dutiable goods of less than $100 in value by appraisement, and also the affida\fitthitt no invoice had'beeni received of the merchandise 'described in the application. The goods were sent to the appraiser's store, and there kept'until the appraisement was made and theehtty completed; the were for. tIle labor of ha\lling1 the storage to,b9, p,a,ld,by theunportet. ,A ,protest was filed that ,under Rev. St. it th/ltimported entered .' by appraiA;ement without tflBt, under sections; 2789, 2926, 2963, merchandise, the entry 'of which may be incomplete for want of particulars, should be taken into the custody of the collector of the or store-house, and there remain port, ,nndconveyed to some 'uritil' 'the particulars wettJ by ,of 'original invoiye bY" 't\ppraisement. ' It"was cHtimed, i'n theproiest' thitt 'no charges 'by the cOllect01' 'except when incurred {or the storage oftJ;letthana.ise. or; jnvoice, and' that. they were not' wheretlle 'riletchandjSewas sentto the :United States publiC: store for'appraisementpurpos'es only,. inasmu,ch .as under Rev. St§2,955 that placewlls 'Jorapptalsement purposes' oilly, and not for the'stdtage'o'f thEl'goods; , " " , F.' for plaintiffs. ':"' . . .' W:'W:' (hrr,Asst. and J'qhn u,. S. Atty., for deferitlant. ' . 'I ·. ' · . ,
or
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The court, (BUTI.ER, J.,) after for sented his case, suggested ,that its view ofthe }awwas against the contena vdluntarynonsuit was' suffered." '.l -,,.,.,--...,...,..,.-.-........ , ,......,.,. LEE t1. UPSON
& HART Co. et al. '" ,'t"
(Cfrcuit Oourt, D. Oonnecticut. June 11.1890.) PATENTS POR Letter!! patent No. 365,819, July 5,1887, to Horatio Jordan, for an art of welding the ends of, :metal tubes, had partioular reflll'anoe to the manner of shaping and bending the oval or round ends of the hollow handles of steel cutlerYLso as to butweld the handles, and Inake a perfect seam, which would not 'leak. 'J.'he improvement shaping the blank so as to form at the end Qftlle tube double lips or Which were adapted to be.bent inwardly, and welding them together by gies, HeZd"tpat the Wl\S not infringed, the tl8e similar plan of turn ng the ends of the tube Inward, and but-weldIng them, SInce before the patent was issued such a plan was known and praoticed, though it was not carried out well enough to be a commercial success.
IIi 'Bill for infringement of letters patent. Edward S.Bea'ch and 'J. E. Ma'!fnadier, for complainant. JohnP. Bartktt, for defendants. , ' <
l ' ,
,; )
i
SHIPMAN, :J:- 'This iSll; bill'iri equity wbich isbased upon the alleged ·infringement of two letters patent, theflrst being No. 365,819, dated
LEE·V. UPSON & HART 00.
.
531
July 5, 1887, to Horatio Jordan; assignor toWilliam W. Lee, for an improvement in the art of welding the ends of metal tubes, Il,nd the other being No. 365,829, dated .July 5, 1887, to the. said Lee, for. an improveffi:ent in the art of p:ll)-king hollQW handles. Nothing need be said in regard to the Lee patent, as it is co.nceded that its infringement was not proved. The ilIlprovement described in .the Jordan patent had reference to the manner of shaping and bending the oval or round ends of the hollow handles of steel cutlery, so as to but-weld the handles, and make a perfect seam, which would not leak. Great difficulty had been experienced in the manufacture of this kind of knives, because the ends of the handles could not be made perfectly water-tight, either by brazing or by lap-welding. No difficulty had been experienced in but-welding the side seam of the handle. The Jordan improvement consisted in shaping the blank so as to form at the' end ·of the tube lips or projections, which were adapted to be bent in:. wardly each other, in bending these projections towards each, other, and afterwards in welding between dies so shaped as to force the inwardly bent portions together. The particular form which is given the edges inwardly towards each other to the end. of the tube by is the distfnctive feature of the improvement. THe claim is as follows: "The lmproved art herein descrlhed of butrwelding the ends of metal tubes. consisting in llrst shaping the end to be welded, then clQsing the end of the tube sulllcielltly to bring the edges each opposite to the other, and then ing and welding betwt'en dies shaped to force the inwardly bent portions the end tit "the tube together, and form a butrweld, sqbstantially as and for the purJ.>OseB set forth." .
