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General Electric Credit & Leasing Corp. v. Drill Ship Mission Exploration (5th Cir. 1982)

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General Electric Credit & Leasing Corp. v. Drill Ship Mission Exploration (1982)

Citation: 668 F.2d 811 · Court: U.S. Court of Appeals for the Fifth Circuit (opinion by Tate, J.) · Decided: February 22, 1982

Source note (2026-10-18):

  • Links on this page to https://static.case.law/f2d/668/cases/0811-01.json are an (unofficial Caselaw Access Project copy, retrieved before 2026-10-18; host disallows automated access); no official or otherwise permitted full-text copy was located on 2026-10-18.

Facts

General Electric Credit & Leasing foreclosed a preferred ship mortgage on the drill ship Mission Exploration under the then-Ship Mortgage Act, 46 U.S.C. §§ 951–954 (now recodified in 46 U.S.C. ch. 313). The vessel was seized in December 1977 near New Orleans; on joint petition of the owner and GE, the captain and relief captain were appointed keepers. The keeper retained some crew to maintain the vessel (e.g., “pumping water from a leak”) and arranged for the intervenor, a caterer (“Foods Services”), to keep feeding them through March 1978, without a court order. At the June 1978 judicial sale GE “purchased the vessel for approximately the unpaid amount due on its mortgage, it being authorized by the court to bid up to the amount due on its mortgage without making any payment, provided that it would guarantee the payment of any liens or claims superior in rank to its preferred mortgage.” The district court denied Foods Services priority over the mortgage.

Holding

Reversed. (a) Foods Services’ pre-seizure claims ranked as preferred maritime liens for crew wages, because “[o]ne who advances money to pay crew’s wages is entitled to a maritime lien of the same rank”; and (b) its post-seizure catering “should be recognized as in custodia legis expenses to preserve the vessel while it was under seizure,” payable ahead of the preferred mortgage.

Reasoning

  • Under the statute the preferred mortgage primes all claims except preferred maritime liens and court-allowed expenses; that structure continues in 46 U.S.C. § 31326(b)(1) (“except for expenses and fees allowed by the court, costs imposed by the court, and preferred maritime liens”).
  • “The expenses of maintaining and preserving the vessel after it has been seized under legal process— while it is in custodia legis—are included within this priority. While it is preferable to secure a court order authorizing this expense before incurring it, nevertheless even in the absence of court order these ‘custodia legis expenses’ may be ordered by the court to be paid in priority to the seizing mortgage creditor if ‘equity and good conscience’ so require” (citing New York Dock Co. v. The Poznan, 274 U.S. 117 (1927)).

Practical impact

  • Credit-bidding mortgagees: a court may allow a credit bid conditioned on guaranteeing senior liens and custody costs — those claims must still be funded.
  • Third-party bidders: custody costs and crew-wage claims come out of the sale fund first, reducing what reaches the mortgage and the owner’s surplus. See admiralty-arrest-and-marshals-sale, maritime-liens-and-preferred-ship-mortgages.
  • Vendors to arrested vessels: post-arrest services ordered by the custodian for preservation can earn custodia legis priority, though prior court authorization is “preferable.”

Good-law status

Decided under the predecessor statute (46 U.S.C. § 953); the priority structure carries into § 31326(b). No negative treatment located; a citator check was not run this session (needs_verification). Binding in the Fifth Circuit as to its reasoning.

Applies in →

Fifth Circuit (louisiana, texas, mississippi); persuasive elsewhere.

Sources

This page provides general legal information, not legal advice. Verify the holding and its current treatment against the primary source and consult a licensed maritime attorney before acting. Last verified: 2026-10-16.

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