Pt. I. 34. Mortgagee not treated as owner. general principle that a first mortgage taken to cover future advances has not priority over a second mortgage as regards advances made after notice of the second mortgage (as to which see Hopkinson v. Rolt (1861), 34 L. J. Ch. 468; 9 H. L. Cas. 514), applies to mortgages of ships notwithstanding this section. Ibid. 34. Except as far as may be necessary for making a mortgaged ship or share available as a security for the mortgage [1854, s. 70 debt, the mortgagee shall not by reason of the mortgage be deemed the owner of the ship or share, nor shall the mortgagor be deemed to have ceased to be owner thereof. ] "Except as far. . . . debt."-These words occurred at the end of the repealed section, but the alteration in their position does not seem to affect the meaning. The following is a summary of the principal cases upon the rights and liabilities of mortgagor and mortgagee: I. MORTGAGOR IN POSSESSION-MORTGAGEE'S RIGHT TO TAKE POSSESSION, &c. The section enacts in substance that the mortgagee shall be deemed owner for all purposes necessary for making the ship available as a security for the mortgage debt. Per Coleridge, J., Kitchen v. Irvine (1858), 28 L. J. Q. B. 46. And to make the ship so available he may take possession of her and collect the freight. Per Ld. Campbell, C. J., S. C., sub nom. Dickinson v. Kitchen (1858), 8 E. & B. 789. He may prevent her sailing uninsured if mortgagor agreed to insure. Laming v. Seater (1889), 16 Ct. of Sess. Cas. (4th Ser.) 828. Where the mortgagors entered into a charter-party for the carriage of contraband of war to the port of one of two belligerents, and the ship was not insured against risk of capture, the Court gave the mortgagees a declaration that the charter was not binding on them because it impaired their security. Law Guarantee and Trust Society v. Russian Bank for Foreign Trade, 74 L. J. K. B. 577: [1905] 1 K. B. 815, following Collins v. Lamport, infra. Where a ship, under an engagement of an unusual kind which would be prejudicial to its sale, was mortgaged to A. without notice, and then to B. with notice, A. was held entitled (upon default of mortgagor) to sell her to B., and B. to take, free of the engagement. The Celtic King, 63 L. J. P. 37; [1894] P. 175. But a mortgagor remaining in possession retains all rights and powers of ownership, and his contracts with regard to the ship will be valid and effectual, provided they do not materially impair the security. Collins v. Lamport (1865), 34 L. J. Ch. 196; 11 L. T. 497; The Heather Bell, 70 L. J. P. 57; [1901] P. 143, 272. Where, therefore, a mortgagor in possession had entered into a beneficial charter-party, the mortgagees were restrained by injunction at the suit of the charterer from dealing with the ship so as to interfere with the execution of the charter-party. Ibid. And see, as to ship under charter at time of mortgage, De Mattos v. Gibson (1859), 28 L. J. Ch. 165, 498. But see also The Celtic King, supra. And where the mortgagees had brought an action of possession and arrested the ship before the mortgage money became due, and while she was under a charter not prejudicial to the security, the court, on the motion of the owners, ordered her re'ease. The Blanche (1887), 6 Asp. M. L. C. 272. Similarly, where the charter-party is not prejudicial to the security, a mortgagee of shares not in possession cannot maintain an action of restraint against co-owners who have let the ship without his consent. The Innisfallen (1866), 35 L. J. Ad. 110; L. R. 1 A. & E. 72. Nor may he arrest her while under such a charter-party, even though he takes possession of the shares before she sails. The Maxima (1878), 4 Asp. M. L. C. 21. A mortgagee cannot object to a charter-party being carried out simply on the ground that it would remove the ship out of the jurisdiction and render enforcement of the mortgage security more difficult. The Fanchon (1880), 50 L. J. Ad. 4; 5 P. D. 173. The onus is on him to show that his security would be prejudiced. Ibid. The mortgagee, so long as he does not interfere and claim possession, will be taken to have allowed