776 F.2d 85 | 3rd Cir. | 1985
Lead Opinion
OPINION OF THE COURT
Plaintiffs, four foreign maritime lien creditors of the defendant M/V PRODROMOS (the vessel), appeal from an interlocutory order
I.
The Fisher Shipping Corporation (Fisher), a Liberian corporation, bought the M/V PRODROMOS on January 11, 1983, financing its purchase with a loan from Locabail International Finance Limited of France and Banque Paribas of Bermuda (the Banks). The Banks secured the loan with a mortgage on the M/V PRODROMOS for $4,500,000, which Fisher executed in London the day it purchased the vessel. On
The mortgage agreement provided a space for the “Provisional Patente of Navigation Number” (alternately known as the navigation license number or naval patent),
Plaintiffs argue that the omission of the navigation license from the preliminary and protocolized mortgage registrations render the registrations invalid under Panamanian law) Article 1515 of the Commercial Code of Panama specifies the procedural requirements for a naval mortgage contract. It states, in relevant part, that the naval mortgage contract “in every case, shall contain ... [t]he name, distinctive features of the vessel; a complete description thereof, her registry and navigation license.”
The M/V PRODROMOS sailed into Philadelphia on July 10, 1984, with many unpaid debts, and on July 12 and on subsequent dates the vessel was arrested by various parties asserting maritime lien claims. The four plaintiffs in this case supplied fuel, food, and other necessaries to the M/V PRODROMOS outside the United States. The plaintiffs, Mobile Marine Sales, Limited, of the United Kingdom, Van Ommeren Rotterdam, B.V., of the Netherlands, Drew Chemical Corporation of New Jersey (operating throughout the globe), and Hermes Ship Chandlers Limited of South Africa, made a total of approximately $300,000 in claims against the M/V PRODROMOS for services provided abroad. American suppliers made additional claims for approximately $250,000. The Banks intervened to enforce their mortgage interest, $4,500,000. All the actions were consolidated in the United States District Court for the Eastern District of Pennsylvania.
About a month after the ship was arrested, the Banks moved for its sale under Rule E(9) of the Supp.R. Admiralty and Maritime Claims, Fed.R.Civ.P. The district
Judge Weiner for the district court rejected plaintiffs’ argument that omission of the navigation license from the mortgage made its registration fatally defective under Panamanian law. He held that the mortgage was duly registered under Panamanian law, and thus was a preferred mortgage under the Act. The plaintiffs appeal.
II.
Prior to the enactment of the Act in 1920, ship mortgages were held not to be maritime contracts and therefore could not be considered under a court’s admiralty jurisdiction. Bogart v. The Steamboat John Jay, 58 U.S. (17 How.) 399, 402-03, 15 L.Ed. 95 (1854). Congress passed the Act to facilitate the dismantling by the United States of its merchant marine after World War I, with the United States expected to be the principal beneficiary, as the holder of most of the ship mortgages. G. Gilmore & C. Black, The Law of Admiralty 698 (2d ed. 1975). The Act made the lien of mortgages that complied with its procedural requirements a “preferred mortgage” and a maritime lien. 46 U.S.C. § 922 (1982). It gave jurisdiction to foreclose to the district courts acting as admiralty courts. 46 U.S.C. § 951 (1982). The Act only applied to American flag vessels and required the parties to the mortgage to be American citizens. 46 U.S.C. § 922 (1982).
After World War II, the United States sought once again to dismantle its merchant fleet, but found that the increasingly popular use of foreign flags of convenience required expanding preferred mortgage status to foreign ship mortgages. H.R. Rep. No. 1662, 83d Cong., 2d Sess. 2, reprinted in 1954 U.S.Code Cong. & Ad. News 2451, 2452; S.Rep. No. 1213, 83d Cong., 2d Sess. 3. In 1954, Congress amended the Act to cover foreign mortgages, but the procedural requirements for domestic mortgages were not imposed. Instead, the Act viewed the foreign mortgage in light of the applicable foreign law. The Act reads, in relevant part:
Foreign ship mortgages____ [T]he term “preferred mortgage” shall include, in addition to a preferred, mortgage made pursuant to the provisions of this chapter, any mortgage, hypothecation, or similar charge created as security upon any documented foreign vessel ... if such mortgage, hypothecation, or similar charge has been duly and validly executed in accordance with the laws of the foreign nation under the laws of which the vessel is documented and has been duly registered in accordance with such laws in a public register either at the port of registry of the vessel or at a central office____
46 U.S.C. § 951 (emphasis added). The amendment goes on to note that foreign preferred mortgages are subordinate to maritime liens for services performed in the United States. Id.
