that the proceeds in the registry of the court, if the lien claims are all discharged, may be distributed equitably among the intervening creditors of the owners, but the court is of the opinion that the rule that the proceeds in that state of the case belong to the owner is correct in principle, and that the weight of authority is in its favor, notwithstanding those cases, of which The John [ Footnote 21 ] is the one most frequently cited. But in that case there was no opposition by the owners, nor was the question much considered. Directly opposed to that case is the case of The Maitland, [ Footnote 22 ] in
which the admiralty court refused to follow it, remarking that there is no solid distinction between original suits and suits against the proceeds where there is opposition. Mere remnants, if unclaimed by the owner, may stand upon a different footing, and it is upon that ground that the admiralty courts have sometimes decreed the payment of small unclaimed sums to a creditor of the owner having a clear equity, to prevent the same from being indefinitely impounded in the registry of the court. Exactly the same point was decided in the same way in the case of The Neptune, [ Footnote 23 ] in which all of the authorities to that time were carefully examined. Where the ship is sold the proceeds are in the hands of the court, which holds the fund in trust, and the court in the following case added that the owner is in some sense entitled to the same, but finally decided that inasmuch as he cannot obtain the fund without the order of the court, that it cannot be attached under the garnishee process. [ Footnote 24 ]
Supplemental suits in the nature of a suit in rem may unquestionably be entertained in favor of parties having an interest in the proceeds, as was held by this Court in the case of Andrews v. Wall, [ Footnote 25 ] in which this Court said that such suits may be entertained to ascertain to whom the proceeds belong and to deliver the same over to the parties who establish the lawful ownership to the property, as in the case of the sale of a ship to satisfy claims for seamen's wages, or for a bottomry bond, or for salvage services, or to discharge a lien for repairs and supplies, the rule being that after the original demand is paid if a surplus remains in the registry, the court may determine to whom the same belongs. Other lien claims are also mentioned for which the ship may be sold, but it is unnecessary to recapitulate them, as those enumerated are sufficient to explain the principle adopted by the court. [ Footnote 26 ]
Different views have in some few instances been adopted
by the district courts, but the right of the court to decree that third persons who could not have proceeded against the property in rem may recover a proportion of the proceeds to satisfy their claims against the owner in a case where the owner appears and opposes the application seems to be repugnant to every sound principle of judicial proceeding, and it is certainly opposed to the great weight of authority. [ Footnote 27 ]
Reference is sometimes made to the case of Place v. Potts, [ Footnote 28 ] as supporting the opposite rule, but the Court here is not able to regard the case as having any such tendency, as the judgment in that case in the court of original jurisdiction was founded almost entirely upon the decision of the admiralty judge in the case of The Dowthorpe, [ Footnote 29 ] which is nothing but a simple apportionment of the different liens upon the ship and freight.
Suppose that is so, still it is contended that the appellees acquired the right of preference in the fund by virtue of the proceedings under the garnishee process, as more fully set forth in the record; but the court is entirely of a different opinion, for several reasons:
1. Because the fund, from its very nature, is not subject to attachment either by the process of foreign attachment or of garnishment, as it is held in trust by the court to be delivered to whom it may belong, after hearing and adjudication by the court. [ Footnote 30 ]
2. Because the proceeds in such a case are not by law in the hands of the clerk nor of the judge, nor is the fund subject to the control of the clerk. Moneys in the registry of the federal courts are required by the Act of Congress to be
deposited with the Treasurer of the United States, or an assistant treasurer or designated depositary, in the name or to the credit of such court, and the provision is that no money deposited as aforesaid shall be withdrawn except by the order of the judge or judges of said courts respectively, in term time or vacation, to be signed by such judge or judges and to be entered and certified of record by the clerk. [ Footnote 31 ] Regulations substantially to the same effect have existed in the acts of Congress for more than half a century, and within that period it is presumed that no proceeding to attach such a fund by a creditor of the owner has ever been sustained. [ Footnote 32 ]
3. Judgments were never a lien upon personal property, unless made so by attachment under mesne process, which is all that need be said in respect to the proposition that the appellees acquired a right of preference to the proceeds in the registry of the court by virtue of their judgment against the owners.
