Court Opinion

ID: 70650
Source: CourtListenerOpinion
Date Created: 2010-04-26 07:05:56+00
Date Added: 2024-06-11T17:17:44.140465
License: Public Domain

United States Court of Appeals,

                           Eleventh Circuit.

                             No. 94-4093.

   Leslie S. DIETRICH, Plaintiff-Counter Defendant-Appellant,

                                  v.

         KEY BANK, N.A., Defendant-Counter Plaintiff-Appellee,

 Gilman Yacht Sales, Inc., Jeffrey Shearer, Cracker Boy Marina,
Inc., Defendants.

                             Jan. 3, 1996.
Appeal from the United States District Court for the Southern
District of Florida. (No. 87-8407-CIV), Jose A. Gonzalez, Jr.,
Judge.

Before TJOFLAT, Chief Judge, ANDERSON, Circuit Judge, and FAY,
Senior Circuit Judge.

     ANDERSON, Circuit Judge:

     This case involves the construction of the Ship Mortgage Act

of 1920, 46 U.S.C.A. § 31301-31343 (West Supp.1995) (former version

at 46 U.S.C.A. § 911-984 (West 1995))1 ("the Act").    The question

     1
      Although the former version was in place and in effect
until January 1, 1989, we refer to the version now in existence,
i.e., 46 U.S.C.A. § 31301-31343. In reorganizing the Ship
Mortgage Act, Congress made some substantive changes. However,
none of those changes have any bearing on the issues in this
case. Also important for our analysis is that the coverage of
the Act, i.e., its scope, is substantially the same as before the
1988 Act.

          The section of the Act central to the issue in this
     appeal is § 31325(b). The House Report indicates that the
     only major substantive change Congress made to that
     subsection was "by allowing a nonadmiralty civil action to
     be brought against the mortgagor, comaker, or guarantor for
     the amount of the outstanding indebtedness secured by the
     vessel or any deficiency in paying off that indebtedness."
     H.R.Rep. No. 918, 100th Cong., 2d Sess., at 44, 1988
     U.S.Code Cong. & Ad.News at pp. 6104, 6137. The report
     notes that "[t]his change allows an action to be brought
     even when the vessel is outside U.S. jurisdiction. This
     section will also allow the action to be brought against the
presented here has not been decided by any other circuit:              whether

the provisions for enforcement of the Ship Mortgage Act set forth

at 46 U.S.C.A. § 31325 provide the exclusive procedures for the

enforcement of preferred ship mortgage liens or whether parties to

preferred ship mortgages can contract to use state self-help

repossession and resale procedures. We hold that the Ship Mortgage

Act does not prohibit state self-help enforcement procedures when

they are authorized by the underlying contracts.

                           I. FACTUAL BACKGROUND

     On April 30, 1982, Key Bank, N.A. ("Key Bank") financed Leslie

Dietrich's purchase of a thirty-five foot, 1980 Mako sport fishing

boat.    Dietrich signed a security agreement giving Key Bank a

security interest in the boat and promising to repay $97,300.00 in

monthly installments at an annual interest rate of 18%.                    The

security agreement was to protect the lender until the First

Preferred Ship Mortgage was duly recorded.             On August 30, 1983,

over a year later, Dietrich executed the First Preferred Ship

Mortgage.2    Among other things, that mortgage provided for payment

of the debt on the same monthly installment terms and with the same

interest provided in the security agreement, and for acceleration

of the entire debt in the event of default.           In the summer of 1986,

Dietrich defaulted on her note.             After notifying her of the

payments     she   owed,   Key   Bank   accelerated    the   note    and   then

peacefully repossessed the vessel in December, 1986.                The vessel

     comaker or guarantor of the mortgage."            Id.
     2
      The parties agree that the preferred mortgage executed by
Dietrich was validly recorded and had the status of a preferred
mortgage under the statute.
was then sold by Key Bank in a private sale to one of three bidders

for $40,000.

