Ranking of Maritime Liens.—There may be several claimants holding maritime and other liens on the same vessel. For example, a foreign vessel comes into collision by her own fault and is damaged and her cargo also; she is assisted into port by salvors and ultimately under a towage agreement, and put into the hands of a shipwright who does necessary repairs. The innocent party to the collision has a maritime lien for his damage, and the seamen for their wages; the cargo owner has a suit in rem or a statutory lien for damage, and the shipwright a possessory lien for the value of his repairs, while the tugs certainly have a right in rem and possibly a maritime lien also in the nature of salvage. The value of the property may be insufficient to pay all claims, and it becomes a matter of great consequence to settle whether any, and if so which, have priority over the others, or whether all rank alike and have to divide the proceeds of the property pro ratâ amongst them. The following general rules apply: liens for benefits conferred rank against the fund in the inverse, and those for the reparation of damage sustained in the direct order of their attaching to the res; as between the two classes those last mentioned rank before those first mentioned of earlier date; as between liens of the same class and the same date, the first claimant has priority over others who have not taken action. The courts of admiralty, however, allow equitable considerations, and enter into the question of marshalling assets. For example, if one claimant has a lien on two funds, or an effective right of action in addition to his lien, and another claimant has only a lien upon one fund, the first claimant will be obliged to exhaust his second remedy before coming into competition with the second. As regards possessory liens, the shipwright takes the ship as she stands, i.e. with her incumbrances, and it appears that the lien for seaman’s wages takes precedence of a solicitor’s lien for costs, under a charging order made in pursuance of the Solicitors Act 1860, § 28.
Subject to equitable considerations, the true principle appears to be that services rendered under an actual or implied contract, which confer a maritime lien, make the holder of the lien in some sort a proprietor of the vessel, and therefore liable for damage done by her—hence the priority of the damage lien—but, directly it has attached, benefits conferred on the property by enabling it to reach port in safety benefit the holder of the damage lien in common with all other prior holders of maritime liens. It is less easy to see why of two damage liens the earlier should take precedence of the later, except on the principle that the res which came into collision the second time is depreciated in value by the amount of the existing lien upon her for the first collision, and where there was more than one damage lien, and also liens for benefits conferred prior to the first collision between the two collisions and subsequent to the second, the court would have to make a special order to meet the peculiar circumstances. The claim of a mortgagee naturally is deferred to all maritime liens, whether they are for benefits conferred on the property in which he is interested or for damage done by it, and also for the same reason to the possessory lien of the shipwright, but both the possessory lien of the shipwright and the claim of the mortgagee take precedence over a claim for necessaries, which only confers a statutory lien or a right to proceed in rem in certain cases. In other maritime states possessing codes of commercial law, the privileged debts are all set out in order of priority in these codes, though, as has been already pointed out, the lien for damage by collision—the most important in English law—has no counterpart in most of the foreign codes.
Stoppage in Transitu.—This is a lien held by an unpaid vendor in certain cases over goods sold after they have passed out of his actual possession. It has been much discussed whether it is an equitable or common-law right or lien. The fact appears to be that it has always been a part of the Law Merchant, which, properly speaking, is itself a part of the common law of England unless inconsistent with it. This particular right was, in the first instance, held by a court of equity to be equitable and not contrary to English law, and by that decision this particular part of the Law Merchant was approved and became part of the common law of England (see per Lord Abinger in Gibson v. Carruthers, 8 M. & W., p. 336 et seq.). It may be described as a lien by the Law Merchant, decided by equity to be part of the common law, but in its nature partaking rather of the character of an equitable lien than one at common law. “It is a right which arises solely upon the insolvency of the buyer, and is based on the plain reason of justice and equity that one man’s goods shall not be applied to the payment of another man’s debts. If, therefore, after the vendor has delivered the goods out of his own possession and put them in the hands of a carrier for delivery to the buyer, he discovers that the buyer is insolvent, he may re-take the goods if he can before they reach the buyer’s possession, and thus avoid having his property applied to paying debts due by the buyer to other people” (Benjamin on Sales, 2nd ed., 289). This right, though only recognized by English law in 1690, is highly favoured by the courts on account of its intrinsic justice, and extends to quasi-vendors, or persons in the same position, such as consignors who have bought on behalf of a principal and forwarded the goods. It is, however, defeated by a lawful transfer of the document of title to the goods by the vendor to a third person, who takes it bonâ fide and for valuable consideration (Factors Act 1889; Sale of Goods Act 1893).