Before' the date of Jordan's improvement, the handles of hollow handled cutlery had been made by but-welding the side seams, and by b:r:azing, and lap-welding the end seam, and all these methods of uniting the edges of the tubular blank were well known. The fact that seams were but-welded is notimport8l}t, for there is .an important practical difference between but-welding a longitudinal seam, where veryJittle fin is formed, and but-welding the end portipns of a tube whereihemetal is contracted into a cup-like form, and flpwsout more than it does at the sides. The flat or "square" ends of the hl1ndles of tqeBeecher and Patterson patents were lap-welded. The .Jlijcalds and. Lawtoll patent of 1884 showed a tubular metallic blank for ahol10", handle, having at one end projecting lips which were bent inwardly, and brazed together. The lips of the blank were very edge like the. Jordan blank, were bent towards each in .the same way, but nearer together than in that qlank, for the purpose. of being cemented by the. brazing process. . A .Jeraldsand Lawton blank, of the proper thickne$" was capable of being but-welded by the use of tpe appropriate dies, ,alId.ll skilled forger of metals could have but-welded such a blank b,efore .the date of the ,Jordan invention/ if he had been tQld to doit.. Un,dl;lr this state of facts, without other in regard to the, history of the art, it would seem to beanadvance not amounting to bring the inwardly inclined ends of
532
FEDEltAJ. REPORTER,
vol. 42.
ton blank together by \\:elding instead of by brazing; but an inspection, of'the various patents in the case, and the testimony of the exper.t'meother than the two Messrs. Hart, who are connected with the defendant company, indicate that, as a matter of history, much timl.' and thought had been ineffectually spent by experts in groping for success in the manufacture' of hollow handles. A study of the history or the art will lead to the conclusion that the idea of but-welding the end of a Jeralds and Lawton blank was the fruit of an inventive mind. It is established by the testimony that this idea had been carried out, and hollow handled table cutlery had been manufactured in a small way by the Messrs. Hart, in the deferidant's shop, in and prior to 1881, who but-welded blanks which were made substantially after the Jeralds and Lawton. pattern; that the knives ,were used, and were given away; and that samples were sent tCl the plated cutlery establishmepts in the neighborhClOd. They were made from too thin steel, were prClpably not well made, and were unfavorably received. I think that but very few were sold. The fact that the 'officers of the different factories for the manufacturEi of plated cutlery to which these samples were sent, and who have testified, do recollect their existence, is unimportant; for the receipt at the respective factories of samples of actual or alleged improvements is not so unusual an occurrence as to impress itself upon the minds of the witnesses. The complainant ltt)hi,s point of the urges that the JeraJds and Lawton blank and the Jordan bl!inj{ .a're different things; because ,the edges of the earlier blank are brought close together for the purpose of brazing, while there is, a C'onsiderable space between the edges of the later blank. It is said, with a gooddel:tl of earnestness,that if the ends of the Jordan blanks were benttqgether, as is the case with "Hart's Oval Handle," (which is substantially like the Jeralds and Lawton blank,) there would be metal in a space which ought to be empty, and that such metal would be surplusage, and would eitherform a fin which would prevent the dies frOm coming together and interfere with the perfectionof the weld, or would be driven within the hollow space which would tend "to crippling of the surface of the hollow handle." It is thus contended that the invention consisted in part in so arranging the lips with reference to each other that there would be no surplusage of metal, and only a small fin, and that, therefore, merely but-welding a Jeralds and Lawton blnnk was far from the Jordan invention. The difficulty in the circUIIlstances referred to is rather the difficulty of making an article with commercial success, than the impossibility of making, with the use of proper dies, a but-weld; for it is testified by the plaintiff, who is an expert upon the subject, that, under favorable conditions of dies, the end should but-weld, and it seems most plain that if the handles, made after the pattern of "Hart's Ovlll Handle," were riot properly but-wl'lded, and too much fin was created, the would be apparent to the skilled mechanfe, who would make 'his dies of the proper shape, andvrould, from the knowledge gained by experience, regulate" the space between the edges, which were to be brought tClgether
NIPPERT V.THE J. B. WILLIAMS.
533
and thoroughly welded by the dies. It may be added that the patent places no stress upon the particular distance between the edges of the tubular blank. After the idea had been reached that but-welding the end of a tubular blank could be beneficially obtained by inwardly bending the edges of the blank towards each other, the shape of the dies and the separation of the edges by the blank were matters of detail, to be wrought out by the mechanical, rather than by the inventive, mind. The defendant's testimony is to the effect that, after the oval handle had been made, and before the date of the application for the patent, it manufactured the round stub and handle, the blank for which is conceded to be like the Jordan blank, from which the plaintiff supposes that the round handle was copied. I am inclined to the opinion that the round handle was a modification of the oval handle, and was not copied from the Jordan invention; but I do not place the decision upon that ground, but upon the prior invention of the oval handle, which was manufactured in accordance with the distinctive characteristic of the Jordan method, although with little commercial success. The bill is dismissed.
NIPPERT
et ale
11.
TnE J. B. WILLIAMS.
(Circuit C6Urt, D. Kenf!lUfky. April 5, 1800.)
1.
MARITIME LIEN-AnVANCEs-AccOMMODATION INDORSERS. '
Where a draft. drawn in a foreign port by the master of a steamer upon the owners, to the order of a firm accustomed to furnish the stellmer with supplies, is indorsed by the firm, and discounted with a bank, and the proceeds immediatelv turned over to the master, the firm is an accommodation indorser only; and although it has taken up the draft. which bears upon its' face the words," Charge to wages, and supply account," it cannot assert. a lien against the steamer for the amount thereof. It is incumbent upon one who makes advances to the master of a steamer in II foreign port to ascertain for what purposes the money is needed; and although advances are made upon drafts against the owners which bear upon their faces the words, "Charge to wages and supply account," thl're is no lien except for the amounts actually used in discharging claims which constitute II lien against her. Reversing 31l Fed. Rep. 828.
