Bank One, Louisiana N.A. v. Mr. Dean MV

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT

No. 00-31288

BANK ONE LOUISIANA N A,
Plaintiff-Appellee,

versus

MR DEAN MV, Etc.; ET AL,
Defendants,

BARGECARIB INCORPORATED,
Intervenor-Appellant.

Appeals from the United States District Court
for the Eastern District of Louisiana

June 10, 2002

Before GARWOOD and WIENER, Circuit Judges and FALLON, District
Judge.1

GARWOOD, Circuit Judge:

BargeCarib, Inc. (BargeCarib) appeals the district court's

grant of summary judgment in favor of Bank One, Louisiana N.A.

(Bank One) establishing that Bank One's preferred ship mortgage had

priority over BargeCarib's maritime lien for breach of charter.

Because maritime liens for breach of charter attach at the moment

1
District Judge of the Eastern District of Louisiana, sitting
by designation.
the owner places the vessel at the charterer's disposal, we vacate

and remand.

Background

BargeCarib, Inc. (a subsidiary of American Rice, Inc.) sells

rice to Haiti and transports it there by an oceangoing barge called

the LauriKristi. To provide propulsion for the LauriKristi,

BargeCarib executed a time charter agreement with Offshore Supply

Ships, Inc. (Offshore), owner of the towboat M/V Sovereign, to hire

the Sovereign for a period of one year, beginning August 15, 1996.

BargeCarib began using the Sovereign under this charter and later,

in July 1997, timely exercised its contractual right, provided for

in the charter, to extend the charter for another year.

On May 20, 1997, Offshore sold the Sovereign to Global Towing,

LLC (Global). To finance this purchase, Global received a line of

credit from First National Bank of Commerce (FNBC) and in return

gave FNBC a $2,000,000 preferred ship mortgage as security. Global

completely satisfied the Sovereign's existing mortgage of record

and FNBC duly recorded its preferred mortgage on May 21, 1997. On

October 2, 1998, Global's owner Michael Blake executed an $800,000

guarantee of the Global indebtedness.

After the sale of the vessel and recording of the mortgage,

Offshore and Global reassured BargeCarib that the Sovereign, now

renamed the M/V Mr. Dean, would sail on time for a scheduled trip

to Haiti. Nevertheless, Global delivered neither the Mr. Dean nor

2
a substitute suitable under the charter. BargeCarib immediately

filed suit in the United States District Court for the Southern

District of Texas against the Mr. Dean in rem and Global in

personam for breach of the charter. This court held that the

charter had indeed been breached. BargeCarib Inc. v. Offshore

Supply Ships, Inc., 168 F.3d 227 (5th Cir. 1999). On remand, the

district court held that the date of breach was July 10, 1997.

Global defaulted on the loan and Blake refused to pay under

the terms of his guarantee. On March 24, 2000, Bank One (successor

by merger to FNBC) responded by filing the present lawsuit in the

United States District Court for the Eastern District of Louisiana

against the Mr. Dean in rem and against Global and Blake in

personam. On June 2, 2000, BargeCarib intervened in the lawsuit

and asserted a maritime lien based on the breach of charter.

BargeCarib and Bank One disputed the priorities of their claims to

the Mr. Dean, a critical issue because the proceeds of sale of the

Mr. Dean would be unlikely to satisfy both interests. They filed

cross motions for summary judgment, and by order dated September

29, 2000 and entered October 2, 2000, the district court denied

BargeCarib’s motion and granted summary judgment to Bank One,

determining that Bank One's mortgage had priority over BargeCarib's

maritime lien. BargeCarib has timely appealed the September 29

order.

