to a corporation of say $30,000, receiving therefor 3,000 shares, being all of its capital stock. He, then being practically the corporation, has it execute a mortgage to himself for $30,000 without other consideration. If the mortgaged property is brought into court charged with the lien of the mortgage and also with other liens to creditors, will the mortgagee be awareded a preferred lien upon the property? We are propounding this as a general question without the Act of Congress, although without it such a claim would not give a maritime lien. The question admits only of the answer that as against lien creditors of the corporation the mortgage would be without consideration and a nullity. How is it under the act? The act authorizes the mortgaging or vessel property, but provides that, although such mortgages are good as against the mortgagor "and a person having actual notice thereof," (43 USCA § 921) they are invalid as against "any person other than" the mortgagor and those having actual notice of the existence of the mortgage, unless the mortgage is recorded with the Collector of Customs in the home port of the vessel. The home port can be designated only with the approval of the Commissioner of Navigation of the Department of Commerce. These mortgages were not so recorded. It is true they were deposited with the Collector of Customs of the Port of New York, but that port had not at that time been designated as the home port of the vessels. It is likewise true that New York was afterwards designated as such home port.
We do not think there was in this a compliance with the requirements of the act. What is sought to be done is to visit upon creditors constructive notice of the mortgages. A compliance with the act would be such constructive notice, but something else would not be. In re Empire Shipbuilding Co. (C.C.A.) 221 F. 223; The Underwriter (D.C.) 3 F.2d 483; The Jean L (D.C.) 286 F. 727; The Susana (C.C.A.) 2 F.2d 410.
We pass without a specific ruling the effect of the requirement of the indorsement of the mortgage upon the ship's papers where the mortgagee has been a party to the hiding of this notice.
The provision, in case other property than the vessel is included in the mortgage, is under the facts of this case somewhat difficult to construe. There was a pledge here, not only of the vessel, but of freight earned and to be earned. Obviously no freight had been earned, and just as obviously future earnings could not be apportioned. Freight earnings are a part of the vessel as much as the ship's tackle. This is true, however, only of freight earned. There is authority for the proposition that the value of mortgaged property suffered by the mortgagee to go to the mortgagor may, in favor of another lien creditor, be deducted from the mortgage debt. The Red Lion (D.C.) 22 F.2d 329.
There is no evidence, however, that any earned freights were either applied to the mortgage or released to the mortgagor. The practical effect of mortgaging each vessel separately for the whole $30,000 mortgage debt was to make of each mortgage one of a pledge of both vessels for the $30,000 debt.
We refuse to hold that there was here any property pledged "other than a vessel" within the meaning of clause "e" of § 30, subsec. D of the Act (46 USCA § 922 (e). We do hold, however, that the mortgages in suit are not "preferred" mortgages within the meaning of the act of Congress as against the other libelants. There remains only the other libels.
The discussion has already been extended to a tiresome length. The claims of the other libelants are not disputed and have been decreed pro confesso, and may be allowed with a single comment. Libelants for supplies, etc., are now relieved from averring or proving that the supplies were furnished on the credit of the vessel. That, none the less, is still the basis for a libel in rem. If the debt was contracted on the personal credit of the one who contracted the debt, no lien can be successfully asserted. Here is its zeal to visit bad faith upon the mortgagee in the contraction of the debt, one of the libelants has come dangerously near to a waiving of its otherwise lien against the vessel. This is because one of the expressions used might be construed as a statement that the debt was contracted wholly upon the personal credit of the owner and in nowise upon the credit of the vessel.
We construe this expression, however, as meaning that the libelant furnished supplies to the vessel on its credit, and, in consequence, acquired a lien. The enforcement of such a lien is, however, troublesome and expensive. They, because of this, inquired into the additional financial ability and credit of the owner without waiving their lien against the vessel.
The claims are all allowed.
There are a number of these libels.
We accordingly grant leave to the proctors concerned to submit formal judgments disposing of the several claims and the cause in accordance with this opinion, retaining jurisdiction of the cause for the purpose of entering final judgments.
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