the mortgagor to enter into all engagements for the employment of the ship of the sort usually entered into by a person who has the apparent control and ownership of the ship. Hence, where a ship was, at the time of demand for possession by the mortgagee, under engagement for a voyage, the mortgagee wis held not entitled to damages for detention of the ship till the conclusion of the voyage. Johnson v. Royal Mail S. P. Co. (1867), 37 L. J. C. P. 33; L. R. 3 C. P. 38. Damages for the wrongful arrest of a ship by the mortgagee were awarded to the mortgagor in The Cathcart (1867), L. R. 1 A. & E. 314; 16 L. T. 211. II. MORTGAGEE IN POSSESSION-RIGHTS AND LIABILITIES OF. On the mortgagee's taking possession he is bound by a charter-party entered into by the mortgagor. Cory Bros. v. Stewart (1885), 2 T. L. R. 508. He may collect the freight, and yet he is protected from liabilities to which he might otherwise be subject as the legal owner in possession. Per Lord Campbell, C. J., Dickinson v. Kitchen, supra. On taking possession, the mortgagee is enticed to the benefit of outstanding contracts made by the mortgagor. Collins v. Lamport, supra. He becomes owner, and as such, and not ordinarily by virtue of any contract or antecedent right, is entitled to freight. Keith v. Burrows (1877), 46 L. J. C. P. 801; 2 App. Cas. 636; Liverpool Marine Credit Co. v. Wilson (1872), supra (s. 33). But in order to defeat the mortgagor's right to freight he must take possession, actual or constructive, before the freight is paid. Rusden v. Pope (1868), 37 L. J. Ex. 137; L. R. 3 Ex. 269; Liverpool M. C. Co. v. Wilson (1872), supra; Beynon v. Godden (1878), 3 Ex. D. 263. He cannot intercept the freight by merely giving notice to the charterer before payment. Liverpool M. C. Co. v. Wilson, supra. But where actual taking possession was impossible because the ship was at sea, notice to mortgagor and charterers was held equivalent thereto. Rusden v. Pope, supra. The mortgagee cannot recover freight which he has allowed the mortgagor to receive. Wilson v. Wilson (1872), 41 L. J. Ch. 423; L. R. 14 Eq. 32; Willis v. Palmer (1860), 29 L. J. C. P. 194; 7 C. B. (N. S.) 340; following Gardner v. Cazenove (1856), 26 L. J. Ex. 17. As to the position of a ship's husband, who is mortgagor of shares, with regard to freight and the assignment thereof, see Beynon v. Godden (1878), 2 Ex. D. 263; 4 Asp. M. L. C. 10. As to the mortgagee's right to have the expenses of taking possession, &c. allowed in taking the accounts, see Wilkes v. Saunion (1877), 47 L. J. Ch. 150; 7 Ch. D. 188. Where in order to obtain possession the mortgagee is compelled to pay wages, disbursements, &c., he can recover the same from the mortgagor, or other perons primarily liable therefor. The Orchis (1889), 59 L. J. P. 31; 15 P. D. 38; Johnson v. Royal Mail S. P. Co., supra. At As to whether and in what circumstances the mortgagee has a right to use the ship, see Marriott v. Anchor_Reversionary Co. (1861), 2 Giff. 457; affirmed 13 L. J. Ch. 571; 3 De G. F. & J. 177; where Lord Campbell, L. C., dissented from the dicta of Wood, V.-C., in European and Australian R. M. Co. v. Royal Mail S. P. Co. (1858), 4 Kay & J. 676. And see De Mattos v. Gibson, supra. any rate he is liable to the mortgagor for loss sustained through his imprudent use and sale of the ship. Marriott v. Anchor, &c. Co., supra. He cannot be comrelled at the instance of other parties interested in the ship to join in a charterparty instead of selling her. Samuel v. Jones (1863), 7 L. T. 760. As to a sale decreed at suit of mortgagee of part of ship, see The Fairlie (1868), 37 L. J. Ad. 66. As to wrongful sale by mortgagee, and construction of mortgage deed, see Brouard v. Dumaresque (1811), 3 Moo. P. C. C. 457. The judgment creditor of the mortgagor cannot take the ship in execution, because that would impair the mortgagee's security. Kitchen v. Irvine, Dickinson v. Kitchen, supra. The mortgagee taking possession is bound by a lien on the ship for necessary repairs ordered by the mortgagor when in possession. Williams v. Allsupp (1861), 30 L. J. C. P. 353; 10 C. B. (N. S.) 417. But he takes