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right to a particular mark grows out of its | Etna Ins. Co. v. Commonwealth, 106 Ky. use, not its mere adoption; its function is 864, 881, 51 S. W. 624, 45 L. R. A. 355; Nider simply to designate the goods as the product v. Commonwealth, 140 Ky. 684, 687, 131 S. of a particular trader and to protect his W. 1024, Ann. Cas. 1913E, 1246. We are regood will against the sale of another's prod- ferred to no decision by the courts of that uct as his; and it is not the subject of prop- state, and have found none that lays down erty except in connection with an existing any peculiar doctrine upon the subject of business. Hanover Milling Co. v. Metcalf, trade-mark law. There is some meager leg240 U. S. 403, 412-414, 36 Sup. Ct. 357, 60 islation, but none that affects this case (KenL. Ed. 713. tucky Stats. § 2572c, subsec. 7; sections 4749-4755). There was nothing to prevent the state of Kentucky (saving, of course, what Congress might do within the range of its authority) from conferring affirmative rights upon Rectanus, exclusive in that commonwealth as against others whose use of the trade-mark there began at a later time than his; but whether he had such rights, or respondent now has them, is a question not presented by the record; there being no prayer for an injunction to restrain petitioner from using the mark in the competitive field.

The owner of a trade-mark may not, like the proprietor of a patented invention, make a negative and merely prohibitive use of it as a monopoly. See United States v. Bell Telephone Co., 167 U. S. 224, 250, 17 Sup. Ct. 809, 42 L. Ed. 144; Bement v. National Harrow Co., 186 U. S. 70, 90, 22 Sup. Ct. 747, 46 L. Ed. 1058; Paper Bag Patent Case, 210 U. S. 405, 424, 28 Sup. Ct. 748, 52 L. Ed. 1122.

In truth, a trade-mark confers no monopoly whatever in a proper sense, but is merely a convenient means for facilitating the protection of one's good-will in trade by placing a distinguishing mark or symbol- a commercial signature upon the merchandise or the package in which it is sold.

[3] It results that the adoption of a trademark does not, at least in the absence of some valid legislation enacted for the purpose, project the right of protection in advance of the extension of the trade, or operate as a claim of territorial rights over areas into which it thereafter may be deemed desirable to extend the trade. And the expression, sometimes met with, that a trademark right is not limited in its enjoyment by territorial bounds, is true only in the sense that wherever the trade goes, attended by the use of the mark, the right of the trader to be protected against the sale by others of their wares in the place of his wares will be sustained.

[4] Property in trade-marks and the right to their exclusive use rest upon the laws of the several states, and depend upon them for security and protection; the power of Congress to legislate on the subject being only such as arises from the authority to regulate commerce with foreign nations and among the several states and with the Indian tribes. Trade-Mark Cases, 100 U. S. 82, 93, 25 L. Ed. 550.

[6] It is not contended, nor is there ground for the contention, that registration of the Regis trade-mark under either the Massachusetts statute or the act of Congress, or both, had the effect of enlarging the rights of Mrs. Regis or of petitioner beyond what they would be under common-law principles. Manifestly the Massachusetts statute (Acts 1895, p. 519, c. 462) could have no extraterritorial effect. And the Act of Congress of March 3, 1881 (21 Stat. 502, c. 138), applied only to commerce with foreign nations or the Indian tribes, with either of which this case has nothing to do. See Ryder v. Holt, 128 U. S. 525, 9 Sup. Ct. 145, 32 L. Ed. 529. Nor is there any provision making registration equivalent to notice of rights claimed thereunder. The Act of February 20, 1905 (33 Stat. 724, c. 592 [Comp. St. 1916, § 9485 et seq.]), which took the place of the 1881 act, while extending protection to trade-marks used in interstate commerce, does not en-8 *large the effect of previous registrations, unless renewed under the provisions of its twelfth section, which has not been done in this case; hence we need not consider whether anything in this act would aid the petitioner's case.

