of the court serves the common benefit of all those parties having an interest in the vessel. Steamship POZNAN, 274 U.S. at 120-22; Kingsgate Oil, 815 F.2d at 922-23 (citations omitted). Moreover, in order to receive reimbursement for products or services provided to a vessel in custodia legis, the products or services must be necessary for the due care and preservation of the ship. 2 Benedict on Admiralty § 48, at 3-86 - 91 (7th ed. 1992).
The arrest of the M/V ZIYA S on March 29 by the United States Marshals Service constituted official process required by law and thus effected seizure of the vessel, providing actual and constructive notice to the world that the vessel was in custodia legis. See Supplemental Rules For Certain Admiralty And Maritime Claims Rule C (action in rem may be brought to enforce any maritime lien and court may issue warrant for arrest of vessel); IMF's Memorandum Of Law In Support Of Its Motion For Summary Judgment, Attachment 1 (presenting Manual For United States Marshals, 1987 AMC 1041, 1052-53 (1986)). In addition, it is acceptable practice for the Court to appoint the Master of a seized vessel as substitute custodian. See Manual For United States Marshals, 1987 AMC 1041, 1049 (1986). Therefore, IMF's argument that the arrest of the M/V ZIYA S was only nominal fails and the Court finds that the M/V ZIYA S was in custodia legis as of 11:15 a.m. on March 29, 1992. Because IMF's delivery of oil to the M/V ZIYA S occurred on March 30, one day after the arrest of the vessel by the Marshals Service, IMF could not obtain a maritime lien and IMF can only receive payment if the delivery of oil was an "expense of justice." Steamship POZNAN, 274 U.S. 117, 120-21, 71 L. Ed. 955, 47 S. Ct. 482 (1927).
IMF's delivery of oil to the M/V ZIYA S while in custodia legis was not necessary to preserve the vessel and does not satisfy the POZNAN requirement that the delivery of oil benefit all of the parties with an interest in the vessel. The M/V ZIYA S consumed about 0.8 - 1.8 tons of fuel oil while berthed at a pier facility, and the vessel consumed approximately 10 tons of fuel oil per day while navigating/maneuvering in a fresh water port such as Philadelphia. Royal Bank's Motion For Final Distribution, Exhibit C at 3 & Appendices B3-4. Diesel oil consumption for the M/V ZIYA S was approximately 1.5 tons per day without cargo operation. Id. The M/V ZIYA S contained 433.1 tons of fuel oil and 86.9 tons of diesel oil on March 29, 1992, and 2673.5 tons of fuel oil and 203.4 tons of diesel oil on March 31, 1992, the increase resulting from the IMF delivery. Id. at Exhibit D. The delivery of fuel and diesel oil was not necessary to preserve the M/V ZIYA S as the vessel had sufficient fuel to preserve the ship after its seizure on March 29, 1992.
In addition, the subsequent sale of the oil for $ 130,000, although adding to the funds in the Court Registry, does not inure to the benefit of all parties with an interest in the vessel. Rather, IMF's attachment of the fuel, sale of the fuel in a separate transaction, and IMF's claim of superior rights to the proceeds from the sale of the fuel demonstrate that the delivery of the fuel did not inure to the benefit of any parties other than IMF and is not an "expense of justice." See Kingsgate Oil v. M/V GREENSTAR, 815 F.2d 918, 924 (3d Cir. 1987) (cost of unloading ship that benefitted only some parties not "expense of justice" entitled to preferential categorization).
Finally, ignorance of actual seizure of the vessel will not elevate in custodia legis claims to maritime lien status. 2 Benedict on Admiralty § 48, at 3 - 90 - 91 (7th ed. 1992); The COMMACK, 8 F.2d 151, 153 (S.D. Fla. 1925). IMF's claim that the posting of the notice of arrest on the wheelhouse of the vessel that could not be seen at the time of fuel delivery fails because ignorance of the seizure cannot create any rights or maritime lien. The COMMACK, 8 F.2d 151, 153 (S.D. Fla. 1925). The Court also notes that executory contracts to supply fuel do not create a lien until the fuel is delivered. See Garcia v. Warner Quinlan, 9 F. Supp. 1010, 1011 (S.D.N.Y. 1934). Thus, a contract for the delivery of fuel to the M/V ZIYA S entered before the arrest of the vessel cannot create a maritime lien for fuel that was delivered under the contract after the arrest. Id.
Therefore, IMF's argument that it obtained a maritime lien for necessaries delivered to a foreign vessel in the United States under section 31326(b)(2) fails because a maritime lien is barred once a vessel is in custodia legis. See New York Dock Co. v. Steamship POZNAN, 274 U.S. 117, 120, 71 L. Ed. 955, 47 S. Ct. 482 (1927); Kingsgate Oil v. M/V GREENSTAR, 815 F.2d 918, 922 (3d Cir. 1987). Further, IMF's delivery of fuel does not qualify as an "expense of justice" because the delivery did not inure to the common benefit of the parties with an interest in the vessel, nor was it necessary for the preservation of the vessel while under arrest.