Mention should also be made of another error, which ought if possible to be promptly corrected. Where an appeal is taken from the decree of the district court in a proceeding in rem to the circuit court, the property or proceeds thereof follows the cause into the circuit court, where it remains until the litigation is ended, as it does not follow the cause into the Supreme Court. [ Footnote 33 ] Application was made to the district court to send up the proceeds, and the record shows that the court overruled the same, which is a plain error and one which ought to be promptly corrected, unless the proceeds have been paid over as directed by the court, and if so, they should be recalled, if practicable, and restored to the registry, and then sent up to the circuit court, as the circuit court in such cases executes its own decree.
Imperfectly tried, as the case has been, the Court here is of the opinion and directs that leave be given to both parties
to amend their pleadings, and if need be to take further proofs. Error was also committed by the circuit court in affirming the decree of the district court, as it is plain it should have been reversed. For these reasons, the decree of the circuit court is in all things
Reversed and the cause remanded for further proceedings in conformity to this opinion.
[ Footnote 1 ]
17 U. S. 4 Wheat. 443.
[ Footnote 2 ]
32 U. S. 7 Pet. 324.
[ Footnote 3 ]
Acts of May 8, 1792, 1 Stat. at Large 275, and of August 23, 1842, 5 id. 516.
[ Footnote 4 ]
66 U. S. 1 Black 529.
[ Footnote 5 ]
2 Haggard's Admiralty 254.
[ Footnote 6 ]
3 id. 130; S.C. on appeal, 3 Knapp 711.
[ Footnote 7 ]
[ Footnote 8 ]
2 Stat. at Large 244.
[ Footnote 9 ]
1 id. 84.
[ Footnote 10 ]
17 U. S. 4 Wheat. 443.
[ Footnote 11 ]
[ Footnote 12 ]
[ Footnote 13 ]
Abbott on Shipping 143, 148.
[ Footnote 14 ]
[ Footnote 15 ]
The General Smith, 4 Wheat. 443.
[ Footnote 16 ]
43 Admiralty Rule, Revised Code of Practice, Art. 3273-4327; Revised Statutes of Louisiana 604.
[ Footnote 17 ]
[ Footnote 18 ]
43 Admiralty Rule; Williams & Bruce's Admiralty Jurisdiction 229.
[ Footnote 19 ]
Conkling's Practice (5th ed.) 570; Stratton v. Jarvis, 8 Pet. 4; The Killarney, Lushington 430; Williams & Bruce's Admiralty Jurisdiction 199; The Julindur, 1 Spinks 75; The Louisa, Browning & Lushington 59; The Caledonia, Swabey 17; The Mary Anne, 1 Ware 108.
[ Footnote 20 ]
Nations v. Johnson, 24 How. 205; 43 Admiralty Rule.
[ Footnote 21 ]
3 Robinson 290.
[ Footnote 22 ]
2 Haggard's Admiralty 253.
[ Footnote 23 ]
3 Knapp's Privy Council 111.
[ Footnote 24 ]
The Wild Ranger, Browning & Lushington, 88.
[ Footnote 25 ]
44 U. S. 3 How. 573.
[ Footnote 26 ]
[ Footnote 27 ]
2 Parsons on Shipping 231; The New Eagle, 2 W.Robinson 441; Gardner v. Ship New Jersey, 1 Peters' Admiralty 226; Clement v. Rhodes, 3 Addams 40.
[ Footnote 28 ]
8 Exchequer 705; Same Case, 10 id. 370; Same Case, 5 H.L. 383.
[ Footnote 29 ]
2 W.Robinson 90.
[ Footnote 30 ]
The Albert Crosby, 1 Lushington 101; The Wild Ranger, Browning & Lushington 8; 1 Chitty's Archbold's Practice (11th ed.) 702.
[ Footnote 31 ]
17 Stat. at Large 1.
[ Footnote 32 ]
3 id. 395.
[ Footnote 33 ]