Assignment or Transfer of Lien.—A lien being a personal right acquired in respect of personal services, it cannot, as a rule, be assigned or transferred; but here again there are exceptions. The personal representative of the holder of a possessory lien on his decease would probably in all cases be held entitled to it; and it has been held that the lien over a client’s papers remains with the firm of solicitors notwithstanding changes in the constitution of the firm (Gregory v. Cresswell, 14 L.J. Ch. 300). So also where a solicitor, having a lien on documents for his costs, assigned the debt to his bankers with the benefit of the lien, it was held that the bankers might enforce such lien in equity. But though a tradesman has a lien on the property of his customer for his charges for work done upon it, where the property is delivered to him by a servant acting within the scope of his employment, such lien cannot be transferred to the servant, even if he has paid the money himself; and the lien does not exist at all if the servant was acting without authority in delivering the goods, except where (as in the case of a common carrier) he is bound to receive the goods, in which case he retains his lien for the carriage against the rightful owner. Where, however, there is a lien on property of any sort not in possession, a person acquiring the property with knowledge of the lien takes it subject to such lien. This applies to equitable liens, and cannot apply to those common-law liens in which possession is necessary. It is, however, true that by statute certain common-law liens can be transferred, e.g. under the Merchant Shipping Act a master of a ship having a lien upon cargo for his freight can transfer the possession of the cargo to a wharfinger, and with it the lien (Merchant Shipping Act 1894, § 494). In this case, however, though the matter is simplified by the statute, if the wharfinger was constituted the agent or servant of the shipmaster, his possession would be the possession of the shipmaster, and there would be no real transfer of the lien; therefore the common-law doctrine is not altered, only greater facilities for the furtherance of trade are given by the statute, enabling the wharfinger to act in his own name without reference to his principal, who may be at the other side of the world. So also a lien may be retained, notwithstanding that the property passes out of possession, where it has to be deposited in some special place (such as the Custom-House) to comply with the law. Seamen cannot sell or assign or in any way part with their maritime lien for wages (Merchant Shipping Act 1894, § 156), but, nevertheless, with the sanction of the court, a person who pays seamen their wages is entitled to stand in their place and exercise their rights (the Cornelia Henrietta, 1866, L.R. 1 Ad. & Ec. 51).
Waiver.—Any parting with the possession of goods is in general a waiver of the lien upon them; for example, when a factor having a lien on the goods of his principal gives them to a carrier to be carried at the expense of his principal, even if undisclosed, he waives his lien, and has no right to stop the goods in transitu to recover it; so also where a coach-builder who has a lien on a carriage for repairs allows the owner from time to time to take it out for use without expressly reserving his lien, he has waived it, nor has he a lien for the standage of the carriage except by express agreement, as mere standage does not give a possessory lien. It has even been held that where a portion of goods sold as a whole for a lump sum has been taken away and paid for proportionately, the conversion has taken place and the lien for the residue of the unpaid purchase-money has gone (Gurr v. Cuthbert, 1843, 12 L.J. Ex. 309). Again, an acceptance of security for a debt is inconsistent with the existence of a lien, as it substitutes the credit of the owner for the material guarantee of the thing itself, and so acts as a waiver of the lien. For the same reason even an agreement to take security is a waiver of the lien, though the security is not, in fact, given (Alliance Bank v. Broon, 11 L.T. 332).