Discussion

3
I. Threshold Issues

This court takes jurisdiction of this appeal pursuant to 28

U.S.C. § 1292(a)(3), allowing for review of interlocutory decrees

of district courts determining the rights and liabilities of the

parties to admiralty cases. Because the grant of summary judgment

disposed of BargeCarib's case on the merits, we have jurisdiction

even without Rule 54(b) certification. See Walter E. Heller and

Co. v. O/S Sonny V., 595 F.2d 968, 971-72 (5th Cir. 1979). We

review a grant of summary judgment “de novo, applying the same

standards as the district court, while viewing all disputed facts

and reasonable inferences in the light most favorable to the

nonmoving party.” McClendon v. City of Columbia, 258 F.3d 432, 435

(5th Cir. 2001) (quotation omitted).

II. Attachment of a Maritime Lien

Under the Ship Mortgage Act, Bank One's mortgage takes

priority over all other claims against the vessel except for

“preferred maritime liens.” 46 U.S.C. § 31326(b)(1). Under the

facts of this case, BargeCarib's lien could only be preferred if it

“arose” before the mortgage was filed. 46 U.S.C. § 31301(5)(A).

The time charter commenced before the mortgage was filed, but

Offshore and Global breached the charter twenty days after that

date. Thus, this case presents the purely legal question of when

a maritime lien for breach of charter “arises.” Bank One prevails

if maritime liens arise at the time of breach, while BargeCarib

4
prevails if they arise at the inception of the charter.

We begin our analysis, as we must, with a recognition of the

unique qualities of the maritime lien. Rather than arising from

the English common law, maritime liens are based on principles of

civil law. The Young Mechanic, 30 F. Cas. 873, 874 (Curtis,

Circuit Justice 1855). As a result, a “maritime lien, so-called,

is not a lien at all in the common-law sense of the term.” GRANT

GILMORE & CHARLES L. BLACK, JR., THE LAW OF ADMIRALTY 586 (2nd ed. 1975)

(hereinafter GILMORE & BLACK). “A lien is a lien is a lien, but a

maritime lien is not.” Id. at 589. This case concerns the

maritime lien's unique power to confer the right to sue the vessel

itself in rem, almost as if it were a person. See id. at 589.2

When the vessel is sold under an in rem proceeding to satisfy a

maritime lien, the owner takes the vessel free of all liens imposed

anywhere in the world. Id. at 622. Accordingly, we take note that

our analysis should not be primarily guided by reference to the

commercial law of secured credit or the land-based common law of

liens. Instead, we find our guidance in the ancient and peculiar

case law of admiralty. While recent cases cast only a dim glow, we

2
“[T]he ship, personified, is itself—or herself—the defendant
in a proceeding in rem to enforce a lien. The ship is “the
offending thing”; the lien itself is, in an obscure Latin jingle
which has been so often repeated that it is no longer polite to
inquire what it means, jus in re rather than jus ad rem.” GILMORE
& BLACK at 589. Yet, “[i]t may be concluded that the fiction of
ship's personality has never been much more than a literary theme.”
Id. at 616.

5
find our lighthouse in the Supreme Court of the 1860s.

A. Older Case Law

A wealth of authority from the nineteenth century exists to

guide us in our resolution of this case. We discover that courts

have long understood that maritime liens for charters and shipping

contracts attach at the beginning of the contract and remain

inchoate until breached.

The Supreme Court first examined the timing of charter liens

in The Freeman, 59 U.S. (18 How.) 182 (1855), observing in dictum

that “charterparties, must, in the invariable regular course of

that business, be made, for the performance of which the law

confers a lien on the vessel.” Id. at 190. The Court added that

“third persons, who have shipped merchandise and taken bills of

lading therefor, would thereby acquire a lien on the vessel.” Id.

This use of “thereby” implies that the lien attaches at the

delivery of the merchandise, a point made explicit in 1860 when Mr.

Justice Nelson held that:

“The goods were put on board of the vessel, and, if the
lien attached at all, it attached as soon as they were
laden on board. So far as the form of the remedy is
concerned, it is the same as if the voyage had been
broken up by the charterers at any other point in the
course of the voyage, after the vessel had been out a
week, a month, or longer.” The Hermitage, 12 F. Cas. 27,
28 (Nelson, Circuit Justice 1860).

