Common-Law Liens.—These may be either particular, i.e. a right over one or more specified articles for a particular debt, or general, i.e. for all debts owing to the creditor by the debtor.
The requisites for a particular lien are, firstly, that the creditor should be in possession of the article; secondly, that the debt should be incurred with reference to the article; and thirdly, that the amount of the debt should be certain. It may be created by express contract, by implied contract (such as the usage of a particular trade or business), or as a consequence of the legal relation existing between the parties. As an example of the first, a shipowner at common law has a lien on the cargo for the freight; but though the shipper agrees to pay dead freight in addition, i.e. to pay freight on any space in the ship which he fails to occupy with his cargo, the shipowner has no lien on the cargo for such dead freight except by express agreement. The most usual form of the second is that which is termed a possessory lien—the right a ship-repairer has to retain a ship in his yard till he is paid for the repairs executed upon her,[1] and the right a cobbler has to retain a pair of shoes till he is paid for the repairs done to them. But this lien is only in respect of the work done on, and consequent benefit received by, the subject of the lien. Hence an agistor of cattle has no lien at common law upon them for the value of the pasturage consumed, though he may have one by agreement; nor a conveyancer upon deeds which he has not drawn, but which are in his possession for reference. The most common example of the third is that of a carrier, who is bound by law to carry for all persons, and has, therefore, a lien for the price of the carriage on the goods carried. It has been held that even if the goods are stolen, and entrusted to the carrier by the thief, the carrier can hold them for the price of the carriage against the rightful owner. Of the same nature is the common-law lien of an innkeeper on the baggage of his customer for the amount of his account, he being under a legal obligation to entertain travellers generally. Another instance of the same class is where a person has obtained possession of certain things over which he claims to hold a lien in the exercise of a legal right. For example, when a lord of a manor has seized cattle as estrays, he has a lien upon them for the expense of their keep as against the real owner; but the holder’s claim must be specific, otherwise a general tender of compensation releases the lien.
A general lien is a right of a creditor to retain property, not merely for charges relating to it specifically, but for debts due on a general account. This not being a common-law right, is viewed by the English courts with the greatest jealousy, and to be enforced must be strictly proved. This can be done by proof either of an express or implied contract or of a general usage of trade. The first of these is established by the ordinary methods or by previous dealings between the parties on such terms; the second is recognized in certain businesses; it would probably be exceedingly difficult, if not impossible, to extend it at the present time to any other trades. When, however, a lien by general usage has once been judicially established, it becomes part of the Law Merchant, and the courts are bound to recognize and enforce it. The best known and most important instance is the right of a solicitor to retain papers in his hands belonging to his client until his account is settled. The solicitor’s lien, though probably more commonly enforced than any other, is of no great antiquity in English law, the earliest reported case of it being in the reign of James II.; but it is now of a twofold nature. In the first place there is the retaining lien. This is similar in kind to other possessory liens, but of a general nature attaching to all papers of the client, and even to his money, up to the amount of the solicitor’s bill, in the hands of the solicitor in the ordinary course of business. There are certain exceptions which seem to have crept in for the same reason as the solicitor’s lien itself, i.e. general convenience of litigation; such exceptions are the will of the client after his decease, and proceedings in bankruptcy. In this latter case the actual possessory lien is given up, the solicitor’s interests and priorities being protected by the courts, and it may be said that the giving up the papers is really only a means of enforcing the lien they give in the bankruptcy proceedings. In the second place there is what is called a charging lien—more correctly classed under the head of equitable lien, since it does not require possession, but is a lien the solicitor holds over property recovered or preserved for his client. He had the lien on an order by the court upon a fund in court by the common law, but as to property generally it was only given by 23 & 24 Vict. c. 127, § 28; and it has been held to attach to property recovered in a probate action (ex parte Tweed, C.A. 1899, 2 Q.B. 167). A banker’s lien is the right of a banker to retain securities belonging to his customer for money due on a general balance. Other general liens, judicially established, are those of wharfingers, brokers and factors (which are in their nature akin to those of solicitors and bankers), and of calico printers, packers of goods, fullers (at all events at Exeter), dyers and millers; but in all these special trades it is probable that the true reason is that the account due was for one continuous transaction. The calico would come to be printed, the goods to be packed, the cloth to be bleached, the silk to be dyed, and the corn to be ground, in separate parcels, and at different times, but all as one undertaking; and they are therefore, though spoken of as instances of general lien, only adaptations by the courts of the doctrine of particular lien to special peculiarities of business. In none of these cases would the lien exist, in the absence of special agreement, for other matters of account, such as money lent or goods sold.
