Except for the Master of the vessel, who is not a party to these proceedings, the libelants, appellants, are all of the officers and crew of the "SS WAHCONDAH" at the time of its arrival at the Port of New Orleans with a cargo of two thousand long tons of bulk sugar on or about June 18, 1962. The libelants' wages had last been paid on approximately May 1, 1962. After their arrival in New Orleans, and about two weeks after the sugar had been discharged from the vessel, the libelants demanded of the Master that they be paid the wages due them as of that time,1 but the Master had had no money with which to pay them.

The vessel was of Canadian registry, and two of the libelants were Canadian citizens. The others came from the West Indies, from Latin America, and from as far away as Bombay, India. The ship remained at anchor in the Port of New Orleans until after September 19, 1962. No wages were paid the libelants, and they were without funds to repatriate themselves. Because of their status as unauthorized aliens, they could not attempt to find employment ashore. After remaining aboard the vessel for approximately three months, the supplies and provisions had been consumed and they sought the advice of counsel. On September 19, 1962, a libel was filed seeking their back wages, future wages that might be required of them while the ship was in the custody of the court, repatriation expenses, and penalty wages provided by 46 U.S.C.A. § 596.2

On the day after this libel was filed, the district court was apprised of the fact that libelants were still aboard the vessel, and that they were in desperate circumstances, having neither food nor water, nor the means of obtaining these necessities of life. The district court entered an order recognizing the claim of a local ship chandler for provisions furnished subsequent to the seizure of the vessel as a priority claim, on the basis of which libelants were able to obtain provisions on credit. On four later occasions, the lower court signed similar orders authorizing the purchase of additional provisions.

The vessel was owned by Ahern Shipping Company, Ltd., a Canadian corporation. On December 13, 1961, at Miami, Florida, Ahern had entered into a "Special Agency Agreement" with Miami Marine Agency, Inc. The agreement recited that Ahern "herewith and herein advises and notifies the Agent that it is in a precarious financial position and cannot obligate itself to advance any monies for expenses for the operation of the Vessel nor to repay any such advances or costs for the operation of the Vessel, but that all such advances, payments, etc. shall be made against the credit of the Vessel * * *." It authorized Miami "to collect freights in behalf of Owners and apply such funds to disbursements of the Vessel, including the purchase of supplies for the Vessel, and to advance funds in excess of those collected from freights as necessary to keep the Vessel in operation * * *." Miami intervened in the proceedings, asserting a lien against the vessel for advances between the dates of December 13, 1961 and May 31, 1962 in the amount of $15,530.03.

Under orders of the district court, the ship was finally sold to Miami for $20,100.00 and the sale confirmed by the court on November 21, 1962. On the same day the district court ordered that the sum of $10,187.94 from the amount on deposit as the proceeds from the sale of the vessel be distributed among the libelants, and in its order specifically recognized and reserved the rights of the libelants "to claim further distribution for wages through confirmation of the sale of the said vessel, repatriation expenses, statutory penalties, court costs, and legal interest out of the remainder of the proceeds of the sale of the `SS WAHCONDAH'."

Also on that same day, the district court entered a default judgment in favor of the libelants against the vessel for the amount of the wages of the libelants through September 19, 1962, "specifically reserving to libellants and intervening libellants their rights to claim statutory penalties, wages due subsequent to the seizure of the vessel, and repatriation expenses upon proper motions filed."

On January 17, 1963, the libelants, along with J. B. Delaney Company and Lamendola Ship Chandler, moved the district court to distribute $8,769.61 of the remaining proceeds of sale as follows:

  Officers and Crew:

    a/c Wages while the vessel was in custodia
        legis ...................................  $3,482.94
    a/c Repatriation Expenses ...................     920.85
                                                    ________
                                                              $4,403.79
  J. B. Delaney Co.:

    a/c Fuel and Provisions .....................  $2,449.02
    a/c Attorney's Fees .........................     500.00
                                                    ________
                                                              $2,949.02
  Court Costs due Officers and Crew ........................      59.69
  Lamendola Ship Chandler ..................................     910.11
  Matthew Basic for Advance to the Ship ....................     447.00
                                                               ________
                         TOTAL .............................  $8,769.61

Miami opposed this motion in two respects: (1) It denied that the officers and crew were entitled to wages while the vessel was in custodia legis, and (2) it questioned the right of the Court to allow any attorney's fee to the J. B. Delaney Company. Miami also requested additional time properly to prepare to oppose the motion, and the court postponed the hearing on the motion until February 6, 1963. On that day the court entered a default decree against the vessel, then represented by her proceeds of sale, in the amount claimed for advances by Miami, $15,530.03.