[7] Undoubtedly, the general rule is that, as between conflicting claimants to the right [5] Conceding everything that is claimed to use the same mark, priority of appropriain behalf of the petitioner, the entire busi- tion determines the question. See Canal Co. ness conducted by Mrs. Regis and her firm v. Clark, 13 Wall. 311, 323, 20 L. Ed. 581; prior to April, 1911, when petitioner acquir- McLean v. Fleming, 96 U. S. 245, 251, 24 L. ed it, was confined to the New England Ed. 828; Manufacturing Co. v. Trainer, 101 States, with inconsiderable sales in New U. S. 51, 53, 25 L. Ed. 993; Columbia Mill York, New Jersey, Canada, and Nova Scotia. Co. v. Alcorn, 150 U. S. 460, 463, 14 Sup. Ct. There was nothing in all of this to give her 151, 37 L. Ed. 1144. But the reason is that any rights in Kentucky, where the principles purchasers have come to understand the of the common law obtain. Hunt v. War- mark as indicating the origin of the wares, nicke's Heirs, 3 Ky. (Hardin) 61, 62; Lath- so that its use by a second producer amounts rop v. Commercial Bank, 38 Ky. (8 Dana) to an attempt to sell his goods as those of 114, 121, 33 Am. Dec. 481; Ray v. Sweeney, his competitor. The reason for the rule does 77 Ky. (14 Bush) 1, 9, 29 Am. Rep. 388; not extend to a case where the same trade

mark happens to be employed simultaneously, will resulting from his long-continued use of by two manufacturers in different markets the mark in Louisville and vicinity, and his separate and remote from each other, so that substantial expenditures in building up his the mark means one thing in one market, an trade, but of enabling petitioner to reap subentirely different thing in another. It would stantial benefit from the publicity that Recbe a perversion of the rule of priority to give tanus *has thus given to the mark in that loit such an application in our broadly extended | cality, and of confusing if not misleading country that an innocent party who had in the public as to the origin of goods thereaftgood faith employed a trade-mark in one state, er sold in Louisville under the Rex mark, for, and by the use of it had built up a trade in that market, until petitioner entered it, there, being the first appropriator in that ju- "Rex" meant the Rectanus product, not that risdiction, might afterwards be prevented | of Regis. from using it, with consequent injury to his trade and good will, at the instance of one who theretofore had employed the same mark, but only in other and remote jurisdictions, upon the ground that its first employment happened to antedate that of the firstmentioned trader.

[8] In support of its contention petitioner cites the same cases that were relied upon by the District Court, namely, McLean v. Fleming, 96 U. S. 245, 24 L. Ed. 828; Menendez v. Holt, 128 U. S. 514, 9 Sup. Ct. 143, 32 L. Ed. 526; Saxlehner v. Eisner & Mendelson Co., 179 U. S. 19, 39, 21 Sup. Ct. 7, 45 L. Ed. 60; and Saxlehner v. Siegel-Cooper Co., 179 U. S. 42, 21 Sup. Ct. 16, 45 L. Ed. 77. They exemplify the rule that, where the proof of infringement is clear, a court of equity will not ordinarily refuse an injunction for the future protection of the proprietor of a

In several cases federal courts have held that a prior use of a trade-mark in a foreign country did not entitle its owner to claim exclusive trade-mark rights in the United States as against one who in good faith had adopted a like trade-mark here prior to the entry of the foreigner into this market. Rich-trade-mark right, even where his acquiter v. Anchor Remedy Co. (C. C.) 52 Fed. *455, 458; Richter v. Reynolds, 59 Fed. 577, 579, 8 C. C. A. 220; Walter Baker & Co. v. Delapenha (C. C.) 160 Fed. 746, 748; Gorham Mfg. Co. v. Weintraub (D. C.) 196 Fed. 957,

961.

The same point was involved in Hanover Milling Co. v. Metcalf, 240 U. S. 403, 415, 36 Sup. Ct. 357, 361 (60 L. Ed. 713), where we said:

"In the ordinary case of parties competing under the same mark in the same market, it is correct to say that prior appropriation settles the question. But where two parties independently are employing the same mark upon goods of the same class, but in separate markets wholly remote the one from the other, the question of prior appropriation is legally insignificant, unless at least it appear that the second adopter has selected the mark with some design inimical to the interests of the first user, such as to take the benefit of the reputation of his goods, to forestall the extension of his trade, or the like."