     Afterwards, Dietrich filed suit against Key Bank alleging
                                          3
breach of contract and conversion,            and    Key   Bank   filed     a

counterclaim seeking a deficiency judgment.          Dietrich moved for

partial summary judgment on Key Bank's counterclaim contending that

under the Ship Mortgage Act, Key Bank was prohibited from using

self-help repossession to enforce the preferred mortgage. She also

contended that even if it were lawful to contract for self-help

repossession and resale, the contracts in this case did not make

such provisions.     The district court decided that the contracts

between the parties did authorize Key Bank to use Florida law to

repossess peacefully and sell its collateral upon the debtor's

default and that the Ship Mortgage Act did not prohibit Key Bank

from pursuing these contracted for state remedies.4               After a

non-jury trial in December of 1993 on the remaining claims, 5 the

district court entered a deficiency judgment against Dietrich, the

amount of which is not at issue in this appeal.

     On appeal, Dietrich reasserts the grounds of her summary

judgment   motion.    She   contends   that   the   Ship   Mortgage   Act's

statutory enforcement scheme, i.e., foreclosure either in rem or in

     3
      Dietrich originally filed suit in Palm Beach County Circuit
Court. The action was removed to the district court.
     4
      The district court's thoughtful opinion is published.           693
F. Supp. 1112 (S.D.Fla.1988).
     5
      These issues included Key Bank's deficiency claim as well
as Dietrich's affirmative defenses that the bank failed to give
proper notice and that the resale of the collateral was not done
in a commercially reasonable manner.
personam in admiralty, is the exclusive remedy for default of a

preferred mortgage lien.      She also argues that the district court

erred in concluding that the underlying contracts provided for

state self-help repossession and resale remedies.

      We first address whether the underlying contracts provide for

state law self-help repossession and resale, and then we determine

whether the Ship Mortgage Act precludes such remedies.

             II. CONSTRUCTION OF THE UNDERLYING CONTRACTS

          Dietrich argues that she did not contract for state law

self-help repossession and resale in the mortgage contracts.        Her

argument fails.     It is uncontested that once perfected, the terms

of the First Preferred Ship Mortgage governed, 6 and that document

contemplated repossession and resale. At least three paragraphs in

the document explicitly mention the availability of repossession

and   two    mentioned   resale   after   repossession.   For   example,

Paragraph 20 states:

      SALE OR USE OF REPOSSESSED VESSEL.     If you repossess the
      Vessel, you may, in my name, lease, charter, operate or
      otherwise use the Vessel as you think advisable, being
      accountable for net profits, if any, and keep the Vessel free
      of charge at my premises or elsewhere, at my expense. For
      such purpose and subject to any applicable state regulation,
      you and your agents are irrevocably appointed my true and

      6
      Dietrich contends that the lower court mistakenly relied on
language set forth in the Security Agreement in determining that
she had contracted for self-help remedies. (Under its
"Additional Terms and Conditions", the Security Agreement stated,
"To protect you until a First Preferred Ship Mortgage is duly
recorded, I give you a security interest under the Uniform
Commercial Code in the Vessel and any equipment which may become
a part of the Vessel in the Future....") She argues that that
reliance was misplaced because the Security Agreement was not
binding after the execution of the First Preferred Ship Mortgage.
However, the First Preferred Ship Mortgage itself allowed for
self-help repossession and sale; therefore, her argument is
misplaced.
       lawful attorneys-in-fact to make all necessary transfers of
       the Vessel upon resale after repossession, in my name and
       stead.

This       paragraph        unequivocally     anticipates     both   self-help

repossession and self-help resale.              Both are provided for under
                                                      7
Florida      law.     Fla.Stat.Ann. § 679.503.               Furthermore,    this

paragraph specifically provides that state regulation would govern

the mortgagee's transfer of vessel upon resale after repossession.

Other      language    in    the   document   contemplates    repossession   and

resale. Paragraph 16 of the First Preferred Ship Mortgage required

Dietrich to sign and deliver those documents to the purchaser which

would help the mortgagee "carry out a resale of the Vessel in the

event it becomes necessary for [the mortgagee] to repossess it."

At paragraph 19, the document set forth how the mortgagor might

redeem the vessel should it be repossessed and stated that the

mortgagor's "right to redeem will end when the repossessed Vessel

has been sold."

       Thus, we reject Dietrich's argument that the contracts did not

       7
      Section 679.503, entitled "Secured party's right to take
possession after default" states in part:

              Unless otherwise agreed a secured party has on default
              the right to take possession of the collateral. In
              taking possession a secured party may proceed without
              judicial process if this can be done without breach of
              the peace or may proceed by action.

