Source: https://law.justia.com/cases/federal/appellate-courts/F2/772/565/249443/
Timestamp: 2020-07-15 03:57:12
Document Index: 449965516

Matched Legal Cases: ['§ 911', '§ 953', '§ 1292', '§ 922', '§ 961', '§ 961', '§ 961', '§ 961']

Seattle-first National Bank, Trustee, a National Bankingassociation, Plaintiff-appellee, v. Bluewater Partnership, et al., Defendants,andpacific Fishermen, Inc., a Washington Corporation,defendant-appellant.seattle-first National Bank, Trustee, a National Bankingassociation, Plaintiff-appellee, v. Bluewater Partnership, et al., Defendants,andballard Oil Company, Inc.; the Boatyard, Inc.; and Lundeelectric Company, Inc., Defendants-appellants, 772 F.2d 565 (9th Cir. 1985) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Ninth Circuit › 1985 › Seattle-first National Bank, Trustee, a National Bankingassociation, Plaintiff-appellee, v. Bluewate...
Seattle-first National Bank, Trustee, a National Bankingassociation, Plaintiff-appellee, v. Bluewater Partnership, et al., Defendants,andpacific Fishermen, Inc., a Washington Corporation,defendant-appellant.seattle-first National Bank, Trustee, a National Bankingassociation, Plaintiff-appellee, v. Bluewater Partnership, et al., Defendants,andballard Oil Company, Inc.; the Boatyard, Inc.; and Lundeelectric Company, Inc., Defendants-appellants, 772 F.2d 565 (9th Cir. 1985)
US Court of Appeals for the Ninth Circuit - 772 F.2d 565 (9th Cir. 1985) Argued and Submitted Sept. 3, 1985. Decided Sept. 24, 1985
This consolidated admiralty appeal requires us to determine the qualifications for trustee status under the Ship Mortgage Act ("Act"), 46 U.S.C. §§ 911-984. Initially, we must decide whether we have jurisdiction over the appeal brought by Pacific Fishermen, Inc.
The court reasoned that Sea-First met "the five [statutory] requirements imposed by Congress upon any entity seeking to act as a trustee." Memorandum Decision filed May 17, 1984, at 3. Judge Voorhees found that those were the only requirements of a ship mortgage trustee. He ruled that Sea-First held valid preferred ship mortgages which had priority over defendants' maritime liens under 46 U.S.C. § 953(b).
The court's findings of fact are reviewed under the clearly erroneous standard. Anderson v. City of Bessemer, --- U.S. ----, 105 S. Ct. 1504, 1511, 84 L. Ed. 2d 518 (1985); Fed. R. Civ. P. 52(a). The issue of Sea-First's trustee duties under the Ship Mortgage Act involves the application of legal principles "in the mix of fact and law" and is reviewed de novo. See United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.) (en banc), cert. denied, --- U.S. ----, 105 S. Ct. 101, 83 L. Ed. 2d 46 (1984).
We agree with Sea-First's assertion that this court lacks jurisdiction over Pacific's appeal because the requirements of 28 U.S.C. § 1292(a) (3) are not met.
Section 1292(a) (3) provides:
It was a common practice for the admiralty court to determine first the issue of liability and, if it found liability, to refer the parties to a commissioner for the determination of damages. The purpose of Sec. 1292(a) (3) was to permit a party found liable to take an immediate appeal from that finding and thereby possibly avoid an oftentimes costly and protracted trial of the damages issue.
The section permits appeals only when the order appealed from determines the rights and liabilities of the parties. Astarte Shipping Co. v. Allied Steel & Export Co., 767 F.2d 86, 88 (5th Cir. 1985). See also Patton-Tully Transportation Co. v. Ratliff, 715 F.2d 219, 222 (5th Cir. 1983) (no interlocutory appeal from order determining plaintiff is a Jones Act seaman because it permitted the claim to proceed against defendant); Gave Shipping Co., S.A. v. Parcel Tankers, Inc., 634 F.2d 1156, 1157 (9th Cir. 1980) (no appellate jurisdiction because order granting motion to stay arbitration does not finally determine rights and liabilities of the parties).
Section 1292(a) (3) is an exception to the final judgment rule and, therefore, is construed narrowly. See Hollywood Marine, Inc. v. M/V ARTIE JAMES, 755 F.2d 414, 416 (5th Cir. 1985). But see 16 Wright, Miller, Cooper & Gressman, Federal Practice and Procedure Sec. 3927, at 113 (1977) (some expansion has crept into the section's application).
Rule 54(b) certification is not a prerequisite to appellate jurisdiction under Sec. 1292(a) (3). Gulf Towing Co., Inc. v. S/T AMOCO NEW YORK, 648 F.2d 242, 244 (5th Cir. 1981) (per curiam). We would have jurisdiction over Pacific's appeal if the May 2 order finally determined its claims as to Sea-First. See Walter E. Heller & Co. v. O/S SONNY V., 595 F.2d 968, 971 (5th Cir. 1979) (Sec. 1292(a) (3) jurisdiction from partial summary judgment order). It does not.
Pacific's reliance on the rule that subsequent events may cure premature notices of appeal is misplaced. See Anderson v. Allstate Insurance Co., 630 F.2d 677, 680-81 (9th Cir. 1980) (subsequent events can validate prematurely filed appeal); Ruby v. Secretary of the U.S. Navy, 365 F.2d 385, 389 (9th Cir. 1966) (en banc) (premature notice of appeal will be directed to subsequently-entered final decision dismissing action), cert. denied, 386 U.S. 1011, 87 S. Ct. 1358, 18 L. Ed. 2d 442 (1967).
