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no new facts were either proved or were found to be true. Mr. Babbidge testified again, but it is apparent that his memory of the previous transactions had not been modified. The facts upon which this petition must rest are therefore the same as those which were stated in the opinion of this court in the maritime lien cases. 72 Fed. 793. The position which the petitioners take is that they furnished the guaranties at the request of the owner of the steamships, to save them from being sold in a foreign port; that, by means of the aid thus furnished, a great benefit was conferred upon the vessels and upon their owner; that it would be inequitable to allow the owner to reap the benefit from payments which were made by the petitioners upon the supposition that they had a maritime lien upon the vessels, and thus compel them to endure a large loss; and that the mortgagee, who did not take possession of the ships, has no superior equity to that of the owner. The petitioners seek to bring their case within some of the circumstances which courts of equity have declared create equitable liens upon property, real or personal. For example, a vendor who has not been paid his purchase money for the land sold is entitled, as between himself and the purchaser, to a vendor's lien upon the land. A person who has advanced money for the benefit of an estate, upon the credit of the property, and upon the promise and the expectation of a mortgage thereon, is entitled to an equitable lien upon the estate, as between himself and the owner. Perry v. Board, 102 N. Y. 99, 6 N. E. 116. An assignee of a claim, holding it under an assignment supposed to be good, but afterwards adjudged to be invalid, who successfully prosecutes the claim, and protects and preserves it at his own expense from rival claimants, is entitled to a reimbursement of his expenses by the true owner, upon a settlement between them. A court of equity will compel the owner of land who comes into that court to obtain relief against a bona fide purchaser, under a title which has a latent defect, to make reasonable compensation for the improvements which the purchaser has made without notice of an adverse claim. Williams v. Gibbes, 20 How. 535. Circumstances which imply a contract between the parties to give a particular lien, and especially fraud practiced by the true owner of the property upon the nominal and bona fide owner, will incite the conscience of a court of equity to do justice between the parties. It is the province of such a court, under those and other like circumstances, to rectify a proposed wrong, to compel the parties to carry into effect their implied agreements, or to prevent one from asserting against another a defense which is both inequitable and unjust.

The question upon this appeal is whether the facts of the case can bring it within the remedial control of a court which is governed by the principles of equity. In the statement which has been given of the petitioner's case, as presented by them, one important fact was omitted, which is that the guaranties were given upon an express contract for security upon the freights, which has proved beneficial to the petitioners to the extent of about $25,000. The effect which this fact has upon the claim of the petitioners that a maritime lien upon the vessels ought to supplement an express agreement for a maritime lien upon the freights has already been considered in the maritime


lien cases, and the result of this case has been foreshadowed. would seem to be manifest that if the petitioners had taken, as their security, an express pledge of personal property, not maritime in its character, they could not, in the event of loss, resort to an unpledged maritime security. Neither can they, having taken one kind of maritime security which has not proved sufficient, turn to another, which it cannot be found was offered by the owner. It is, however, urged by the petitioners, that Huntington signed the second and became liable upon the third guaranty, upon the supposition, belief, or expectation that he was to have security upon the American ships, and paid his money in reliance upon that expectation, and that this fact brings him and his associate within the boundary of equitable liens.. It is said that as in Perry v. Board, supra, the complainant advanced his money upon the expectation of a mortgage, so Huntington paid his money in reliance upon a lien upon the vessels. The difference between the case at bar and the well-established cases of equitable liens, of the class of which the Perry Case is an example, is that in the latter the equitable lienors had a just right to expect the security of the estate, whereas Huntington had no just right to rely upon the vessels, because he had made an express contract which limited his lien, and in view of that contract his expectations had no adequate or firm foundation.

The decree of the district court is affirmed, with costs.







(Circuit Court of Appeals, Second Circuit. March 17, 1896.)


A letter of credit may be maritime or nonmaritime, according to the objects of the loan, the intent of the parties, and the circumstances attending it; and consequently a contract guarantying, on the express security of a vessel's freights, a letter of credit issued to enable her to pay her debts in a foreign port, and enable her to return home, is a maritime contract, enforceable in the admiralty.


The owner can, by express contract made in the home port, create a maritime lien for a loan of credit, whereby the vessel is enabled to procure necessary supplies in a foreign port; but in such case the prima facie presumption of necessity for the credit of the ship which arises when supplies are furnished in a foreign port on the sole order of the master does not apply, and on that question the claimant of the lien has the affirmative.

