this same connection, a distinguished writer Martin J. Norris, in his treatise on the Law of Seamen, volume 1, second edition, section 298, page 336, states "The wages of seamen have been favored in the law of all nations because of the peculiar and perilous service in which they are earned." Certainly these statements apply with equal force to the master as well as the other officers and members of the crew and, in point of fact, the master has the greater responsibilities but shares the same risks.

I might add that denial of a lien to the master inures to the benefit of other claimants who may have loaned money on the security of the vessel or may have sold supplies or rendered services. Claims of this type are commercial and financial in nature and ample provision may be made in the prices charged for such supplies and services and in rates of interest for money loaned so as to protect creditors in these categories for the occasional loss that they may suffer where the owners of the vessel default. The master is not in a position to make such provisions in his dealings with the owners and can only be protected if he is given the same lien that the other members of the crew now have.

Included in the pending bill is a provision giving the master a lien for disbursements made by him of his own funds on behalf of the vessel as well as a lien for his wages. As has already been stated, a master will frequently advance his own funds and in the absence of a lien has found himself unable to recover when the owner or operator gets into financial difficulties resulting in the libeling and sale of the vessel. We suggest that there is no logical reason why the master should be denied a lien for such disbursements. I might add that the amounts which a master may advance under such circumstances are quite substantial and represent money that the average master can ill afford to lose.

The injustice and inequity which masters have suffered in their efforts to enforce their wage claims and claims for disbursements under the present law has been borne out by the experience of our firm and the experience of other attorneys. We have had case after case in Baltimore where the sale of the vessel produced ample funds to pay the wages of the entire crew but the master has been excluded and has suffered substantial loss because the law denies him a lien. We have that very situation at the present time in the matter of the SS Jian wherein the master of that vessel, Harold I. Dumble, has a proper and valid wage claim for $3,133.27 and a further claim for disbursements made by him on behalf of the vessel in the amount of $870. Although all other seamen have been paid their wages out of the proceeds of sale of that vessel, nothing has been paid to Captain Dumble out of those proceeds. Claims have been filed on his behalf; however, payment to Captain Dumble is being resisted and it is highly unlikely that we will be able to effect any recovery on his behalf. In the case of the SS Pacific Carrier, which vessel was also sold in Baltimore, the master, Capt. Clifford Carlson, suffered a substantial loss of approximately $6,400. Another case in Baltimore involved the SS Valiant Explorer, where the master, Capt. Nicholas E. Mavroleon, suffered a loss of over $500 for a wage claim incurred prior to the libeling of the vessel and was obliged to settle for 69 percent a claim for wages incurred after the libeling of the vessel resulting in a further

loss of approximately $1,700. A further case involved the SS Westhampton. The master, Capt. William J. Lindros, was fortunate and suffered a smaller loss of $461.82.

In 1963, Bull Lines, Inc., went out of business. Although the SS Easthampton was sold in Bombay, India, due to the fact that the ship is American, the American law will be applied. There were two masters involved, Costos and Moore, who will be unable to assert claims of $5,405.07 and $4,806.64, respectively.

Also in 1963, the SS Kathryn was sold after being libeled in Norfolk, Va. All of the seamen were paid except the master, Walter Link, who suffered a loss of $1,497.34.

In Philadelphia in 1963, the SS Start Point was sold under the jurisdiction of the admiralty court and the master's claim of $2,757.75 in that proceeding was disallowed.

The SS Pacific Explorer was sold in Mobile, Ala., in 1959. The master, William Matrinos, was unable to enforce a claim of $3,317.87. Also in 1959, the SS Pacific Ocean was sold in Galveston, Tex. All other seamen were paid but the master, John A Mayer, who lost $3,699.36 in wages.

I might add that in many of the instances which I have cited above the amount of the claim includes both unpaid wages and disbursements. The above list is, of course, incomplete, but does illustrate the real loss occasioned to masters by the absence of maritime lien for their wages.

For the reasons which I have set forth in the course of these remarks, I respectifully urge that your committee approve this bill and recommend its prompt passage.

The CHAIRMAN. That was a fine statement, Mr. Fischer.

Mr. Byrne?

Mr. BYRNE. Not at this time, Mr. Chairman.

The CHAIRMAN. Mr. Pelly?

