Maruwa Shokai (Guam) Inc v Pyung Hwa 31 [1993] FMSC 1; 6 FSM Intrm. 001 (Pon. 1993) (4 January 1993)

6 FSM Intrm. 1 (Pon. 1993)

FEDERATED STATES OF MICRONESIA
SUPREME COURT TRIAL DIVISION

CIVIL ACTION NO. 1992-090

MARUWA SHOKAI (GUAM), INC.,
Plaintiff,

vs.

PYUNG HWA 31, PYUNG HWA 33,
PYUNG HWA 36, PYUNG HWA 38,
PYUNG HWA 61, PYUNG HWA 63,
SHARON 31, and SHARON 33, IN REM
and SHARON FISHING CO.
and PYUNG HWA WONYANG CO., LTD.,
IN PERSONAM and QUASI IN REM,
Defendants.

OPINION

Richard H. Benson
Associate Justice

Hearing: December 28, 1992
Decided: January 4, 1993

APPEARANCES:

For the Plaintiff: Daniel R. Del Priore, Esq.
Del Priore & Gumataotao, P.C.
414 West Soledad Avenue
Agaña, Guam 96910

For the Defendant: R. Barrie Michelsen, Esq.
Law Offices of R. Barrie Michelsen
P.O. Box 1450
Kolonia, Pohnpei FM 96941

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HEADNOTES

Admiralty
Supplies and service that are necessaries when provided to a vessel give rise to maritime liens. Maruwa Shokai (Guam), Inc. v. Pyung Hwa 31, 6 FSM Intrm. 1, 3 (Pon. 1993).

Admiralty
A general agent is not barred from obtaining a maritime lien. Obtaining the lien depends on whether the supplies and services furnished the vessel are necessaries, not on the contractual relation. Maruwa Shokai (Guam), Inc. v. Pyung Hwa 31, 6 FSM Intrm. 1, 3 (Pon. 1993).

Admiralty
Necessaries are defined as those things reasonably needed in the business of the vessel. Maruwa Shokai (Guam), Inc. v. Pyung Hwa 31, 6 FSM Intrm. 1, 3 (Pon. 1993).

Admiralty
To be entitled to a maritime lien a provider of necessaries must rely on the credit of the vessel. General maritime law presumes that a provider of necessaries relies on the credit of the vessel. Maruwa Shokai (Guam), Inc. v. Pyung Hwa 31, 6 FSM Intrm. 1, 3 (Pon. 1993).

Civil Procedure - Summary Judgment
Without supporting affidavits the non-moving party cannot rely on inferences culled from the record to raise inferences as to the existence of genuine issues of material fact unless the non-movant has shown affidavits are unavailable. Maruwa Shokai (Guam), Inc. v. Pyung Hwa 31, 6 FSM Intrm. 1, 4 (Pon. 1993).

Admiralty
A contract provision for a line of credit that was never filled in as to the amount and never funded cannot overcome the presumption that a supplier of necessaries relied on the credit of the vessel. Maruwa Shokai (Guam), Inc. v. Pyung Hwa 31, 6 FSM Intrm. 1, 4 (Pon. 1993).

Admiralty; Jurisdiction
A maritime contract cannot be converted into a non-maritime one by stipulation of the parties so as to divest the court of its admiralty jurisdiction. Maruwa Shokai (Guam), Inc. v. Pyung Hwa 31, 6 FSM Intrm. 1, 4 (Pon. 1993).

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COURT'S OPINION

RICHARD H. BENSON, Associate Justice:

This case came before me for oral argument on pending motions on December 28, 1992. The disposition of the motions is found in the order filed January 4, 1993. This memorandum is to set out the reasoning as to the plaintiff's motion for a partial summary judgment and the defendants' motion for an order dismissing the action.

The complaint, filed August 7, 1992 invokes this court's admiralty and maritime jurisdiction. Three causes of action are alleged. The motion for partial summary judgment addresses only the first, that the plaintiff is entitled to a maritime lien on the defendant vessels because of the amount owing to the plaintiff for the supplies and services provided pursuant to general maritime law.

A warrant to arrest the defendant vessels was issued, and the following vessels were arrested in Pohnpei: Pyung Hwa 31, Pyung Hwa 33, Pyung Hwa 36, Pyung Hwa 38, Pyung Hwa 61 and Pyung Hwa 63. Thereafter a letter of credit was deposited in court by the defendants and the vessels were released.

The defendant's motion for an order dismissing the action for lack of jurisdiction was filed September 21, 1992. The plaintiff's motion for partial summary judgment was filed November 13, 1992. The defendants ask that I consider their motion as a part of their opposition to the plaintiff's motion. I have done so because the basic question in both motions is whether, under the circumstances, the supplies and services provided by the plaintiff were necessaries giving rise to maritime liens.

