11. Sale.—
The sale of a ship is usually evidenced by a bill of sale on a government form which will be furnished by the collectors. It is essential that it should include a copy of the last registry or enrollment and licenses, executed in the presence of two witnesses and acknowledged before a notary public. Mortgages may be made upon similar forms and the statute provides that, "No sale, conveyance, or mortgage which, at the time such sale, conveyance, or mortgage is made, includes a vessel of the United States, or any portion thereof, as the whole or any part of the property sold, conveyed, or mortgaged shall be valid, in respect to such vessel, against any person other than the grantor or mortgagor, his heir or devisee, and a person having actual notice thereof, until such bill of sale, conveyance, or mortgage is recorded in the office of the collector of customs of the port of documentation of such vessel." (Ship Mortgage Act, 1920, Subsection C (a). See Appendix, Merchant Marine Act, 1920, § 30.) While a prudent man will invariably evidence the sale of a ship by a written instrument, this is not essential to the validity of the sale, if the common law essentials to a sale of personal property—delivery or payment, in whole or in part, or both,—are present. The requirement of the statute (Rev. St. § 4170; Ship Mortgage Act 1920, Subsection H; See Merchant Marine Act 1920, § 30) that a bill of sale be given, containing a copy of the registry or enrollment, and recorded in the Collector's Office, is for the purpose of giving notice to the world of the transfer. Without these formalities, the sale is valid as against the grantor and persons having actual notice only; not as against any other persons claiming an interest in the ship. If an American vessel be sold to an alien without obtaining the Shipping Board's approval and without recording the transfer, the vessel is liable for forfeiture.
12. Transfer of Flag and Sales to Foreigners.—
The Merchant Marine Act of June 5, 1920 (see Appendix), provides that no American vessel shall be sold or transferred to any one not a citizen or placed under foreign registry without obtaining the approval of the Shipping Board. Any vessel transferred in violation of this provision is subject to forfeiture and fine. An American vessel may not be sold by order of a district court of the United States in a suit in rem in admiralty to any person not an American citizen.
13. Admiralty Sales.—
The title to the ship may also be transferred by a sale in admiralty. This passes a new and complete title to the purchaser and absolutely frees the ship from all existing liens, titles or encumbrances. Such a sale is only made in the course of a suit in admiralty against the ship for the enforcement of a maritime lien, or other matter within the jurisdiction of the court. A ship which passes through such a sale becomes in effect an absolutely new vessel so far as prior title or encumbrances are concerned, and all previous claims are relegated to the proceeds in the registry of the court (The Garland, 16 Fed. 283). The Ship Mortgage Act, 1920 (§ 30 Merchant Marine Act, Subsection O), which creates preferences in favor of certain mortgages, provides that, on the sale in admiralty of a ship upon which there has existed a preferred mortgage the court shall, on request of an interested party, require the purchaser at the judicial sale to give a new mortgage on terms similar to the old one and, if such new mortgage is given, the mortgagee shall not be paid from the proceeds of the sale and the amount of the purchase price shall be diminished by the amount of the new mortgage. It is essential that the court should have full and complete jurisdiction to make the sale. Such sales are made by the marshal under a writ issued in a pending suit in admiralty; neither the officer nor the court warrants anything and the title given depends wholly upon the regularity of the proceedings and the jurisdiction of the court. The essentials are simple and it is easy to ascertain if they have been complied with. For example, when the marshal seizes a ship under admiralty process, he is required to give public notice of the seizure and the return-day of the writ in order that all the world may be bound by the proceeding. This is accomplished by taking actual possession of the vessel, posting a copy of the writ in some conspicuous place, and publishing an appropriate notice in some newspaper within the district. Sometimes this publication is omitted or deferred to a later stage of the proceedings. In Gould v. Jacobson, 58 Mich. 288, the results of such an omission were fatal to the title of the purchaser at a marshal's sale of the Pickwick. The ship had been seized in admiralty and sold to pay her debts. The marshal had failed to publish notice of the seizure; the Court held that the sale was quite void and that replevin would lie in favor of the representatives of the original owner against the marshal's vendee.
14. Sales by Trustees and Executors.—
These will only transfer the title of the true owner if the conditions of the trust or power given by the will are strictly observed. The rules are no different than in sale of other personal property and create no further exemption from maritime liens or other encumbrances than sales by ordinary owners. The warranty is usually less sweeping.