The remaining party with a claim to the proceeds in the Court Registry, Baytur, claims that it has a maritime lien arising from its delivery of fuel in Turkey. In light of the record before the Court and the lack of any dispute regarding Baytur's delivery of fuel, the Court finds that Baytur possesses a maritime lien against the M/V ZIYA S as of the date of deliveries in August and October 1991. 46 U.S.C.A. § 31342.
In summary, the Court finds that Royal Bank has a preferred mortgage under section 31301(6), IMF has no right to payment under the doctrine of in custodia legis, and Baytur possesses a valid maritime lien under § 31342.
The next issue is the priority between Royal Bank's preferred mortgage and Baytur's maritime lien regarding the funds in the Court Registry. Baytur argues that in deciding the priority issue, the Court is faced with a choice of law issue, and moreover, that the law of Turkey applies to the determination of priorities.
Despite Baytur's vigorous argument that the priority contest presents a choice of law issue, the Court finds that as a matter of law, priority contests between maritime liens and preferred mortgages are determined by the law of the forum; in the instant case, the United States. See Gulf Oil Trading Co. v. Creole Supply, 596 F.2d 515, 521 (2d Cir. 1979); Payne v. SS TROPIC BREEZE, 423 F.2d 236, 238-39 (1st Cir.), cert. denied, 400 U.S. 964 (1970); G. Gilmore & C. Black, The Law of Admiralty 701 & nn.262f & 262g (2d ed. 1975).
As Baytur states, "The laws of every maritime nation include rules by which the priority of competing lien and mortgage claims are to be determined." Baytur's Motion For Partial Summary Judgment, at 2. Baytur goes on to argue that the "center of gravity" test established by the Supreme Court in Lauritzen v. Larsen, 345 U.S. 571, 97 L. Ed. 1254, 73 S. Ct. 921 (1952) should be used to determine whose law applies to the determination of priorities. Although Baytur argues persuasively for the application of Turkish law, the Court finds the opinion in Payne v. SS TROPIC BREEZE, 423 F.2d 236 (1st Cir.), cert. denied, 400 U.S. 964 (1970) relevant regarding the application of the Lauritzen factors to priority determinations:
In casting their argument on this point in traditional choice-of-law terms, the parties seem to have misapprehended the nature of the question. The Ship Mortgage Act establishes the relative priorities of foreign ship mortgages and other maritime liens. It is axiomatic that Congress has the power "to condition access to our ports by foreign-owned vessels upon submission" to our law, substantive and procedural. Lauritzen v. Larsen, 345 U.S. 571, 592, 73 S. Ct. 921, 933, 97 L. Ed. 1254 (1953). The crux of the matter, then, is whether Congress so intended the priority provisions of the Ship Mortgage Act. We conclude that it did.
Id. at 238-39. The recent amendment to the admiralty laws do not appear to alter the decision of the Payne court. Therefore, the Court finds that a priority contest between a foreign ship mortgage and a maritime lien is governed by the law of the forum and does not raise a choice of law issue.
The Court finds that there are no disputes of material facts and the case is ripe for summary judgment. See Turner v. Schering-Plough Corp., 901 F.2d 335, 340-43 (3d Cir. 1990); White v. Westinghouse Electric Co., 862 F.2d 56, 59 (3d Cir. 1988). Applying the United States priority law under 46 U.S.C.A. § 31326(b), Royal Bank's preferred mortgage has priority over Baytur's maritime lien because the liens arose in 1991, subsequent to the execution and registration of Royal Bank's mortgage in September 1989. Accordingly, Royal Bank is entitled to all of the remaining funds in the Court Registry, including accrued interest, because Royal Bank is owed an amount greater than that contained in the Court Registry.
An appropriate order follows.
Clarence C. Newcomer, J.
ORDER - April 6, 1993, Filed
AND NOW, this 5th day of April, 1993, upon consideration of Motion of Plaintiff/Intervenor Royal Bank of Scotland For Final Distribution of M/V Ziya S and Bunker Sale Proceeds, Motion of Plaintiff/Intervenor International Marine Fuels of San Francisco Inc. For Summary Judgment, and Motion of Plaintiff/Intervenor Baytur Trading S.A. For Partial Summary Judgment, and responses thereto, it is hereby ORDERED that Motion of Plaintiff/Intervenor Royal Bank of Scotland For Final Distribution of M/V ZIYA S and Bunker Sale Proceeds is GRANTED. IT IS FURTHER ORDERED that Motions of Plaintiff/Intervenor International Marine Fuels of San Francisco Inc. For Summary Judgment and the Motion of Plaintiff/Intervenor Baytur Trading S.A. For Partial Summary Judgment are DENIED. It is FURTHER ORDERED that Plaintiff/Intervenor Royal Bank of Scotland shall receive the entirety of the funds remaining in the Court Registry from the judicial sale of the M/V ZIYA S and her bunkers, including accrued interest. It is FURTHER ORDERED that the Clerk of the Court distribute the aforesaid funds to Plaintiff/Intervenor Royal Bank of Scotland.
AND IT IS SO ORDERED.
Clarence C. Newcomer, J.