The entire Court agreed that same term, holding that “we do not see

why the lien may not attach, when the cargo is delivered to the

master for shipment.” The Edwin, 65 U.S. (24 How.) 386, 394

6
(1860). The Court reaffirmed the principle six years later.

“[T]he better opinion is, that the lien for freight commences as

soon as the goods are delivered into the control of the master, or

certainly as soon as they are put on board.” The Bird of Paradise,

72 U.S. (5 Wall.) 545, 563 (1866).3 These holdings were reiterated

by district and circuit courts. “[A]s soon as the performance of

the contract is commenced a lien exists on the vessel in favor of

the shipper or charterer, and a suit in rem may be maintained

against the same for any liability of the master or owner arising

on or growing out of such contract.” The Director, 26 F. 708, 710

(D. Or. 1886). See also The Oceano, 148 F. 131, 133 (S.D.N.Y.

1906) (quoting same); The Esrom, 272 F. 266, 270-71 (2nd Cir. 1921)

(“[T]he lien of the vessel upon the goods and of the goods upon the

vessel attaches from the moment the goods are laden on board”).

Soon after The Bird of Paradise, the Supreme Court elaborated

further by adopting the Privy Council's classic exposition of the

maritime lien:

“A maritime lien is the foundation of the proceeding in
rem, a process to make perfect a right inchoate from the
moment the lien attaches; and whilst it must be admitted

3
This reasoning was carried forward in Osaka Shosen Kaisha
v. Pacific Export Lumber Co. (The Saigon Maru), 43 S.Ct. 172
(1923), which held that “[t]he contract of affreightment itself
creates no lien, and this court has consistently declared that the
obligation between ship and cargo is mutual and reciprocal and does
not attach until the cargo is on board or in the master's custody.”
Id. at 174. See also Krauss Bros. Lumber Co. v. Dimon S.S. Corp.,
54 S.Ct. 105, 106 (1933).

7
 that where such lien exists, a proceeding in rem may be
had, it will be found to be equally true, that in all
cases where a proceeding in rem is the proper course,
there a maritime lien exists, which gives a privilege or
claim upon the thing, to be carried into effect by legal
process.” The Bold Buccleugh, 7 Eng. Rep. 267, 284
(1851), quoted in The Rock Island Bridge, 73 U.S. (6
Wall.) 213, 215 (1867) (emphasis added).

This statement explains how a maritime lien can attach at the

beginning of the charter, yet only be enforceable at the time of

breach: the lien remains “inchoate” until “perfected.” The lien

exists from the beginning of the charter to provide security for

the parties:

“Shipowners contract for the safe custody, due transport,
and right delivery of the cargo, and for the performance
of their contract the ship, her apparel and furniture,
are pledged in each particular case, and the shipper,
consignee, or owner of the cargo, contracts to pay the
freight and charges, and to the fulfillment of their
contract the cargo is pledged to the ship, and those
obligations are reciprocal, and the maritime law creates
reciprocal liens for their enforcement.” The Maggie
Hammond, 76 U.S. (9 Wall.) 435, 450 (1869).

Judge Hough later clarified the true purpose of the rule:

“The ancient and customary lien of the sea is not
maintained, nor was it created (so far as history reveals
its origin) for the convenience or assurance of parties,
but for the encouragement of commerce and shipping as a
presumed benefit to the public, in respect of an
occupation hazardous and uncertain beyond most land
ventures.” The Saturnus, 250 F. 407, 414 (2nd Cir.
1918).

Even though the lien attaches at the beginning of the venture,

the inchoate lien cannot permit suit against the vessel in rem

until “perfected” by a breach of the charter. This principle was

best stated in 1921:

8
 “From the moment, therefore, that the cargo was aboard
the St. Paul, the lien attached. It is argued, however,
that this lien was 'inchoate,' in the meaning of not
being perfected . . . . It is 'inchoate' only in the
sense of enforceability. In other words, the lien is
discharged, ipso facto, when the ship performs its duty
to the cargo. If it does not, then the enforcement
'relates back to the period when it first attached'; for
the lien is born and exists, until discharged, from the
moment the cargo is aboard.” The St. Paul, 277 F. 99,
106 (S.D.N.Y. 1921).