2.
SAME-DuTY OF INQUIRY.
In Admiralty. Libel for advances. On appeal from district court, Sri Fed. Rep. 823. Goodloe & Barr, for libelants. Knox & Reed and Brown, Humphrey & Davie, for intervenor. JACKSON, J. The question presented by the appeal and cross-appeal in this case relates to the proper distribution or disposition to be made ·of the surplus proceeds in the registry of the court arising from the sale of the steamer or tow-boat J. B. Williams. The contest over the fund is between the intervening claimant, 1. D. Risner, as mortgagee of the boat, and M. Nippert & Co., who on February 16,1889, libeled the J . .E. Williams for alleged advances to her master in December, 1888,
Fli}Dlj:RAL REPORTER ,vol.
42.
and FebruarY'f1889, to enable him to pa.y off the crew and' hands of the vessel, and supply bills, futnished her by others. The steamer was sold during .the,progressoftne proceedings,and the proceeds thereof were court. Intervening libelants, asserting deposited in the registry maritime liens against the ,boat, and asta whose claims there was no dispute,have all been paid out of saidpfoceeds of sale, and there remains in the registry a considerable surplus, as to which libelants, Nippert &Co. j claim priority oflien for their alleged advances to the stenmer, or to the master thereof :on the credit :of the boat; while Risher, as mortgagee of the'steamel', cOlltrovertsthe validity of said libelants' lien, and claims said. fund as.ptope:rly belonging to himself. The district portion' Oflibelants'clairp and allowed the balance. court }t'romthis decree both sides have. appealed. The material facts of the case on :which the questions of law: arise, and the rights of the respective claimants depend, are the following, viz.: The -steamer J. B. Williams was owned by the Grand Lake Coal Company, a private firm or copartnership, composed ofJoseph B. Williams, James Williams, John Williams, and rl'homas Patterson, residents of Pittsburgh, Pa., which was the firm's place of business, and the home port of said steamer, and where she was registered or enrolled. John Williams, one of the partners, was the captain and master of the anotqE!r partner, was one of his pilots. vessel, and Thomal;l, The Grand Lake Coal Company was engaged in the coill trade between Pittsburgh and points southpn tbeOhio,.and-Mississippirivers, by means of barges which were transported by its tow-boats, of which the steamer J. B. the J. B. Williams, being the largest tow-boat on· the river, at the' opening' of navigation in the fall would come downfrq:QlPittsbt:ltgHtoLouisvjlle, Ky., with a tow of barges loaded with coal. After carrying its. tow to destination, the steamer would return to Louisvill'e; and lie up there, or at the landing on the Indiana side of the river, and await the coming down of another tow of upon-arrival it would take charge of and transport. south to destination, generally New Orleans, and then return to Lo1.1isville, 'where 'Its ,crew would: be paid off, and .the boat would be tied up lintil other barges arrived 'to be carried south. So that, after coming down from Pittsburgh in the fall, said steamer rarely, if ever, returned to that port during the season:ofnavigation, but made Louisville, or the Indiana port opposite, her starting and returning port during the period. Upon her return from trips south, her .crew and hands would be paid off. ,'. 'Her:services bei1.1g chiefly rendered for her owners, she earned but little money with which to meet her expenses, wnich were considerable for south and back. ' . The libelants, ,M. N.j,ppert & Co., were and areship-chanfllers and dealers in ,boat ,fftores· atr JJiOuisville,and,were in the habit of furnishing said steamerwhh upon the mderor request of her master. Their bills for:sneh-supplies;were generally paid at the company's office in Pittsburgh. knew that John· Williams, the. master of the steamer, arid ThdmllS;,Patterson, the pilot, were each members ofzl8.id
!\IPPERT V. THE .J. B. WILLIAMS.