       Section 679.504, entitled "Secured party's right to dispose
       of collateral after default; effect of disposition", states
       in part:

              A secured party after default may sell, lease or
              otherwise dispose of any or all of the collateral in
              its then condition or following any commercially
              reasonable preparation or processing. Any sale of
              goods is subject to chapter 672.
allow for self-help repossession and resale upon default.                   We

therefore turn to the Ship Mortgage Act issue.

                    III. THE SHIP MORTGAGE ACT OF 1920

A. Background

        Before the passage of the Ship Mortgage Act of 1920, vessel

mortgage liens could not be enforced in admiralty court.               See The

Thomas Barluum, 293 U.S. 21, 32, 55 S. Ct. 31, 33, 79 L. Ed. 176

(1934).     State court enforcement was ineffective because state

courts could not affect maritime liens.           Thus, a ship mortgagee's

security interest was not satisfactorily protected. See id. at 39,

55 S.Ct. at 36 (pointing out that mortgage security on ships was

practically worthless).         The Ship Mortgage Act provided a means

through which vessel mortgages could be given a preferred status

and could be enforced in admiralty.           The underlying purpose of the

Act was to encourage investment in shipping.              See id. at 40, 55

S.Ct. at 37 (indicating fundamental purpose of Congress was to

promote confidence in ship mortgages);           Merchants & Marine Bank v.

The T.E. Welles, 289 F.2d 188, 193-194 (5th Cir.1961) ("[P]assage

of the Ship Mortgage Act came about primarily from the necessity of

affording       substantial   security   to   persons   supplying   essential

financing to the shipping industry.")

     The Act itself did at least three important things—it set

forth     the    requirements    for     recording   preferred      mortgages,

established that only maritime liens would have priority over ship

mortgages, and provided for a means of enforcing preferred mortgage

liens in admiralty.

B. Federal Preemption
      Dietrich argues that the statutory provisions for enforcement

of preferred mortgage liens under the Act, 46 U.S.C.A. § 31325(b)

(formerly 46 U.S.C.A. §§ 951, 954), are exclusive remedies and

that, as such, they preempt state law remedies.            Specifically, 46

U.S.C.A. § 31325(b) provides:

      (b) On default of any term of the preferred mortgage, the
           mortgage[e] may—

                (1) enforce the preferred mortgage lien in a civil
           action in rem for a documented vessel, a vessel to be
           documented under chapter 121 of this title, or a foreign
           vessel; and

                (2) enforce a claim for the outstanding indebtedness
           secured by the mortgaged vessel in—

                     (A) a civil action in personam in admiralty against
                     the mortgagor, maker, comaker, or guarantor for the
                     amount of the outstanding indebtedness or any
                     deficiency in full payment of that indebtedness;
                     and

                     (B) a civil action against the mortgagor, maker,
                     comaker, or guarantor for the amount of the
                     outstanding indebtedness or any deficiency in full
                     payment of that indebtedness....

      The statute itself makes no statement with respect to state

law   except    in    §   31307,   which   established   that   the   statute

superseded     the    provisions   of   state   law   conferring   liens   for

necessaries on vessels insofar as such statutes purported to create

rights of action to be enforced by suits in rem in admiralty:

      This chapter supersedes any State statute conferring a lien on
      a vessel to the extent the statute establishes a claim to be
      enforced by a civil action in rem against the vessel for
      necessaries.

46 U.S.C.A. § 31307.        That limited preemption does not affect the

self-help remedies at issue here.          The Ship Mortgage Act contains

no direct expression of congressional intent to preempt state law

allowing for self-help repossession and resale.
      The    question    presented     is    whether       these   provisions     for

enforcement      of   preferred    mortgage        liens    preempt    state    law.

Recently, the Supreme Court stated:

      In the absence of an express congressional command, state law
      is pre-empted if that law actually conflicts with federal law
      [cit.] or if federal law so thoroughly occupies a legislative
      field " "as to make reasonable the inference that Congress
      left no room for the States to supplement it.' "

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 516, 112 S. Ct.
2608, 2617, 120 L. Ed. 2d 407 (1992) (citations omitted). Because we

find no express congressional command, we must determine whether

state     law   actually   conflicts        with    the    federal    statute    or,

alternatively,        whether   federal      law     thoroughly      occupies    the

legislative field.