3. SAME.

A guaranty of letters of credit, in the home port, on the request of the known insolvent owner, for the purpose of enabling the vessel to pay her debts in a foreign port, and thereby escape detention, creates no

maritime lien on the vessel herself, where there was an express contract for a lien on the freights alone. 63 Fed. 726, affirmed.


One giving a guaranty under an express contract whereby he is to have a lien on the freight alone is not subrogated to the rights of lienors in a foreign port, whose claims are paid with money obtained on the strength of the guaranty.

Appeal from the District Court of the United States for the Southern District of New York.

These were petitions by Collis P. Huntington and Pratt & Co. against the proceeds, respectively, of the steamships Advance, Allianca, and Vigilancia, to assert an alleged lien arising out of a contract whereby libelants guarantied payment of certain letters of credit. The district court dismissed the petition (63 Fed. 726), and the peti tioners have appealed.

Robert D. Benedict and Maxwell Evarts, for appellants. Lewis Cass Ledyard and Chas. D. Wetmore, for appellees. Before WALLACE, LACOMBE, and SHIPMAN, Circuit Judges. SHIPMAN, Circuit Judge. The United States & Brazil Mail Steamship Company, a corporation organized under the laws of the state of New York, had been engaged for some years prior to October, 1892, in the business of running a line of passenger and freight steam vessels between the city of New York and different ports in Brazil, with increasingly poor pecuniary success. Mr. Collis P. Huntington

was a stockholder, a director, and the vice president of the company, but without any active share in its management, except to lend it money in its times of need, which he was in the habit of doing to a very large amount. He had advanced, during five or six years before October, 1892, about $400,000. Charles Pratt & Co., of Brooklyn, were stockholders, who, like Mr. Huntington, loaned or advanced money largely to the corporation. Each of these persons was aware prior to October, 1892, that the corporation was insolvent, and in great financial straits, and had concluded to lend it no more money without security. Prior to October, 1892, the corporation had been in the habit of disbursing its ships in Brazil, with moneys derived from letters of credit issued by Brown Bros. & Co., bankers of New York, secured by a written hypothecation of the freight moneys of the line.. This firm apparently grew restive and indisposed to increase their line of credit to the corporation, and it therefore became indispensa ble that it should obtain financial assistance elsewhere, for the purpose of enabling its vessels to pay their debts in Brazil, and return to New York. They must be kept in motion in order to keep the corporation alive. In this state of things, Mr. Huntington and Pratt & Co., in New York, at the solicitation of the steamship company, were induced to become guarantors of three other letters of credit issued by Heidelbach, Ickelheimer & Co., of New York, to the superintend ents of the corporation at Santos and Rio, for the purposes of disbursing the vessels, and preventing their detention and sale at those ports. The whole history of this transaction in regard to guaranties, as given by the witnesses and as indicated by the circumstances, shows that

they were furnished in reliance upon the oral promise or pledge, in New York, of some security in addition to the bare credit of the steamship company. The particulars in regard to the use which was made of these letters are stated by the district judge in the case of the libels and petitions of different claimants of the freights of the vessels, as follows (Freights of The Kate, 63 Fed. 707):

"The first of the three letters of credit was for £4,000, dated October 14, 1892, and was sent by the steamship company to its agent at Santos; the second and third were for £8,000 each, dated January 9, 1893, and February 8, 1893, respectively, and sent by the steamship company to its superintendent at Rio. These letters authorized drafts within four months on C. J. Hambro & Son, of London, at 90 days' sight, and were accompanied by similar agreements of the steamship company to provide Heidelbach, Ickelheimer & Co., in New York, with funds to pay all drafts fifteen days before their maturity in London. They did not, however, contain any pledge or hypothecation either of ship or freight; but, instead of that security, they were accompanied by a written personal guaranty, the first two signed by Mr. Huntington, and the last by Pratt & Co., that the steamship company would perform its agreement, and that they, the guarantors, would pay the drafts in case of the company's default. Under the first of these three letters two drafts were drawn and negotiated at Santos, for £2,000 each, dated November 16, 1892, and December 2, 1892, which, on maturity, after the failure of the steamship company, were paid by Mr. Huntington, on March 1 and March 13, 1892, respectively. Under the second letter of January 9, 1893, five drafts, amounting in all to £8,000, were drawn and negotiated at Rio, from the middle of January, 1893, to about February 1, 1893, all of which were paid by Mr. Huntington at maturity, between May 6 and May 19, 1893. Under the last letter of credit of February .8, 1893, only three drafts were drawn, viz. on February 18th and 21st, and March 3d, amounting in all to £4,500, which, at maturity, were paid by Pratt & Co., from May 26 to June 5, 1893."