In this case, as already remarked, there is no suggestion of a sinister purpose on the part of Rectanus or the Rectanus Company; hence the passage quoted correctly defines the status of the parties prior to the time when they came into competition in the Kentucky market. And it results, as a necessary inference from what we have said, that petitioner, being the newcomer in that market, must enter it subject to whatever rights had previously been acquired there in good faith by the Rectanus Company and its predecessor. To hold otherwise-to require Rectanus to retire from the field upon the entry of Mrs. Regis' successor-would be to establish the right of the latter as a right in gross, and to extend it to territory wholly remote from the furthest reach of the trade to which it was annexed, with the effect not merely of depriving Rectanus of the benefit of the good

escence and laches have been such as to disentitle him to an accounting for the past profits of the infringer. The rule finds appropriate application in cases of conscious infringement or fraudulent imitation, as is apparent from a reading of the opinions in those cases; but it has no pertinency to such a state of facts as we are now dealing with. In McLean v. Fleming, the only question raised in this court that affected the right of the appellee to an injunction was whether the Circuit Court had erred in finding that defendant's labels "Dr. McLean's Universal Pills," eta, infringed complainant's label "Dr. C. McLane's Celebrated Liver Pills," and this turned upon whether the similarity was sufficient to deceive ordinarily careful purchasers. The evidence showed without dispute that from the beginning of his use of the offending labels the defendant (McLean) had known of the McLane liver pills, and raised at least a serious question whether he did not adopt his labels for the purpose of palming off his goods as those of complainant. What he controverted was that his labels amounted to an infringement of complainant's, and when this was decided against him the propriety of the injunction was clear. In Menendez v. *Holt, likewise, defendants (Menendez) admitted the existence of the brand in question-the words "La Favorita" as applied to flour-and admitted using it, but denied that Holt & Co. were the owners, alleging that one Rider was a former member of that firm and entitled to use the brand, and that under him defendants had sold their flour branded "La Favorita, S. O. Rider," There was, however, no question but that defendants adopted the brand knowing it to be already in use by others. In the Saxlehner Cases, the facts were peculiar, and need not be rehearsed; injunctions were allowed to

restrain the sale of certain waters in bottles; vancement as a loan from the insurer to the and under labels in which those of complainant were intentionally imitated. In all four cases the distinguishing features of the present case were absent.

Here the essential facts are so closely parallel to those that furnished the basis of decision in the Allen & Wheeler Case, reported

sub nom. Hanover Milling Co. v. Metcalf, 240 U. S. 403, 419-420, 36 Sup. Ct. 357, 60 L. Ed. 713, as to render further discussion unnecessary. Mrs. Regis and her firm, having during a long period of years confined their use of the "Rex" mark to a limited territory wholly remote from that in controversy, must be held to have taken the risk that some innocent party might in the meantime hit upon the same mark, apply it to goods of similar character, and expend money and effort in building up a trade under it; and since it appears that Rectanus in good faith, and without notice of any prior use by others, selected and used the "Rex" mark, and by the expenditure of money and effort succeeded in building up a local but valuable trade under it in Louisville and vicinity before petitioner entered that field, so that "Rex" had come to be recognized there as the "trade signature" of Rectanus and of respondent as his successor, petitioner is estopped to set up their continued use of the mark in that territory as an infringement of the Regis trademark. Whatever confusion may have arisen from conflicting use of the mark is attributable to petitioner's entry into the field with notice of the situation; and petitioner cannot complain of this. As already stated, respondent is not complaining of it. Decree affirmed.

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Concurrent decisions of District Court and Circuit Court of Appeals on an issue of fact, as the unseaworthiness of a steamer, will be accepted by the Supreme Court, unless shown to be clearly erroneous.

2. CARRIERS 125-STIPULATION AS TO INSURANCE-EFFECT OF PAYMENT BY INSURER. A bill of lading providing that, in case of loss for which the carrier shall be liable, the! carrier to that extent shall have benefit of any insurance is valid; and if the shipper effects insurance, and is paid full amount of loss, neither he nor insurer can recover against carrier. 3. INSURANCE 606(3)—MARINE INSURANCE -PAYMENT OF LOSS-REIMBURSEMENT FROM CARRIER.

Where a bill of lading provided that the carrier should have the benefit of insurance, and the policies procured by the shipper contained the warranty by assured, free from liability for merchandise in possession of any carrier, who may be liable

shipper, after loss, of amount covering damage, shipper agreeing to sue carrier, preserved to the insurer the right of reimbursement from carrier. 4. PAYMENT 1(1)-INTENTION.

