Beverly Hills National Bank & Trust Co. v. Compania De Navegacione Almirante S.A., Panama

Invoking admiralty jurisdiction, Com-pañía De Navegacione Almirante, owner of the S.S. Searaven, initiated this proceeding to recover charter hire due Compañía under a charter party agreement with Kenray, Inc., an exporter of scrap metals, by enforcing a lien, or imposing a constructive trust, upon funds held by Beverly Hills National Bank & Trust Company. The disti'ict court awarded Compañía $96,750 from the fund, the amount of the charter hire, plus interest. Compañía De Navegacione Almirante S.A. Panama v. Certain Proceeds of Cargo, 288 F.Supp. 77 (C. D.Cal.1967). We reverse.

Kenray was heavily indebted to the bank, which held a security interest in certain scrap metal owned by Kenray. Kenray and the bank agreed that the scrap would be sold in an overseas market to enable Kenray to reduce its debt to the bank. They agreed that Kenray would charter a vessel to carry the metal abroad and would purchase additional scrap with funds to be supplied by the bank in order to utilize the full capacity of the chartered ship. The bank financed the purchase of the additional scrap and provided a letter of credit to cover stevedoi’ing service, but asked Kenray to procure a vessel without a…