The Act is a complex statutory scheme, and its terms are read with particularity and with no requirements imposed that are not explicit in the Act. See Detroit Trust Co. v. The Barlum, 293 U.S. 21, 40-42, 55 S.Ct. 31, 37, 79 L.Ed. 176 (1934) (construing earlier provisions of the
The narrow question presented in this case is whether the Banks’ mortgage on the M/V PRODROMOS was “duly registered” under the laws of Panama, so as to be a preferred mortgage under the Act. Interpretation of the phrase “duly registered” in the Act appears to be a point of first impression in this case, and requires reference to the requirements of Panamanian law for registering a mortgage.
Foreign law questions are considered questions of law in the federal courts, and may be resolved by reference to any relevant information. Fed.R.Civ.P. 44.1. The court of appeals on review owes no deference to the district court’s determination of foreign law, and may consider information not available to or considered by the district court. Kalmich v. Bruno, 553 F.2d 549, 552 (7th Cir.1977).
There are three grounds for finding that the mortgage was duly registered despite the omitted navigation license number. First, there is the certification by the Public Registry that the mortgage was duly registered. Although the district court was not explicit in its reasoning, it appears the certification was sufficient to persuade Judge Weiner that the mortgage was duly registered. Second, there is the reference in the preliminary and protocolized mortgage registrations to the preliminary flag registration, which contained the navigation license number omitted from the mortgage registrations. The omitted term may be deemed incorporated by reference. Third, there are Panamanian statutes, which to the extent provided by the parties appear to state that the absence of the navigation license number, while a ground for the Registry to refuse the registration, is not a ground for its subsequent cancellation.
The certification of due registration by the Public Registry is of limited persuasiveness. The Banks obtained the certification through a Panama law firm, which inspected the microfilm file of the M/V PRODROMOS at the Public Registry, made a list, and submitted the list to the Public Registry for certification as accurate. An official of the Public Registry copied the list word for word and certified it. The list was submitted twice. The first time, the Panama law firm stated that the mortgage registrations were “in full force,” and the Public Registry official parroted this language. The second time, apparently with the requirements of the Act in mind, the Panama law firm described the mortgage as “duly registered,” and once again the Public Registry official copied the exact language. The phrase “duly registered” appears in the ninth of twelve paragraphs of description. There is no indication that the Panama law firm alerted the Public Registry official to the importance of the phrase in American law or to the question of the omitted navigation license number. From the Panamanian statutes provided by the parties, it does not appear that the phrase “duly registered” has any meaning in Panamanian law, and the Public Registry official, in copying the phrase, may
The Banks argue that the Public Registry in Panama is a quasi-judicial body, and that the recordation of a document by it is not subject to attack, absent fraud, in an American court.
The Banks during the oral argument of this appeal for the first time raised the argument that the navigation license number included in the flag registration had been incorporated by reference in the mortgage registrations. Because questions of foreign law are questions of law over which a court on appeal has plenary review, we may consider the Banks’ argument although it was not made to the district court. Fed.R.Civ.P. 44.1. The mortgage as registered in preliminary and protocolized form refers to the flag registration, which contains the navigation license number, in the same paragraph in which the navigation license number was omitted. The reference to the flag registration does not state that the navigation license number is to be found there. The Banks offer no proof that under Panamanian law reference in a mortgage registration to another document that supplies a necessary term will suffice to correct a flaw in the registration. Nor may we comfortably draw an analogy between the present situation and instances in American law where the parol evidence rule allows non-contradictory evidence outside the four corners of a contract to explain the contract’s material terms. The question here is one of due registration and not contract interpretation.