Thus, the maritime lien attaches at the commencement of the

undertaking and any subsequent breach perfecting the lien relates

back to that time. BargeCarib's maritime lien arose when the Mr.

Dean (then called the Sovereign) was delivered under the time

charter agreement, and it was perfected when Global and Offshore

breached the contract.

B. The Executory Contract Doctrine

The above cases require that the cargo be aboard the vessel in

order for the lien to attach. This comes from the “executory

contract doctrine,” the principle that a maritime lien does not

attach if the contract has not, by the actual loading of cargo,

ceased to be wholly executory. Though it can be seen in earlier

cases, the Court stated the rule clearly in 1870:

“[T]he law creates no lien on a vessel as a security for
the performance of a contract to transport a cargo until
some lawful contract of affreightment is made, and the
cargo to which it relates has been delivered to the
custody of the master or some one authorized to receive
it.” The Keokuk, 76 U.S. (9 Wall.) 517 (1870).

Bank One characterizes the executory contract doctrine as an

exception to the general rule that breach of contract gives rise to

9
a maritime lien, not as an indication of when the lien attaches.

Thomas Schoenbaum intimates the same in his treatise Admiralty and

Maritime Law. See 1 THOMAS J. SCHOENBAUM, ADMIRALTY AND MARITIME LAW § 9-

2, at 506-07 (3rd ed. 2001).

We choose instead to rely upon the above case law and on other

treatises. See 2 BENEDICT ON ADMIRALTY § 43, at 3-48 (7th ed. rev.

1988); MICHAEL WILFORD ET AL., TIME CHARTERS 498 (4th ed. 1995). The

executory contract doctrine encompasses the earlier case law and

merely restates the fact that an inchoate maritime lien attaches

once the cargo is loaded. This is the meaning of our more recent

statement that “under the 'executory contract doctrine,' a maritime

lien for breach of charterparty arises once (and to the extent

that) cargo is loaded on board.” Cardinal Shipping Corp. v. M/V

Seisho Maru, 744 F.2d 461, 467 (5th Cir. 1984).

We must also note the application of this doctrine to the

present case. The asserted maritime lien arises from a time

charter and not a contract of affreightment, a distinction we made

in E.A.S.T., Inc. of Stamford, Connecticut v. M/V Alaia, 876 F.2d

1168 (5th Cir. 1989). “A time charterer does not pay freight to

the vessel owner for the safe transport of a specific cargo to a

specific destination, but pays instead for the use of the vessel

for a specified period of time—the intended use of the vessel may

not include the transportation of any cargo at all or may be to

make a series of voyages, carrying different cargo to various

10
destinations.” Id. at 1176. For that reason, even though a

contract for affreightment ceases to be executory only when the

cargo is loaded, “the vessel begins performance of the [time

charter] contract when it 'is placed at the charterer's disposal'”

and ceases to be executory at that point. Id. at 1176. Under the

logic we expressed in Alaia, then, a maritime lien for breach of a

time charter attaches when the owner places the vessel at the

charterer's disposal. In the present case, the vessel had already

been delivered to BargeCarib and BargeCarib had made several

voyages with it.4 BargeCarib's maritime lien thus arose before the

preferred ship mortgage was recorded.

