The law of the sea

by George L. Canfield; J. Y. Brinton; George W. Dalzell

16. Sales by Master.—

In case of actual necessity the master may sell the ship and convey a good title to the purchaser, free of all liens. Such sales become necessities within the meaning of the maritime law, where the master cannot communicate with the owner and there is nothing better that can be done for him or the others concerned in the adventure. If the master has an honest purpose to serve those who are interested in the ship and can clearly prove that the situation required the sale, he will be entirely justified and the purchaser's title secure. Good faith and necessity must concur. If, within a reasonable time, the master can consult with the owner, he should do so, because, if possible, the owner's judgment must control; and, in any event, the master should not sell without the advice of competent persons on the spot, whose opinions should be taken as to whether it is better judgment to repair or sell. His authority does not depend on their recommendation, but if he acts on it, his justification will be the more secure. Where possible, the facts should be presented by a survey of the ship and the surveyors' report give in detail the steps they take and their conclusions, with the facts necessary to vindicate them. When a vessel is lawfully sold by the master all existing liens are divested and an absolute title passes. The liens attach to the proceeds, however, which become, in the view of the maritime law, the substitute for the ship. A good title will pass by such a sale even if no bill-of-sale is executed. A parole sale—that is to say, a sale by word of mouth, without bill of sale or other writing—and delivery will effectually pass the property; while formal documents are, of course, desirable they are not essential to its validity.

The principles governing the sale of a vessel by her master are set forth very clearly by Mr. Justice Davis, in delivering the opinion of the Supreme Court in the case of the Amelie, 6 Wall. 18: The Amelie on her voyage from Surinam to Boston encountered perils of the sea, and was obliged to seek the harbor of Port au Prince, Hayti, and was sold there at public auction by the master, and purchased by Reviere, the claimant. The owner of the cargo, because of its non-delivery, filed a libel and insisted that the sale of the vessel was not justifiable and passed no title to Reviere, the claimant; and even if the sale was proper under the circumstances, that Reviere took title subject to all existing liens.

The sale of a ship becomes a necessity within the meaning of the commercial law, when nothing better can be done for the owner, or those concerned in the adventure.... In order to justify the sale, good faith in making it and the necessity for it must both concur, and the purchaser to protect his title must be able to show their concurrence. The question is not whether it is expedient to break up a voyage and sell the ship, but whether there was a legal necessity to do it. If this can be shown, the master is justified; otherwise not. And this necessity is a question of fact, to be determined in each case by the circumstances in which the master is placed, and the perils to which the property is exposed.

If the master can within a reasonable time consult the owners, he is required to do it, because they should have an opportunity to decide whether in their judgment a sale is necessary.

At this point it may be observed that modern means of communication by cable and wireless render consultation with the owner feasible in many instances where it was not formerly possible, and there can be no doubt that it is the master's duty to avail himself of these means before selling the vessel. The court proceeds:

He should never sell, when in port with a disabled ship without first calling to his aid disinterested persons of skill and experience, who are competent to advise, after full survey of the vessel and her injuries, whether she had better be repaired or sold. And although his authority to sell does not depend on their recommendation, yet, if they advise a sale, and he acts on their advice, he is in a condition to furnish the court or jury reviewing the proceedings strong evidence in justification of his conduct.

In this case the ship was surveyed by competent surveyors, who made a full report and advised that the vessel be sold as the cost of repairs would exceed her value. The court continued:

After this advice, the master who was bound to look to the interest of all parties concerned in the venture, had no alternative but to sell. In the face of it, had he proceeded to repair his vessel, he would have been culpable. Being in a distant port, with a disabled vessel, seeking a solution of the difficulties surrounding him; at a great distance from his owners, with no direct means of communicating with them; and having good reason to believe the copper of his vessel was displaced, and that worms would work her destruction, what course so proper to pursue as to obtain the advice "of that body of men who by the usage of trade have been immemorially resorted to on such occasions?" (Gordon v. Mass. Ins. Co., 2 Pick. 264). No prudent man, under the circumstances, would have failed to follow their advice, and the state of things, as proved in this case, imposed on the master a moral necessity to sell his vessel and reship his cargo.

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It is insisted, even if the circumstances were such as to justify the sale and pass a valid title to the vendee, he, nevertheless, took the title subject to all existing liens. If this position were sound, it would materially affect the interests of commerce, for, as exigencies are constantly arising, requiring the master to terminate the voyage as hopeless, and sell the property in his charge for the highest price he can get, would any man of common prudence buy a ship sold under such circumstances, if he took the title encumbered with secret liens, about which, in the great majority of cases, he could not have the opportunity of learning anything? The ground on which the right to sell rests is, that in case of disaster, the master, from necessity, becomes the agent of all parties in interest and is bound to do the best for them that he can, in the condition in which he is placed and, therefore, has the power to dispose of the property for their benefit. When nothing better can be done for the interests of those concerned in the property than to sell, it is a case of necessity, and as the master acts for all, he sells as well for the lien holder as the owner. The very object of the sale, according to the uniform current of the decisions, is to save something for the benefit of all concerned; and if this is so, the proceeds of the ship, necessarily, by operation of law, stand in place of the ship. If the ship can only be sold in case of necessity, where the good faith of the master is unquestioned, and if it be the purpose of the sale to save something for the parties in interest, does not sound policy require a clean title to be given the purchaser in order that the property may bring its full value? If the sale is impeached, the law imposes on the purchaser the burden of showing the necessity for it, and this he is in a position to do, because the facts which constitute the legal necessity are within his reach; but he cannot know, or be expected to know, in the exercise of reasonable diligence, the nature and extent of the liens that have attached to the vessel. Without pursuing the subject further, we are clearly of the opinion, when the ship is lawfully sold, the purchaser takes an absolute title divested of all liens, and that the liens are transferred to the proceeds of the ship, which in the case of the admiralty law becomes the substitute for the ship.

The sale in this case was made by parole; the master delivered the vessel to the purchaser, without, so far as appeared, executing any document evidencing the sale. On this subject, the court said:

The title of Reviere, the claimant, was questioned at the bar, because he did not prove the master executed to him a bill of sale of the vessel. We do not clearly see how this question is presented in the record, for there is no proof, either way, on the subject, but if it is, it is easily answered. A bill of sale is not necessary to transfer the title to the vessel. After it was sold and delivered, the property was changed and no written instrument was needed to give effect to the title. The rule of common law on this subject has not been altered by statute. The law of the United States which requires the register to be inserted in the bill of sale on every transfer of a vessel, applies only to the character and privileges of the vessel as an American ship. It has no application to this vessel in this case.

Sales of vessels by their masters are less common now than formerly in view of the modern facilities for communication with owners. If such sales are subject to the restrictions of the recent acts of Congress, heretofore mentioned, it would appear to be practically impossible for a master to sell an American ship to a foreigner. Whether such sales, arising as they do, ex necessitate, under the general principles of maritime law, are to be regarded as outside of the provisions of these statutes, has not been decided. There is no reason to suppose that the requirements of the statutes are suspended in such cases.