The bills would provide that the master of an American-flag vessel shall have the same lien for his wages, and the same priority for that lien, as any other seaman serving on the vessel. The bills would further provide that such a master shall have the same lien for disbursements he makes, or for liabilities he properly incurs, for or on account of the vessel, and the same priority for that lien, as he would have under the bills for his wages. The bills would also amend certain other statutes to conform them to the foregoing changes in the law. If the bills are amended as hereinafter proposed, we would recommend favorable consideration of the bills. If the bills are amended as we propose, they will grant the master of an American-flag vessel a lien for his wages if he is not the owner or a part owner of the vessel and if he does not, directly or indirectly, own stock in the corporation that owns the vessel, but it would not grant him a lien for his disbursements. There are certain liens specified in the Ship Mortgage Act, 1920, which are always paid before the preferred mortgage regardless of when they attach. These are seamen's wages and salvage, wages of a stevedore when employed directly by the owner, operator, master, ship's husband or agent of the vessel, general average, and any contract lien which attached prior to the preferred mortgage. All liens on a vessel are paid in the following order: (1) Seamen's wages and salvage, (2) Tort liens, (3) Contract liens which attached prior to the preferred mortgage, general average, and the foregoing stevedore wages, (4) The preferred mortgage, (5) Contract liens which attached after the preferred mortgage except general average and the foregoing stevedore wages. Within each of the foregoing classes (except the preferred mortgage class), the liens are paid in the reverse order of their creation. The only liens that the preferred mortgage is ahead of are the above-described contract liens that attached after the preferred mortgage attached. For more than a century, our Courts have given seamen liens for wages against a vessel priority over all other maritime liens against that vessel. Courts have frequently referred to the language used by Mr. Justice Story in an 1831 opinion of the Supreme Court (Sheppard v. Taylor, 30 U.S. 675, 710) where he described the seamen's lien for wages as being "so sacred and indelible, that . . . it adheres to the last plank of the ship." The priority placed on liens for wages is based on the philosophy underlying much of admiralty law-that is to say, the necessity of keeping the ship sailing. Where, for one of many causes, including the shaky financial condition of the owner of a ship, wages cannot be paid when due, seaman stick with the ship rather than leave it at the first hint of trouble because they know that they can have the vessel arrested and then be entitled to a lien of highest priority on that vessel. We believe that in modern times the same rationalization applies to the master if he is not an owner or part owner of the vessel and does not own stock in the corporation that owns the vessel. We think that such a master should have a lien for his wages that is of the same rank as that of the crew. We do not believe a master should have such a lien if he is owner or part owner of the vessel. Such a master is a private enterpriser and we believe that the liens we have listed have a better claim to share in the proceeds of sale of the vessel than he has. We do not believe a master should have a lien for his disbursements. We believe it is quite unusual for a master to make disbursements out of his own funds for the account of the vessel unless he is part owner of the vessel. If he does make such disbursements, he is subrogated to the position of the person he has paid. For example, if he pays seamen's wages with his own funds, he has the lien of the seamen he paid, and on sale of the vessel, he would participate with the unpaid seamen and salvage as the first class of claimants on the proceeds. Similarly if he pays a supplier, he would be subrogated to the suppliers' lien. As we have said, we think it is rare for a master who is not part owner of the vessel to make disbursements for the account of the vessel. If he does make such a payment, he is subrogated to the lien of the person he paid and therefore do not believe he is entitled to any other lien or any other priority for such disbursement. If the bill is enacted to give the master "the same priority for disbursements or liabilities properly made or incurred by him for or on account of the vessel" as a seaman has for wages, a means would have been created to erode the position of tort claims, of general average, of the above-described stevedore wages, and of the preferred mortgage. We think this would be unfair to such claimants and would seriously impair the usefulness of preferred mortgages as an instrument of finance to obtain the construction or reconstruction of ships. The Ship Mortgage Act, 1920, was enacted to provide a means of financing the construction and reconstruction of ships. As we have stated the only liens that a preferred mortgage is ahead of are certain contract liens that attach after the preferred mortgage. By making disbursements from his own funds, or by incurring liabilities for himself for or on account of the vessel, the master, under the bill, could advance such contract liens over the above-described liens and put such contract liens in the same class with seamen's wages and salvage. Within each class, liens are paid in the reverse order of their creation. It is entirely possible therefore under the bill that instances will occur in which there will be no funds available to pay any lien except such after-acquiring contract liens and that there will be nothing remaining to pay seamen's wages or salvage or tort claims or general average or stevedore wages or the preferred mortgage. If the bill is amended to grant the master a lien for his wages only if he is not a part owner of the vessel and neither directly nor indirectly owns stock in the corporation that owns the vessel, and to delete the provisions that would grant him a lien for his disbursements and for liabilities he incurs for the account of the vessel, we would recommend favorable consideration of the bill. In its present form, we recommend against enactment of the bill. We have been advised by the Bureau of the Budget that there would