Whether transfer of money or other thing shall operate as a payment ordinarily is a matter determined by the intention of the parties.

5. SHIPPING 137-LIABILITIES OF OWNERS -PERSONAL CONTRACT-LIMITATIONS ACTS.

Where any liability of the owners of a vessel under charter rests on their personal contract, St. 1916, § 8021], and Act June 26, 1884, § 18 the limitations acts (Rev. St. § 4283 [Comp. [Comp. St. 1916, § 8028]) do not apply, although the ship's unseaworthiness was without owner's privity or knowledge.

6. SHIPPING 42-TIME CHARTER - WarRANTY OF SEAWORTHINESS.

Where time charter of steamer stated that, being on her delivery tight, staunch, and strong, owners would maintain her in a thoroughly efficient state, in hull and machinery, during servexhausted on delivery to charterers, and mainice, original warranty of seaworthiness was not tenance clause imported warranty of seaworthiness at commencement of each voyage. 7. SHIPPING 41-TIME CHARTER-DEMISE. A time charter, like a charter for a single 8. SHIPPING 132(1)—LIABILITIES OF OWNvoyage, is not a demise of the ship.

ERS-ACTIONS-MODIFICATION OF DECREE.

Where right to recover against all owners of vessel on shipper's libel for full amount, in verted, decree of Circuit Court of Appeals that case any of them was liable, was not contropayment should be made by a certain estate, a part owner only, should be modified to render all the owners liable.

On Writ of Certiorari to the United States Circuit Court of Appeals for the Second Cir

cuit.

Libel by the W. J. McCahan Sugar Refining Company against the Insular Line and the Julia Luckenbach, owned by Edgar F. Luckenbach and others, who were impleaded. From decree for libelant, limiting the liability of the owners, both as against the Sugar Refining Company and as against the Insular Line, etc., the owners and the Insular Line appealed to the Circuit Court of Appeals, which modified the decree (235 Fed. 388, 148 C. C. A. 650), and the owners petition for writ of certiorari. Affirmed.

Messrs. Peter S. Carter, Charles C. Burlingham, and Roscoe H. Hupper, all of New York City, for petitioners.

Mr. J. Parker Kirlin, of New York City, for respondent Insular Line.

Mr. Lawrence Kneeland, of New York City, for respondent W. J. McCahan Sugar Retining Co.

*Mr. Justice BRANDEIS delivered the opinion of the Court.

The W. J. McCahan Sugar Refining Company shipped a cargo of sugar from Porto Rico to Philadelphia by the Julia Luckenbach which was under charter to the Insular Line, and the cargo suffered severe damage. In the District Court of the United States for carrier may have benefit of insurance," the ad- the Southern District of New York, a libel For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes

dise shipped under

and for merchan

stipulation that

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seeking damages was filed in the name of the dismissed, because the shipper had already been compensated for the loss by insurance which it effected; and that the carrier is entitled to the full benefit of this insurance.

shipper in personam against the Insular Line
It alleged
and in rem against the steamer.
that the damages resulted from unseaworthi-
ness of the hull, existing at the commence-
ment of the voyage. The petitioners, own-
ers of the ship, were impleaded. The bills
of lading sued on contained a clause relieving
the carrier from liability for damages aris-
ing from-

or by un-
"any latent defect in hull.
seaworthiness of the ship, even existing at the
time of shipment or sailing on the voyage, but
not discoverable by the exercise of due diligence
by the ship owner or manager.

The shipper had effected full insurance. The bills of lading sued on contain the following clause:

"In case of any loss, detriment or damage done to or sustained by said goods or any part

thereof for which the carrier shall be liable to the shipper, owner or consignee, the carrier shall to the extent of such liability have the full benefit of any insurance that may have been effected upon or on account of said goods."