We find no reported admiralty case invoking the rule, probably because it clashes with Sec. 1292(a) (3). Nor has the rule been applied where, as here, a defendant appeals an interlocutory dismissal, remains in the case for trial to see whether it can secure a favorable ruling, then fails to appeal entry of final judgment against it.
A timely notice of appeal is mandatory and jurisdictional. Browder v. Director, Department of Corrections of Illinois, 434 U.S. 257, 264, 98 S. Ct. 556, 560, 54 L. Ed. 2d 521 (1978); Bordallo v. Reyes, et al., 763 F.2d 1098, 1101 (9th Cir. 1985). After participating in the trial, Pacific should have joined the other appellants in their appeal from final judgment. Its appeal is dismissed for want of jurisdiction.
Before the Act's passage, it was impossible to foreclose on a ship mortgage in admiralty. Bogart v. The John Jay, 58 U.S. (17 How.) 399, 401-02, 15 L. Ed. 95 (1854). "This inferior status provided the mortgage holder with little security, a fact which adversely affected investor interest." Merchants National Bank of Mobile v. Ward Rig No. 7, 634 F.2d 952, 955 (5th Cir. 1981). See G. Gilmore & C. Black, Jr., The Law of Admiralty 689 (2d ed. 1957).
The Act was passed to stimulate private investment in U.S. shipping and to protect the United States as the principal source of credit. Ward Rig, 634 F.2d at 955; G. Gilmore, supra at 691. See generally Gyory, Security at Sea: A Review of the Preferred Ship Mortgage, 31 Fordham L. Rev. 231 (1962). Legislative history reflects the Act's dual purposes "of encouraging low-interest private financing for the construction and reconstruction of American-flag ships, while at the same time limiting the possibility of foreign control of such ships." H.R.Rep. No. 1116, 89th Cong., 1st Sess. 2, reprinted in 1965 U.S.Code Cong. & Ad.News 4231, 4232.
The Act grants preferred status to a mortgage lien on American-flag vessels owned by U.S. citizens. 46 U.S.C. §§ 922, 953. Only U.S. citizens may be ship mortgagees. Id., Sec. 922(a) (5). Mortgagee "in the case of a mortgage involving a trust deed and a bond issue thereunder, means the trustee designated in such deed." Id., Sec. 911(5).
Ship mortgages will not lose their preferred status where minor discrepancies exist. Substantial compliance with the Act's requirements is sufficient. See Ward Rig, 634 F.2d at 957 (four-day discrepancy on maturity dates between mortgages and payment schedules not fatal to mortgages' validity); Suburban Trust Co. v. O/S Teddy Bear, 1975 A.M.C. 1668, 1671 (M.D. Fla .1975) (discrepancies between date on mortgage and execution date had no adverse effect on defendants and would not affect validity of mortgage).
Thus, the Act permits foreign investment in U.S. vessels provided the financing technique involves a U.S. citizen as trustee. See State Street Bank and Trust Co. v. F/V Seafreeze Atlantic, 1981 A.M.C. 2001, 2002-03 (E.D. Va. 1979); Moon Engineering Co. v. A/S VALIANT POWER, 214 F. Supp. 555, 559 (E.D. Va. 1963) (trustee's citizenship is the Act's primary consideration).
The parties differ over the trustee's required duties and the effect of Congress' reaction to Chemical Bank New York Trust Co. v. S/S Westhampton, 358 F.2d 574 (4th Cir. 1965), cert. denied, 385 U.S. 921, 87 S. Ct. 228, 17 L. Ed. 2d 145 (1966).
Westhampton involved a mortgage on an American-flag ship given to a U.S. citizen trustee to secure a bond held by a foreign bank. In denying preferred status, the Fourth Circuit held that the bond was an "interest" in the ship and that "the transfer of the bond to an alien, illegal because made without Maritime Administration approval, infect [ed] the mortgage under which it was issued." Id. at 583.
Congress responded quickly with Pub. L. 89-346. The relevant provision, as amended in 1981, reads:
46 U.S.C. § 961(e).
By this amendment, "the fiction that American-flag shipping will not be allowed to come under foreign control was elegantly maintained without being allowed to interfere with the realities of the marketplace." G. Gilmore, supra at 698. We find that Congress chose the broad terms "bond, note, or other evidence of indebtedness" to protect other prevalent types of vessel financing other than the bond issue used in the Westhampton case. See 1965 U.S.Code Cong. & Ad.News 4231-36; 46 U.S.C. § 961(e).
Besides any duties defined in the trust agreement itself, we agree with Judge Voorhees that Congress did not intend additional requirements beyond those set forth in 46 U.S.C. § 961(e). To be a trustee, an entity must:
See 46 U.S.C. § 961(e).
The Act's legislative history describes the U.S. trustee's requirements as "certain minimum standards." 1965 U.S.Code Cong. & Ad.News at 4235. Section 961(e) directs that once the requirements are met, " [t]he Secretary of Transportation shall grant his approval" (emphasis added). Moreover, the Maritime Administration's regulations state that " [a]pplicants meeting the standards for trustees specified in Pub. L. 89-346 will be eligible for approval as trustees." 46 C.F.R. Sec. 221.25(a) (1984).