The South Coast

Background

This case involves the owner of the steamer South Coast, a California corporation, a charterer named Levick who had control of the vessel, and a local supplier in San Pedro who provided necessary supplies. The ship was under a bareboat charter that made Levick responsible for charges and allowed the owner to retake the vessel if Levick failed to discharge liens or payments. Owner representatives warned the supplier not to furnish goods on the credit of the ship, but the ship’s master—appointed by the owner but under Levick’s orders—ordered the supplies and the supplier delivered them, creating the dispute over whether the supplier could impose a lien against the vessel.

Reasoning

The Court addressed whether the master had authority to bind the ship for supplies. It relied on the Act of June 33, 1910, which gives a maritime lien for supplies and presumes that a master appointed by a charterer has authority from the owner to procure them. That presumption can be overcome only if the supplier knew or could have discovered by reasonable diligence that the master lacked authority. The Court concluded the charter gave the charterer power to authorize the master and that nothing about the transaction would have allowed the supplier to know of any lack of authority, so the lien was valid and the lower courts were affirmed.

Real world impact

Ship owners and suppliers must recognize that when a vessel is under a charter, suppliers can generally rely on the charterer’s appointed master to create a lien for supplies, even if the owner objects privately. Suppliers should still exercise reasonable diligence when there are clear signs the master lacks authority.

Dissents or concurrances

Three Justices dissented; the opinion notes their disagreement but does not set out their arguments in the text.