1. Whether State Self-help Repossession and Sale Conflicts with
     Federal Law.

         We first determine whether state law is preempted because "

"it actually conflicts with a federal statute.' "                     International

Paper Co. v. Ouellette, 479 U.S. 481, 491, 107 S. Ct. 805, 811, 93
L. Ed. 2d 883 (1987) (quoting Ray v. Atlantic Richfield Co., 435 U.S.
151, 158, 98 S. Ct. 988, 991, 55 L. Ed. 2d 179 (1978)).

        "Such a conflict arises when "compliance with both federal and
        state regulations is a physical impossibility,' ... or when
        state law stands as an obstacle to the accomplishment and
        execution of the full purposes and objectives of Congress...."

Hillsborough County, Fla. v. Auto. Med., 471 U.S. 707, 713, 105
S. Ct. 2371, 2375, 85 L. Ed. 2d 714 (1985) (citations omitted).                      In

the case at bar, there is no direct conflict between the state and

federal law.     Cf. Nat G. Harrison Overseas Corp. v. American Barge

Sun   Coaster,    475 F.2d 504,   506    (5th    Cir.1974)      (where    direct

conflict existed between the state usury laws and the federal
statutory    provision     that     the   mortgage        may   bear    such    rate    of

interest as may be agreed upon);               J. Ray McDermott & Co., Inc. v.

The Vessel Morning Star, 457 F.2d 815 (5th Cir.) (en banc), cert.

denied, 409 U.S. 948, 93 S. Ct. 292, 34 L. Ed. 2d 218 (1972) (where

direct conflict existed because under state law any deficiency

judgment was forfeited by conducting a public sale without an

appraisal,      whereas    under       federal    law     an    appraisal      was     not

required).

      The    federal      statute       provides       procedures       for     judicial

foreclosure and sale.          As discussed previously, 46 U.S.C.A. §

31325(b) allows for enforcement of a preferred mortgage lien in a

civil action in rem or a civil action in personam and sets forth

procedures for judicial enforcement.8                   However, the Act nowhere

describes the procedures to be followed when parties to a preferred

ship mortgage seek to enforce the mortgage using nonjudicial,

self-help remedies.        Thus, no direct conflict exists.                   2 Benedict

on Admiralty § 70f (7th ed. 1995).

      It cannot be argued that state law stands as an obstacle to

the full accomplishment of the purposes and objectives of Congress.

The   purpose     of   Congress     was   to     create    a    means   of     enforcing

mortgages    in    admiralty      in    order     to    promote    ship       financing.

Allowing financiers to contract for state law self-help remedies in

addition to their statutory right to foreclose in admiralty does

      8
      The Act     provides for the termination of all liens upon a
judicial sale     in rem, the lien then attaching to the sale
proceeds. 46      U.S.C.A. § 31326. Because these remedies are
judicial, any     sale held pursuant to these remedies would be
court-ordered     and, as such, governed by 28 U.S.C.A. §§ 2001 and
2004.
not undermine this purpose.       Rather, allowing for supplementation

through state law furthers the objectives of Congress by providing

another avenue for enforcement of vessel mortgage liens.

2. Whether the Ship Mortgage Act Occupies the Field.

      Having determined that the Act did not explicitly preempt

state law, and that there is no conflict between the state and

federal law, we must determine whether Congress intended to occupy

the field.    We can infer an "intent to occupy a given field to the

exclusion of state law ... where the pervasiveness of the federal

regulation precludes supplementation by the States" or "where the

federal    interest   in   the   field    is   sufficiently   dominant...."

Schneidewind v. ANR Pipeline Co., 485 U.S. 293, 300, 108 S. Ct.
1145, 1150, 99 L. Ed. 2d 316 (1988).         We can also infer an intent to

preempt where " "the object sought to be obtained by the federal

law and the character of the obligations imposed by it' " reveal a

purpose to preclude the enforcement of the state laws on the same

subject.     Id. (citation omitted).

