of mort

gagees.

Although it has been enacted that a mortgagee of a The rights British ship only becomes the owner for the purposes of the mortgage, so that he may be protected from claims for which he would otherwise be liable as owner in possession,1 yet the mortgage gives him a right, as has been pointed out, to the actual possession of the ship at any time for the purposes of his security. Accordingly, though mortgages may be unregistered, or registered according to the provisions of the Merchant Shipping Act, 1854, yet an unregistered mortgage is good against all persons except registered transferees and mortgagees. Accordingly, as between two unregistered mortgagees, or an equitable mortgagee and the assignee of the freight, the first in time would have the first claim to the ship and freight; and, as between a mortgagee of the freight and an unregistered and subsequent mortgagee of the ship, the latter would have the first claim to the ship and freight. But, as between a registered and unregistered mortgagee, the former, though he may be last in point of time, is first in point of rank.2 But, since after a first mortgage the legal right to the ship has passed to the mortgagee, if there then comes an equitable mortgagee of the freight (though the first mortgage carries with it the legal right on taking possession to the freight); and, next, an equitable or second mortgagee of the ship, without notice of the mortgage of the freight, the last two incumbrancers would take according to the time of their securities, because the last equitable mortgagee takes subject to all equities which are prior to his own. Yet, if the first mortgagee of the ship is also the subsequent mortgagee of the freight without notice of any

1 Dickinson v. Kitchen, 8 E. & B. 789.

* Keith v. Burrows, L, R. 1 C. P. D. 722; 45 L. J. C. P. D. 876; L. R. 2 C. P. D. 163; 46 L. J. C. P. D. 452; L. R. 2. App. Cas. 636; 46 L. J. C. P. D. (H. L.) 801. The judgment of the House of Lords in this case does not appear to conflict with the dicta of the Court below on the priority of mortgages, and turned solely upon whether a certain sum could be considered as freight: see, too, Wilson v. Wilson, L. R. 14 Eq. 32; 41 L. J. Ch. 423.

The Court will use

intervening charge, his claim to the freight is a prior right to that of the second mortgagee of the ship.'

A mortgage of a British ship must be in the form preequitable scribed by the Merchant Shipping Act, 1854. An unremedies. finished ship, incapable of registration, can be equitably mortgaged by the deposit of the builder's certificate. The Court will act on equitable principles in adjudicating upon cases of mortgage; thus, it will look behind the register, so as to discover the real character of the transaction, so that what is on the face of it an absolute transfer may be treated, if such was the intention of the parties, as a mortgage.3

And on the same principle equities will be enforced between the parties to a mortgage, all transactions which have taken place, as well as the registered documents, being fully considered; and equally also the Court will correct mistakes, as, when a receipt for the mortgage money was indorsed on the mortgage by mistake, and the mortgagees had sold the ship, the Court made a decree that the purchaser was entitled to the possession of the ship.

A mortgagee, having no maritime lien on a ship, ranks after all claimants against her except those who have supplied necessaries to British ships, since a mortgage is a valid charge on a vessel from the day when it is given, whilst the ship is not chargeable with a debt for necessaries until the suit is actually instituted."

1 The Liverpool Marine Credit Co. v. Wilson, L. R. 7 Ch. 507; 41 L. J. Ch. 798.

2 Ex parte Winter, L. R. 20 Eq. 746; 44 L. J. Bank. 107.

3 The Innisfallen, L. R. 1 Ad. 72; 35 L. J. Ad. 110.

The Cathcart, L. R. 1 Ad. 314; M. S. A. 1862, s. 6.

5 The Rose, L. R. 4 Ad. 6; 42 L. J. Ad. 11; and see also J. A. 1873, s. 25, sub-s. 11.

6 The Two Ellens, L. R. 4 P. C. 161 ; 41 L. J. Ad. 33.

CHAPTER VIII.

BOTTOMRY AND RESPONDENTIA.

tract of

BOTTOMRY is a contract in the nature of a mortgage by The conwhich money is borrowed to be applied to the necessities bottomry. of a ship. The keel or bottom of the ship (a part signifying the whole) and the freight which it will earn and the cargo on board is the security thereby given for the repayment of the sum lent, together with interest. Both principal and interest are forfeited if the ship is lost on the voyage. But no property passes as by mortgage, and no possession is given as by a pledge.1

dentia.

Respondentia is a similar contract. The security here of responis only the cargo laden on board,2 and the money is raised for the necessities of the cargo only.

Over questions relating to bottomry and respondentia bonds, the Admiralty Division has almost sole jurisdiction, but the power of the Court to enforce a bottomry bond (under which term we include a respondentia bond) depends of course on its validity. The elements of such The form validity are not numerous. But, firstly, the contract must contract.