precedence of such claims where there is ro lien. The Pacific (1864), 33 L. J. Ad. 120; B. & L. 243. The Scio (1867), L. R. 1 A. & E. 353; 16 L. T. 642. The Lyons (1887), 6 Asp. M. L. C. 199; 57 L. T. 818. He is postponed to the master's claim for wages and disbursements. See note () to s. 167. When in possession he is liable for disbursements of his agent to the same extent as if owner. Havilland Pt. I. 34. Pt. I. 35-36. Mortgagee to have power of sale. v. Thomson (1864) (Sc.), 3 Ct. of Sess. Cas. (3rd Ser.) 313. But he is not liable for necessaries ordered by the master not acting as his agent. The master has no implied authority from him for that purpose. The Troubadour (1866), L. R. 1 A. & E. 302; 16 L. T. 156. As to the mortgagee's right to freight as against creditors for disbursements, &c., see Japp v. Campbell (1887), 57 L. J. Q. B. 79; Gibson v. Ingo (1847), 6 Hare, 112. As to deductions by charterers from freight payable to the mortgagee, see Tanner v. Phillips (1872), 42 L. J. Ch. 125; 27 L. T. 717. As to rights, as against assignee of freight, of mortgagee, see Brown v. Tanner (1868), 37 L. J. Ch. 923; L. R. 3 Ch. 597; Wilson v. Wilson, supra; of purchaser from mortgagee, Dobbyn v. Comerford (1860) (Ir.), 10 Ir. Ch. Rep. 327. As to right of part-owner to deduct proportion of expenses of voyage from freight payable to mortgagee of his co-owner, see Alexander v. Simms (1854), 23 L. J. Ch. 721. As to appointment of receiver of freight at instance of mortgagee, see The Faust, Burn v. Herlofson (1887), 6 Asp. M. L. C. 126; 56 L. T. 722-(C. A.). As to priority of mortgagee's costs over claim of material men intervening in mortgage action, see The Sherbro (1883), 52 L. J. P. 28; 48 L. T. 767. The mortgagee has a right to defend an action against the ship for wages and disbursements, but can only rely on defences open to the owner. The Chieftain (1863), 32 L. J. Ad. 106; B. & L. 104. As to his right to have ship released on giving bail, see The Ringdove (1858), Swa. 310; The Acacia (1879) (Ir.), 4 Asp. M. L. C. 226; 41 L. T. 564. 35. Every registered mortgagee shall have power absolutely to dispose of the ship or share in respect of which he is regis[1854, s. 71.] tered, and to give effectual receipts for the purchase money; but where there are more persons than one registered as mortgagees of the same ship or share, a subsequent mortgagee shall not, except under the order of a court of competent jurisdiction, sell the ship or share, without the concurrence of every prior mortgagee. Mortgage not affected by bankruptcy. As to the mortgagee's right to exercise the power of sale as against the mortgagor and other parties, see note to s. 31. A first mortgagee having sold a ship under this power is not thereby an express, though he may be a constructive, trustee of the surplus proceeds for a second mortgagee, and hence the Statute of Limitations is not barred. Banner v. Berridge (1881), 50 L. J. Ch. 630; 18 C. D. 254. Where the first mortgagee sold by arrangement with the second mortgagee, and there was a surplus, then such arrangement, and not the law of mortgage, was held to create a trust. Tanner v. Heard (1857), 23 Beav. 555 (considered by Kay, J., in case last cited, 18 C. D. at pp. 261, 262). 36. A registered mortgage of a ship or share shall not be affected by any act of bankruptcy committed by the mortgagor after (a) the date of the record of the mortgage, notwithstanding [1854, s. 72.] that the mortgagor at the commencement of his bankruptcy had the ship or share in his possession, order, or disposition, or was reputed owner thereof, and the mortgage shall be preferred to any right, claim, or interest therein of the other creditors of the bankrupt or any trustee or assignee on their behalf. (a) Where a mortgage is granted by a mortgagor who has already committed an act of bankruptcy to a mortgagee without notice of the act of bankruptcy, the mortgagee is protected by s. 49 of the Bankruptcy Act, 1883. The Ruby (1900), 9 Asp. M. L. C. 146; 83 L. T. 438, following Lyon v. Weldon (1824), 2 Bing. 334. Pt. I. 37-39. 