United States v. Carver

Background

A supplier sued to charge the United States and the receiver of a bankrupt steamship company for supplies delivered to two government-owned ships, the Clio and the Morganza. The United States owned the vessels but had chartered them to the State Steamship Corporation, which agreed to pay operating costs and to prevent any lien that would have priority over the owner’s title. Suppliers delivered goods on orders from the company’s port captain and later sought payment from the ships and the Government.

Reasoning

The Court addressed whether a supplier would have had a maritime lien if the ships had been privately owned. It read the 1910 Act and the 1920 Ship Mortgage Act as requiring reasonable inquiry when facts put a supplier on notice. Because the charter expressly promised the charterer would not allow liens and would remove any that appeared, the Court concluded a reasonably diligent supplier could have discovered the charter terms and that those terms barred a lien. The Court therefore found no maritime lien on either vessel.

Real world impact

The ruling leaves suppliers without a lien on these chartered ships and without a direct claim against the vessels or the United States; suppliers must look to the chartering company for payment. The Court declined to address additional questions about United States liability that were unnecessary to resolve here.