Sale of Goods under Lien.—At common law the lien only gives a right to retain the goods, and ultimately to sell by legal process, against the owner; but in certain cases a right has been given by statute to sell without the intervention of legal process, such as the right of an innkeeper to sell the goods of his customer for his unpaid account (Innkeepers Act 1878, § 1), the right of a wharfinger to sell goods entrusted to him by a shipowner with a lien upon them for freight, and also for their own charges (Merchant Shipping Act 1894, §§ 497, 498), and of a railway company to sell goods for their charges (Railway Clauses Act 1845, § 97). Property affected by an equitable lien or a maritime lien cannot be sold by the holder of the lien without the interposition of the court to enforce an order, or judgment of the court. In Admiralty cases, where a sale is necessary, no bail having been given and the property being under arrest, the sale is usually made by the marshal in London, but may be elsewhere on the parties concerned showing that a better price is likely to be obtained.
American Law.—In the United States, speaking very generally, the law relating to liens is that of England, but there are some considerable differences occasioned by three principal causes. (1) Some of the Southern States, notably Louisiana, have never adopted the common law of England. When that state became one of the United States of North America it had (and still preserves) its own system of law. In this respect the law is practically identical with the Code Napoleon, which, again speaking generally, substitutes privileges for liens, i.e. gives certain claims a prior right to others against particular property. These privileges being strictissimae interpretationis, cannot be extended by any principle analogous to the English doctrine of equitable liens. (2) Probably in consequence of the United States and the several states composing it having had a more democratic government than Great Britain, in their earlier years at all events, certain liens have been created by statute in several states in the interest of the working classes which have no parallel in Great Britain, e.g. in some states workmen employed in building a house or a ship have a lien upon the building or structure itself for their unpaid wages. This statutory lien partakes rather of the nature of an equitable than of a common-law lien, as the property is not in the possession of the workman, and it may be doubted whether the right thus conferred is more beneficial to the workman than the priority his wages have in bankruptcy proceedings in England. Some of the states have also practically extended the maritime lien to matters over which it was never contended for in England. (3) By the constitution of the United States the admiralty and inter-state jurisdiction is vested in the federal as distinguished from the state courts, and these federal courts have not been liable to have their jurisdiction curtailed by prohibition from courts of common law, as the court of admiralty had in England up to the time of the Judicature Acts; consequently the maritime lien in the United States extends further than it does in England, even after recent enlargements; it covers claims for necessaries and by material men (see Maritime Lien), as well as collision, salvage, wages, bottomry and damage to cargo.
Difficulties connected with lien occasionally arise in the federal courts in admiralty cases, from a conflict on the subject between the municipal law of the state where the court happens to sit and the admiralty law; but as there is no power to prohibit the federal court, its view of the admiralty law based on the civil law prevails. More serious difficulties arise where a federal court has to try inter-state questions, where the two states have different laws on the subject of lien; one for example, like Louisiana, following the civil law, and the other the common law and equitable practice of Great Britain. The question as to which law is to govern in such a case can hardly be said to be decided. “The question whether equitable liens can exist to be enforced in Louisiana by the federal courts, notwithstanding its restrictive law of privileges, is still an open one” (Derris, Contracts of Pledge, 517; and see Burdon Sugar Refining Co. v. Payne, 167 U.S. 127).
British Colonies.—In those colonies which before the Canadian federation were known as Upper Canada and the Maritime Provinces of British North America, and in the several Australasian states where the English common law is enforced except as modified by colonial statute, the principles of lien, whether by common law or equitable or maritime, discussed above with reference to England, will prevail; but questions not dissimilar to those treated of in reference to the United States may arise where colonies have come to the crown of Great Britain by cession, and where different systems of municipal law are enforced. For example, in Lower Canada the law of France prior to the Revolution occupies the place of the common law in England, but is generally regulated by a code very similar to the Code Napoleon; in Mauritius and its dependencies the Code Napoleon itself is in force except so far as modified by subsequent ordinances. In South Africa, and to some extent in Ceylon and Guiana, Roman-Dutch law is in force; in the island of Trinidad old Spanish law, prior to the introduction of the present civil code of Spain, is the basis of jurisprudence. Each several system of law requires to be studied on the point; but, speaking generally, apart from the possessory lien of workmen and the maritime lien of the vice-admiralty courts, it may be assumed that the rules of the civil law, giving a privilege or priority in certain specified cases rather than a lien as understood in English law, prevail in those colonies where the English law is not in force.
(F. W. Ra.)