Stevens Shipping v. Japan Rainbow II

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DMC/SandT/03/31
Stevens Shipping & Terminal Co. v. Japan Rainbow II MV
Fifth Circuit Court of Appeals: Circuit Judges Duhe, Garza, and DeMoss
Docket No. 02-30627, 2003 U.S. App.: June 13, 2003.
vessel on Charter: Charterparty contained a no-lien Clause: Services rendered to vessel for account of charterer: charterer defaults: service provider claims maritime lien against vessel: notice of no-lien clause faxed by owners to service provider in advance of render of services: Denial of receipt: Telefax sheet confirming delivery: whether good evidence of receipt by service provider of actual knowledge of no lien clause
Summary
Owner’s agent claimed that it telefaxed notice of a prohibition of lien clause to the Stevens stevedoring agency. Stevens claimed it did not have actual knowledge of this notice. Stevens argued that the district court erred in finding that the telefax confirmation sheet created a rebuttable presumption that Stevens had actual knowledge of the no-lien clause, thus shifting the burden to Stevens to prove it did not have actual knowledge. The appellate court affirmed the district court because neither party disputed the fact that telefaxes were a reliable and customary method of communicating in the shipping business. It therefore follows that the law could not allow Stevens to deny knowledge of a no lien clause when the telefax was delivered in a manner that was both customary and reliable in the shipping business.

DMC Category Rating: Confirmed

Case Note contributed by Raymond A. Psonak, attorney with the law firm Healy & Baillie LLP. Healy & Baillie are the International Contributors to the website for the USA

Facts
Stevens ship-agency, Stevens, filed a complaint seeking the arrest of the M/V Japan Rainbow II ("the vessel"), on the grounds of non-payment for services rendered in Savannah and New Orleans. Stevens claimed it had served as stevedore and husbanding agent for Charterer. Owner was aware Charterer was having financial problems. As a result, Owner had notices of the prohibition of lien clause in the charter telefaxed to each agent listed in Charterer’s voyage instructions, including the telefax number listed for Stevens’ offices. The telefax was sent to Stevens on January 23, 2001 and a telefax sheet confirming delivery to Stevens’ telefax number was dated the same day.

On February 20, 2001, when the vessel arrived in Savannah, the master delivered a notice of prohibition of lien to Stevens, after Stevens had already started work on the vessel. Stevens asserted that it did not know about the prior telefax until after it arrested the vessel in New Orleans, and that it would not have undertaken the services it did had it been informed previously of the prohibition of lien clause.

Based on the general rule that a party with actual knowledge of a prohibition of lien clause before supplying goods or services to a vessel cannot later claim a maritime lien, the district court concluded that the telefax confirmation sheet created a rebuttable presumption that Stevens had received actual notice. The district court relied on Beck v. Somerset Techs., Inc., 882 F.2d 993, 996 (5th Cir. 1989), for the proposition that a letter placed in a U.S. Postal Service mail receptacle creates a presumption that it was actually received by the person to whom it was addressed. Based on the record, the district court continued, Stevens had failed to offer convincing evidence that the telefax had not been received and, therefore, Stevens had the requisite "actual knowledge" of the prohibition of lien clause. The court stated that a supplier cannot deny knowledge of a no-lien clause when notice was delivered in a manner that is "customary and reliable in the shipping business," and therefore the court concluded that Stevens did not have a maritime lien on the vessel.

The issue on appeal was, therefore, whether the existence of a telefax confirmation sheet created the rebuttable presumption that party receiving it had actual knowledge of a no-liens clause.

Judgment
The Court of Appeals essentially adopted the district court’s reasoning. The Court stated that "Neither party disputes that facsimiles are a reliable and customary method of communicating in the shipping business.... [T]he law cannot simply allow a supplier to deny knowledge of a no lien clause when it was delivered in a manner that was both customary and reliable in the shipping business." As a result, the Court affirmed the holding of the district court that Stevens did not have a maritime lien on the vessel.

 

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