An Act to amend title XI of the Merchant Marine Act, 1936, as amended, to provide for the deposit of funds in escrow with the Secretary of Commerce, to provide for the payment of insurance, in part, on the basis of such deposits, and for other purposes.
PL 86-127 (S.2148), enacted 07/31/1959

272 
PUBLIC LAW 86-126-JULY 31, 1959 
[73 ST AT 
States directly to individual Indians, as compensation for the loss of 
fishing rights due to the construction, operation, and maintenance of 
the Dalles Dam, Columbia Eiver, Washington and Oregon, shall not 
be subject to Federal or State income tax. 
Approved July 31, 1959. 
July 31, 1959 
[S. 1^5] 
Public Law 86-126 
AN ACT 
To provide transportation on Canadian vessels between ports in southeastern 
Alaska, and between Hyder, Alaska, and other points in southeastern Alaska, 
and between Hyder, Alaska, and other points in the United States outside 
Alaska, either directly or via a foreign port, or for any part of the trans-
portation. 
Alask 
Tr an 
on Can 
sels. 
spoliation 
adian ves-
Be it enacted hy the Senate and House of Representatives 
of the 
United States of Amsrica in Congress assembled, That, until June 30, 
1960, notwithstanding the provisions of law of the United States re-
stricting to vessels of the United States the transportation of passen-
gers and merchandise directly or indirectly f 
roiti any port in the United 
States to another port of the United States, passengers may be trans-
ported on Canadian vessels between ports in southeastern Alaska, and 
passengers and merchandise may be transported on Canadian vessels 
between Hyder, Alaska, and other points in southeastern Alaska, and 
between Hyder, Alaska, and other points in the United States outside 
Alaska, either directly or via a foreign port, or for any part of the 
transportation, unless the Secretary of Commerce determines that 
United States-flag service is available to provide such transportation. 
Approved July 31, 1959. 
July 31, 1959 
[S. 2148] 
Public Law 86-127 
AN ACT 
To amend title XI of the Merchant Marine Act, 1936, as amended, to provide 
for the deposit of funds in escrow with the Secretary of Commerce, to pro-
vide for the payment of insurance, in part, on the basis of such deposits, and 
for other purposes. 
Vessels. 
Escrow fund. 
52 Stat. 969. 
Insurance. 
Restriction. 
Ante, p. 269. 
Be it enacted hy the Seriate and House of Representatives 
of the 
United States of America in Congress assembled, That title X I of the 
Merchant Marine Act, 1936, as amended (46 U.S.C. 1271-1279), is 
amended as follows: 
(1) By revising the proviso in section 1101(f) to read as follows: 
"That in no event shall the Secretary of Commerce pay as insurance 
under this title in respect of the unpaid balance of the principal of a 
mortgage or loan an amount in excess of 75 per centum, or 87^^ per 
centum, as the case may be, of the amount paid by or for the account 
of the mortgagor or borrower for the construction, reconstruction, or 
reconditioning (including designing, inspecting, outfitting, and equip-
ping) of such vessel, except that if the mortgagor or borrower creates 
an escrow fund as authorized by section 1111 of this Act, the amount 
that shall be paid as insurance is the interest on and the unpaid bal-
ance of the principal of such loan or mortgage." 
(2) By inserting after section 1110 a new section 1111 to read "as 
follows: 
"SEC. 1111. (a) CREATIOX OF THE ESCROW FUND.—In connection 
with the insurance of loans and mortgages, which are financed by sale 
73 S T A T . ] 
PUBLIC LAW 86-127-JULY 31, 1959 
273 
of bonds to the general public, the Secretary of Commerce is author-
ized to accept a deposit in escrow in an amount which at the time 
of such deposit is equal to (i) the excess of the principal of such loan 
or mortgage over 75 per centum, or 871/^ per centum, as the case 
may be, of the amount paid by or for the account of the mortgagor 
or borrower for the construction, reconstruction, or reconditioning 
(including designing, inspection, outfitting, and equipping) of the 
vessel, (ii) with interest thereon for the period of the escrow 
agreement. 
"(b) DISBURSEMENT PRIOR TO TERMINATION OF THE ESCROW AGREE-
MENT.—The Secretary of Commerce shall, as specified in the escrow 
agreement, disburse the escrow fund to pay amounts the mortgagor 
or borrower is obligated to pay as interest on such loan or mortgage 
or for the construction, reconstruction, or reconditioning (including 
designing, inspecting, outfitting, and equipping) of the vessel, except 
that if insurance becomes payable under the insurance contract prior 
to the termination of the escrow agreement, all amounts in the escrow 
fund at the time such insurance becomes payable (including realized 
income which has not yet been paid to the borrower or mortgagor) 
shall, subject in the case of insurance on a mortgage to the application 
of mortgage provisions contemplated by section 1104(a) (10) of this 
Act, be paid into the Federal Ship Mortgage Insurance Fund and (i) 
be credited against any amounts due or to become due to the Secretary 
of Commerce from the borrower or mortgagor with respect to the 
insured loan or mortgage and (ii) to the extent not so required, be 
paid to the borrower or mortgagor. 
"(c) 
DISBURSEMENT UPON TERMINATION or THE ESCROW AGREE-
MENT.—If insurance has not become payable under the insurance con-
tract prior to the termination of the escrow agreement, any balance 
of the escrow fund at the time of such termination shall be disbursed 
by the Secretary of Commerce to prepay the excess of the principal of 
the loan or mortgage over 75 per centum, or 87i/^ per centum, as the 
case may be, of the actual cost of the vessel to the extent paid, and to 
pay interest on such prepaid amount of principal, and the remainder 
of such balance of the escrow fund shall be paid to the borrower or 
mortgagor. 
"(d) INVESTMENT OF THE ESCROW FUND.—The Secretary of Com-
merce may invest and reinvest all or any part of the escrow fund in 
obligations of the United States with such maturities that such fund 
will be available as required for purposes of the escrow agreement. 
"(e) INCOME ON THE ESCROW FUND.—^Any income realized on the 
escrow fund shall, upon receipt by the Secretary of Commerce, be paid 
to the borrower or mortgagor. 
"(f) OTHER TERMS.—The escrow agreement shall contain such 
other terms as the Secretary of Commerce may consider jiecessary 
to fully protect the interests of the United States." 
(3) By inserting before the periods at the end of both the second 
and third sentences of section 1104(d) a comma and the following: 
46 use 1274. 
"excluding the average amount (except interest) on deposit in an es-
crow fund created under section 1111 of this Act." 
(4) By inserting in section 1104(e), after the word "commitments," 
^^ "^c 1274. 
the words "for services in connection with the escrow fund authorized 
by section 1111." 
Approved July 31, 1959.