     Although enforcement of preferred mortgage liens is a federal

interest, it is not the sort of uniquely federal interest which is

so dominant it would create an inference that Congress intended to

preempt state law in that field.         Cf. Hines v. Davidowitz, 312 U.S.
52, 61 S. Ct. 399, 85 L. Ed. 581 (1941) (concluding that immigration

and foreign affairs were such predominant federal interest).           Nor

is this a situation in which the enforcement of state law, i.e.,

self-help repossession and resale, poses a serious danger to the

administration of the federal program. Rather, a mortgagee remains

free to pursue a federal remedy notwithstanding the fact that he
contracted for the option to use a state law remedy.                         As long as

the conveyances and sales are properly recorded with the customs

officials, the federal scheme is not endangered.9

          It cannot be said that the object sought to be obtained by

the Act and the character of the obligations imposed reveal a

purpose to preclude enforcement of nonconflicting state law on the

same subject.            While it is true that Congress sought to provide a

remedy in an area in which state law was insufficient, neither the

object sought to be obtained by the Act, i.e., preferred status of

mortgage         liens    enforceable    in   admiralty,      nor   the   obligations

imposed by the statute, i.e., various statutory conditions and

documentation requirements, indicate that Congress's purpose was to

preclude state law enforcement of preferred mortgages in the manner

proposed in this case.           Cf. Howard v. Uniroyal, Inc., 719 F.2d 1552

(11th Cir.1983) ("[P]re-emption and implied private cause of action

analyses are distinct modes of divining Congressional intent.")

           The    appellant     seems    to   rely    on   the    argument    that    the

pervasiveness of federal regulation precludes supplementation by

the states.          Her argument is undermined by a close look at the

statute itself.           The fact that the statute does provide two means

to   enforce       preferred     mortgage     liens    does      not,   without   more,

indicate         that    the   federal    statute     is   pervasive.10         Compare

      9
      Passing of title by extra-judicial repossession and resale
is provided for in the Coast Guard regulations. 46 C.F.R. §
67.83 (1994).
      10
      The statute provides for enforcement in a civil action                         in
rem and also in a civil action in personam. With respect to                          the
former, the jurisdiction of the federal courts is exclusive,                         but
with respect to the latter, there is concurrent jurisdiction                         with
the state courts.
International Paper Co. v. Ouellette, 479 U.S. 481, 107 S. Ct. 805,

93 L. Ed. 2d 883 (1987) (finding that Congress intended Clean Water

Act   to    establish     all-encompassing       program   of   water-pollution

regulation where Act applied to all point sources and virtually all

bodies of water) and Capital Cities Cable, Inc. v. Crisp, 467 U.S.
691, 104 S. Ct. 2694, 81 L. Ed. 2d 580 (1984) (deciding FCC occupied

field      where   it   pervasively    regulated    importation       of   distant

broadcast      signals,    signal     carriage    generally,    and    technical

standards) with Pac. Gas & Elec. v. St. Energy Resources. Conserv.,

461 U.S. 19, 103 S. Ct. 1713, 75 L. Ed. 2d 752 (1983) (finding that

despite comprehensiveness in safety regulations in Atomic Energy

Act   of    1954,    Congress   intended    states    to    retain    its   other

traditional roles in regulating utilities, and concluding it almost

inconceivable that Congress would leave regulatory vacuum).

        Because the language of the Act is permissive—i.e., the Act

uses the permissive "may" rather than exclusive "must" with respect

to its enforcement procedures—and because the Act is silent with

respect to self-help repossession and resale, we are drawn to the

conclusion that the federal law is not so pervasive that it

thoroughly occupies the field. This reasoning accords with that of

a majority of the cases and treatises which have squarely addressed

the question.       See Merchants & Marine Bank v. T.E. Welles, 289 F.2d
188, 194 (5th Cir.1961) ("With all of its statutory protections,

[the Ship Mortgage Act] still has infirmities in contrast to

land-based securities" and "the approach ought to be one of harmony

with usual security principles.");           First Federal Sav. F.S.B. v.

M/Y Sweet Retreat, 844 F. Supp. 99, 102 (D.R.I.1994) ("The text of
the act indicates that it is not exclusive.");                Maryland National

Bank v. Darovec, 820 F. Supp. 1083, 1087 (N.D.Ill.1993) (concluding

that        the   Act    "stops   short      of    pre-empting      extra-judicial

repossessions and private sales");                Pee Dee State Bank v. The F/V

Wild    Turkey,     1992 A.M.C. 1896,    1991 WL 355221   (D.S.C.1991);

Southland Financial Corp. v. O/S MARY EVELYN, 248 F. Supp. 520, 522

(E.D.La.1965);          Chemical Bank v. United States Lines, S.A. (In Re

McLean Ind.), 132 B.R. 271 (Bankr.S.D.N.Y.1991); Price v. Seattle-

First Nat'l Bank, 582 F. Supp. 1568 (W.D.Wash.1983);                    see also 8

Benedict on Admiralty § 1.06[C] (7th ed. 1995);                  Grant, Gilmore &

Charles L. Black, Jr., The Law of Admiralty, 721 (2d ed. 1975).