Such a clause is valid, because the carrier might himself have insured against the loss, even though occasioned by his own negli

ing containing this provision effects insurance and is paid the full amount of his loss, neither he nor the insurer can recover against the carrier. Phoenix Insurance Co. v. Erie & Western Transportation Co., 117 U. S. 312, 6 Sup. Ct. 750, 29 L. Ed. 873; Wager v. Providence Insurance Co., 150 U. S. 99, 14 Sup. Ct. 55, 37 L. Ed. 1013. In the case at bar, the shipper has received from the insurance companies an amount equal to the loss; but it is contended that the money was received as a loan or conditional payment merely, and that, therefore, the carrier is not relieved from liability. The essential facts are these: The policies under which the shipper was insured contained the following, or a similar, provision:

The libel alleged that the unseaworthiness would have been discovered, had due diligence; and if a shipper under a bill of ladgence been exercised. The District Court so found and held that the libelant was entitled to recover. The damages were agreed to be $87,526.65, with interest, and the value of the ship and pending freight was found or agreed to be $66,600. The owners duly moved for limitation of liability. The District Court found that the damages sustained were occasioned without the privity or knowledge of the owners; held that they were entitled to limit their liability, both as against the shipper and as against the charterer, who claimed indemnity; and ordered that the owners should pay the shipper's claim to the extent of the value of the *ship and pending freight, and that the balance should be paid by the Insular Line. 235 Fed. 388, 148 C. C. A. 650. Both the owners and the Insular Line appealed to the Circuit Court of Appeals. That court modified the decree, so as to award that payment of the full amount be made to the shipper primarily by the steamer and the owners, and that the charterer should be called upon to make payment only of the deficiency, if any. 235 Fed. 3S8, 148 C. C. A. 650. The case comes here on writ of certiorari granted on the petition of the owners. 242 U. S. 638, 37 Sup. Ct. 111, 61 L. Ed. 540.

It is urged, on three grounds, that the decision of the Circuit Court of Appeals should be reversed and that the District Court should be directed, either to dismiss the libel or to limit the owners' liability to the value of the ship and pending freight.

[1] First. The owners contend that both lower courts erred in holding that the steamer was unseaworthy at the commencement of her voyage and that due diligence to make her seaworthy had not been exercised. The issue involved is one of fact; and no reason appears why the general rule should not apply, that concurrent decisions of the two lower courts on an issue of fact will be accepted by this court unless shown to be clearly erroneous. The Wildcroft, 201 U. S. 378, 387, 26 Sup. Ct. 467, 50 L. Ed. 794; The Carib Prince, 170 U. S. 655, 658, 18 Sup. Ct. 753, 42 L. Ed. 1181.

[2-4] Second. The owners (and also the charterer) contend that the libel should be

"Warranted by the assured free from any liability for merchandise in the possession of any carrier or other bailee, who may be liable for any loss or damage thereto; and for merchandise shipped under a bill of lading containing a stipulation that the carrier may have the benefit of any insurance thereon."

The

The situation was, therefore, this: carrier (including in this term the charterer, the ship, and the owners) would, in no event be liable to the shipper for the damages occasioned by unseaworthiness, unless guilty of negligence. The insurer would, in no event, be liable to the shipper, if the carrier was liable. In case the insurer should refuse to pay until the shipper had established that recovery against the carrier was not possible-prompt settlement for loss (which is essential to actual indemnity and demanded in the interest of commerce) would be defeated. If, on the other hand, the insurers should settle the loss, before the question of the carrier's liability for loss had♬ been determined, the insurer would lose the benefit of all claims against the carrier, to which it would be subrogated in the absence of a provision to the contrary in the bill of lading (The Potomac, 105 U. S. 630, 634, 26 L Ed. 1194), and the carrier would be freed from liability to any one. In order that the shipper should not be deprived of the use of was entitled to receive money which it promptly after the loss, either from the carrier or from the insurers, and that the insurer should not lose the right of subroga

tion, agreements in the following (or similar) | whether he does or does not insure. The form were entered into between the insurers general law does not give the carrier, upon and the shipper:

"New York, Aug. 15, 1912. "Received from the Federal Insurance Company. twenty-three hundred four and 16/10 dollars, as a loan and repayable only to the extent of any net recovery we may make from any carrier, bailee or others on account of loss to our property (described below) due to damage on S/S Julia Luckenbach from Porto Rico/ Philadelphia, on or about 19-, or from any insurance effected by any carrier, bailee or others on said property, and as security for such repayment we hereby pledge to the said Federal Insurance Company, the said recovery and deliver to them duly endorsed the bills of lading for said property and we agree to enter and prosecute suit against said railroad, carrier, bailee, or others on said claim with all due diligence at the expense and under the exclusive direction and control of the said Federal Insurance Company.

