Source: https://m.openjurist.org/712/f2d/991
Timestamp: 2020-01-17 17:23:03
Document Index: 440725438

Matched Legal Cases: ['§ 953', '§ 953', '§ 953', '§ 113', '§ 178', '§ 243', '§ 953']

712 F2d 991 General Electric Credit Corporation v. Oil Screw Triton Vi United States | OpenJurist
712 F. 2d 991 - General Electric Credit Corporation v. Oil Screw Triton Vi United States
712 F2d 991 General Electric Credit Corporation v. Oil Screw Triton Vi United States
712 F.2d 991
1984 A.M.C. 1583
The OIL SCREW TRITON, VI, Etc., Defendant.
The OIL SCREW TRITON, VI, etc., Defendant,
General Electric Credit Corporation, Intervenor-Appellee.
The issue before us concerns the priorities in the disposition of proceeds from the judicial sale of a vessel subject to a preferred maritime ship mortgage. Specifically, the principal issue is whether the attorney's fees provided for in the mortgage agreement (for collection in the event of default) are entitled to the same priority over all other claims to the proceeds (except preferred maritime liens and costs in custodia legis ) as is the principal of the debt secured by the mortgage. 46 U.S.C. § 953(b). We hold that the reasonable attorney's fees so provided are entitled same priority in payment as are the principal and interest. We affirm the district court's judgment to this effect.
The United States appeals, contending that the district court erred in according § 953(b) priority to the attorney's fees, as well as that it abused its discretion in fixing the amount of them awarded to General Electric. The United States also contends that its expenses in seizing and maintaining the vessel before it was placed in custodia legis should be accorded the same priority under § 953(b) over any debt secured by the mortgage as are the costs of preserving the vessel after it is placed under jurisdiction of the court (in custodia legis ) through arrest by the United States marshal.
The general rule in almost all American jurisdictions is that attorney's fees and costs, when stipulated in the mortgage contract, may be validly recovered as part of the mortgage indebtedness secured. See, e.g., Leenerts Farms, Inc. v. Rogers, 421 So.2d 216, 219 (La.1982), as well as decisions cited at 59 C.J.S. "Mortgages", § 113e at 162-63, § 178d at 225-26, § 243 at 367 (1949). This general rule has been applied without comment in numerous preferred ship mortgage foreclosure cases. In the few reported decisions in which issue has been raised as to the priority under the Ship Mortgage Act of contractually-provided-for-attorney's fees and costs to enforce the mortgage, the decisions have uniformly held that these expenses to enforce the mortgage are entitled to the same priority and rank of payment as is the principal indebtedness secured by the mortgage, and are equally secured by the preferred mortgage lien.3 "The preferred [ship] mortgage lien and priority also includes interest and attorney's fees if the contract so provides." Varian, "Rank and Priority of Maritime Liens", 47 Tul.L.Rev. 751, 759 (1973).
The government claims that the amount of attorney's fees awarded by the court was excessive. Without elaboration, we will simply state that the record supports the award. The litigation involved the complicated interplay of a forfeiture suit and a foreclosure action, as well as a vigorous contest between various maritime lienholders and the government. The number of hours and the hourly amount were supported by sworn testimony, as well as by affidavits. Despite two hearings at which the government was entitled to contest the amount awarded, it did not produce adverse witnesses. (Subsequently, it did file two affidavits contesting the amount, based solely upon the affiant's review of the court record.)"Where attorney's fees are provided by contract, a trial court does not possess the same degree of equitable discretion to deny such fees as it has when applying a statute providing for a discretionary award." Cable Marine v. M/V Trust, 632 F.2d 1344, 1345 (5th Cir.1980). Of course, it may nevertheless, reduce the contractual attorney's fees claimed if it finds such an award "would be inequitable and unreasonable." Id. On appeal, the review is limited "to considering whether the district court abused its discretion in awarding attorney's fees." Copper Liquor, Inc. v. Adoph Coors Company, 624 F.2d 575, 581 (5th Cir.1980). Under the facts of this case, we are unable to find any abuse of the district court's discretion in the amount awarded as reasonable attorney's fees in the protection and enforcement of General Electric's ship mortgage.
Without citation of authority, the government contends that its expenses of seizing and maintaining the vessel before it was placed within the custody of the court should be awarded the same priority (superior to the preferred ship mortgage lien) as those expenses of seizure and preservation incurred after the vessel comes within the custody of the court (in custodia legis ) through arrest by the federal marshal as an officer of the court.
The preservation expenses before seizure are by definition and functional purpose not within the expenses in custodia legis alone (along with preferred maritime liens) entitled to priority in payment under § 953(b)(2) over the preferred ship mortgage lien. These custodia legis preferred expenses arise "out of the foreclosure proceedings and administering the custody after the vessel ... after it has been seized under legal process." General Electric Credit & Leasing Corporation v. Drill Ship Mission Exploration, 668 F.2d 811, 815 (5th Cir.1982) (emphasis the court's). See Varian, supra, 47 Tul.L.Rev. at 753-54. See also Rayon Y Celanese Peruana v. M/V PHGH, 471 F.Supp. 1363, 1369-70 (S.D.Ala.1979) (rejecting the government's claim for in custodia legis priority for its custodial expenses following its administrative seizure for forfeiture purposes, insofar as incurred before a judicial seizure to enforce a preferred maritime lien).
European-American Banking Corporation v. M/S Rosaria, 486 F.Supp. 245, 272-73 (S.D.Miss.1979); Nova University of Avanced Technology, Inc. v. Motor Vessel Gypsy, 331 F.Supp. 721, 722 (S.D.Fla.1971); The Home, 65 F.Supp. 94, 95-96 (W.D.Wash.1946); The John Jay, 15 F.Supp. 937 (E.D.Pa.1936)
The Mariam, 66 F.2d 899 (9th Cir.1933); The Maberhex, 6 F.2d 415 (D.C. RI 1925)