C. Recent Case Law

Very few recent cases even hint at when a maritime lien

arises.5 The Supreme Court has not discussed the priority of

maritime liens since 1898, no recent circuit court case addresses

the issue before us, and district courts have addressed the issue

4
We acknowledge that Alaia only applies to “a breach only of
the time charter qua time charter and not of a contract of
affreightment evidenced by a time charter.” Alaia, 876 F.2d at
1177 (emphasis in original). After reviewing the record, the time
charter agreement, the complaint in intervention, and our prior
opinion in BargeCarib's claim, nothing appears which suggests that
this was merely a contract of affreightment evidenced by a time
charter.
5
“There has been little priority litigation even at the trial
court level since, roughly, the 1920's.” GILMORE & BLACK at 736.
“In a priority case today, the most recent authority on any point
will probably be a case decided by a District Judge thirty or forty
or fifty years ago.” Id. at 737.

11
but split in their results. Though this confusion means we cannot

rest upon recent holdings, it also means that nothing has altered

the precedent laid down in the last century.

Bank One most heavily relies upon our decision in Cardinal

Shipping Corp. v. M/V Seisho Maru, 744 F.2d 461 (5th Cir. 1984),

quoting our statement that “a maritime lien typically arises when

the owner has breached its contract with the charterer.” Id. at

466. Yet, in Cardinal Shipping we were discussing whether a sub-

charter confers the right to sue the vessel in rem or whether the

litigant must be satisfied with the usual in personam and quasi in

rem approaches. Id. at 467. Placed within its context, the

statement merely addresses the existence of a maritime lien and not

when that lien attaches. This reading gains support from our later

statement in Cardinal Shipping that “under the 'executory contract

doctrine,' a maritime lien for breach of charterparty arises once

(and to the extent that) cargo is loaded on board.” Id. “The

fanciful courts have envisioned a 'union of ship and cargo' marking

the commencement of the lien.” Id. As we explained above, these

later statements delineate the exact point at which the lien

attaches and undermine Bank One's interpretation of the earlier

sentence. At any rate, Cardinal Shipping would not bind us because

it addressed a breach at the beginning of the charter. Id. at 464.

Any statement regarding the timing of the lien would therefore be

dictum.

12
 For the same reason, we find inapposite the Second Circuit's

treatment of maritime liens in Rainbow Line, Inc. v. M/V Tequila,

480 F.2d 1024 (2nd Cir. 1973). The Second Circuit held in Rainbow

Line that “there is a maritime lien for the breach of a charter

party,” a holding we followed in International Marine Towing v.

Southern Leasing Partners, Ltd., 722 F.2d 126, 130-31 (5th Cir.

1983). Though the Rainbow Line court states that “a maritime lien

for breach of charter has priority over the mortgagee only if it

has attached before the mortgage was recorded,” Rainbow Line, 480

F.2d at 1028, this only begs the question before us. Moreover,

just as in Cardinal Shipping, the Rainbow Line court was

considering a breach of charter that occurred before the mortgage

was recorded. Any inference regarding the time of attachment would

thus be dictum.

Finally, we note that our opinion in International Marine

Towing v. Southern Leasing Partners, Ltd., 722 F.2d 126 (5th Cir.

1983) implies in several places that the breach of the charter

gives rise to the maritime lien. See, e.g., id. at 130 (“III.

MARITIME LIENS ARISING FROM BREACH OF THE CHARTER PARTY”); id. at

132 (“. . . the clause does not speak to the issue of liens created

by the owner's breach . . .”). We also note, however, that

International Marine Towing only discussed the existence of the

maritime lien and declined to go any further. Id. at 132-33. As

with Rainbow Line and Cardinal Shipping, this court did not have

13
before it the question we consider today. Therefore, while we were

apparently under the impression that breach of charter confers a

maritime lien at the moment of breach, we don't think our passing

dicta should lead us to disregard Supreme Court precedent.

Some district courts have, of late, directly ruled on the

question presented here. In Kopac International, Inc. v. M/V Bold

Venture, 638 F. Supp. 87 (W.D. Wash. 1986), the court held6 that a

mortgage took priority over a lien for breach of charter because

the mortgage was recorded before any breach could have occurred.

