The Key City

APPEAL from the Circuit Court for the Eastern District of Wisconsin; the case being thus:

Young shipped a quantity of wheat on the steamboat Key City, a vessel owned by a corporation called the Northwestern Packet Company, which had this and several other steamboats engaged in the navigation of the Upper Mississippi River. The cargo was lost, and so never delivered. At the time when the shipment was made and the cargo lost on the Key City, there was engaged in the same business in the same waters with the Northwestern Packet Company, a rival corporation known as the La Crosse and Minnesota Steam Packet Company.

After the loss of the wheat, these two companies united their stock in trade, their steamboats, barges, and other property, and formed a new corporation, the corporators of which were taken exclusively from those in the two old companies; and to the new corporation they gave the name of the Northwestern Union Packet Company. To this company all the property of the two other companies was transferred by appropriate instruments. Whether at the time of this union and transfer the La Crosse and Minnesota Company owed debts or not, or what became of them, did not appear. But it did appear that the Northwestern Company, the original owner of the Key City, was largely indebted, and that this was well known to all the parties. Not only was it well known, but provision was made for the payment of the debts generally of that company by the newly formed company out of a fund to come within its control. The nature of that provision was this: certificates of stock of the value of the boats, barges, and other property of the Northwestern Company merged in the new company were issued, but on their face they recited that no dividends would be paid on such stock until the debts of the Northwestern Company should be paid out of the proportion of the net profits which the shareholders of that company would otherwise be entitled to.

In this state of things, Young, three years and a half after the wheat was lost, and his cause of action had accrued, filed a libel in admiralty against the Key City for its failure to perform its contract of affreightment. The Northwestern Union Packet Company, that is to say, the new corporation, appeared as claimants, ant set up as a defence that the lien was lost by the lapse of time, to wit, the three years and a half which had intervened between the date when the cause of action accrued and the date of the commencement of the suit; and that defence was sustained by the Circuit Court. The change in the ownership of the vessel during the interval was relied on as strengthening the defence.

Mr. J. W. Cary, for the appellant:

1. Professor Parsons says as follows:

'It has been decided that neither the statute of Anne limiting suits in the English admiralty, nor the statute of limitations of any of our States, is of any force in our admiralty. Whether a claim is to be considered stale or not must depend upon the peculiar circumstances of each particular case, and it is difficult to lay down any general rule. It is, however, we think, evident that a party may have a suit in personam, when be cannot sue in rem; because in this latter case, the rights of a bon a fide purchaser may intervene. If the vessel remains in the hands of the owners who were in possession at the time the debt accrued, an action may be brought after a considerable lapse of time. But if the vessel has been sold to a bon a fide purchaser, the suit should be brought as soon as an opportunity is presented; and if it is not, a delay is fatal.'

The position laid down in this last sentence rests alike on reason and authority.

It rests on reason, because admiralty liens are secret; they are not accompanied by possession, and there is no record of them, as in the case of chattel mortgages. It rests equally on authority. In The Admiral, decided by Sprague, J., a collision occurred October 7th, 1852. The vessel continued for some months plying on her old course, and was then sold to a stock company, and stock in the company given in payment. On a libel being afterwards filed the judge dismissed the libel. He says:

'The rule adopted in courts of admiralty, is to allow the continuance of the lien until a reasonable opportunity is given to enforce it. If a party neglects to avail himself of it, third persons are not to be prejudiced by his delay.'

In The Louisa, the libel was for a seaman's wages, and was filed in November, 1845, for wages, commencing in March, 1842, and ending in November after. The vessel in the interim had been sold, and one of the old owners was insolvent. Both the District and Circuit Courts refused to sustain the libel, on the ground 'of the long delay to resort to the vessel, and when, in the meantime, the owners had changed and one of them become insolvent.'

In The Buckeye State, it was held that a delay of three years to enforce a lien by a material-man, was a bar to recovery, and the libel was dismissed for that reason, a third person in the meantime having become the owner of the boat.

In The Lillie Mills, supplies were furnished in March, June, and October, 1853, and the libel was filed October, 1855; a change of ownership having previously occurred. Sprague, J., says:

'When the rights of third persons have intervened, the lien will be regarded as lost, if the person in whose favor it existed has had a reasonable opportunity to enforce it, and has not done so. This is the well-settled rule in admiralty.'

In The General Jackson, the supplies were furnished September, 1852. The vessel was sold to the claimant in May, 1854, and the libel filed about eighteen months after supplies furnished. Sprague, J., says: