Bollinger & Boyd Barge Service, Inc. v. Motor Vessel, Captain Claude Bass

• Decision Date: 12 July 1978
• Docket Number: No. 76-4478,76-4478
• Citation: 576 F.2d 595
• Parties: BOLLINGER AND BOYD BARGE SERVICE, INC., Plaintiff-Appellant, Wallo Boat Services, Intervenor, v. The MOTOR VESSEL, CAPTAIN CLAUDE BASS, its engines, apparel, tackle, etc., in rem, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 595

576 F.2d 595

BOLLINGER AND BOYD BARGE SERVICE, INC., Plaintiff-Appellant Wallo Boat Services, Intervenor, v. The MOTOR VESSEL, CAPTAIN CLAUDE BASS, its engines, apparel tackle, etc., in rem, et al., Defendants-Appellees.

No. 76-4478.

United States Court of Appeals Fifth Circuit.

July 12, 1978.

Stanwood R. Duval, Jr., Houma, La., for plaintiff-appellant.

W. E. Noel, New Orleans, La., for Raymond J. Ullo & Wallo Marine Towing and Wallo Boat Service, Inc.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before TUTTLE, GEE and FAY, Circuit Judges.

FAY, Circuit Judge:

This is an admiralty action for foreclosure of a preferred ship's mortgage under the Ship Mortgage Act, 46 U.S.C. §§ 951 et seq. Plaintiff, Bollinger and Boyd Barge Service, Inc., named as defendants, the motor vessel "Captain Claude Bass", in rem, and Wallo Marine Towing Co., Inc., Raymond J. Ullo, and Patrick H. Watts, ¹ in personam.

In July, 1974, the plaintiff sold the motor vessel "Captain Claude Bass" to Wallo for $150,000 which included a preferred mortgage for $145,000. The note secured by the mortgage was signed by Wallo and endorsed by Ullo. The vessel was thereafter sold to Claude Bass on November 19, 1974, with Bass assuming the mortgage. Payments on the mortgage note stopped some months later and at that time $94,000.00 was the balance due, with interest at the rate of twelve percent (12%). ²

In the district court plaintiffs moved for an entry of default against the vessel in rem, notice was given to all defendants and on March 18, 1976, default judgment was entered ordering the sale of the vessel "Captain Claude Bass" by the United States Marshal. 46 U.S.C. § 951. Because there was no question surrounding the balance due and payable on the mortgage note of $94,000, the Court allowed the plaintiff-mortgagee to bid any portion of that sum for the vessel. On April 27, 1976, the motor vessel was sold to the plaintiff for $100.00 and the Court without objections confirmed the sale.

Plaintiffs then proceeded with its in personam suit against Wallo and Ullo for the balance due on the note. Following the pretrial conference, the court instructed the parties to file motions for summary judgment. On November 19, 1976, the court granted defendants' motion for summary judgment and denied any deficiency against the individuals. Plaintiff appeals. We reverse and remand for trial in accordance with this opinion.

Plaintiff, in his appeal, relies upon the holding in J. Ray McDermott & Co., Inc. v. Vessel Morning Star, 457 F.2d 815 (5th Cir. 1972), and equitable principles for the proposition that it is entitled to the entire amount due on the mortgage note less $100.00 credit to defendants for the amount bid for the vessel.

In McDermott, this Court en banc was faced with the question of whether state or federal law governs deficiency judgments under the Ship Mortgage Act. The en banc Court held that even though state law may occasionally be used to fill in gaps in federal maritime law, there were no such gaps in the Ship Mortgage Act when it is "read together with the statutes delineating the judicial sale procedure . . . ." J. Ray McDermott & Co., Inc. v. Vessel Morning Star, 457 F.2d 815, 818 (5th Cir. 1972).

Specifically, McDermott held:

46 U.S.C.A. § 951 provides that a mortgagee may enforce his lien by a suit in rem in admiralty. Original jurisdiction is granted exclusively to the district courts. Section 954(a) permits the mortgagee to bring suit in personam against the mortgagor in admiralty for any deficiency in the amount of the indebtedness secured by the vessel. Fed.R.Civ.P. E(9)(b) provides that a judicial sale may be held prior to the completion of the foreclosure action. 28 U.S.C.A. § 2004 directs that any personalty sold under order of a court must be sold in accordance with Section 2001. The latter section provides for both private and public sales and defines the prerequisites necessary for their validity. Section 2001(b) requires, inter alia, that the court appoint three disinterested persons to appraise the property before it can confirm a private sale. There is no appraisal requirement under Section 2001(a) for a public sale.

McDermott stated clearly that federal law would apply in actions under the Ship Mortgage Act and briefly touched on the district court's discretion with respect to confirmation of judicial sales. However, a careful reading of McDermott indicates the en banc Court did not reach the specifics of the law governing the deficiency decree action itself. Therefore, we find it necessary to decide what the district court must determine in its consideration of a deficiency action.

First, we find that the trial court erred in granting summary judgment for the defendants. In so doing, the trial court has, in effect, held without evidentiary proof that the fair market value of the motor vessel was $94,000 and because plaintiff now has the vessel it is entitled to no more.

But granting plaintiff's motion for summary judgment would have been equally erroneous. Such a holding would have in effect been a finding that the fair market value of the...