Id. at 90. The only authority offered by the Kopac court was the

equivocal quote from Rainbow Line discussed above; the district

court apparently jumped to conclusions and thus the decision

commands little deference. Id. In Rainbow Line, Inc. v. M/V

Tequila, 341 F. Supp. 459 (S.D.N.Y. 1972), a district court

determined priority by reference to the date of breach. Id. at

464. This reference was not carried forward into the Second

Circuit's opinion in the case, probably because (as discussed

above) it is not necessary to the decision.

On the other hand, some modern district court opinions support

BargeCarib's position. In Medina v. Marvirazon Compania Naviera,

S.A., 533 F. Supp. 1279 (D. Mass. 1982), the district court held

6
Appellants attempt to characterize the Kopac holding as
dictum, but we note that the proceeds of the sale were distributed
according to the court's holding on priority. Kopac, 638 F. Supp.
at 93.

14
that “a lien in favor of the charterer attaches to the vessel from

the moment performance of a charter commences.” Id. at 1290.

BargeCarib also directs us to two district court cases where

ongoing contracts begun before the mortgage were held to have

priority over the mortgage. Redwood Empire Production Credit

Association v. Fishing Vessel Owners Marine Ways, Inc., 530 F.

Supp. 75 (W.D. Wash. 1981); Caterpillar Financial Services, Inc. v.

Aleutian Chalice, 1994 A.M.C. 1767, 1994 WL 468187 (W.D. Wash.

1994). These cases fall within a line of such holdings, explained

by Gilmore and Black:

“Where repairs, being performed under contract, were
begun before, but not completed until after recording and
indorsement, it has reasonably been held that the entire
repair claim was entitled to priority. The basis of such
holdings seems to be that the repair man was under a
contractual duty to go forward with the work; a supply
man who continued to furnish supplies after the mortgage
had been recorded and indorsed would not be entitled to
priority.” GILMORE & BLACK at 755-56, citing The Eastern
Shore, 31 F. Supp. 964, 1940 A.M.C. 388 (D. Md. 1940) and
The Transford, 1929 A.M.C. 727 (E.D.N.Y. 1929).

We agree with BargeCarib that these cases suggest that the relevant

date for continuing contracts should be the date of commencement of

performance, and that the charter is somewhat analogous.

Nothing in the more modern case law dissuades us from the path

charted by the Supreme Court 140 years ago.

D. Other Language in Recent Case Law

Some recent statements in dictum are even more ambiguous as to

the present question, but should nevertheless be examined in light

15
of the rule we have discovered. We first note our passing

observation that “the [maritime] lien arises when the debt arises.”

Equilease Corp. v. M/V Sampson, 793 F.2d 598, 602 (5th Cir. 1986)

(en banc).7 This court took as its authority The Poznan, 9 F.2d

838, 842 (2nd Cir. 1925), rev'd on other grounds, 47 S.Ct. 482

(1927). Equilease, 793 F.2d at 602. The true meaning of the

quoted language can be more clearly seen in The Poznan, which

states the rule as follows:

“[The maritime lien] is given by the law, and it gives
the creditor a special property in the ship, which
subsists from the moment the debt arises, and it gives
him a right to have the ship sold that his debt may be
paid out of the proceeds of the sale.” The Poznan, 9
F.3d at 842.

This was the original statement of the rule, before the language

was modernized. See The Young Mechanic, 30 F. Cas. 873, 875

(Curtis, Circuit Justice 1855) (“the law creating an incumbrance

thereon, and vesting in the creditor, . . . which subsists from the

moment when the debt or claim arises”); The J.E. Rumbell, 13 S.Ct.

498, 499 (1893) (quoting same); 2 BENEDICT ON ADMIRALTY § 22 (7th ed.

rev. 1988). The word “subsists” becomes essential here, because it

does not mean “springs into being” but rather “exists” in the sense

of “persists” or “continues.” See Webster's Third New

7
This language was quoted in Governor and Co. of Bank of
Scotland v. Sabay, 211 F.3d 261, 268 (5th Cir. 2000). The district
court also makes a similar statement in European-American Banking
Corp. v. M/S Rosaria, 486 F. Supp. 245, 255 (S.D. Miss. 1978).

