
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: 46USC31326]

 
                           TITLE 46--SHIPPING
 
                    Subtitle III--Maritime Liability
 
         CHAPTER 313--COMMERCIAL INSTRUMENTS AND MARITIME LIENS
 
                  SUBCHAPTER II--COMMERCIAL INSTRUMENTS
 
Sec. 31326. Court sales to enforce preferred mortgage liens and 
        maritime liens and priority of claims
        
    (a) When a vessel is sold by order of a district court in a civil 
action in rem brought to enforce a preferred mortgage lien or a maritime 
lien, any claim in the vessel existing on the date of sale is 
terminated, including a possessory common law lien of which a person is 
deprived under section 31325(e)(2) of this title, and the vessel is sold 
free of all those claims.
    (b) Each of the claims terminated under subsection (a) of this 
section attaches, in the same amount and in accordance with their 
priorities to the proceeds of the sale, except that--
        (1) the preferred mortgage lien, including a preferred mortgage 
    lien on a foreign vessel whose mortgage has been guaranteed under 
    title XI of the Merchant Marine Act, 1936 (46 App. U.S.C. 1101 et 
    seq.) \1\ has priority over all claims against the vessel (except 
    for expenses and fees allowed by the court, costs imposed by the 
    court, and preferred maritime liens); and
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    \1\ So in original. Probably should be followed by a comma.
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        (2) for a foreign vessel whose mortgage has not been guaranteed 
    under title XI of that Act, the preferred mortgage lien is 
    subordinate to a maritime lien for necessaries provided in the 
    United States.

(Pub. L. 100-710, title I, Sec. 102(c), Nov. 23, 1988, 102 Stat. 4746; 
Pub. L. 103-160, div. A, title XIII, Sec. 1360, Nov. 30, 1993, 107 Stat. 
1816.)

                      Historical and Revision Notes
------------------------------------------------------------------------
          Revised section                Source section (U.S. Code)
------------------------------------------------------------------------
31326(a)..........................  46:953(b), 961(c)
31326(b)(1).......................  46:953(b)
31326(b)(2).......................  46:951 (2d par. proviso)
------------------------------------------------------------------------

    Section 31326(a) provides for a court-ordered sale to enforce a 
preferred mortgage lien or a maritime lien and the priority of claims. 
When a mortgaged vessel is sold by court order in a civil action in rem, 
any prior claim in the vessel is terminated--including any possessory 
common law lien. This subsection makes a substantive change to law by 
making the process the same for maritime liens as was provided for 
preferred mortgage liens. This eliminates the requirement for making a 
new mortgagee for a court sale to enforce a maritime lien. This section 
also broadens the jurisdiction to courts in the territories, as defined 
in section 31301.
    Section 31326(b)(1) provides that each of these terminated claims 
attaches, in the same amount and priority, to the proceeds of sale--
except that the preferred mortgage lien always has priority over these 
other claims. However, the preferred mortgage lien is still subordinated 
to expenses and fees allowed by the court, costs imposed by the court, 
and any preferred maritime liens. This may include statutory fees such 
as the fee of the United States Marshal under 28 U.S.C. 1921. Except for 
broadening its coverage under subsection (a), this makes no substantive 
change to law.
    Section 31326(b)(2) provides in the case of a foreign vessel, the 
preferred mortgage lien is also subordinated to a maritime lien for 
necessaries performed or supplied for the vessel in the United States. 
``Provided'' has been substituted for ``provided or supplied'' for 
consistency in usage. Except for broadening its coverage under 
subsection (a), this paragraph makes no substantive change to law.

                       References in Text

    The Merchant Marine Act, 1936, referred to in subsec. (b), is act 
June 29, 1936, ch. 858, 49 Stat. 1985, as amended. Title XI of the Act 
is classified generally to subchapter XI (Sec. 1271 et seq.) of chapter 
27 of the Appendix to this title. For complete classification of this 
Act to the Code, see section 1245 of the Appendix to this title and 
Tables.


                               Amendments

    1993--Subsec. (b)(1). Pub. L. 103-160, Sec. 1260(1), inserted ``, 
including a preferred mortgage lien on a foreign vessel whose mortgage 
has been guaranteed under title XI of the Merchant Marine Act, 1936 (46 
App. U.S.C. 1101 et seq.)'' after ``preferred mortgage lien''.
    Subsec. (b)(2). Pub. L. 103-160, Sec. 1360(2), inserted ``whose 
mortgage has not been guaranteed under title XI of that Act'' after 
``foreign vessel''.

                  Section Referred to in Other Sections

    This section is referred to in section 31301 of this title.