be no objection to the submission of this report from the standpoint of the Administration's program. Sincerely yours, BURT W. ROPER, Acting General Counsel. U.S. DEPARTMENT OF THE INTERIOR, Hon. EDWARD A. GARMATZ, OFFICE OF THE SECRETARY, Washington, D.C., April 12, 1967. Chairman, Committee on Merchant Marine and Fisheries, DEAR MR. GARMATZ: Your Committee has requested the views and recommendations of this Department on H.R. 16, a bill "To grant the masters of certain United States vessels a lien on those vessels for their wages and for certain disbursements," and an identical bill H.R. 5749. We would have no objection to the enactment of H.R. 162, but only if it is amended as suggested herein. H.R. 162 would give a master of a vessel of the United States a lien on the vessel for his wages. Thus, the bill would place the master on a par with the seaman insofar as his wages are concerned. It provides, however, that Revised Statutes 4546 and 4547, as amended (46 U.S.C. 603 and 604), shall not apply to proceedings brought by a master for the enforcement of the above lien. These statutes relate to the enforcement of the lien by seamen through the process of summoning the master for nonpayment of wages and the issuing of process against the vessel. R.S. 4547 does not apply to fishing vessels. The bill also gives the master the same lien and the same priority for disbursements or liabilities properly made or incurred by him for or on account of the vessel as he has under the bill for wages. The bill also amends R.S. 4535 (46 U.S.C. 600). This amendment protects the master by declaring that he cannot forfeit his lien or be deprived of any remedy for wages by agreement except as provided in title 53 of the Revised Statutes. Similar protection is now afforded seamen. Lastly, the bill gives the master the same protection afforded seamen relative to the attachment or arrestment of wages and support of his wife. The bill applies to masters of commercial fishing vessels of the United States as well as other vessels of the United States. The purpose of the legislation is to enable the master of a vessel to collect his wages even if the vessel is libelled for nonpayment of maritime liens or preferred mortgages. The purpose is to protect the master for nonpayment of his wages where the vessel is in financial difficulties. We are in sympathy with this purpose but do not believe that the benefits should extend to an owner or part owner of the vessel. Ownership provides additional incentives and also implies that certain risks be assumed. One of these risks is that no returns can be expected if the venture is unsuccessful. This Department is the mortgagee of many commercial fishing vessels of the United States, and we insure mortgages on many more. In most cases, the owner or part owner of the vessel is also the master. In cases where the master is not the owner or part owner, the protection afforded by this legislation is probably very desirable, although we are not in a position to determine in how many instances this legislation would be used in the fishing industry. Such a nonowner is just as entitled to his wages as is the seaman who now has a preferred position over the mortgagee and maritime lienholders. If, however, the master who is the owner or part owner of the vessel is allowed to have a preferred position against the Department of the Interior, as mortgagee, in the case of a fishing vessel, then he can collect wages from the proceeds of a marshal's sale at the expense of the mortgagee. He is the person who borrowed the money secured by the mortgage. He should not be allowed this preference. We recommend that H.R. 162 be amended by adding a new subsection to read as follows: "(f) For the purposes of this Act, Revised Statues 4546, 4547, 4535, as amended, and section 12 of the Act of March 4, 1915, as amended, the term 'master' shall not mean any person who has any financial interest in the vessel of the United States against which a lien for wages or disbursements or liabilities is claimed.” The Bureau of the Budget has advised that there is no objection to the presentation of this report from the standpoint of the Administration's program. Sincerely yours, HARRY R. ANDERSON, Assistant Secretary of the Interior. U.S. DEPARTMENT OF THE INTERIOR, Hon. EDWARD A. GARMATZ, OFFICE OF THE SECRETARY, Washington, D.C., April 17, 1967. Chairman, Committee on Merchant Marine and Fisheries, House of Representatives, Washington, D.C. DEAR MR. GARMATZ: During the recent hearings on H.R. 162, a bill "To grant the masters of certain United States vessels a lien on those vessels for their wages and for certain disbursements", you requested that this Department consider the possibility of revising our proposed April 12 amendment to H.R. 162. The revision would enable masters who had less than a 10-percent financial interest in a vessel to obtain the benefits of the bill. From the standpoint of this Department's program, we would have no objection to this approach. It is our experience that the financial interest that a master of a fishing vessel has generally will be substantially more than 10 percent. Thus, this change would not affect our program interests. We, however, defer to the Department of Commerce on the need for, and desirability of, this change in the case of vessels other than commercial fishing vessels of the United States. Our amendment, as revised, is as follows: (f) For the purposes of this Act, Revised Statute 4535, as amended, and section 12 of the Act of March 4, 1915, as amended, the term 'master' shall not include any person who has any financial interest of more than ten percent in the vessel of the United States against which a lien for wages or disbursements or liabilities is claimed at the time the lien arises." The Bureau of the Budget has advised that there is no objection to the presentation of this supplemental report from the standpoint of the Administration's program. Sincerely yours, STANLEY A. CAIN, Assistant Secretary of the Interior. OFFICE OF THE ATTORNEY GENERAL, Hon. EDWARD A. GARMATZ, Chairman, Committee on Merchant Marine and Fisheries, DEAR MR. CHAIRMAN: This is in response to your request for the views of the Department of Justice on H.R. 162, a bill "To grant the masters of certain United States vessels a lien on those vessels for their wages and for certain disbursements." H.R. 162 would give the master of a vessel documented or