Where an American ship subject to a "preferred mortgage" is sold at an admiralty sale at the suit of a lienor whose lien is inferior to that of the mortgage, the Ship Mortgage Act, 1920, provides that the vessel shall be sold free from all preëxisting claims, but the court shall, at the request of the mortgagee, the libellant or any intervenor, require the purchaser to give and the mortgagor[19] to accept a new mortgage of the vessel for the term of the original mortgage, and in that case the mortgagee shall not be paid from the proceeds of the sale and the purchase price shall be diminished in the amount of the new mortgage debt.
REFERENCES FOR GENERAL READING
Chattel Mortgages, Herman (1877), Chapter XIII.
Mortgages, Boone, § 254.
J. E. Rumbell, 148 U. S. 1.
Grapeshot, 9 Wall. 129.
Blake, 107 U. S. 418.
O'Brien v. Miller, 168 U. S. 287.
[19] Apparently a misprint in the act for mortgagee.