Equitable Liens.—“Where equity has jurisdiction to enforce rights and obligations growing out of an executory contract,” e.g. in a suit for specific performance, “this equitable theory of remedies cannot be carried out unless the notion is admitted that the contract creates some right or interest in or over specific property, which the decree of the court can lay hold of, and by means of which the equitable relief can be made efficient. The doctrine of equitable liens supplies this necessary element; and it was introduced for the sole purpose of furnishing a ground for these specific remedies which equity confers, operating upon particular identified property instead of the general pecuniary recoveries granted by courts of common law. It follows, therefore, that in a large class of executory contracts express and implied, which the common law regards as creating no property, right nor interest analogous to property, but only a mere personal right to obligation, equity recognizes in addition to the personal obligation a particular right over the thing with which the contract deals, which it calls a lien, and which though not property is analogous to property, and by means of which the plaintiff is enabled to follow the identical thing and to enforce the defendant’s obligation by a remedy which operates directly on the thing. The theory of equitable liens has its ultimate foundation, therefore, in contracts express or implied which either deal or in some manner relate to specific property, such as a tract of land, particular chattels or securities, a certain fund and the like. It is necessary to divest oneself of the purely legal notion concerning the effects of such contracts, and to recognize the fact that equity regards them as creating a charge upon, or hypothecation of, the specific thing, by means of which the personal obligation arising from the agreement may be more effectively enforced than by a mere pecuniary recovery at law” (Pomeroy, 2 Eq. Jur. 232).
This description from an American text-book seems to give at once the fullest and most concise definition and description of an equitable lien. It differs essentially from a common-law lien, inasmuch as in the latter possession or occupation is as a rule necessary, whereas in the equitable lien the person claiming the lien is seldom in possession or occupation of the property, its object being to obtain the possession wholly or partially. A special instance of such a lien is that claimed by a publisher over the copyright of a book which he has agreed to publish on terms which are not complied with—for example, the author attempting to get the book published elsewhere. It cannot perhaps be said that this has been absolutely decided to exist, but a strong opinion of the English court of exchequer towards the close of the 18th century was expressed in its favour (Brook v. Wentworth, 3 Anstruther 881). Other instances are the charging lien of a solicitor, and the lien of a person on improvements effected by him on the property of another who “lies by” and allows the work to be done before claiming the property. So also of a trustee for expenses lawfully incurred about the trust property. The power of a limited liability company to create a lien upon its own shares was in 1901 established (Allen v. Gold Reefs, &c., C.A. 1900, 1 Ch. 656).
Maritime Liens.—Maritime lien differs from all the others yet considered, in its more elastic nature. Where a maritime lien has once attached to property—and it may and generally does attach without possession—it will continue to attach, unless lost by laches, so long as the thing to which it attaches exists, notwithstanding changes in the possession of and property in the thing, and notwithstanding that the new possessor or owner may be entirely ignorant of its existence; and even if enforced it leaves the owner’s personal liability for any balance unrealized intact (the “Gemma,” 1899, P. 285). So far as England is concerned, it must be borne in mind that the courts of admiralty were conducted in accordance with the principles of civil law, and in that law both the pledge with possession and the hypothecation without possession were well recognized. The extreme convenience of such a right as the latter with regard to such essentially movable chattels as ships is apparent. Strictly speaking, a maritime lien is confined to cases arising in those matters over which the courts of admiralty had original jurisdiction, viz. collisions at sea, seamen’s wages, salvage and bottomry, in all of which cases the appropriate remedy is a proceeding in rem in the admiralty court. In the first of these—collisions at sea—if there were no maritime lien there would frequently be no remedy at all. When two ships have collided at sea it may well be that the innocent ship knows neither the name nor the nationality of the wrongdoer, and the vessel may escape with slight damage and not have to make a port of refuge in the neighbourhood. Months afterwards it is ascertained that she was a foreign ship, and in the interval she has changed owners. Then, were it not a fact that a maritime lien invisible to the wrongdoer nevertheless attaches itself to his ship at the moment of collision, and continues to attach, the unfortunate owner of the innocent ship would have no remedy, except the doubtful one of pursuing the former owner of the wrong-doing vessel in his own country in a personal action where such proceedings are allowed—which is by no means the case in all foreign countries. The same reasons apply, though not possibly with quite the same force, to the other classes of cases mentioned.