535
In.additiol1 to furnishing said steamer with boat-store supplies, were in the habit, after each return trip of the steamer, of indorsing a draft of the master drawn at Louisville upon the Grand Lake Ooal Oompany, Pittsburgh, for SUch amount as the master might indicate or desire to meet the accrqed expenses of the vessel. Such draft or drafts were made payable to the order of M. Nippert & 00. ,and contained upon their fa.;:e the statement or direction to "charge to wages and supply account of. str, J. B. Afterindorsement by said M. Nippert &00., the drafts, USl,ll:illy payable 90 days after date, would be discounted by the Masonic Savings BaI1katLouisville, and the proceeds thereof be paid over to the master, and be by him or the clerk of the steaimer expended or disbursed. This manner of raising funds for the steamer continued for 13 or 14 years. was ever made byihe drawees of the master's authority thus to draw upon them, and his drafts, indorsed by Nippert & 00., and discounted by. the Masonic Savings Bank of Louisville, were in everyinby acceptance npon presentation; and at maturity were up' py the drawees,. the owners of the steamer, except the drafts tbe present controversy.. Tbe Masonic Savings Bank, whieh ,or discounted such drafts of the master, required an indorser thereon, and such indorsement was made. generally, if .not in every ,nstance, by libelants. .. '.. " The steam!!r' having returned from a towing trip to New. Orleans, and the master, John Williams, needihg 'f1,1ilds for the boat; and $2,.000..for .the Grand Lake CQaLOOU1pany, wentto libelantson December 11, 1888, for said put· to raise anl1procure,in the uSUlll way, {be sum of pose. He drew his draft as captain for that amount, payable 90 days afterdate{to the order of libelants,:on the Grand 4ke Ooal OOInpany, at Pittsburgh, Pa., the draft expressing on its face t4at it was for "value received, and charge to wages and supply .account of steamer J. B·. Williams." .:This draft was indorsed in blank by M. ,Nippert. & OQ., and .0hristianBosche, the finanoial member of saidij.r,m,. went with the master to the Masonic Savings Bank of Lo.uisv:ille to have it discounted. )t was discounted by said bank, the discount and exchange charged and deducted from the face of the draft being $135, leaving, as the net proceeds of the draft, the sum of $6,364. 95,which was,plllced to the credit of the indorsers on the books of the bank, and for :which M. Nippert & 00. at the same time drew their check, which was.payable "to proceeds of draft or bearer." On this check oU6,364.95, for the proceeds of the draft, the bank paid over to the master of the steamer the sum of $3,864.95, and for the balance issued its twodrafts,.on the Importers' & Traders' National Bank of New York, payable to the order of M. Nippert & Oo.,--one for the sum of $500, which .s.aid Nippert & Co. spe<lially:indorsed to the order of James Rafferty, a pilot. on the J. B.. Williams:, to whom that amount was due from the the qther for the sum:6f$2,000, which said ·M. Nippert & Oo.indorsed to the order of the Grand Lake Ooal Oompany, andwhicb was forwarded to Slliid :coql.pany, and ,used by it·. This.appliCl!'.ti?nof
nrm styled the "Grand Lake Coal Company."
, 586
FEDERAL REPORTER,
vol. 42,
be further noticed and explained later on. The proceeds of his $6,500 draft, received by the master, amounting to $3,864.95, appears to have been used by him or the clerk of the steamer in paying off the boat's crew, to whom about $2,972.30 was then due, and for supplies. Said draft for $6,500, so discounted by the bank, was accepted by the drawees on December 19, 1888. Early in January, 1889, the J. B. Williams made another trip to New Orleans, and returned about February 11, 1889; tying up on the Tndiana side of the Ohio river, opposite Louisville, arid on the 12th February, 1889, the master again went to libelant8fOdhe purpose of raising the sum of $7,800 to meet the wants of .the 'steamer. Christian Bosche, libelants' financial manager, explains in his deposition what thelloccurred between the captain and himself. He says:" . "The came in intije morning. and he had a little memorandum on which was $7,600 or $7,8C)lJ, I cannot tell exactly which, that he said that he needed for the boat. la.'lked him if that was lIot a large amount. He told me that he had drawn no money in New Orleans; that he owed bills at Memphis for 'supplies, and atdiffel'ent points;, also Howard Ainslie & Cochran & Co.; anl1.b:is yearly officers W;ere pretty well behind, and it would take,all that to .paY,it out. He, says: 'P,9 you want any money?' I says: · I would liko to to paYIriY November bill of stores that I supplipd in November.and a few little 'bills paid here for you.' My bill was $972.80, which, .with costs paid out for the boat, made $1,022.30. 'fhat, .added to the $7,600 Or $7,800.(1 am not positive. what the amount was,) made about $8,800. He says: . 'You ,had better make a draft fOf;$9,000;' which Idid. and we went and had it discounted, and here is the check for the proceeds which I gave to th(l bank.48.tl24.25. The draft is for $9;000, and that is less the discount. The discount, on that $9.000 draft andexch'nnge on Pittsburgh was $175.25." j
,Said draft was in thesnmeform as the December draft for $6,500. It wasdrawIiby John Williams, captain, payable 90 days after date, to the order of M. Ni ppett & Co., with the direction on its face to "charge to wages and supply acconntof steamer J. B. Williams," and addressed to the Grand Lake Coal Company, at Pittsburgh, Pa., as the drawees. The proceeds of this draft were placed to the credit of l'YI. Nippert & Co., the indorsers,and at the time of the discount they drew their check, "Pay to proceeds of str. J. B. Williams; draft, or bearer,"for the amount of said proceeds, $8,824.25, which was applied as follows: $1,022.30 in paying their own bill, for which they were given a deposit ticket by the bank, and the balance of $7,801.95 was paid over by the bank to John Williams,'the master of said steamer, and was by him appropriated and expended as follows: $2,556.69 was used in paying off the crew; $1,159.15 was paid to Thomas Patterson, one of the partners and joint owners of the steamer, for services as pilot, and the balance was approprilited by Capt. John Williams, also a partner and joint owner of the the boat, toward'S' the payment of his salary as master. When Capt. Williams applied to libelants on February 12, 1889, to assist him in raising the' money he wanted for the steamer, the clerk of the boat, Ike Willia!ris,aooompanied him, and had on the back of an envelope a mem6mnda of the items making up the ,sum' wanted. This memoranda,
NIPPERT V. THE J. B. WILLIAMS.
