§31325 Preferred Mortgage Liens and Enforcement

Revised sectionSource section (U.S. Code) 31325(a)46:951 (1st sentence) 31325(b)(1)46:951 (2d sentence) 31325(b)(2)46:954(a) 31325(b)(3)New 31325(c)46:951 (3d sentence) 31325(d)46:951 (4th to 6th sentences) 31325(e)46:952 (1st, 2d sentences) section 31325 provides for the

of a preferred mortgage lien. section 31325(a) makes a “preferred mortgage” a lien on the vessel in the amount of the mortgage indebtedness secured by the vessel outstanding at foreclosure. This subsection makes no substantive change to law. section 31325(b) provides that, on default of any term, the mortgagee may enforce the preferred mortgage lien in a civil action in rem, or in personam in admiralty against the mortgagor, comaker, or guarantor for the amount of the outstanding indebtedness secured by the vessel or any deficiency in paying off that indebtedness. This subsection makes a substantive change to law by allowing a nonadmiralty civil action to be brought against the mortgagor, comaker, or guarantor for the amount of the outstanding indebtedness secured by the vessel or any deficiency in paying off that indebtedness. This change allows an action to be brought even when the vessel is outside U.S. jurisdiction. This section will also allow the action to be brought against the comaker or guarantor of the mortgage. section 31325(c) provides for original and exclusive jurisdiction by a district court, to the exclusion of the courts of a State for civil actions brought in rem. It also provides for original jurisdiction for civil actions brought in personam in admiralty and civil actions brought under subsection (b)(3). This subsection makes a substantive change to law by broadening the jurisdiction to courts in the territories, as defined in section 31301, as well as giving original jurisdiction to the district courts in nonadmiralty civil actions brought to enforce the preferred mortgage lien. Subsection (d) provides that actual notice of a civil action in rem to enforce a maritime lien must be given in a manner directed by the court to the master, individual in charge of the vessel, to any person that recorded a notice of a claim of an undischarged lien, and, for the first time, to the mortgagee of a mortgage filed with the Secretary. This notice is not required if, after a search is made that is satisfactory to the court, the person entitled to notice is not found in the United States. Failure to give notice does not affect the court’s jurisdiction. However, the mortgagor is still liable to the person not notified for damages in the amount of that person’s interest in the vessel that was terminated by the civil action in rem, and a civil action may still be brought to recover the amount of the terminated interest. The district courts have original jurisdiction of the action, regardless of the amount in controversy or the citizenship of the parties. If plaintiff prevails, the court shall award costs and attorneys fees to the plaintiff. Subsection (e) provides that, in a civil action in rem, the court may appoint a receiver and authorize operation of the vessel. When directed by the court, a United States marshal may take possession—even if the vessel is in the possession of or under the control of a person claiming a possessory common law lien. This subsection makes a substantive change to law by allowing the court to retain in rem jurisdiction over the vessel even if the receiver operates the vessel outside the district in which the court is located. house floor statementSubsection (c) of this section clarifies that the district courts have original jurisdiction for a civil action under subsection (b) of this section, and exclusive jurisdiction in the case of vessels documented or to be documented under chapter 121 of title 46.

2008—Subsec. (b)(3)(B). Pub. L. 110–181 amended Pub. L. 109–304, § 15(30). See 2006 Amendment note below. 2006—Subsec. (b)(3)(B). Pub. L. 109–304, § 15(30), as amended by Pub. L. 110–181, substituted “section 56101 or 56102 of this title” for “section 9 or 37 of the Shipping Act, 1916 (46 App. U.S.C. 808, 835)”. 2002—Subsec. (d)(1)(B). Pub. L. 107–295, § 205(b)(1), substituted “an unexpired notice of a claim” for “a notice of a claim”. Subsec. (f)(1). Pub. L. 107–295, § 205(b)(2), substituted “an unexpired notice of a claim” for “a notice of a claim”. 1998—Subsecs. (b)(1), (3), (c). Pub. L. 105–383 inserted “a vessel titled in a State,” after “chapter 121 of this title,”. 1996—Subsec. (b). Pub. L. 104–324, § 1124(a)(1), substituted “mortgagee may” for “mortgage may” in introductory provisions. Subsec. (b)(1). Pub. L. 104–324, § 1124(a)(2)(A), substituted “preferred” for “perferred”. Subsec. (b)(3). Pub. L. 104–324, § 1124(a)(2)(B), (3), added par. (3). Subsec. (f). Pub. L. 104–324, § 1124(b), added subsec. (f). 1989—Subsecs. (b), (c). Pub. L. 101–225 amended subsecs. (b) and (c) generally. Prior to amendment, subsecs. (b) and (c) read as follows: “(b) On default of any term of the preferred mortgage, the mortgagee may enforce the preferred mortgage lien in— “(1) a civil action in rem for a documented vessel or a vessel to be documented under chapter 121 of this title; “(2) a civil action in personam in admiralty against the mortgagor, comaker, or guarantor for the amount of the outstanding indebtedness secured by the mortgaged vessel or any deficiency in full payment of that indebtedness; and “(3) a civil action against the mortgagor, comaker, or guarantor for the amount of the outstanding indebtedness secured by the mortgaged vessel or any deficiency in full payment of that indebtedness. “(c) The district courts have original jurisdiction of a civil action brought under subsection (b) of this section. However, for documented vessels or vessels to be documented under chapter 121 of this title, this jurisdiction is exclusive of the courts of the States for a civil action under subsection (b)(1) of this section.”

of 2008 AmendmentAmendment by Pub. L. 110–181 effective as if included in the enactment of Pub. L. 109–304, see section 3529(b)(2) of Pub. L. 110–181, set out as a note under section 3205 of this title.

of 2002 Amendment Pub. L. 107–295, title II, § 205(e), Nov. 25, 2002, 116 Stat. 2096, provided that: “This section [see Tables for classification] shall take effect January 1, 2003.”

Section effective Jan. 1, 1989, with certain exceptions and qualifications, see section 107 of Pub. L. 100–710, set out as a note under section 31301 of this title.

of 1996 Amendment Pub. L. 104–324, title XI, § 1124(c), Oct. 19, 1996, 110 Stat. 3981, provided that: “The

made by subsections (a) and (b) [amending this section] may not be construed to imply that remedies other than judicial remedies were not available before the date of enactment of this section [Oct. 19, 1996] to enforce claims for outstanding indebtedness secured by mortgaged vessels.”