Between 1840 and 1873 the jurisdiction of the admiralty court was largely extended. At the latter date it was merged in the probate, divorce and admiralty division of the High Court of Justice. Since the merger questions have arisen as to how far the enlargement of jurisdiction has extended the principle of maritime lien. An interesting article on this subject by J. Mansfield, barrister-at-law, will be found in the Law Quarterly Review, vol. iv., October 1888. It must be sufficient to state here that where legislation has extended the already existing jurisdiction to which a maritime lien pertained, the maritime lien is extended to the subject matter, but that where a new jurisdiction is given, or where a jurisdiction formerly existing without a maritime lien is extended, no maritime lien is given, though even then the extended jurisdiction can be enforced by proceedings in rem. Of the first class of extended jurisdictions are collisions, salvage and seamen’s wages. Prior to 1840 the court of admiralty only had jurisdiction over these when occurring or earned on the high seas. The jurisdiction, and with it the maritime lien, is extended to places within the body of a county in collision or salvage; and as to seamen’s wages, whereas they were dependent on the earning of freight, they are now free from any such limitation; and also, whereas the remedy in rem was limited to seamen’s wages not earned under a special contract, it is now extended to all seamen’s wages, and also to a master’s wages and disbursements, and the maritime lien covers all these. The new jurisdiction given over claims for damage to cargo carried into any port in England or Wales, and on appeal from the county courts over all claims for damage to cargo under £300, though it may be prosecuted by proceedings in rem, i.e. by arrest of the ship, yet confers no maritime lien; and so also in the case of claims by material men (builders and fitters-out of ships) and for necessaries. Even though in the latter case the admiralty court had jurisdiction previously to 1840 where the necessaries were supplied on the high seas, yet as it could not be shown that such jurisdiction had ever been held to confer a maritime lien, no such lien is given. Even now there is much doubt as to whether towage confers a maritime lien or not, the services rendered being pursuant to contract, and frequently to a contract made verbally or in writing on the high seas, and being rendered also to a great extent on the high seas. In these cases and to that extent the high court of admiralty would have had original jurisdiction. But prior to 1840 towage, as now rendered by steam tugs expressly employed for the service, was practically unknown, and therefore there was no established catena of precedent to show the exercise of a maritime lien. It may be argued on the one hand that towage is only a modified form of salvage, and therefore entitled to a maritime lien, and on the other that it is only a form of necessary power supplied like a new sail or mast to a ship to enable her to complete her voyage expeditiously, and therefore of the nature of necessaries, and as such not entitled to a maritime lien. The matter is not of academical interest only, for though in the case of an inward-bound ship the tug owner can make use of his statutory right of proceeding in rem, and so obtain much of the benefit of a maritime lien, yet in the case of an outward-bound ship, if she once gets away without payment, and the agent or other authorized person refuses or is unable to pay, the tug owner’s claim may, on the return of the ship to a British port, be met by an allegation of a change of ownership, which defeats his right of proceeding at all if he has no maritime lien; whereas if he has a maritime lien he can still proceed against the ship and recover his claim, if he has not been guilty of laches.