American cases considering the meaning of due registration in different contexts do not directly address the question presented here: whether reference to another document in the same file of a registry suffices to cure a registration that, lacks a necessary term. The American cases do make clear, however, a common policy underlying requirements of due registration in recording statutes. Despite the often-quoted broad statement of a legal encyclopedia that due registration means perfect regularity of procedure and compliance in all particulars with the legal requirements of registration, 28 C.J.S. Duly § 1, the cases turn on whether the registration requirements necessary to give an innocent third party notice of claimed rights were followed. See Torgeson v. Connelly, 348 P.2d 63, 66 (Wyo.1959) (registration is invalid when made in the wrong place, because no constructive notice is given); Sabo v. Horvath, 559 P.2d 1038, 1043 (Alaska 1976) (deed recorded outside chain of title gives no notice and is invalid); Kenya
A review of the Panamanian statutes provided by the parties reveals that the omission of the navigation license number is not sufficient grounds for cancelling the mortgage registration under Panamanian law, and that the omission may be corrected at any time, without prejudice to the mortgage. The plaintiffs provided the opinion of a Panamanian lawyer, Dr. de la Guardia, that the omission of any term required by a Panamanian statute renders the mortgage registration invalid. Dr. de la Guardia supported his contention by reference to Article 31 of Decree 9 of January 13, 1920, the Panamanian public registry regulation, which provides: “All the documents by virtue of which some entry must be practiced in the Registry, must contain the requisites that the law specially or respectively provides for.” But a provision of the Civil Code of Panama governing the operation of the Public Registry provides that registrations once made will be can-celled only for a few narrow reasons provided by statute. Article 1782 of the Panama Civil Code states:
Art. 1782. — The total cancellation of a recording may be requested in the following cases:
1) upon extinction of the immovable or real right recorded;
2) if the title by virtue of which the recording has been made is declared void;
3) when the recording is made, contravening the prohibitions contained under this Title [governing operation of the Public Registry],
The right granted by the mortgage has not been extinguished, the title in the M/V PRODROMOS has not been declared void, and no provisions governing the operation of the Public Registry
The plaintiffs’ reference to the strict procedural requirements of the Act for domestic shipping mortgages does not offer convincing support for the proposition that such procedural niceties are generally to be imputed to foreign ship mortgages. As noted in a leading treatise, “[t]he Mortgage Act outdoes the worst of the old-fashioned state chattel mortgage acts in its insistence on formalities of execution and in the detail of its recording mechanics.” G. Gilmore & C. Black at 706-07. The Act makes foreign mortgages preferred ship mortgages if they satisfy the foreign nation’s proce-
III.
We conclude that the evidence of Panamanian law presented to this court supports the district court’s holding that the mortgage was duly registered under Panamanian law and thus a preferred mortgage under the Act, although our reasoning differs from the district court’s. It appears that the absence of the navigation license number from the mortgage registration, although a ground for the Registry’s rejection of the registration, is not a ground for the subsequent cancellation of the registration. The omission could have been corrected, as provided by Panamanian law, and the incorporation of the flag registration by reference in the mortgage registration may suffice to satisfy the notion of fair notice implicit in a requirement of due registration. Even absent the incorporation by reference, the registration complied sufficiently with the procedural requirements to provide completely adequate notice of the mortgage on this vessel to any third party who inspected the records. Thus, the mortgage was duly registered under Panamanian law, and was entitled to preferred status as a foreign ship mortgage under the Act.
Accordingly, the interlocutory order of the district court will be affirmed.
. This court has jurisdiction of interlocutory appeals in admiralty cases pursuant to 28 U.S.C. §• 1292(a)(3) (1982). The district court had subject matter jurisdiction pursuant to 28 U.S.C. § 1333 (1982) (admiralty jurisdiction).
. The navigation license number or naval patent signifies that the vessel has a license permitting it to navigate under the Panamanian flag.
. All statutes of the Republic of Panama quoted in this opinion are from English translations provided by the intervenor banks and agreed to by the plaintiffs.
. We believe that the presumption of regularity relied on in the concurrence to this opinion does not apply to the facts of this case. The policy reasons for requiring substantial evidence before the honor of a foreign official acting in the line of duty is impugned, as was the case in State of Israel v. M/V NILI, 435 F.2d 242, 245, 251-52 (5th Cir.1970), cert. denied, 401 U.S. 994, 91 S.Ct. 1232, 28 L.Ed.2d 532 (1971), are gounded in notions of comity and respect. These notions do not come into play here, where it is asserted only that the Public Registry, in performing a ministerial act, has not noticed a mistake that was not brought to its attention.
. The plaintiffs do not contend that the M/V PRODROMOS could not be identified as the vessel subject to the mortgage as a result of the absence of the navigation license number, or that they suffered any prejudice due to the omitted term. The vessel's name, dimensions, and weight are included in the mortgage registrations.
. The parties have provided all statute sections in the title of Panamanian law governing the operation of the Public Registry.
Concurrence Opinion
concurring.
I concur in the judgment of the court. I write separately because I find it unnecessary to explore the nuances of Panamanian law. In my view, the fact that the mortgage was registered by the Public Registry in Panama creates a presumption under United States law that it was duly registered which can be defeated only by clear and convincing evidence to the contrary, see State of Israel v. M/V Nili, 318 F.Supp. 1196, 1199-1200 (S.D.Fla.1968), affd 435 F.2d 242, 245, 251-52 (5th Cir.1970), cert. denied, 401 U.S. 994, 91 S.Ct. 1232, 28 L.Ed.2d 532 (1971). No such clear and convincing showing was made in this case.