Mr. PELLY. I would just like to ask one question. It has to do with the point raised in the same letter that I referred to before. This firm indicated approval of the idea of removing discrimination against masters for the payment of wages, but they went on to say that they were less enthusiastic about priorities for wages of the master if there was no written agreement specifying what the wages are.

Have you any

comment on that?

Mr. FISCHER. To my knowledge, there is always a written agreement for a master's wages on merchant vessels. The master signs aboard the ship at a certain wage scale.

Mr. PELLY. It sounds like a lawyer's question to me. They always like to have everything done in writing. I just wondered what the common practice was and whether it was to have any written agreement. I take it from what you say that actually it rarely occurs that there is no written agreement.

Captain O'CALLAGHAN. Yes, sir. In 90 percent of the cases, the master is covered by the collective bargaining agreement, and in cases where he is not it is well established what his wages are.

Mr. PELLY. That answers my question.

The CHAIRMAN. Mrs. Sullivan?

Mrs. SULLIVAN. I have just one question.

78-657-67- -3

In any of these examples that you have given here of the masters, were any of them also owners or co-owners of the vessels?

Mr. FISCHER. None at all; none.

Mrs. SULLIVAN. That is all.
The CHAIRMAN. Mr. Grover?
Mr. GROVER. I will defer.

The CHAIRMAN. Mr. Schadeberg?

Mr. SCHADEBERG. I would like to ask this. In your statement you suggested that these claims were both for wages and disbursements. Has there been any difficulty in getting return for disbursements, or was it just for wages you were having difficulty?

Mr. FISCHER. There is difficulty in both areas.

Mr. SCHADEBERG. In both areas?

Mr. FISCHER. Yes.

Mr. SCHADEBERG. That is all.

Captain O'CALLAGHAN. One thing I would like to point out as far as disbursements go, is that there have been cases where a master has given a draw in money in advance to crewmembers out of his own. pocket and the man has signed for it, it appeared on the payroll and yet the master is not even able to retrieve that money. It is taken off of the voyage payroll, but it is not returnable to the master under the present law.

Mr. SCHADEBERG. That is all, sir.

The CHAIRMAN. Mr. Grover?

Mr. GROVER. Just to clarify a point, and I don't know if it is necessary to clarify it. With the simple change that we are making here we in effect, giving the master the identical protection as the seaman for wages and disbursements? In other words, he will stand in the same shoes as the seaman in distribution.

Mr. FISCHER. In that connection, I would like to say that in our experience, when these ships are sold there is a great deal of money resulting. The Westhampton sold for $2,600,000, and the Jian, something in the neighborhood of $600,000. And the seamen's wages and the master's pay are only a very small part of the total proceeds of the sale of these ships, and it really wouldn't prejudice anyone to a great extent to give the master his lien.

Mr. GROVER. These wage liens are prior to any other lien, is that so? Exclusive?

Mr. FISCHER. Yes; seamen's wages are a first preferred lien. As a matter of fact, we have no difficulty in obtaining payment for the other deck officers. As soon as the amount of the wages can be adequately determined and the money is in the registry of the court, everyone will agree that the court sign an order granting immediate payment.

We have always been able to get immediate payment for other deck officers.

Mr. GROVER. I think there is a comparable area of the law in the bankruptcy law as it applies to nonadmiralty cases, that for employees of a corporation, for example, there are provisions giving that certain priorities to employees.

Are there any comparable priorities given to supervisory personnel for wages in corporations?

Mr. FISCHER. I am not completely familiar with the bankruptcy law in that area, but I would think that supervisory personnel do have the same rights in a bankruptcy case, and I believe stockholders who are also officers and employees of the corporation have the same right to a prior claim for their wages in a bankruptcy case.

Mr. GROVER. I think salaried personnel are entitled to it under the corporate bankruptcy.

Mr. FISCHER. Yes.

The CHAIRMAN. Counsel has a question.

Mr. DREWRY. What is the standing of the master at present under the bankruptcy law? Would he just be in with the general creditors generally and has no preferred status at all?

Mr. FISCHER. Well, the bankruptcy courts don't usually come into play. Now, in the case of Bull Lines where there numerous corporations went out of business, all owned by the Kulukunois Enterprises, at the same time, that case is being administered under the bankruptcy laws in New York. But each individual ship is being sold under the admiralty laws in various cities. There is one in Bombay, one in Aden, one in Baltimore. There was one in Portland. Any moneys that are remaining out of the proceeds of sale of any of those vessels, that remain after the payment of the mortgages and all other creditors who have maritime license, those proceeds if any-and I would say that it is very unlikely in most cases that there will be any-will be transferred to the bankruptcy court in New York.

But this is an unusual situation. Generally, all of the proceeds are used up in the admiralty proceeding. Now, the master can file a claim in the bankruptcy proceeding, if there is one, but he is ranking with all other general creditors and his return would hardly be worth filing the claim.

Mr. DREWRY. This is an observation which I would like your comment on. It would seem to me that possibly the enactment of this legislation would give an incentive to the master of a ship to preserve that property to the best extent he can. Captain O'Callaghan mentioned the desire of the skipper to bring the ship back home, if possible. If he knows he has the protection of the law, there would be more incentive for him to protect the property which would not only be from a selfish standpoint, of course, but also to the ultimate benefit of all the other creditors.

Is there any validity to that observation?

Mr. FISCHER. I think it is very valid. I would certainly think, human nature being what it is, if the master had his own funds and was able to advance wages to the seamen to get them to work the ship back home, and to buy supplies, if that master knew that he was going to be reimbursed, I think there would be every reason in the world to bring the ship back.

Now you are asking a good deal of the master to advance his own money and bring the ship back. It is a real tribute to these people that often times they do this. As I said, in the case of the Bull Lines there are ships scattered all over the world. Perhaps if this law had been in effect, some of those ships would have gotten home.

Mr. DREWRY. That was the point I wanted to make.
The CHAIRMAN. Are there any other questions?
Thank you very much.

We have on hand here Mr. Vaughn, Assistant Solicitor for Fish and Wildlife, Department of the Interior to answer any questions. We have just received your report this morning. Do you have a statement?

STATEMENTS OF C. E. PETERSON, CHIEF, BRANCH OF LOANS AND GRANTS, BUREAU OF COMMERCIAL FISHERIES, AND HERBERT L. BLATT, ATTORNEY-ADVISER, OFFICE OF THE SOLICITOR, FISH AND WILDLIFE, DEPARTMENT OF THE INTERIOR

Mr. BLATT. I do want to comment on the record. This is Mr. Peterson. He will make the report. I am Mr. Blatt, sitting instead of Mr. Vaughn.

Mr. PETERSON. C. E. Peterson, Chief, Branch of Loans and Grants, Bureau of Commercial Fisheries, Department of the Interior.

Mr. Blatt is our admiralty attorney for the Department. We do not have a prepared statement, as we feel that the Departmental report covers our position quite well.

Very briefly, what we have proposed is that an amendment be added at the end of the bill so that the master who is an owner or part owner, in other words, one who has a financial interest in the vessel, will not be included in this bill.

The fishing industry is somewhat different than the merchant marine, in that a large proportion of the masters are also owners or part owners of the vessel. Inasmuch as they are the persons who have borrowed the money which is secured by a mortgage, we feel that they should carry some of the risks involved."

The Department's interest is that we hold mortgages on approximately 400 fishing vessels under our fisheries loan program and have insured mortgages on approximately 100 more under the mortgage insurance program.

However, I think that this same interest is shared by a great many banks, insurance companies, and other financial institutions throughout the country who probably have a similar interest.

Thank you.

The CHAIRMAN. Have you anything to add?

Mr. BLATT. No, sir; other than our loans are made under the provisions of the acts with which we deal, and the mortgage that we cause to be executed by a borrower reflects the law, the law being, as previously mentioned, that crews' wages would take a priority over our mortgages, and in that event the captain being considered part of the crew, even though an owner having a financial interest, at a foreclosure proceeding would come prior to our security.

That is why we ask that this proposed legislation be so amended. The CHAIRMAN. Mr. Byrne?

Mr. BYRNE. As to this amendment that you propose, was anyone under suspicion as being a part owner at any time?

Mr. PETERSON. I didn't understand the question, sir.

Mr. BYRNE. You have an amendment here, ". . . the term 'master' shall not mean any person who has any financial interest." Are there any masters that have financial interest?

Mr. PETERSON. Probably 90 percent of the fishing boat masters have a financial interest.