46 U.S.C. § 31326

Court sales to enforce preferred mortgage liens and maritime liens and priority of claims

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(a) When a vessel is sold by order of a district court in a civil action in rem brought to enforce a preferred mortgage lien or a maritime lien, any claim in the vessel existing on the date of sale is terminated, including a possessory common law lien of which a person is deprived under section 31325(e)(2) of this title, and the vessel is sold free of all those claims.(b) Each of the claims terminated under subsection (a) of this section attaches, in the same amount and in accordance with their priorities to the proceeds of the sale, except that—(1) the preferred mortgage lien, including a preferred mortgage lien on a foreign vessel whose mortgage has been guaranteed under chapter 537 of this title, has priority over all claims against the vessel (except for expenses and fees allowed by the court, costs imposed by the court, and preferred maritime liens); and(2) for a foreign vessel whose mortgage has not been guaranteed under chapter 537 of this title, the preferred mortgage lien is subordinate to a maritime lien for necessaries provided in the United States.(Pub. L. 100–710, title I, § 102(c), Nov. 23, 1988, 102 Stat. 4746; Pub. L. 103–160, div. A, title XIII, § 1360, Nov. 30, 1993, 107 Stat. 1816; Pub. L. 109–304, § 15(31), Oct. 6, 2006, 120 Stat. 1704.)

Historical and Revision Notes
Revised section	Source section (U.S. Code)
31326(a)	46:953(b), 961(c)
31326(b)(1)	46:953(b)
31326(b)(2)	46:951 (2d par. proviso)

Section 31326(a) provides for a court-ordered sale to enforce a preferred mortgage lien or a maritime lien and the priority of claims. When a mortgaged vessel is sold by court order in a civil action in rem, any prior claim in the vessel is terminated—including any possessory common law lien. This subsection makes a substantive change to law by making the process the same for maritime liens as was provided for preferred mortgage liens. This eliminates the requirement for making a new mortgagee for a court sale to enforce a maritime lien. This section also broadens the jurisdiction to courts in the territories, as defined in section 31301.

Section 31326(b)(1) provides that each of these terminated claims attaches, in the same amount and priority, to the proceeds of sale—except that the preferred mortgage lien always has priority over these other claims. However, the preferred mortgage lien is still subordinated to expenses and fees allowed by the court, costs imposed by the court, and any preferred maritime liens. This may include statutory fees such as the fee of the United States Marshal under 28 U.S.C. 1921. Except for broadening its coverage under subsection (a), this makes no substantive change to law.

Section 31326(b)(2) provides in the case of a foreign vessel, the preferred mortgage lien is also subordinated to a maritime lien for necessaries performed or supplied for the vessel in the United States. “Provided” has been substituted for “provided or supplied” for consistency in usage. Except for broadening its coverage under subsection (a), this paragraph makes no substantive change to law.

Editorial NotesAmendments

2006—Subsec. (b)(1). Pub. L. 109–304, § 15(31)(A), substituted “chapter 537 of this title,” for “title XI of the Merchant Marine Act, 1936 (46 App. U.S.C. 1101 et seq.)”.

Subsec. (b)(2). Pub. L. 109–304, § 15(31)(B), substituted “chapter 537 of this title” for “title XI of that Act”.

1993—Subsec. (b)(1). Pub. L. 103–160, § 1260(1), inserted “, including a preferred mortgage lien on a foreign vessel whose mortgage has been guaranteed under title XI of the Merchant Marine Act, 1936 (46 App. U.S.C. 1101 et seq.)” after “preferred mortgage lien”.

Subsec. (b)(2). Pub. L. 103–160, § 1360(2), inserted “whose mortgage has not been guaranteed under title XI of that Act” after “foreign vessel”.

Statutory Notes and Related SubsidiariesEffective Date

Section effective Jan. 1, 1989, with certain exceptions and qualifications, see section 107 of Pub. L. 100–710, set out as a note under section 31301 of this title.

Notes of Decisions

Cited in 64 cases (10 in the last 5 years), 1989–2025 · leading case: Dresdner Bank AG v. M/V Olympia Voyager, 463 F.3d 1210 (11th Cir. 2006).