       The appellant contends that this circuit's precedent controls

and that such precedent has held that the Ship Mortgage Act is

comprehensive and pre-empts state law enforcement remedies.                   She

cites two cases, J. Ray McDermott & Co., Inc. v. The Vessel Morning

Star, 457 F.2d 815 (5th Cir.) (en banc),11 cert. denied, 409 U.S.
948, 93 S. Ct. 292, 34 L. Ed. 2d 218 (1972), and Nat G. Harrison Over.

Corp. v. American Barge Sun Coaster, 475 F.2d 504 (5th Cir.1974).

However, both cases can be distinguished from the case at bar.

       In J. Ray McDermott, the en banc court addressed whether the

Ship Mortgage Act preempted state law with respect to federal

judicial sales and the resulting deficiency judgments. Id. at 816-

17.    In that case there was a judicial foreclosure and a public,

judicially-supervised sale;           there was no appraisal before sale.

       11
      In Bonner v. City of Prichard, 661 F.2d 1206 (11th
Cir.1981) (en banc), this court adopted as binding precedent all
of the decisions of the former Fifth Circuit handed down prior to
the close of business on September 30, 1981. Id. at 1209.
The district court granted a deficiency judgment in favor of the

mortgagee after the judicial sale of a vessel.               Id. at 816.   The

panel of the circuit court on appeal concluded that no deficiency

judgment was due because Louisiana law provided that the sale of

mortgaged property without an appraisal and under a waiver of

appraisal fully satisfies and discharges the debt and the personal

obligation of the debtor, thus forfeiting any deficiency judgment.

Disagreeing with that opinion, the en banc court concluded that

there was no void in the statutory scheme governing the judicial

sale procedure such that supplementation by state law could be

allowed.       Id. at 818.      The en banc court noted that the relevant
                                                       12
federal statutes, 28 U.S.C.A. §§ 2001, 2004,                provided all the

necessary requisites for judicial sales. Section 2001 specifically

requires appraisal at judicially supervised private sales, but

there was no provision for an appraisal in judicially-supervised

public sales.           Having expressly provided for appraisal in one

context and not in another context, Congress implicitly excluded

the necessity for appraisal at public sales.                The en banc court

then        concluded    that   state   law   could   not     supplement   the

comprehensive federal provisions for sales held pursuant to court

order because state and federal law conflicted.              Id. at 818-19.

       That holding does not control our decision in this case. This

is not a situation in which a party has attempted to supplement the

provisions governing the judicial sale of a vessel.              Rather, here

the mortgagee has chosen to forego judicial foreclosure and sale

       12
      These two sections, though not referenced in the Ship
Mortgage Act, govern judicial sales by federal courts.
altogether, opting instead for a self-help remedy.                   Here there is

no direct conflict of law.         Although the provisions for judicially

supervised sales might be comprehensive, the statute is silent with

regard     to   self-help      remedies    which      do   not    invoke   judicial

supervision.

      Despite the narrowness of its holding, the J. Ray McDermott

decision did employ broad language in its description of the scope

of the Ship Mortgage Act, specifically the following:

      It is clear that Congress intended that the ready availability
      of credit to support interstate commerce should not be impeded
      by parochial limitations and that the Act would wholly and
      completely supersede state law and practice in every respect.

Id. at 818.      Although J. Ray McDermott represents in effect an en

banc decision of this court (sitting then as the former Fifth

Circuit), the quoted language is dicta13 and is not controlling in

this case.       J. Ray McDermott involved a judicially-supervised

foreclosure and a direct conflict between federal and state law.

      Nor is Nat G. Harrison Overseas Corp., 475 F.2d 504 (5th

Cir.1974), controlling.          The issue in that case was whether the

federal court's deficiency judgment should be purged of interest

and or barred because the mortgage interest was usurious under the

laws of Georgia.        The court concluded that U.S.C.A. § 926(d) (the

substantive provision is now located at 46 U.S.C.A. § 31322(b))

controlled. That subsection specifically allowed for "such rate of

interest as is agreed by the parties" to the preferred mortgage.