In a supplemental memorandum in support of their motion to distribute, the libelants undertook to reserve their claim for penalties in the event the court should rule that they are not entitled to the payment of wages for the period while the ship was in the custody of the court.3

On April 30, 1963, the district court ruled with Miami in the two respects in which it had opposed the motion for distribution, and concluded that "the balance of the proceeds of the sale must be paid to intervenor, Miami Marine Service." On May 6, 1963, the libelants moved for a rehearing, asserting as one of the grounds that,

"The Court erred in failing to make any disposition whatsoever in the said opinion and order to the claims of the officers and crew for penalty wages that are due to them under 46 USCA 596, which penalties were originally claimed by the officers and crew in the libels and intervening libels filed herein, and their claims preserved in all of the pleadings and legal memorandum filed in this proceeding, in the event that this Court should find that they were not entitled to collect wages for their services subsequent to the seizure of the said vessel."

In a memorandum in support of their motion for rehearing, the libelants sought to assert their lien for wages and penalties on the earned freight.4

On appeal the libelants urge a single error, viz: "The district court erred in refusing to consider appellant's (sic) claim for statutory penalties due them under the provisions of 46 USCA 596." The libelants also ask for permission to take testimony to establish that an amount in excess of the wages due them was paid on the order of Miami for freight due the ship for the cargo of raw sugar delivered to New Orleans, and, hence, that there was no sufficient cause for failing to pay their wages.

It is well settled that the earned freight is subject to the seaman's maritime lien for wages. Clifford v. Merritt-Chapman & Scott Corporation, 5 Cir. 1932, 57 F.2d 1021, 1024 (per Sibley, Circuit Judge); 1 Benedict on Admiralty (6th ed.) sec. 80, p. 249.

In Collie v. Fergusson, 1930, 281 U.S. 52, 54, 50 S. Ct. 189, 196, 74 L. Ed. 696, Mr. Justice Stone collected the cases holding that, "The claim for double wages which, when valid, is by the terms of the statute `recoverable as wages,' has been held to be embraced in the seaman's lien for wages, with priority over other liens, and governed by the procedure applicable to suits for the recovery of seaman's wages."

"But the increased payment for waiting time is not denominated wages by the statute, and the direction that it shall be recovered as wages does not purport to affect the condition prerequisite to its accrual that refusal or neglect to pay shall be without sufficient cause. The phrase `without sufficient cause' must be taken to embrace something more than valid defenses to the claim for wages. Otherwise, it would have added nothing to the statute. In determining what other causes are sufficient, the phrase is to be interpreted in the light of the evident purpose of the section to secure prompt payment of seamen's wages (H.R.Rep. 1657, Committee on the Merchant Marine and Fisheries, 55th Cong., 2nd Sess.), and thus to protect them from the harsh consequences of arbitrary and unscrupulous action of their employers, to which, as a class, they are peculiarly exposed.

"The words `refuses or neglects to make payment * * * without sufficient cause' connote, either conduct which is in some sense arbitrary or willful, or at least a failure not attributable to impossibility of payment. We think the use of this language indicates a purpose to protect seamen from delayed payments of wages by the imposition of a liability which is not exclusively compensatory, but designed to prevent, by its coercive effect, arbitrary refusals to pay wages, and to induce prompt payment when payment is possible. Hence we conclude that the liability is not imposed regardless of the fault of the master or owner, or his retention of any interest in the vessel from which payment could be made. It can afford no such protection and exert no effective coercive force where delay in payment, as here, is due to the insolvency of the owner and the arrest of the vessel, subject to accrued claims beyond its value. Together these obstacles to payment of wages must be taken to be a sufficient cause to relieve from the statutory liability." 281 U.S. at pp. 55-56, 50 S.Ct. at pp. 191, 74 L. Ed. 696.

See also McCrea v. United States, 1935, 294 U.S. 23, 29, 30, 55 S. Ct. 443, 79 L. Ed. 933.

Miami urges that the libelants waived any claims which they may have had under the provisions of 46 U.S.C.A. § 596. The test of waiver is contained in this court's definition in Watkins v. Fly, 5 Cir. 1943, 136 F.2d 578, 580: "A waiver may be defined as the intentional relinquishment of a known right with both knowledge of its existence and an intention to relinquish it."

The penalties due under 46 U.S. C.A. § 596 were consistently claimed by the libelants, and reserved to them by the orders of the district court until the last motion to distribute, and then the libelants made known that they desired to reserve their claim for penalties in the event the district court ruled that they are not entitled to wages while the ship was in custodia legis. See note 3, supra. There was never any such intention to relinquish their right to penalties as would amount to a waiver by libelants of any claims which they may have under 46 U.S.C.A. § 596.

The district court erred in refusing to rule upon the libelants' claim for statutory penalties which may have been due them under the provisions of 46 U.S.C.A. § 596. The judgment is therefore reversed and the cause remanded for the taking of additional relevant testimony, and for further proceedings consistent with this opinion.

Reversed and remanded.