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Dresdner Bank AG v. M/V Olympia Voyager, 463 F.3d 1210 (11th Cir. 2006). · cites it 2× “See 46 U.S.C. § 31326 . The Banks contested Zernavi’s claim, arguing that English law should be applied to Zernavi’s claim under the choice of law provision in the proposed contract that ROC submitted to Zernavi in December, or, alternatively, that Greek law should apply.”

Goldfish Shipping, S.A. v. HSH Nordbank AG., 623 F. Supp. 2d 635 (E.D. Pa. 2009). · cites it 6× “” See 46 U.S.C. § 31326 (b). In the alternative, we stated that Goldfish’s claims failed because, inter alia, the First Amended Complaint did not allege (1) any contract or warranty between the parties, (2) any promise or misrepresentation made by Nordbank to Goldfish, (3) any…”

Dresdner Bank AG v. M/V Olympia Voyager, 446 F.3d 1377 (11th Cir. 2006). · cites it 2× “See 46 U.S.C. § 31326 . No written agreement between the parties existed, so the district court engaged in a choice-of-law analysis prior to determining the existence of a maritime lien under CIMLA.”

In Re Muma Servs., Inc., 322 B.R. 541 (Bankr. D. Del. 2005). · cites it 5× “46 U.S.C. § 31326 (b)(1). A preferred maritime lien is defined as a maritime lien on a vessel — (A) arising before a preferred mortgage was [duly] filed .”

Associated Metals & Minerals Corp. v. Alexander's Unity MV, 41 F.3d 1007 (5th Cir. 1995). · cites it 2× “1 46 U.S.C. § 31326 ; All Alaskan Seafoods, 882 F.”

Oil Shipping (Bunkering) B.V. v. Royal Bank of Scotland, 817 F. Supp. 1254 (E.D. Pa. 1993). · cites it 4× “Under 46 U.S.C.A. § 31326 , when a vessel is sold at a judicial sale, all claims against the vessel are terminated and subsequently attach to the proceeds of the sale.”

Dresdner Bank AG v. M/V Olympia Voyager, 463 F.3d 1233 (11th Cir. 2006). · cites it 2× “” 46 U.S.C. § 31326 (b)(1). Because Greek law determines that any possible lien held by Eko-Elda in relation to its tort claims would not be a maritime lien, United States law would not rank it higher in priority than the Banks’ preferred ship mortgage.”

Universal Oil Ltd. v. Allfirst Bank, 419 F.3d 83 (2d Cir. 2005). · cites it 2× “§ 363 (f) did not extend to vessels over which the district court lacked in rem jurisdiction, because only an admiral *87 ty court acting in rem pursuant to 46 U.S.C. § 31326 and traditional tenets of admiralty law could deliver a vessel free and clear of its maritime liens.”

Navieros Inter-Americanos, S.A. v. M/V Vasilia Express, 120 F.3d 304 (1st Cir. 1997). “See 46 U.S.C. § 31326 (b)(2) (for certain foreign vessels, preferred mortgage lien subordinate to maritime lien for necessaries provided in the United States); id.”

Mullane v. Chambers, 438 F.3d 132 (1st Cir. 2006). “See 46 U.S.C. § 31326 (b)(1); 2-IV Benedict on Admiralty § 51 (2005).”

United States v. Alakai (O.N. 1182234), 815 F. Supp. 2d 948 (E.D. Va. 2011). · cites it 8× “See 46 U.S.C. § 31326 (b)(1) (“[A] preferred mortgage .”

Key Bank of Puget Sound v. Alaskan Harvester, 738 F. Supp. 398 (W.D. Wash. 1989). · cites it 2× “46 U.S.C. § 31326 (b)(1). The objecting intervenors hold maritime liens for necessaries they supplied to the ALASKAN HARVESTER between December 1988 and June 1989.”

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— 46 U.S.C. § 31326(b) — 2 cases

Bank of Am., N.A. v. Marine Princess M/V (E.D. La. 2022).

United States v. Huakai (O.N. 1215902), 768 F. Supp. 2d 832 (E.D. Va. 2011).

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