§31328. Limitations on parties serving as trustees of mortgaged vessel interests
(a) Without the approval of the Secretary of Transportation, an instrument or evidence of indebtedness secured by a mortgage of a documented vessel to a trustee may not be issued, assigned, or transferred to, or held in trust for, a person not qualifying as a citizen of the United States under section 2 of the Shipping Act, 1916 (46 App. U.S.C. 802), unless the trustee-
(1) is a State;
(2) is the United States Government;
(3) is a person approved by the Secretary and qualifying as a citizen of the United States under that section 2; or
(4) has been approved by the Secretary.
(b) The Secretary shall approve a trustee under subsection (a)(3) or (4) of this section if the trustee-
(1) is organized as a corporation, and is doing business, under the laws of the United States or of a State;
(2) is authorized under those laws to exercise corporate trust powers;
(3) is subject to supervision or examination by an official of the United States Government or a State;
(4) has a combined capital and surplus (as stated in its most recent published report of condition) of at least $3,000,000; and
(5) if the trustee is to be approved under subsection (a)(4) of this section, meets any other requirements prescribed by the Secretary.
(c) If the trustee at any time does not satisfy the qualifications of subsection (b) of this section, the Secretary shall disapprove the trustee.
(d) Except as provided in subsection (a) of this section, a right under a mortgage of a documented vessel may be issued, assigned, or transferred to a person not eligible to be a mortgagee of that vessel under section 31322 of this title only with the approval of the Secretary.
(e) The vessel may be operated by the trustee only with the approval of the Secretary.
(f) The issuance, assignment, or transfer of an instrument or evidence of indebtedness contrary to this section is void.
(
| Revised section | Source section (U.S. Code) |
|---|---|
| 31328 | 46:808 (4th par.), 961(d), (e) |
Section 31328(a) imposes limitations on issuing, assigning, or transferring instruments or evidence of indebtedness secured by a mortgage to a person not qualifying as a citizen of the United States under section 2 of the Shipping Act, 1916, without setting up a trust. However, the trustee must be a State, the United States Government, a person approved by the Secretary as qualifying as a citizen of the United States, or any other person approved by the Secretary. This makes substantive changes to the law including broadening the types of persons that may be a trustee. In this section, the words "or a substitute trustee" have been deleted as unnecessary since the approval of a trustee inherently includes the approval of a substitute trustee.
Section 31328(b) requires the Secretary to approve the trustee if the person meets certain specific requirements listed in this subsection and the regulations prescribed under it.
Section 31328(c) allows the Secretary to disapprove a trustee if at any time the trustee does not meet the requirements of the Secretary and the prescribed regulations.
Section 31328(d) prohibits a right under a mortgage of a documented vessel from being issued, assigned, or transferred to a person not eligible to be a mortgagee unless the Secretary approves of that issuance, assignment, or transfer.
Section 31328(e) prohibits a vessel from being operated by a trustee acting on behalf of foreign holders of indebtedness unless the trustee has the Secretary's approval.
Section 31328(f) voids any issuance, assignment, or transfer of an instrument of indebtedness that is contrary to this section. This subsection makes no substantive change to law.
Section Referred to in Other Sections
This section is referred to in section 31330 of this title; section 808 of Appendix to this title.