W. A. Marshall & Co. v. S. S. "President Arthur"

Background

A coal company sold bunker coal to a steamship owned by a shipping company and agreed to longer payment terms. The seller required the buyer to give two trade acceptances endorsed by three named individuals as payment security. The written contracts said they were the entire agreement and did not reserve any lien on the vessel. The coal was delivered; one endorsed acceptance was paid and the other was unpaid. The seller sued to enforce a maritime lien on the ship, but lower courts dismissed the claim and the seller continued a separate suit against the endorsers.

Reasoning

The central question was whether the seller had given up any maritime lien by making the written contracts and taking the endorsed trade acceptances. The Court explained that federal law gives a lien for necessary supplies but also allows a supplier to waive that lien by agreement. The Court reviewed earlier cases that held taking personal negotiable obligations instead of relying on the ship’s credit generally shows an intention to relinquish a lien. Because these contracts specified payment by endorsed acceptances, stated the full agreement, and the seller accepted and kept that personal security, the Court concluded the seller had waived any lien on the vessel and must rely on the contracts and the endorsers.

Real world impact

The decision means sellers who agree to and accept personal endorsements cannot later seize the vessel for unpaid charges unless they explicitly keep the lien. Ship owners can limit vessel exposure by arranging personal security in contracts. The coal seller’s remedy lies in suing the endorsers rather than enforcing a maritime lien on the steamship.