The documents before me - pleadings, and affidavits identifying and incorporating exhibits - show that there is no genuine issue as to any material fact, and the motion for partial summary judgment presents matters of law to be decided.

On June 3, 1991 the plaintiff and defendant Pyung Hwa Co., Ltd. entered into an agency contract in which the plaintiff was to furnish specified supplies and services to the defendant vessels for which the defendant agreed to pay. From June of 1991 until June of 1992 the plaintiff provided the services and supplies. There is an amount unpaid which the plaintiff seeks to recover in this action.

The plaintiff provided invoices to the respective masters of the defendant vessels and to defendant Pyung Hwa Co., Ltd. for the supplies and services provided to each ship each port visit. Typical invoices included port charges, water, fuel oil, seamen's wages, and provisions for the vessel and its crew.

It is not disputed that a general agent is not barred from obtaining a maritime lien. It depends upon the supplies and services furnished, not upon the contractual relation.

The defendants contend that one item of supplies and services could not give rise to a maritime lien. The contention is as to the item referred to as "transhipment costs" in argument, and appearing on the invoices as "cargo fare." The amounts are substantial, although less than half of the cost of each vessels' bills. They arose in this way: When a vessel entered port with fish, the plaintiff arranged for unloading, grading and packing of the fish. A marketing agent together with the plaintiff arranged for air cargo space to ship the fish to market (usually a city in Japan). The plaintiff furnished the air cargo costs.

I conclude that the transhipment costs are necessaries giving rise to a maritime lien. Reasons: 1) the costs are similar to stevedoring expenses, which are considered as necessaries; and 2) the scope of necessaries has become broader over the years. They are defined as those things reasonably needed in the business of the vessel. I find that prompt off-loading of the fish and their rapid placement in the market is fundamental to the business of a fishing vessel.

I conclude that the services and supplies furnished by the plaintiff to the defendant vessels were necessaries giving rise to a maritime lien on the vessel so supplied.

General maritime law presumes that a provider of necessaries relies on the credit of the vessel. The plaintiff has also submitted an affidavit attesting that it relied on the credit of the vessel. Nevertheless the defendants contend that the plaintiff did not rely upon the credit of the vessels to secure payment to the plaintiff, and thus the plaintiff is not entitled to a lien. The defendants particularly rely on the agency contract which did contain a provision (although not complete in the contract nor ever put in operation) for the defendant Pyung Hwa Wonyang Co., Ltd. to provide a line of credit from which the plaintiff could draw. The defendants also asserts that the plaintiff computed charges cumulatively and payments were applied to the total, and not an accounting always for each vessels.

I am not persuaded by the inferences that the defendants invite me to draw. A stronger inference is that the line of credit never having been established, the plaintiff relied on the vessels for security. There also exists the uncontradicted statement of the agent for the plaintiff that plaintiff relied on the vessels to secure payment to it.

The defendants have furnished no affidavits in opposition to the plaintiff's summary judgment motion. Nevertheless the defendants have asked me to consider certain inferences asserting that they would give rise to genuine issues of material fact as to whether the plaintiff relied on the credit of the vessels. Without supporting affidavits the non-moving party cannot rely on inferences culled from the record to raise inferences as to the existence of genuine issues of material fact, FSM Civ. R. 56(e), unless the non-movant has shown affidavits were unavailable, FSM Civ. R. 56(f).

1. The defendants point out that the agency contract provided for the defendants to provide a line of credit to pay for the supplies and services. The defendants' belief that this gives rise to a inference that the plaintiff did not look to the vessels is belied by the record which shows that the line of credit provision in the contract was never filled in as to amount, nor was the line of credit ever established.

2. The defendants point out that Minturn v. Maynard, 58 U.S.(17 How.) 477[1854] USSC 6; , 15 L. Ed. 235 (1855) holding maritime jurisdiction did not extend to necessaries furnished pursuant to an agency contract, was in effect on the date the contract in this case was signed, June 3, 1991. Thus, contend the defendants, the intent of the parties at signing was that the vessels could not be subjected to a maritime lien.

Minturn, long criticized by commentators and narrowed by decision, was overruled in Exxon Corp. v. Central Gulf Lines, Inc., [1991] USSC 92; 111 S. Ct. 2071, 114 L. Ed. 2d 649 (1991) on June 3, 1991. Even if, at the time of the signing of the agency agreement, one or more of the parties believed that an agency agreement would not give rise to maritime liens, they could not have assumed so at the times the actual goods and services were provided. I make this response on the basis of the contentions made before me and the authorities presented to me.

3. The defendants contend that the contract provision designating Guam law as the controlling raises an inference that the parties did not intend the agency agreement to be maritime in nature. This contention is fruitless. Firstly, the law applied on Guam includes the admiralty law of the United States and the general maritime law of nations. Secondly, the parties cannot, by stipulation, convert a maritime contract into a non-maritime one so as to divest this court of jurisdiction.

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