The opinion of the court was delivered by: WORTENDYKE
The Mastan Company, Incorporated (Mastan) filed its complaint on March 15, 1967 against the S.S. Sapphire Sandy (Sandy), her engines, boilers tackle, apparel, furniture, etc. to foreclose the first preferred fleet ship mortgage, dated December 29, 1965, and thereafter amended and supplemented, given by Sapphire Steamship Lines, Inc. (Sapphire), the owner of the vessel, to secure indebtedness of Sapphire to Mastan.
The Sandy, being within the jurisdiction of this Court, was sold by the United States Marshal for the District of New Jersey on May 22, 1967 for the sum of $160,000 and said sale was confirmed by this Court's Order of May 24, 1967. The proceeds of the sale of said vessel (the fund) were deposited in the Registry of this Court pursuant to the Order confirming the sale.
By its Order of June 30, 1967 this Court appointed Louis N. Freeman, Esq., as Special Master pursuant to F.R.Civ.P. 53, to hold hearings and determine the amount and priority of all claims filed against the Sandy and to report his findings to this Court.
On August 19, 1968 the Special Master filed his report with the Clerk of this Court in which after reviewing the evidence presented before him he found and reported as follows:
"Accordingly, there is absence of any fraud, delay or hindrance, or any design to the detriment of all creditors and, * * * [there were] affirmative acts and deeds of 'good faith' as set forth and recorded in the preferred fleet ship mortgage of December 29th, 1965, and its supplemental agreements and mortgages.
Accordingly, Todd has no fixed rights to participate and receive any money from the fund in the Registry of the Clerk of the Court. Todd did not offer any pro forma proof establishing its right to assert a maritime lien.
The Valid Amount of Mastan's claim entitled it to receive the balance of the fund in the Registry of the Clerk of the Court, less taxed costs and disbursements to be assessed and ordered to be paid by the Court.
It is recommended that all interest, penalties for late payments and other finance charges as of February 28th, 1967 be denied; and that Mastan accordingly be allowed immediately to withdraw from the Registry of the Court the remainder of the balance of the sum of $61,183.67, after current taxed costs are paid.
The final order in the cause should award the entire proceeds in the registry, after payment of taxed costs, to Mastan."
To the report of the Special Master objections were filed respectively by Mastan and Todd Shipyards Corporation (Todd), which were argued before the Court on October 14, 1968. At the conclusion of the oral arguments on that date the Court reserved decision and now embodies its decision in this Opinion.
Mastan urges five objections to the Master's Report, viz:
1. The finding that the preferred mortgage debt owed to Mastan is limited to $866,580.43;
3. The finding that all interest, penalties for late payments and finance charges should be cut off as of March 13, 1967, the date upon which Sapphire filed its petition under Chapter XI of the Bankruptcy Act;
4. The finding that the interest rate, penalties for late payments and finance charges which Mastan agreed to pay to Sapphire were excessive;
5. The findings referred to in objections 1 through 4 supra were unnecessary to the Special Master's decision because moot, for the reason that the amount in the Registry of the Court is far ...