537
which the proof satisfied the court was shown to seen by said Chris-' tian Bosche, was as follows:" Crew, $3,000; Capt. Thomas Patterson, $1,000; Capt. Jno. Williams, $2,000; bills amt. to $1,300; sundries, $500." Said Bosche knew that said Patterson and Capt. Williams were members of the firm: that owned the steamer; that Capt. Williams was one of the yearly officers, and was informed, not only by Capt. Williams, but by said memoranda; that a portion of the money wanted was for the benefit ofsaid yearly officers. But, aRide from said memoranda, Capt. Williams and Christian Bosche, the managing member of libelants' said transactions, both state that the latter made firm, who no inquiry as to the items for which inoney was wanted by the master, when applied for and raised as above stated; that libelants merely took the captain's word for what he wanted, or for the amount he needed for the boat, and raised it in the above-described manner, without asking any questions or making any inquiry, or without being furnished any statement as to the particular items or objects for which the money was wanted or needed. The funds were, however, understood by libelants to be for the purposes of the steamer, such as the payment of. her crew, stores, supplies, and running expenses. When said drafts for $6.500 and $9,000 were drawn and discounted, neither the master nor the steamer, or her owners had any .funds on hand at Louisville, or on the Indiana side of the river, where the steamer was lying, with which to pay the crew and supply bills. There was at said respective dates no imperative or pressing necessity for money except to payoff the steamer's crew, which was generally discharged after each return trip of the boat. The steamer and her owners were not without credit at Louisville. ,It is shown that the master could have raised money for the wants oLthe steamer on simiJarpaper at-Louisville through other sources than 'libelants. The master made no express hypothecation of the steamer to secure ,said, drafts, or the proceeds thereof, or to protect libelants as indorsers thereof. Libelants supposed that said drafts containing the words, "Charge to wages and supply account of str.J. B. Williams," gave them a preferred lien on the steamer. They state that the money was raised and supplied on the credit of the boat as usual, and that said recital on the face of the drafts was intended to record the fact. The proof, however, discloses no understanding or agreement between libelants and the master or owners that said drafts, or the proceeds thereof, Wffe to constitute any lien upon the steamer; nor does it appear that libelants ever communicated, either to the master or owners, this supposition that the words, "Charge to wages and supply account of str. J. B. Williams," on the face of the drafts, created a lien upon the steamer.. Neither as to said drafts of December 11, 1888, and February 12, 1888. nor as to any former draft of like character and purpose, does it appear that libelants kept or made any account or charge, against said steamer or her master or owners, for either the face of said drafts or the proceeds thereof. On the other hand, the books of the steamer, containing thecontemporaneolls entries of the transactions, :lhow that the amounts of said drafts of December 11, 1888, and Febru-
538
d
ary 12,' 1889; like all previous ones drawn for' the purpose of raising were debited ,to cash', while the disCQunt charged for funds for cashing said idraftS, together with all other sums paid outof the proceeds receivedtheI'efroID,are credited to cash. On February 13, 1889, the Grimd Lake Coal Company, or the partners comprising said firm, veyed said steam to'w-hoat J .B. Williams to the intervening claimant, 1. D. Risher, by way of mortgage, toaecure to him the payment of $20,000, due him from said company. Said mortgage was duly filed for record on February 14, 1889, and recorded in the collector's office for the port of Pittsburgh, as required by law in.: such cases. The firm shortly thereafter made a general .assignment for the benefit of its creditors.Upon learning of the company's failure, libelants requested the Masonic Savings Bank" as the holder and owner of said drafts of December 11, 1888, and February 12, 1889, to recall the former, which had been not to forward the latter for $9,000, which had not been presented for acceptance, which the bank did. On February, 16, 1889, libelants filed ,their libel against said steamer J. B. Williams, alleging, in' ·the,third and-fourth articles thereof, that 011 December 11, 1888, and February 12, 1889, they had furnished and advanced to said steamer the respective sums of $6,500 and $9,000, at the request of the master, and upon his representation that said amounts were at said dates needed for ,the ,purpose' of paying wages of the boat's crew and handl, supplies, and that said advances were made on the credit of said steamer as well asoHheowners. Fiveor six days after,the steamer was libeled, paper or note to the Masonic Savings Bank for the libelants 89,000 draft,. Bnd the master then and that time gave them a receipt for $9,000, the amount represented by the draft, and the note they gave the balikto take uptbe ,draft. This note they have not yet paid in full. Under an orderJtentered in August, 1889, libelanots withdrew $7,500 of the funds in court, which they used in paying off the draft of December 11, 1888, for $6;500, and in making a partial payment on the $9,000 indebtedness to the bank., Under the same order, the intervening claimant, 1. D.Risher, withdrew $3,500 of said funds. Said order does not appear ill the record, nor does it appear whether said parties are liable to return or refund said amounts.. ,There still remains in the registry Of the court, ofsllidproceeds of the steamer, $8,548.22. At the hearing in the district court, libelants produced said two drafts for $6,500 and $9,000, and offered to surrender·the same. By the decree of the district court libelants were allowed the full amount oBhe draft for $9,000, with interest since February 1.2, 1889, and $4,500 of. the draft for $0,500, with interest since December 11, 1888, which sums were declared a maritime lien on said steamer, and entitled to priority of payment out of the proceeds,thereof remaiaing in the registry of: the court. The $2,000 serit,asabove stated, to the Grand Lake Coal C6mpany, December 11, 1888,0ut of the proceeds of the draft for $6,500, was not allowed to libelants. From so much of !laid decree as disallowed said sum of $2,000 libelants have appealed; and from so much of said decree as allows libelants said sum of $9,000
v.