A convenient division of the special liens other than possessory on ships may be made by classifying them as maritime, statutory-maritime or quasi-maritime, and statutory. The first attach only in the case of damage done by collision between ships on the high seas, salvage on the high seas, bottomry and seamen’s wages so far as freight has been earned; the second attach in cases of damage by collision within the body of a county, salvage within the body of a county, life salvage everywhere, seamen’s wages even if no freight has been earned, master’s wages and disbursements. These two classes continue to attach notwithstanding a change of ownership without notice of the lien, if there have been no laches in enforcing it (the “Bold Buccleuch,” 1852, 7 Moo. P.C. 267; the “Kong Magnus,” 1891, P. 223). The third class, which only give a right to proceed in rem, i.e. against the ship itself, attach, so long as there is no bona fide change of ownership, without citing the owners, in all cases of claims for damage to ship and of claims for damage to cargo where no owner is domiciled in England or Wales. Irrespective of this limitation, they attach in all cases not only of damage to cargo, but also of breaches of contract to carry where the damage does not exceed £300, when the suit must be commenced in a county court having admiralty jurisdiction; and in cases of claims for necessaries supplied elsewhere than in the ship’s home port, for wages earned even under a special contract by masters and mariners, and of claims for towage. In all three classes the lien also exists over cargo where the suit from its nature extends to it, as in salvage and in some cases of bottomry or respondentia, and in cases where proceedings are taken against cargo by the shipowner for a breach of contract (cargo ex “Argos” and the “Hewsons,” 1873, L.R. 5 P.C. 134; the “Alina,” 1880, 5 Ex. D. 227).
Elsewhere than in England, and those countries such as the United States which have adopted her jurisprudence in maritime matters generally, the doctrine of maritime lien, or that which is substituted for it, is very differently treated. Speaking generally, those states which have adopted the Napoleonic codes or modifications of them—France, Italy, Spain, Holland, Portugal, Belgium, Greece, Turkey, and to some extent Russia—have instead of a maritime lien the civil-law principle of privileged debts. Amongst these in all cases are found claims for salvage, wages, bottomry under certain restrictions, and necessaries. Each of these has a privileged claim against the ship, and in some cases against freight and cargo as well, but it is a matter of very great importance that, except in Belgium, a claim for collision damage (which as we have seen confers a maritime lien, and one of a very high order, in Great Britain) confers no privilege against the wrong-doing ship, whilst in all these countries an owner can get rid of his personal liability by abandoning the ship and freight to his creditor, and so, if the ship is sunk, escape all liability whilst retaining any insurance there may be. This, indeed, was at one time the law of Great Britain; the measure of damage was limited by the value of the res; and in the United States at the present time a shipowner can get rid of his liability for damage by abandoning the ship and freight. A different rule prevails in Germany and the Scandinavian states. There claims relating to the ship, unless the owner has specially rendered himself liable, confer no personal claim at all against him. The claim is limited ab initio to ship and freight, except in the case of seamen’s wages, which do confer a personal claim so far as they have been earned on a voyage or passage completed prior to the loss of the ship. In all maritime states, however, except Spain, a provisional arrest of the ship is allowed, and thus between the privilege accorded to the debt and the power to arrest till bail is given or the ship abandoned to creditors, a condition of things analogous to the maritime lien is established; especially as these claims when the proper legal steps have been taken to render them valid—usually by endorsement on the ship’s papers on board, or by registration at her port of registry—attach to the ship and follow her into the hands of a purchaser. They are in fact notice to him of the incumbrance.
Duration of Lien.—So long as the party claiming the lien at common law retains the property, the lien continues, notwithstanding the debt in respect of which it is claimed becoming barred by the Statute of Limitations (Higgins v. Scott, 1831, 2 B. & Ald. 413). But if he takes proceedings at law to recover the debt, and on a sale of the goods to satisfy the judgment purchases them himself, he so alters the nature of the possession that he loses his lien (Jacobs v. Latour, 5 Bing. 130). An equitable lien probably in all cases continues, provided the purchaser of the subject matter has notice of the lien at the time of his purchase. A maritime lien is in no respect subject to the Statute of Limitations, and continues in force notwithstanding a change in the ownership of the property without notice, and is only terminated when it has once attached, by laches on the part of the person claiming it (the “Kong Magnus,” 1891, P. 223). There is an exception in the case of seamen’s wages, where by 4 Anne c. 16 (Stat. Rev. 4 & 5 Anne c. 3) all suits for seamen’s wages in the Admiralty must be brought within six years.