Opinion ID: 1308283
Heading Depth: 2
Heading Rank: 4

Heading: jurisdiction under the ship mortgage act of 1920

Text: The Baranof contends that, because a forfeiture decree works in rem and thus will impact on preferred ship mortgage holders and other maritime lienors, the Ship Mortgage Act of 1920, 46 U.S.C. §§ 911-984, divests state courts of jurisdiction over vessel forfeitures where such an interest is involved. It is clear that a forfeiture decree extinguishes the rights of secured parties in and to the res, subject to remission in the case of innocent, non-negligent claimants. State v. Rice, 626 P.2d 104, 114 (Alaska 1981). However, we do not agree that the Ship Mortgage Act of 1920 provides for exclusive federal jurisdiction in an in rem forfeiture proceding instituted by a state. The Ship Mortgage Act of 1920 was enacted to ensure mortgagees a forum for their vessel forfeiture suits. The Act was in response to the Supreme Court's ruling in Bogart v. The Steamboat John Jay, 58 U.S. (17 How.) 399, 15 L.Ed. 95 (1854) which held that a mortgage on a ship ... was not within the admiralty jurisdiction and, thus, the mortgagee could not bring suit in admiralty, either in personam on the debt or in rem to foreclose his security interest in the ship. Port Welcome Cruises, Inc. v. S.S. Bay Belle, 215 F. Supp. 72, 78 (D.Md. 1963). The Ship Mortgage Act of 1920 remedied this situation by providing: [A] preferred mortgage shall constitute a lien upon the mortgaged vessel in the amount of the outstanding mortgage indebtedness secured by such vessel. Upon the default of any term or condition of the mortgage, such lien may be enforced by the mortgagee by suit in rem in admiralty. Original jurisdiction of all such suits is granted to the district courts of the United States exclusively. 46 U.S.C. § 951. If the present proceeding was a foreclosure action, federal jurisdiction would be exclusive. However, the state has brought a forfeiture action against the F/V Baranof. Thus, 46 U.S.C. § 951 does not apply. Further, Madruga v. Superior Court, 346 U.S. at 561-62, 74 S.Ct. at 301-02, 98 L.Ed. at 296-97 states that federal laws dealing with mortgages of vessels do not bar state jurisdiction where it is otherwise valid; in the present case, by the rule of Hendry. [18] The federal rules dealing with priorities of lien holders bind the state courts, but jurisdiction is concurrent. Madruga, 346 U.S. at 561, 74 S.Ct. at 301, 98 L.Ed. at 296.