THE J. B. WILLIAMS.
539
and $4,500 the intervening clahnant and mortgagee, L D. Risher, has appealed. Since said'ap:peals were perfected, libeJants have filed in this an court, without leave of the court, so far as the record amended libel, alleging that saidsUIn of $2,000, which was forwarded to the Grand Lake Coal Company, out of the proceeds of the draft of December 11, 1888, for $6,500, was applied in part payment of a previous draft oflike character,which matured about that time, and under the following circumstances: On April 7, 1888, the captain of the J. B. Williams drew a draft on the Grand Lake Coal Company, at Pittsburgh, for the flum 0[$5,500, payable 90 days after date, to the order of libelants, containing on its face the usual words, "Charge to wagel:J and supply account of str. J. B. Williams," which was indorsed by JibeJants,and discounted by said Masonic Savings Bank; the master of the steamer, as alleged, receiving the proceeds. That at the maturity of said draft, which the drawees accepted, it was renewed on July 9, 1888, for the sum of $4,000, for which a draft was drawn upon the company, by Joseph B. Williams individually, payable at 90 days, to the orderof the Masonic Savings Bank, containing the words, "Charge to wages account of str. Jos. B. Williams." This draft was indorsed in blank by M. Nippert & Co. Itwasnot taken up at maturity, but was paid in part and renewed for $3,000, py draft for that amount, dated October 9, 1888, drawn by,John Williams, captain', on said coal company, payable 60 days after date to the order Nippert & Co., saying on its face," Charge to w!lges and' supply account of steamer J os. B. Williams." This draft was indorsed by M. Nippert & Co. It was duly accepted; and as it matured on the 12th December, 1888, said sum of $2,000, out of the proceeds of the draft of December 11, 1888, for $6,500, was forwarded to the coal company to take it up, and said amount was so applied. It is for libelants that said sum of $2,000, disallowed them by the decree below, went to payoff a prior subsisting maritime lien on the steamer arising out of the $5,500 draft of April 7, 1888, and kept alive by said renewals. There is no evidence, aside from the paper itself, as to what the $5,500 draft of April 7, 1888, was given for, nor what amount of the proceeds thereof, if any, were received by the master for the use of the steamer, or how expended, if received; nor upon what consideration said draft, and the renewals thereof, were indorsed by libelants. The renewal draft of July 9, 1888, for $4,000, was not drawn by the master, but by Joseph B. Williams, and was made payable to the order of the Masonic Savings Bank, and was indorsed by libelants. On the foregoing facts, the court finds or reaches the following conclusions of law: 1. That the claims of libelants to be allowed said sum of $2,000, sent on December 11, 1888, direct to the Grand Lake Coal Company, out of the proceeds of the draft of $6,500, drawn and discounted on that day, cannot be sustained, and was properly rejected by the district court. 2. That neither the drafts of December 11, 1888, and February 12, 1889, for the respective sums of $6,500 and $9,000, nor the proceeds
,340
FEDERAT, REPORTER,
thereof received by the master 'of said steamer J. B. Williams, constituted apy IParitime lien on, said steamer or its proceeds in favor of libel,ante. 'I'here was no express agreement or understanding that either libelants, or the bank discounting such drafts, should have any lien, maritime or otherwise, on the steamer to secure the payment of the drafts. The words contained on the face of the drafts, "Charge to wages and supply account of str. J. B. WUliams," had no other operation and effect than merely to notify and ad\'ise the drawees of the objects for which the drafts were drawn, and the account to which upon payment it should be charged. These words did not, nor did the drafts themselves, create a lien on the vessel. . In The Woodland, 104 U. 8.180, the master's drafts on the owners expresse!:l on their face that they were recoverable against the vessel, freight, and cargo. The drafts were not paid, and the holders thereof libeled the boat. The supreme court held "The drafts did not themselves create a lien on the vessel; unless the debt for which they were given the vessel, the drafts, notwithstanding what is expressed on their face, did not, If the owners owed Niles [the payee of the drafts] nothing under his contract with the master for the repairs and supplies which bad been furnished, be had no lien on the vessel which he or anyone else could enfor()e in admiralty. For the purposes of this suit, the libelants occupy no better position than Niles; and if he could not recover they cannot. Having advanced., their money in good' faith, they may not be affected, so f!