licensed under the laws of the United States the same lien for his wages against the vessel and the same priority as any other seaman serving on such vessel. In the enforcement of the master's lien, the existing sections 603 and 604 of title 46 of the United States Code shall not apply, since they are concerned solely with a seaman's effort to collect his wages. The bill also extends to the master the present protection against forfeiture of wage liens as is enjoyed by seamen under 46 U.S.C. 600. He is also given the same protection against attachment of wages by any court as is provided seamen in 46 U.S.C. 601. Finally, subsection (e) of the bill gives the master a lien equal to his wage lien for disbursements or liabilities properly made or incurred by him for or on account of the vessel. Whether this legislation should be enacted involves policy considerations as to which the Department of Justice makes no recommendation. The Bureau of the Budget has advised that there is no objection to the submission of this report from the standpoint of the Administration's program. Sincerely, RAMSEY CLARK, Hon. EDWARD A. GARMATZ, OFFICE OF THE SECRETARY OF TRANSPORTATION, Chairman, Committee on Merchant Marine and Fisheries, DEAR MR. CHAIRMAN: Reference is made to your request for the views of the Treasury Department on H.R. 162, "To grant the masters of certain United States vessels a lien on those vessels for their wages and for certain disbursements." Since the Coast Guard was transferred to the Department of Transportation on April 1, 1967, your request was forwarded to this Department for a reply. The bill would provide for masters of vessels of the United States the same lien for wages against their vessels, and the same priority therefor, as seamen on these vessels now have. The master would also have the same lien and priority for disbursements or liabilities properly made or incurred by him for or on account of the vessel. Finally, the bill would provide for the master the same protection against attachment of wages as is now afforded seamen. Seamen have traditionally been given a lien for wages on the ship under general maritime law. Existing United States statutory law does not create seamen's liens but recognizes them and grants certain special methods of enforcement. The general maritime law has not recognized liens by masters and it would appear, therefore, that if masters are to have the benefit of such liens, they must be authorized by statute. The Department notes that two subsections of the bill amend a revised statute and a section of a Statute-at-Large, respectively, while the remaining three subsections add substantive provisions of law. If the bill is enacted, the provisions of the bill would necessarily be separated when placed into the code in spite of the fact that they deal collectively with a single subject matter, the masters' liens. The Coast Guard is concerned with the administration of a number of laws relating to seamen and crew members aboard vessels and the organization of these laws is of some interest to the Department. It is suggested that the bill be amended to incorporate its substantive provisions as an additional section to the revised statutes. A draft of a proposed revision is attached. Subject to the foregoing, the Department of Transportation has no objection to the enactment of H.R. 162. 78-657-67—2 The Department has been advised by the Bureau of the Budget that there is no objection from the standpoint of the Administration's program to the submission of this report to your Committee. Sincerely yours, JOHN L. SWEENEY, The CHAIRMAN. In July of 1965, I introduced a bill identical to these (H.R. 10028) at the request of the International Organization of Masters, Mates & Pilots. The basic purpose of the bill is to provide that a master of a vessel documented under laws of the United States would have the same lien for his wages against the vessel as any other seamen serving on such vessel. In a letter dated July 30, 1965, to the late chairman, Herbert C. Bonner, the president of the International Organization of Masters, Mates & Pilots commented that this bill "should adequately serve the purpose of modifying the laws relating to masters only to the extent of granting equity to an individual American so that he might obtain payment for the services he has performed for his employer. The only persons who have requested an opportunity to be heard on this bill are Capt. Thomas F. O'Callaghan, secretary-treasurer of the International Organization of Masters, Mates & Pilots, and Mr. Robert F. Fisher, Baltimore counsel for Local 14 of the Masters, Mates & Pilots. I have received a wire from Mr. Ralph B. Dewey, president of the Pacific American Steamship Association, as follows: Pacific American Steamship Association supports H.R. 162 which would grant masters of United States vessels a lien on the vessels for their wages and requests that this telegram be made a part of the hearing record. This legislation would remove an inequity that is no longer justified. I have also received a telegram from the Brotherhood of Marine Officers, NMU, AFL-CIO, urging enactment of this legislation. Until yesterday, the only departmental report we had received was one from the Office of the Attorney General, dated April 10, stating that the Department of Justice makes no recommendation. I understand that both the Department of the Treasury and the Department of the Interior feel that the bill should be amended in some respect. Although they did not request the opportunity to testify, I asked that they have representatives here to make any statement that seems appropriate and be available for questioning. The General Counsel of the Maritime Administration had a serious conflict in view of hearings previously scheduled for today in the Senate. He asked to be excused with the understanding that he would be heard next Tuesday, April 18. I understand that the Maritime Administration position will express some opposition to the bill in its present form. Accordingly, I think it essential that we hear their views. At the opening of my remarks, I noted that I had introduced identical legislation as long ago as July 1965. No departmental reports were received despite repeated requests for expedition of the reports. H.R. 162, which is before us today, was introduced on January 10, 1967, and again, repeated efforts were made to secure the departmental reports. |