'Stainbank v. Shepherd, 13 C. B. 418 (441).

2 The Cargo ex Sultan, Swa. 510.

3 Stainbank v. Shepherd, 13 C. B. 418 (444); Johnson v. Shippen, 1 Salk. 34; The Cargo ex Sultan, Swa. 510; 5 Jur. N. S. 1060. The Court of Chancery used sometimes to give relief on bottomry bonds, but it is becoming less and less frequent to invoke the aid of that Division; and as under the Judicature Act, 1873, s. 24, equitable remedies are to be administered in every Division, the Admiralty should be as efficient a tribunal as the Chancery Division.

of the

be in writing,' and the original bond on which the action is founded must be brought into Court.2 In form it is generally a bond, but it may be in any shape so long as its essential particulars are set forth.3

These are, the parties to the contract; the amount of the loan; the premium or interest agreed upon; the name of the ship; the voyage during which the risk is to be incurred; the fact that the repayment of the loan depends on the safe arrival of the ship at her destination; and that the vessel, her apparel, and furniture are hypothecated for the loan.

5

The voyage, and the fact that the lenders are incurring maritime risk, must appear on the face of the contract in order to make it valid. The remaining elements must also appear, since they can only be proved by the document itself. The instrument will receive as liberal a construction as possible from the Court.7 But a bond may be good as to one part and bad as to another; the bad, so long as it is not material to the existence of the contract, does not invalidate the good part, and the Court will enforce those portions which it can uphold, if the advances touched by them are not of too trivial a character.10

If necessary the claim can be referred to the Registrar and Merchants, who will examine the items in respect of which

1 Ex parte Halkett, 19 Vesey, 474; The Mary Ann, L. R. 1 Ad. 13. 2 The Rowena, 37 L. T. N. S. 366; 3 Mar. L. C. N. S. 506.

3 The Kynnersley Castle, 3 Hagg. 1; The Mary Ann, L. R. 1 Ad. 13. 4 It is advisable, but not necessary, to state reasons for such a loan; for necessity is the foundation of such a bond, though not of the essence of the contract.

5 Western v. Wildy, Skinner, 152; Williams v. Steadman, Holt, 126; The Jane, 1 Dods. 461.

6 But it is sufficient if this fact can be collected from the document as a whole: The Nelson, 1 Hagg. 169; The Emancipation, 1 W. Rob. 124; The Royal Arch, Swa. 281.

7 The Kynnersley Castle, 3 Hagg. 1; The Vibilia, 1 W. Rob. 5; The Karnak, L. R. 2 Ad. 289; 18 L. T. N. S. 661.

8 The Augusta, 1 Dods. 283; The Staffordshire, L. R. 4 P. C. 194 (209); 41 L. J. Ad. 49.

9 The Edmond, Lush. 57 & 211; 27 L. J. Ad. 76.

10 The Empire of Peace, 39 L. J. Ad. 12; 21 L. T. 763.

the bond was given, and such of these as are not properly matters in respect of which a bond should be given by a master will be deducted, and the amount of the bond will then be pronounced for less such deductions, or if all the charges are improper the Court will hold it invalid.2 Further, it should be borne in mind that, even when a bond is pronounced for, this does not generally determine the actual amount of money to which the bondholder is entitled; it is merely a declaration that the bond itself is valid. And it is, therefore, sometimes necessary, when the question of necessity depends on the amount of items of accounts said to be due by the ship in the place where the hypothecation took place, to order a reference before deciding upon the validity of the bond.*

Next, as regards the subject of the loan.

be bottom

Both the ship and freight may be bottomried, but the What may freight must be that to be earned in the particular voyage red. during which the maritime risks are to be incurred, not that which may accrue from a subsequent voyage,5 and an hypothecation of freight will include that received from sub-shippers of goods by the actual charterers. The cargo may be hypothecated, but only for its own benefit ;7 yet since the master does not become the agent of the owners of the cargo until it is placed on board, this must be done before it can be hypothecated.8

The master is usually the person who borrows money Borrowers. on bottomry, and he has a right so to borrow, as between himself and the world at large, if he is the apparent master,

1 The Edmond, Lush. 57 & 211; and see The Cargo ex Sultan, Swa. 510, where part only of the cargo was exposed to risk, and where the owners had to pay only such a proportion of the bond as the part of the cargo exposed bore to the whole cargo.

2 The Roderick Dhu, Swa. 177.

3 The Catherine, 3 W. Rob. 3.

4 The Roderick Dhu, Swa. 177.

The Staffordshire, L. R. 4 P. C. 194; 41 L. J. Ad. 49.

↑ The Eliza, 3 Hagg. 87.

7 The Gratitudine, 3 C. Rob. 240.

The Jonathan Goodhue, Swa.355; The Glenmanna, Lush. 115.