-u as their remedies against tlW parties to the drafts are concerned; III ... ... but if the, vessel owell Niles nothing, it does not owe them." Libelants had no c1aimagainst the owners, or lien upon the steamer, for the amounts represented by said drafts at the, time they were drawn and discQunted. They had made no loan or ·advances of their own funds or money to the master for the use of the steamer, which the drafts were intended to repay. They indorsed the master's drafts to enable him to obtain from the Masonio Savings Bank the proceeds thereof. The bank derived title'to the drafts through their indorsement, which was manifestly made for accommodation of the drawer and owners of the steamer, and paid over the proceeds thereof, less discount and exchange, to the master. The bank furnished the money upon the drafts, and the contingent ]iabilityof libelants as indorsers thereof. Libelants had no right of ownership to the proceeds of the drafts by virtue of their indorsement. They did not own the drafts before they were discounted. They had advanced or paid no consideration for the drafts, and were not the holders thereof for value when transferred to the bank, nor did they assume the primary liability of taking them up at their maturity. On the contrary, the drafts were drawn to be discounted for the benefit of the steamer in .the usual way, and as between the steamer and her owners and the li.belants, the latter occupied the position of accommodation indorsers. If the bank, while holding the drafts" had attempted to enforce agaitlst the stt'-amer a maritime lien for their payment, its claim could not hav:e been sustained, either as to the drafts or the proceeds
NIPPERT fl. THE J. B. WILLIAMS.
541
thereof received by the master, under the authority of The Woodland, because the words expresseJ on the face of the paper, "Charge to wages and supply account of str. J. B. Williams," did not operate to create a lien upon the steamer; because the bank did not discount the drafts upon the credit of the steamer, or upon the faith that the boat was hypothecatedfortheir payment, and because the libelants, through whose indorsement it acquired title to the drafts, had no such lien upon the steamer aUhe time they were indorsed and received by the bank. When the libelants took up the drafts, after libeling the steamer, they certainly did not thereby acquire any new maritime lien on the steamer superior to that held by themselves, before they were discounted or by the bank as. the first holder thereof for value. It being settled that libelants advanced no consideration for, and acquired no beneficial right in and to, the drafts when drawn, and that said drafts did not operate either as an or implied hypothecation of the steamer, notwithstanding the direction on their face to charge the amounts thereof to wages and supply account of the steamer, they can only be regarded as commercial paper, executed for the purpose of discount for the benefit of the owners of the steamer, and libelants, in taking up the same, under their liability as indorsers either before or after maturity, can occupy no better position in respect to liens on the steamer than the bank, the first holder for value, from whom they acquired the paper, which acquisition conferred upon tbem their first and only right to enforce payment, even against the owners of the steamer. If libelants had advanced their own money to the master as and for the purposes alleged in their libel, and indicated on the face of the draft, and had accepted the drafts as a mode of repaymeJ1t or payment therefor, the question would have been different. But that was not the real transaction. Libelants only loaned the credit of their names by indorsing drafts, in and to which they had no right, title, or interest; and, on the loan of this the drafts are discounted, and the proceeds received by the master and owners. . the careful examination of the authorities which the court has made in the investigation of this case, no decision has been found which will warrant the court in placing a loan of credit in the shape of an accommodation indorsement upon commercial paper upon the same, footing aaan actual advance of funds to a master to e,nable him to discharge maritime liens. In the absence of any controlling authority on the point, our conclusion is that libelants' indorsement of the drafts for accommodation, and their subsequent taking up of the same, do not sustain the allegations of .their libel that they made advances to the master of the steamer on. December 11,1888, and February 12, 1889, which gave them a maritime lien upon the boat for any portion of said drafts. It is proper to state that the foregoing considerations, which lead the court to this conclusion, do not appeal: to have been called to the attention of, or been considered by, the learned district judge, who declared a maritime lien in libelapts' favor for the amount of said drafts, less the $2,000, remitted to the drawers out of the proceeds of the draft of Decem1;>el' l1 t · 1888, for $6,§OO, as aboveex,?lai\lcd, In reaching a conclusion adverse
t6!thef'tight oflibelanrts toanymarltifue liEm upon sa:idsteameror its ptoMeds,eitheron said'drafts, or, for the proceeds therdof 'rooeived by and owners of the stea.mm', it is a source of gratification that involved 'is 'sufficient t&enable libelantstohlivethat conclusion'reviewed btahigher tribunal. ,' 3.; That iflibelanhlcould beCoIisidered as having made advances to the master for the ptitpose ofpaying the steamer's crew, and for supplies furnished her,constitutingrilaritime liens, their right ofrecovery, under and circumstances of this' case, would be limited to the amounts actull.i1yused by the master in discharging such liens. If they did not see the memoranda made by the boat's clerk, showing the items for which the money was wanted on February 12, 18R9, three of which-smidries;$500j for Capt. Williams,$2,OOOj and for Capt. Patterson, $1,000 not lien claims', they made