
From the U.S. Code Online via GPO Access
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[Laws in effect as of January 23, 2000]
[Document not affected by Public Laws enacted between
  January 23, 2000 and December 4, 2001]
[CITE: 46USC31325]

 
                           TITLE 46--SHIPPING
 
                    Subtitle III--Maritime Liability
 
         CHAPTER 313--COMMERCIAL INSTRUMENTS AND MARITIME LIENS
 
                  SUBCHAPTER II--COMMERCIAL INSTRUMENTS
 
Sec. 31325. Preferred mortgage liens and enforcement

    (a) A preferred mortgage is a lien on the mortgaged vessel in the 
amount of the outstanding mortgage indebtedness secured by the vessel.
    (b) On default of any term of the preferred mortgage, the mortgagee 
may--
        (1) enforce the preferred mortgage lien in a civil action in rem 
    for a documented vessel, a vessel to be documented under chapter 121 
    of this title, a vessel titled in a State, or a foreign vessel;
        (2) enforce a claim for the outstanding indebtedness secured by 
    the mortgaged vessel in--
            (A) 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; and
            (B) 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

        (3) enforce the preferred mortgage lien or a claim for the 
    outstanding indebtedness secured by the mortgaged vessel, or both, 
    by exercising any other remedy (including an extrajudicial remedy) 
    against a documented vessel, a vessel for which an application for 
    documentation is filed under chapter 121 of this title, a vessel 
    titled in a State, a foreign vessel, or a mortgagor, maker, comaker, 
    or guarantor for the amount of the outstanding indebtedness or any 
    deficiency in full payment of that indebtedness, if--
            (A) the remedy is allowed under applicable law; and
            (B) the exercise of the remedy will not result in a 
        violation of section 9 or 37 of the Shipping Act, 1916 (46 App. 
        U.S.C. 808, 835).

    (c) The district courts have original jurisdiction of a civil action 
brought under subsection (b)(1) or (2) of this section. However, for a 
documented vessel, a vessel to be documented under chapter 121 of this 
title, a vessel titled in a State, or a foreign vessel, this 
jurisdiction is exclusive of the courts of the States for a civil action 
brought under subsection (b)(1) of this section.
    (d)(1) Actual notice of a civil action brought under subsection 
(b)(1) of this section, or to enforce a maritime lien, must be given in 
the manner directed by the court to--
        (A) the master or individual in charge of the vessel;
        (B) any person that recorded under section 31343(a) or (d) of 
    this title a notice of a claim of an undischarged lien on the 
    vessel; and
        (C) a mortgagee of a mortgage filed or recorded under section 
    31321 of this title that is an undischarged mortgage on the vessel.

    (2) Notice under paragraph (1) of this subsection is not required 
if, after search satisfactory to the court, the person entitled to the 
notice has not been found in the United States.
    (3) Failure to give notice required by this subsection does not 
affect the jurisdiction of the court in which the civil action is 
brought. However, unless notice is not required under paragraph (2) of 
this subsection, the party required to give notice is liable to the 
person not notified for damages in the amount of that person's interest 
in the vessel terminated by the action brought under subsection (b)(1) 
of this section. A civil action may 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 the plaintiff prevails, the court may 
award costs and attorney fees to the plaintiff.
    (e) In a civil action brought under subsection (b)(1) of this 
section--
        (1) the court may appoint a receiver and authorize the receiver 
    to operate the mortgaged vessel and shall retain in rem jurisdiction 
    over the vessel even if the receiver operates the vessel outside the 
    district in which the court is located; and
        (2) when directed by the court, a United States marshal may take 
    possession of a mortgaged vessel even if the vessel is in the 
    possession or under the control of a person claiming a possessory 
    common law lien.

    (f)(1) Before title to the documented vessel or vessel for which an 
application for documentation is filed under chapter 121 is transferred 
by an extrajudicial remedy, the person exercising the remedy shall give 
notice of the proposed transfer to the Secretary, to the mortgagee of 
any mortgage on the vessel filed in substantial compliance with section 
31321 of this title before notice of the proposed transfer is given to 
the Secretary, and to any person that recorded a notice of a claim of an 
undischarged lien on the vessel under section 31343(a) or (d) of this 
title before notice of the proposed transfer is given to the Secretary.
    (2) Failure to give notice as required by this subsection shall not 
affect the transfer of title to a vessel. However, the rights of any 
holder of a maritime lien or a preferred mortgage on the vessel shall 
not be affected by a transfer of title by an extrajudicial remedy 
exercised under this section, regardless of whether notice is required 
by this subsection or given.
    (3) The Secretary shall prescribe regulations establishing the time 
and manner for providing notice under this subsection.

(Pub. L. 100-710, title I, Sec. 102(c), Nov. 23, 1988, 102 Stat. 4745; 
Pub. L. 101-225, title III, Sec. 303(4), Dec. 12, 1989, 103 Stat. 1923; 
Pub. L. 104-324, title XI, Sec. 1124(a), (b), Oct. 19, 1996, 110 Stat. 
3980; Pub. L. 105-383, title IV, Sec. 401(c)(5)-(7), Nov. 13, 1998, 112 
Stat. 3425.)

                      Historical and Revision Notes
------------------------------------------------------------------------
          Revised section                Source 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 enforcement 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 statement

    Subsection (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.


                               Amendments

    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, Sec. 1124(a)(1), substituted 
``mortgagee may'' for ``mortgage may'' in introductory provisions.
    Subsec. (b)(1). Pub. L. 104-324, Sec. 1124(a)(2)(A), substituted 
``preferred'' for ``perferred''.
    Subsec. (b)(3). Pub. L. 104-324, Sec. 1124(a)(2)(B), (3), added par. 
(3).
    Subsec. (f). Pub. L. 104-324, Sec. 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.''


                     Construction of 1996 Amendments

    Section 1124(c) of Pub. L. 104-324 provided that: ``The amendments 
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.''

                  Section Referred to in Other Sections

    This section is referred to in sections 31301, 31326 of this title; 
title 11 section 362.
