The courts of the United States, in the exercise of admiralty
and maritime jurisdiction, cannot take cognizance of questions of
property between the mortgagee of a vessel and the owner.
The mere mortgage of a ship, other than that of an hypothecated
bottomry, is a contract without any of the characteristics or
attendants of a maritime loan, and is entered into by the parties
to it without reference to navigation or perils of the sea.
The admiralty courts in England now exercise a more ample
jurisdiction upon the subject of mortgages of ships, but it is
under a statute of Victoria, and in the United States the admiralty
and maritime jurisdiction remains as it was before.
This was a libel filed by the appellants of the steamboat
John Jay to enforce payment of a mortgage upon the boat
under the circumstances stated in the opinion of the Court.
The district court dismissed the libel, which decree was
Page 58 U. S. 400
affirmed by the circuit court, and the libellants appealed to
this Court.
MR. JUSTICE WAYNE delivered the opinion of the Court.
We will confine ourselves in this opinion to the inquiry,
whether or not a court of admiralty has jurisdiction to decree the
sale of a ship for an unpaid mortgage, or can on that account
declare a ship to be the property of the mortgagees and direct the
possession of her to be given to them. The questions of pleading
made in the case and the other points argued we shall not notice.
The conclusion at which we have arrived makes that unnecessary.
The libellants were the owners of the steamer
John Jay.
They sold her to Joseph McMurray for the sum of $6,000 -- $1,000 in
cash and the residue of $5,000 upon a credit for which promissory
notes were given payable to their order in three, six, nine,
twelve, fifteen, eighteen, twenty-one, and twenty-four months. On
the day of sale, McMurray, the purchaser, executed in a single deed
containing the whole contract between himself and the libellants, a
transfer of the boat to the latter as a security for the payment of
his notes, with the proviso
"that this instrument is intended to operate only as a mortgage
to secure the full and just payment of the eight promissory notes
given in consideration of the purchase money of said vessel or
steamboat."
McMurray failed to pay the second note. Upon such failure the
libel was filed. The libellants set out the contract;
Page 58 U. S. 401
allege that it was to operate as a mortgage to secure the
payment of McMurray's notes; state his failure to pay the second
note; claim in the fifth article of their libel that McMurray's
failure to pay had revested them with the title to the boat and
that McMurray's had become forfeited from his noncompliance with
the condition contained in the contract of sale. Their prayer is
that they may have a decree for the amount of the unpaid purchase
money, with interest and costs, and that
The John Jay and
her equipments may be condemned to pay the same. Afterwards, upon
their appeal in the circuit court, they moved to amend their libel
by inserting the words, "or that the steamboat
John Jay
may be decreed to be their property, and the possession be directed
to be delivered to them."
To this libel George Logan, by way of answer, put in a claim of
ownership of
The John Jay, by a
bona fide
purchase from McMurray, and he further denies the jurisdiction of
the court, upon the ground that the contract between the libellants
and McMurray was not maritime or a case of admiralty and maritime
jurisdiction. It appears that McMurray had received the possession
of the boat; that she had been enrolled at the custom house in his
name; that he first sold one-fourth of her to Logan, and
afterwards, on the 2d December, executed a bill of sale for the
whole of her to Logan, which was recorded in the custom house, and
that thereupon
The John Jay was enrolled and licensed in
the name of Logan.
Upon the hearing of the cause in the district court, the libel
was dismissed. It was carried, by appeal, to the circuit court, and
the judgment of the district court having been affirmed, it is now
here upon appeal from the circuit court. We think that the
affirmance of the judgment of the district court was right, and
will here briefly give our reasons for that opinion.
It has been repeatedly decided in the admiralty and common law
courts in England that the former have no jurisdiction in questions
of property between a mortgagee and the owner. No such jurisdiction
has ever been exercised in the United States. No case can be found
in either country where it has been done. In the case of
The
Neptune, 3 Hagg. 132, Sir John Nicholl, in giving his
judgment, observes:
"Now upon questions of mortgage, the court of admiralty has no
jurisdiction; whether a mortgage is foreclosed, whether a mortgagee
has a right to take possession of a chattel personal, whether he is
the legal or only the equitable owner, and whether a right of
redemption means that a mortgagee is restrained from selling in
repayment of his debt till after the time specified for the
redemption is passed, the decision of these questions belongs to
other courts; they are not within the jurisdiction or
Page 58 U. S. 402
province of the courts of admiralty, which never decides on
questions of property between the mortgagee and owner."
This is not so because such a jurisdiction had been denied by
the jealousy of the courts of the common law. Its foundation is
that the mere mortgage of a ship, other than that of an
hypothecated bottomry, is a contract without any of the
characteristics or attendants of a maritime loan, and is entered
into by the parties to it without reference to navigation or perils
of the sea. It is a security to make the performance of the
mortgagor's undertaking more certain, and whilst he continues in
possession of the ship, disconnecting the mortgagee from all agency
and interest in the employment and navigation of her and from all
responsibility for contracts made on her account. Such a mortgage
has nothing in it analogous to those contracts which are the
subjects of admiralty jurisdiction. In such a case, the ship is the
object for the accomplishment of the contract, without any
reference to the use of her for such a purpose. There cannot be,
then, anything maritime in it. A failure to perform such a contract
cannot make it maritime. A debt secured by the mortgage of a ship
does not give the ownership of it to the mortgagee. He may use the
legal title to make the ship available for its payment. A legal
title passes conditionally to the mortgagee. Where there has been a
failure to pay, he cannot take the ship
manu forti, but he
must resort either to a court of equity or to statutory remedies
for the same purpose when they exist to bar the mortgagor's right
of redemption by a foreclosure, which is to operate at such time
afterward, when there shall be a foreclosure without a sale, as the
circumstances of the case may make it equitable to allow. Indeed,
after a final order of foreclosure has been signed and enrolled and
the time fixed by it for the payment of the money has passed, the
decree may be opened to give further time if there are
circumstances to make it equitable to do so, with an ability in the
mortgagor to make prompt payment.
Thornhill v. Manning, 7
Eng.Rep. 97, 99, 100.
courts of admiralty have always taken the same view of a
mortgage of a ship, and of the remedies for the enforcement of
them, that courts of chancery have done of such a mortgage and of
any other mortgaged chattel. But, from the organization of the
former and its modes of proceeding, they cannot secure to the
parties to such a mortgage the remedies and protection which they
have in a court of chancery. They have therefore never taken
jurisdiction of such a contract to enforce its payment, or by a
possessory action to try the title or a right to the possession of
a ship. It is true that the policy of commerce and its exigencies
in England have given to its admiralty courts
Page 58 U. S. 403
a more ample jurisdiction in respect to mortgages of ships than
they had under its former rule as that has been given in this
opinion. But this enlarged cognizance of mortgages of ships has
been given there by statute 3 and 4 Victoria, ch. 65. Until that
shall be done in the United States by Congress, the rule in this
particular must continue in the admiralty courts of the United
States, as it has been. We affirm the decree of the court
below.
Order
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Southern
District of New York, and was argued by counsel. On consideration
whereof, it is now here ordered, adjudged, and decreed by this
Court that the decree of the said circuit court in this cause be
and the same is hereby affirmed with costs.