16
International Dictionary Unabridged 2279 (1961). The maritime lien

attaches when the cargo is loaded or the chartered vessel

delivered, and continues when the debt perfects (or “vests”) the

power to later sue the vessel in rem. The Second Circuit in The

Poznan must have agreed, or they would not have observed that “the

lien . . . attaches from the moment the goods are laden on board.”

The Poznan, 9 F.2d at 842, quoting The Esrom, 272 F.2d 266, 270

(2nd Cir. 1921). We are therefore not troubled by this statement

in our recent case law. When the debt arises, what “arises” is not

the lien itself but rather the right to sue in rem.

We have also previously stated that “because the damages

sought to be recovered by [the charterer] . . . flow directly from

the breach of the charter, it has a maritime lien.” International

Marine Towing v. Southern Leasing Partners, 722 F.2d 126, 131 (5th

Cir. 1983), quoting Rainbow Line, Inc. v. M/V Tequila, 480 F.2d

1024, 1027 (2nd Cir. 1973) (alterations in original). Given the

Supreme Court precedent on point, we take this statement to mean

only that once the lawsuit is filed, maritime lien status only

extends to those damages which flow directly from the breach of

charter. Insofar as the statement might imply the timing of

maritime liens, it would be dictum anyway.

E. The Ship Mortgage Act

Finally, the parties rely upon the Ship Mortgage Act, now

codified at 46 U.S.C. § 31301 et seq. While the statute has

17
nothing explicit to say on the issue before us, Bank One argues

that the lender protections of the statute would be undermined if

maritime liens for breach of charter attached at the beginning of

performance of the contract, in that the lender would be

subordinated for a longer period of time. While that is likely the

case, we do not agree that this “problem” compels us to accept Bank

One's proposed rule. We also note that a lender may have a

difficult time knowing whether an ongoing charter has been

breached, while a rule establishing an inchoate maritime lien at

the beginning of the charter results in greater certainty. Such

certainty assists the parties with the reporting requirements of 46

U.S.C. § 31323 and with their own investigations.8 The parties

therefore advance two different readings of law, each of which may

demonstrate a Congressional purpose. Because of this equivocation,

we cannot find guidance in either. Instead, we choose to follow

the precedent begun by the Supreme Court in the 1860s and carried

forward into this century by the circuit and district courts.

Conclusion

Courts in the nineteenth and early twentieth centuries held

that a maritime lien attaches when a charter ceases to be executory

and remains inchoate until perfected by the breach of that charter;

8
We note that the lender has no responsibility to search for
obligations beyond those reported by the shipowner under the duty
established in 46 U.S.C. § 31323. Pascagoula Dock Station v.
Merchants and Marine Bank, 271 F.2d 53 (5th Cir. 1959).

18
we see nothing in the ambiguities of recent case law that

undermines that authority. This principle can be refined by

observing that unlike a contract of affreightment, a time charter

ceases to be executory when the owner places the vessel at the

charterer's disposal. A maritime lien for breach of a charter thus

attaches when the owner places the vessel at the charterer's

disposal and remains inchoate until perfected by a breach or

discharged by the undisturbed end of the charter.

In the present case, the vessel had been placed at

BargeCarib's disposal, and was employed under the charter, months

before Bank One recorded its preferred ship mortgage, and therefore

an inchoate maritime lien attached to the Mr. Dean. When Global

and Offshore perfected BargeCarib's maritime lien by breaching the

charter, the lien became enforceable. Nevertheless, the maritime

lien “arose” before the mortgage was filed. For this reason, the

district court improperly granted Bank One's motion for summary

judgment and improperly denied BargeCarib's motion for summary

judgment. Accordingly, we VACATE the decisions of the district

court and REMAND for further proceedings not inconsistent with this

opinion.

VACATED AND REMANDED

19