It has long been recognized by maritime lawyers that the laws of the United States defining and governing the status of vessels of the United States and their documentation and conveyancing were in need. of revision. Four years of experience under the important Ship Mortgage Act, 1920, 41 Stat. 1000 to 1006, coupled with the recent decisions in The Lincoln Land, 1923 A. M. C. 1007, 1924 A. M. C. 194, 295 Fed. 358, and The Susana, 1924 A. M. C. 1389 have demonstrated that this need is pressing.

At the close of the war the United States Government was left with a large merchant marine tonnage of all classes on its hands. There was a practical unanimity of opinion that, with certain exceptions, it was undesirable for it to continue to own and operate this tonnage for any longer period than would be required to get it into private ownership with a prospect of its continued operation as a part of the merchant marine of the United States.

It was evident that this shift could be accomplished within a reasonable time only under some system of part payment in cash with the balance satisfactorily secured on the vessel. Some form of security was required which would be satisfactory to the Government while it was continuing to assist the purchasers in carrying their purchases, and also be satisfactory to banks and other investors, so that they would be encouraged to make loans on such security, thus enabling

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shipowners ultimately to get from those sources such accommodation as they needed for the carrying of vessel property.

The most natural form for such security was a recorded mortgage, but under the law existing in 1920 a vessel mortgage was an unsatisfactory security for two reasons:

(1) Because the vessel and any rights of a mortgagee therein were subject to a great number of maritime liens, including liens for repairs and supplies furnished to the vessel, both before and after the giving of the mortgage, all enforcible in rem against the vessel in admiralty in priority to any rights of the mortgagee.

(2) Not only did all these liens or rights in rem take precedence to any right of the mortgagee but the mortgagee did not even have a maritime lien or right in rem of lower rank which was enforcible in admiralty, or of which a court of admiralty would take cognizance, except to the extent of permitting the mortgagee to intervene in admiralty proceedings, as standing in the shoes of the owner, and, on a sale of the vessel, to have precedence in the distribution of the proceeds of the sale over the mortgagor and over third persons not having maritime liens, if the mortgage had been duly recorded or they took title with actual notice of the mortgage. The John Jay (1854), 58 U. S. (17 How.) 399; The J. C. Rumbell (1891), 148 U. S. 1, at p. 15; The Rupert City (DWash., 1913), 213 Fed. 263; The Katie O'Neil (NDCal. 1895), 65 Fed. 111.

If the desired security was to be in the form of a mortgage it was clear that the status of the proposed mortgage would have to be fundamentally changed. By the Ship Mortgage Act, 1920, provision was accordingly made for mortgages of a special class, entitled "preferred mortgages," which, subject to requirements for recording, endorsement on the ship's document and other conditions, were given the status of a maritime lien, with the right of enforcement in rem in admiralty, ranking in priority to all other maritime liens not existing at the time of the recording of the mortgage and its endorsement on the ship's document, except (a) liens for damages arising out of tort, (b) for wages of stevedores employed directly by the agent, operator, master, ship's husband, or agent of the vessel, (c) for crew's wages, (d) for general average, and (e) for salvage, including contract salvage. (Subsection M (a) of the Ship Mortgage Act.) As, under forms of policies in common use, loss or injury to the ship by marine perils, liabilities for damages arising out of tort, for general average

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and for salvage could be insured against, this left only the lien for stevedore's and crew's wages to diminish, after the taking of the mortgage, the value of the vessel as security to the mortgagee.

Constitutionality of Ship Mortgage Act 1920.

There has been some doubt as to whether it was within the constitutional power of Congress thus to create a maritime lien not previously existing under maritime law, with a rank in priority to other long recognized maritime liens. The point cannot be considered finally settled until passed upon by the United States Supreme Court, but it has now come before inferior courts of the United States in a number of cases, and the constitutionality of the act has been sustained in all of those decisions. The Oconee, 280 Fed. 927 (EDVa.); The Lincoln Land, 1923 A. M. C. 1007; 1924 A. M. C. 194 (DMass.); The Nanking, 1923 A. M. C. 1191, 292 Fed. 642 (NDCal.); The Owego, 1923 A. M. C. 1060 (EDLa.); The Egeria, 1924 A. M. C. 126 (9CCA); The Northern Star, 1924 A. M. C. 136 (EDNY).

Aside from this constitutional point, the lien given to the preferred mortgagee was on its face reasonably satisfactory. For this reason, and because the United States itself has been satisfied to accept such mortgages in part payment on vessel property of large value which it has sold, and also in part because of a widespread and patriotic desire that, so far as possible, the position of the United States as a maritime nation acquired during the war should be maintained, banks and other investors in the United States have quite freely assisted vessel owners by making loans, in many cases to large amounts, on the security of preferred mortgages. It is of much importance for the future of the merchant marine of the United States that the confidence which has been placed in this form of security should not be found to have been misplaced.

But for the proper security of the lender it is necessary not only that the lien should be satisfactory in character and rank, but also that the conditions and formalities prescribed by law for the vesting of the lien should be plain and unambiguous and not such as to render the vesting of it precarious and doubtful. It has become clear to maritime lawyers that in these conditions and formalities under existing law there are pitfalls and difficulties which can be avoided only

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by stepping warily and that it is essential that these pitfalls and difficulties should be eliminated by appropriate legislation.

Under the Ship Mortgage Act the status of a preferred mortgage is given to the security only if the mortgaged vessel is, at the time when the mortgage is given and recorded, a "vessel of the United States" (Subsection D (a)). A "vessel of the United States" is defined as meaning "any vessel documented under the laws of the United States" (Subsection B-4); "documented" is defined as meaning "registered or enrolled or licensed under the laws of the United States, whether permanently or temporarily" (Subsection B-3.) and "port of documentation" is defined as meaning "port at which the vessel is documented, in accordance with law." (Subsection B-3.) It is also provided, in addition to other requirements, that the mortgage must be recorded (Subsections C(a) and D(a)) in the office of the collector of customs "of the port of documentation" of the vessel.

By these provisions the acquisition of the lien provided for by the act is dependent on the vessel having, at the time of the execution of the mortgage, the actual status of a vessel of the United States, legally documented as such, and on the due recording of the mortgage based on a documentation according to law. The existing law as to the United States status of vessels and their documentation according to law is such as to make this foundation most insecure. The main root of existing difficulties will be found to be the basing of the validity of the mortgage security, both under the Act of 1850 hereinafter referred to and the Ship Mortgage Act, upon the actual United States status of the vessel instead of basing it, subject to certain necessary reservations, upon apparent status or of otherwise adjusting the status and documentation provisions so as to afford proper protection to mortgagees taking title in reliance on apparent status and the document in fact given to the vessel. The other difficulties have been due chiefly to ambiguity both in the Act of 1850 and the Ship Mortgage Act as to the required port of recording.

In analyzing the law as to the status and documentation of vessels and the recording of vessel conveyances, three stages in its development are to be noted.

(1) The period from 1789 to 1850, during which there was legal provision for the documenting of vessels and defining their status and the continuance of their status as vessels of the United States but none