46 U.S.C. § 31326 — Court sales to enforce preferred mort-

Page 285 TITLE 46—SHIPPING § 31327 3529(b)(2) of Pub. L. 110–181, set out as a note under sec- tion 3205 of this title. EFFECTIVE DATE OF 2002 AMENDMENT Pub. L. 107–295, title II, § 205(e), Nov. 25, 2002, 116 Stat. 2096, provided that: ‘‘This section [see Tables for classi- fication] shall take effect January 1, 2003.’’ EFFECTIVE DATE 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. CONSTRUCTION OF 1996 AMENDMENT Pub. L. 104–324, title XI, § 1124(c), Oct. 19, 1996, 110 Stat. 3981, 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 enact- ment of this section [Oct. 19, 1996] to enforce claims for outstanding indebtedness secured by mortgaged ves- sels.’’ § 31326. Court sales to enforce preferred mort- gage 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 com- mon 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 sub- section (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 chapter 537 of this title, 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 (2) for a foreign vessel whose mortgage has not been guaranteed under chapter 537 of this title, the preferred mortgage lien is subordi- nate to a maritime lien for necessaries pro- vided in the United States. (Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102 Stat. 4746; Pub. L. 103–160, div. A, title XIII, § 1360, Nov. 30, 1993, 107 Stat. 1816; Pub. L. 109–304, § 15(31), Oct. 6, 2006, 120 Stat. 1704.) 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 jurisdic- tion to courts in the territories, as defined in section 31301. Section 31326(b)(1) provides that each of these termi- nated claims attaches, in the same amount and pri- ority, 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. Ex- cept 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 sup- plied for the vessel in the United States. ‘‘Provided’’ has been substituted for ‘‘provided or supplied’’ for con- sistency in usage. Except for broadening its coverage under subsection (a), this paragraph makes no sub- stantive change to law. Editorial Notes AMENDMENTS 2006—Subsec. (b)(1). Pub. L. 109–304, § 15(31)(A), sub- stituted ‘‘chapter 537 of this title,’’ for ‘‘title XI of the Merchant Marine Act, 1936 (46 App. U.S.C. 1101 et seq.)’’. Subsec. (b)(2). Pub. L. 109–304, § 15(31)(B), substituted ‘‘chapter 537 of this title’’ for ‘‘title XI of that Act’’. 1993—Subsec. (b)(1). Pub. L. 103–160, § 1260(1), inserted ‘‘, including a preferred mortgage lien on a foreign ves- sel 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, § 1360(2), inserted ‘‘whose mortgage has not been guaranteed under title XI of that Act’’ after ‘‘foreign vessel’’. Statutory Notes and Related Subsidiaries EFFECTIVE DATE 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. § 31327. Forfeiture of mortgagee interest The interest of a mortgagee in a documented vessel or a vessel covered by a preferred mort- gage under section 31322(d) of this title may be terminated by a forfeiture of the vessel for a violation of a law of the United States only if the mortgagee authorized, consented, or con- spired to do the act, failure, or omission that is the basis of the violation. (Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102 Stat. 4746.) HISTORICAL AND REVISION NOTES Revised section Source section (U.S. Code) 31327 ............................................ 46:961(b) Section 31327 provides for forfeiture of the mortga- gee’s interest if the mortgagee authorized, consented, or conspired to do the act, failure, or omission that is the basis of the violation that caused forfeiture of the vessel. This section makes no substantive change to law. Statutory Notes and Related Subsidiaries EFFECTIVE DATE 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.