Pengwin

In this appeal we are asked to resolve the priority of various maritime liens against the vessel PENGWIN. Seattle-First National Bank (“Bank”) 1 caused the vessel to be arrested, and the PENGWIN, together with its fishing rights, were sold at a marshal’s auction May 7, 1997. Fishing Vessel Owners & Marine Ways, Inc. (“FVO”) intervened. The district court confirmed the sale and determined that the Bank, which had recorded two preferred ship mortgages before FVO had completed work on the vessel that gave rise to a necessaries lien, as well as a series of mortgages thereafter, had priority to the extent of the outstanding balance on the indebtedness secured by both of the earlier mortgages as of the time FVO’s lien arose. The main issues presented by FVO’s appeal are whether the two earlier mortgages should have been consolidated and treated as replaced and renewed, and whether partial priority should have been accorded the outstanding balance on those mortgages in the face of subsequent mortgages that substantially exceeded the amount of the prior indebtedness. We conclude that the mortgages recorded before the necessaries lien arose were not extinguished and therefore take priority…