The steamship company failed in February, 1893. On March 18, 1893, Henry Winthrop Gray was appointed by the proper state court temporary receiver of the company, and this appointment was made permanent March 6, 1894. The steamships Advance, Allianca, and Vigilancia, owned by the company, arrived in New York on their last voyage from Brazil on February 21, 1893; were soon attached on libels for seamen's wages; and on March 18, 1893, were attached under libels in favor of Brown Bros. & Co. The vessels were sold, and the proceeds were paid into the registry of the district court, when a mass of litigation, consisting of more than 30 cases, ensued, at the instance of divers persons, who claimed maritime liens upon the freights or upon the vessels and their proceeds. Among those cases were five pe titions of the present petitioners, to recover, from the freight moneys which had been received by the steamship company, the moneys paid by them upon their guaranties, it being alleged that the freights were a security which was given when the guaranties were signed, and upon which a maritime lien existed. These petitions were granted, upon a finding that the freights were expressly hypothecated to the petitioners, and that the lien upon them was maritime in its character. From the decree in that class of cases, no appeal was taken; the amount in controversy was divided between the lienors by agreement; and the present petitioners received, as their part of the fund, enough to pay the amount due upon the guaranty of the first letter of credit. The petitions which are the subject of the present appeals were

brought by Mr. Huntington and Pratt & Co., to obtain a decree for the repayment to them, from the avails of the Advance, the Allianca, and the Vigilancia, of the amount which they paid upon their guaranties, and which had been used, by means of the letters of credit, to pay for supplies and materials furnished the respective vessels in Brazilian ports, upon the ground that the petitioners were subrogated to the liens against the steamships for such supplies and materials. Upon the hearing before the district court, the questions of fact resolved themselves into the questions whether the guaranties were given expressly upon the credit of both freights and vessels, and whether, from the known circumstances of the transactions, the fact of a credit upon the vessels could not be fairly inferred. The district judge found that there was no pledge of the vessels, and dismissed the petitions. 63 Fed. 726. From those decrees, these appeals were taken.

The claimant and appellee is the Atlantic Trust Company, to which corporation, as trustee, the steamship company conveyed, by three mortgages, dated July 1, 1889, September 17, 1890, and June 5, 1891, the steamships named in these petitions, and the Finance and Seguranca, and the franchises of the company, and its property then in possession or thereafter to be acquired, to secure the payment of bonds to the amount of $1,250,000. Default in the payment of interest occurred January 1, 1892. Before the mortgagee could gain possession of these vessels, they were attached by some of the libelants.

It appears from the foregoing facts that the cases stand on this wise: At the home port of a line of steamships which are in a foreign port, the insolvent owners of the vessels obtain from the petitioners, who know the owners' insolvent condition, indispensable means, by the aid of which the owners are enabled to discharge the liens resting upon the vessels in the foreign port, and to continue them in their business as seagoing vessels, upon the security either of the vessels and their freights, or of the freights alone, and the petitioners have paid the liabilities which they assumed upon the faith of the security. The mortgagee raises the preliminary question whether the security which the petitioners claim to have received can be regarded as a maritime lien, and says that the transaction with Heidelbach, Ickelheimer & Co. was an ordinary commercial transaction, not maritime in its character; that the guaranty was merely incidental thereto; was one simply of suretyship of letters of credit; that no money was to be paid in Brazil upon the letters, but was to be obtained there by means of drafts within four months upon named bankers of London, at 90 days' sight; that the guarantors' promise to ultimately pay these drafts is very remotely connected with the maritime destination of the money to be raised in Brazil; and that, as a result of these considerations, the guarantors' security, if any there was, was not a maritime lien.

It is obvious that the form by which, or the mode in which, the letters of credit were to be made available in Brazil, and the form in which Heidelbach, Ickelheimer & Co. furnished money to the steam

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