"The W. J. McCahan Sugar Refining Co., "$2.304.16 R. S. Pomeroy, Treasurer. "Description of property: Sugar."

carrier-had been established. The shipper could not have been obliged to surrender to the insurers the conduct of the litigation against the carrier, until the insurers had paid. In consideration of securing then the right to conduct the litigation, the insurers made the advances. It is creditable to the ingenuity of business men that an arrange ment should have been devised which is consonant both with the needs of commerce and the demands of justice.

payment of the shipper's claim, a right by subrogation against the insurers. The insurer has, on the other hand, by the general law, a right of subrogation against the carrier. Such claims, like tangible *salvage, are elements which enter into the calculations of actuaries in fixing insurance rates; and, at least in the mutual companies, the insured gets some benefit from amounts realized therefrom. It is essential to the performance of the insurer's service, that the insured be promptly put in funds, so that his business may be continued without embarrassment. Unless this is provided for, credits which are commonly issued against drafts or notes with bills of lading attached, would not be granted. Whether the transfer of money or other thing shall operate as a payment, is ordinarily a matter which is determined by the intention of the parties to the Upon delivery of this and similar agree transaction. Compare The Kimball, 3 Wall. ments, the shipper received from the insur- 37, 44, 18 L. Ed. 50. The insurer could not ance companies, promptly after the adjust- have been obliged to pay until the condition ment of the loss, amounts aggregating the of their liability—i. e., nonliability of the loss; and this libel was filed in the name | of the shipper, but for the sole benefit of the insurers, through their proctors and counsel, and wholly at their expense. If, and to the extent (less expenses) that, recovery is had, the insurers will receive payment or be reimbursed for their so-called loans to the shipper. If nothing is recovered from the carrier, the shipper will retain the money received by it without being under obligation to make any repayment of the amounts advanced. In other words, if there is no re- [5] Third. The owners contend that, uncovery here, the amounts advanced will op- der section 4283 of the Revised Statutes erate as absolute payment under the policies. (Comp. St. 1916, § 8021) and section 18 of the Agreements of this nature have been a Act of June 26, 1884, c. 121 (23 Stat. 57 common practice. in business for many years. [Comp. St. 1916, § 8028]), their liability Pennsylvania Railroad Co. v. Burr, 130 Fed. should have been limited to the value of 847, 65 C. C. A. 331; Bradley v. Lehigh Val- the ship and her pending freight; because ley Railroad Co., 153 Fed. 350, 82 C. C. A. the District Court found that her unsea426. It is clear that if valid and enforced worthiness was without their privity or according to their terms, they accomplish knowledge; and this finding was not disturbthe desired purpose. They supply the ship-ed by the Circuit Court of Appeals. But the per promptly with money to the full extent of the indemnity or compensation to which he is entitled on account of the loss; and they preserve to the insurers the claim against the carrier to which by the general law of insurance, independently of special agreement, they would become subrogated upon payment by them of the loss. The carrier insists that the transaction, while in terms a loan, is in substance a payment of insurance; that to treat it as if it were a loan, is to follow the letter of the agreement and to disregard the actual facts; and that to give it effect as a loan is to sanction fiction and subterfuge. But no good reason appears either for questioning its legality or for denying its effect. The shipper is under no obligation to the carrier to take out insurance on the cargo; and the freight rate is the same

liability of the owners sought to be enforced here is one resting upon their personal contract; and to such liabilities the limitations acts do not apply. Pendleton v. Benner Line, 246 U. S. 353, 38 Sup. Ct. 330, 62 L. Ed. 770. [6, 7] It is also urged that, as between the owners and the Insular Line, the original warranty of seaworthiness was exhausted upon delivery of the ship to the charterers and that the maintenance clause relied upon does not import a warranty of seaworthiness at the commencement of each voyage under a time charter, but merely an obligation to pay the expense of keeping her hull and machinery in repair throughout the service. Neither the language of the clause nor the character of time charters afford support for this contention. The charter of the vessel states clearly that, the vessel "being, on her deliv

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