Opinion
Bankruptcy No. 77 B 204
January 16, 1981
Former Bankruptcy Act — Trustees — Exmination of Proof of Claim — Existence of Lien
A creditgor, having repaired one of the debtor's ships, was no entitled to a maritime lien on the sale proceeds of another vessel since there was no express grant of a lien attaching to all the ships and the trustee and creditor's committee did not validate the lien. Underthe Federal Maritime Lien Act one vessel of a fleet cannot be made liable for supplies furnished to the others. See Sec. 47 at ¶ 2367, Bankurptcy Rules 214 at ¶ 20,064, and 306(a) at ¶ 20,106.
[Digest of Opinion]
The trustee moved for authorization to distribute the net proceeds of the sale of a ship to certain maritime lienors. The only obstacle to the trustee's plan was an alleged maritime lien of the creditor against the fund.
The facts are as follows: On September 22, 1975, the vessel owned by a third corporation, was assigned to the creditor for repairs. A letter, of the same date, to the president of the corporation, acknowledged arrival of the vessel and outlined the terms and conditions of payment. Approximately a month later, the payment terms were modified by a written agreement between the creditor, the debtor, and the corporation, "jointly and severally" through their mutual president.
During the bankruptcy proceedings, another vessel, an asset of the debtor, was sold free and clear of liens, with provision that such liens would attach to the proceeds. The creditor asserted that it had a valid lien against these proceeds as a maritime lienor-as per the "joint and several" language in the amendment payment terms — and that it relied on the credit of this vessel in contracting to perform work on the ship which was actually repaired.
The issue which the court addressed, acknowledging that the creditor supplied repairs to the vessel, was whether this action in conjunction with the amendment of payment terms gave rise to a maritime lien against another vessel.
No express grant of a lien attaching to the ship of all three companies existed anywhere within the agreements. In addition, no repairs were supplied to the ship that was sold. As the court found in The Walter Adams, 253 F.20 (1st Cir. 1918), aff'd sub nom Piedmont Georges Greek Coal Co. v. Seaboard Fisheries Co., 254 U.S. (1920) one vessel of a fleet cannot be made liable under the statute for supplies furnished to the others.
Alternatively, the creditor claimed that both the trustee and the creditor's committee recognized the validity of the maritime lien and they were therefore estopped from contesting the claim at this time. However, the creditor's committee did not have the power to "allow" claims or to bind the trustee in his investigation of the validity of claims. Further, the creditor did not produce any evidence which proved to this court that the trustee had validated the maritime lien claim or that the trustee had in any way misled the creditor to its detriment.
Consequently, the trustee's motion for authorization to distribute the vessel's funds pursuant to the schedule contained in the application was granted.