Federal statute provides that a mortgage or related instrument that includes any part of a documented vessel or a vessel for which an application for documentation is filed whenever executed must be filed with the Secretary of Transportation to be valid, to the extent the vessel is involved, against any person except[i]:
- the grantor, mortgagor, or assignor;
- the heir or devisee of the grantor, mortgagor, or assignor; and
- a person having actual notice of the sale, conveyance, mortgage, assignment, or related instrument.
Before a vessel is registered, a mortgage of it will be valid if recorded according to the laws of the state. After it is registered or enrolled, the mortgage will not be valid unless recorded as required by the laws of the U.S.[ii].
Where the owners of a motor boat executed a chattel mortgage while the boat was being constructed and that mortgage was recorded in the county recorder’s office but not in the office of the U.S. collector of customs, that mortgage was valid and enforceable until the boat was enrolled and duly licensed by the U.S. Department of Commerce[iii].
However, if after the boat was licensed as a vessel of the U.S. and another chattel mortgage was executed to a person who had no actual notice of the prior mortgage, no mortgage which includes a vessel of the U.S. is valid against any person other than the mortgagor and any person having actual notice thereof, until such mortgage is recorded in the office of the collector of customs at the home port of such vessel.
A federal statute provides that district courts have original jurisdiction of a civil action brought to enforce[iv]:
- a civil action in personam in admiralty against the mortgagor, maker, comaker, or guarantor for the amount of the outstanding indebtedness or any deficiency in full payment of that indebtedness;
- a civil action against the mortgagor, maker, comaker, or guarantor for the amount of the outstanding indebtedness or any deficiency in full payment of that indebtedness; and
- a preferred mortgage lien or a claim for the outstanding indebtedness secured by the mortgaged vessel by exercising any other remedy (including an extrajudicial remedy) against a documented vessel.
A person providing necessaries to a vessel on the order of the owner or a person authorized by the owner has a maritime lien on the vessel[v]. The following persons are presumed to have authority to procure necessaries for a vessel[vi]:
- the owner;
- the master;
- a person entrusted with the management of the vessel at the port of supply; or
- an officer or agent appointed by:
- the owner;
- a charterer;
- an owner pro hac vice; or
- an agreed buyer in possession of the vessel.
However, a person tortiously or unlawfully in possession or charge of a vessel has no authority to procure necessaries for the vessel. In McKenzie v. The Jim-Jet II, 133 F. Supp. 804, 806 (D.N.C. 1955), the court held that any person furnishing repairs, supplies, or other necessaries to any vessel upon the order of the owner has a maritime lien on the vessel and it is not necessary to allege or prove that credit was given to the vessel.
Necessaries are furnished only if and when they are either actually delivered on board of or at the side of a vessel or delivered to its owner or his authorized agent for the purpose of delivery to such vessel[vii].
While a maritime lien may be waived by words or conduct indicating such an intention, the mere acceptance, by a person who has furnished necessaries to a vessel of the promissory note of the owner of such vessel does not in itself constitute or result in such a waiver, unless shown to have been accepted with that intention[viii].
[i] 46 USCS § 31321
[ii] Atlas Imperial Diesel Engine Co. v. Criscuolo, 32 Cal. App. 2d 244 (Cal. App. 1939)
[iv] 46 USCS § 31325
[v] 46 USCS § 31342
[vi] 46 USCS § 31341
[vii] The Denelfred, 59 F.2d 213 (D. Mich. 1932)