The   court     noted   that    state     law   not    only      introduced   "   "an

      13
      See also other dicta to the opposite effect: "state law
may occasionally fill the gaps in an incomplete and less than
perfect maritime system." J. Ray McDermott, 457 F.2d at 818.
undesirable lack of uniformity' " into the Act but that application

of state law "flatly conflict[ed] with Section 926(d)". 475 F.2d

at 506.      Again, though some language of this case might imply that

the Act preempts state law in every respect, that is not its

holding.      Like J. Ray McDermott, Nat G. Harrison involved a direct

conflict between federal and state law.

       Thus, neither J. Ray McDermott nor Nat G. Harrison foreclose

our holding that the Ship Mortgage Act is not pervasive;              we hold

that the Act does leave room for the operation of state law

self-help remedies when authorized by contract.              We acknowledge

that our holding is in conflict with Bank of American National

Trust & Savings Ass'n v. Fogle, 637 F. Supp. 305 (N.D.Cal.1985), and

Nate Leasing Co., Inc. v. Wiggins, 114 Wash.2d 508, 789 P.2d 89

(1990).      Contrary to our holding, the      Fogle court held that the

Ship Mortgage Act exclusively governs all foreclosures of preferred

ship mortgages, and thus preempts any state law provisions allowing

for self-help, nonjudicial foreclosure sales.              The    Fogle court

reasoned that because the statute provided for private sales as

well    as    public   sales   within   its   procedures    for    judicially

supervised foreclosure, Congress necessarily intended to preclude

the use of self-help procedures which also include private sale.

In Nate Leasing, the Supreme Court of Washington followed Fogle and

relied upon the dicta in         J. Ray McDermott, which we have now

disavowed.

       In our opinion, the better reasoned cases support our holding,

and not that of Fogle and Nate Leasing.         As noted above, we see no

direct conflict between the state law self-help provisions and the
federal scheme;     we disagree with theFogle court's suggestion that

Congress intended to preclude the use of nonjudicial, self-help

remedies merely because Congress permitted private sales as well as

public sales within its overall scheme of judicially supervised

foreclosures.           Although     the   federal     scheme    may   well    be

comprehensive with respect to judicial foreclosure, the Act is

silent with respect to self-help repossession and resale. As noted

above, the self-help repossession and resale procedure poses no

threat to the administration of the federal program, but rather is

entirely    consistent      with     the    congressional       purpose.      The

congressional purpose was to facilitate and promote financing for

vessels, and in particular to provide an effective means for

enforcing ship mortgages.            We believe our holding is consistent

with and supportive of that purpose. Our holding merely recognizes

the availability of an optional remedy—one which may be less

cumbersome and expensive in some circumstances14—in addition to the

remedies provided by the federal statute.              Nor do we believe our

holding    will   undermine        any   congressional    goal    of   providing

uniformity.       Not    only   is   the   self-help   remedy    optional,    the

relevant state law is now itself largely uniform as a result of the

widespread adoption of the Uniform Commercial Code.

     Finally, our holding is supported by the permissive language

used by the federal statute in providing for its foreclosure

remedies.     We note also that our holding is supported by leading

treatises on admiralty law.          See 2 Benedict on Admiralty § 70f (7th

     14
      Of course, the self-help remedy could not affect maritime
liens, and thus will not be effective in many situations.
ed. 1995) (criticizing15 the reasoning in Fogle and the dicta in J.

Ray McDermott and indicating that the cases holding that the

federal judicial remedies are not exclusive appear to be better

reasoned).     Accord, Grant Gilmore and Charles L. Black, Jr., The

Law of Admiralty, 718-27 (2d ed. 1975).16

        For the foregoing reasons, we hold that the Ship Mortgage Act

does    not   prohibit   a   mortgagee's   use   of   state   law   self-help

enforcement procedures when the parties have authorized those

procedures by contract.

       AFFIRMED.

       15
      Benedict on Admiralty also recognizes that self-help
repossession and resale was "generally acknowledged as an
available remedy prior to the Fogle decision." Id. at n. 129.
       16
      In addition, we note that the Coast Guard regulations
apparently recognize the availability of self-help repossession
and resale remedies. See 46 C.F.R. § 67.83 ("When title to a
documented vessel has passed by reason of an extra-judicial
repossession and sale, such passage must be established by....").
Because we reach our interpretation of the Act independently, we
need not decide whether the Coast Guard regulations are entitled
to deference.