no inquiry as to the ,items or particular'objects for which the master desired funds. A party lending to a master in a foreign port cannot 'shut his eyes to existing facts as they appear, or by reasonable inquiry could be made to appear, and dehl with the master as a general'agent of the vessel and owners, whose rflpresentativeshemay trust andact'll'Pon without any diligence or inqUiry on his part Mto the extent of, and character of, the vessel's needs and necessities. Necessity creates the agency and confers the authority on the master to borrow or secure loans on the' credit of the vessel, and that necessity equa.lly defines the litnits to which he may rightfully go, and the lender treating with him must make inquiry and judge for himself; and at his own risk,whether the desired advance is a matter of such necessity as to bring it within the master's agency and authority.' The cases on this subject, which it isnot deemed necessary to review, do not, in my opinion, establish the proposition contended fOT by counsel for libelants,and an'nounced in the opinion of the district judge, that a lender in a foreign portean act alone upon the master's representation as to the purpose for which the loan is wanted, and, if su()hexpressed purpose is maritime in its character, thereby acquire a maritime' lien on the vessel for the full amount of the advances made. When funds are advanced to the master to discharge valid existing maritime liens, and are so used, the lender may properly and equitably standin the place of the lienholders, whose demands have been discharged with funds furnished by him. It seems to me that the weight ofreason and authority supports this position, especially in the case of a lender who makes no inquiry, but shuts his eyes as to the necessary wants of the vessel. I think it the safer and the sounder doctrine to follow the intimation, if not the point actually deThe Tangier, 2 Low, cided, in the cases of neA. R. Dunlap, 1 Low, 1-15; The Guiding Star, 9 Fed. 521, 18 Fed. Rep. 264; The Cumberland,30 Fed. Rep. 453; The Dora, 34 Fed. Rep. 343; The Wyoming, 36 Fed. Rep. 494; The:AutJustine Kobbe, 37 Fed. Rep. 701 ,-that where funds are'advanced to the master on the credit of the 'vessel, otherwise than upon bottomry bond, to enable him to payoff maritime liens, and . the funds are so used or applied, the lender acquires a lien of equal rank and standing to those discharged with the funds So advanced; that money
CON(lDON,t'.THE
borrowed to pay a bill stands in the same relation to the vessel as the bill paid. If that was a lien, so is. the new debt created. by the loan, but not otherwise. But, without dwelling on this question, which is controlled by the second conclusion, of law finding that libelants acquired no maritime lien on said steamer J. B. Williams by reason of said draft transactions, it follows that the intervening claimaut, I. D. Risher, as mortgagee, has the better right to the proceeds of said steamer, to the extent of his mortgage lien thereon. It is accordingly ordered and adjudged that the decree of the dilltrict court declaring a lien upon and directing payment out of the pro(lCeds of said steamedn libelantB' favor, to the extent of said drafts for $9,000 and $6,500, less the $2,000, as aforesaid, be, and the same is hereby, reversed, andtlle libel.in respect to said claims covered by the third and, fourth articles thereof, together with the amended libel filed in this court is dismissed, at libelants' costs. The proceeds of the vessel, to the extent of his ,are awarded to the claimant, 1. D. Risher. and a decree be entered accordingly.
CoNGDONetal. (District BALTAn-CoMPENSATION.
'II. THE
ELEANOR.
Court, .D. South Carolina. June 8, 1890.)
The schooner E. went ashore, &tI-!i . failing in its efforts to get off, sent for the tugs C. and B. The master of the C.; which first arrived, refused to do anything because of the danger, but promised to come with the other tug the next morning. Both tugs came down, and the E., having ajfain made efforts to get off and failed, was , towed into deep water, and into port. The weather was calm during the whole time, and :E.was not in imminent danger, but a gale would have exposed her to great danger. ' The tugs were at, nO time in danger.· The E. was valued at $16,000, and hercargoatU,OOO, and the tugs at $20,000 and 115,000, respectively. Held, that this was salvage service, and the were each entitled to $800, tabs USBssed pro rata on the vessel, cargo, and frelght.
In Admiralty. Libel for salvage. Smythe « Lee; for libelant. . I. N. Naihans, for claimants. ,
'
SIMONTON, J. This is for salvage. The Eleanor, ll. three-mast schooner, between three and four hundred tons burden, went ashore on the ocean beach of North island, on the night of 21st February, 1890. North island is on the northern £lide of the Georgetown bar. The weather was perfectly calm,and so continued for the whole period of her stay on the.beach. ahe lay quietly all night. The next morning, as the heur of high tide. (10 o'clock) approached, efforts were made to get her off with a kedge anchor. She could not use her heavy ancbors. Those efforts failed. They were renewed at the succeeding high tide, with the S8JJ:le result. On that master of the schooner hall requested a person who told him that he W!1S on his way to Georgetown to send to him the tugs Congdon and Brewster, the only sea tugs in thatp(>rt. The