37. A registered mortgage of a ship or share may be transferred to any person, and the instrument effecting the transfer Transfer of shall be in the form marked C in the first part of the First mortgages. Schedule to this Act, or as near thereto as circumstances permit, [1854, s. 73.] and on the production of such instrument the registrar shall record it by entering in the register book the name of the transferee as mortgagee of the ship or share, and shall by memorandum under his hand notify on the instrument of transfer that it has been recorded by him, stating the day and hour of the record. The instrument of transfer is exempt from stamp duty, sec s. 721. As to fees on mortgages, see M. S. (Mercantile Marine Fund) Act, 1898, 8. 3, post, p. 457. For provisions as to forms, &c., and as to power of registrar to refuse to register transfer not in prescribed form, see s. 65. As between the transferor and the transferee, the rights under the mortgage pass upon the execution of the instrument of transfer, and not upon registration thereof. The Two Ellens (1871), 40 L. J. Ad. 11; 41 L. J. Ad. 33; L. R. 3 A. & E. 345, 355, following Stapleton v. Haymen, cited in note to s. 26, q. v. Moreover, it seems that an agreement to transfer a mortgage can be enforced under s. 57, though it is not in the prescribed form, and is not registered. note to s. 24, and Batthyany v. Bouch, there cited. See As to the power of the Court to look behind the registered documents and enforce equities between the owner and the transferee of a mortgage, see The Cathcart, infra (s. 57), and as to equities generally, see s. 57, and note (f) thereto. The deposit of a mortgage as security by the registered mortgagee, who subsequently became bankrupt, was held to take the ship out of his "order and disposition." Lacon v. Liffen, supra (s. 31). mortgage 38.-(1.) Where the interest of a mortgagee in a ship or Transmission share is transmitted on marriage, death, or bankruptcy, or by of interest in any lawful means, other than by a transfer under this Act (a), by death, the transmission shall be authenticated by a declaration (b) bankruptcy, of the person to whom the interest is transmitted, containing marriage, &c. a statement of the manner in which and the person to whom [1854, ss. 74, 75.] the property has been transmitted, and shall be accompanied by the like evidence () as is by this Act required in case of a corresponding transmission of the ownership of a ship or share (c). (2.) The registrar on the receipt of the declaration, and the production of the evidence aforesaid, shall enter the name of the person entitled under the transmission in the register book as mortgagee of the ship or share. (a) "Any lawful means, other than, &c."-As to these words, see note (a) to s. 27. (b) As to power of registrar to dispense with declarations and evidence, see 8. 60; as to mode of making declarations, s. 61; and as to their admissibility in evidence, s. 64. (c) See s. 27 for transmission of property in ship. Certificates of Mortgage and Sale. 39. A registered owner, if desirous of disposing by way of Powers of mortgage or sale of the ship or share in respect of which he is mortgage and sale may be registered at any place out of the country in which the port of Pt. I. 40-43. conferred by Requisites for certificates of mortgage and sale. [1854, s. 77.] Restrictions registry (a) of the ship is situate, may apply to the registrar, and the registrar shall thereupon enable him to do so by granting a certificate of mortgage or a certificate of sale. (a) See s. 13 defining a ship's port of registry. 40. Before a certificate of mortgage or sale is granted, the applicant shall state to the registrar, and the registrar shall enter in the register book, the following particulars; (that is to say,) (i.) the name of the person by whom the power mentioned in (ii) the place where the power is to be exercised, or if no exercised. 41. A certificate of mortgage or sale shall not be granted so on certificates as to authorise any mortgage or sale to be madeof mortgage and sale. [1854, s. 78.] Contents of certificates of mortgage and sale. [1851, s. 79.] Rules as to certificates of mortgage. [1854, s. 80.] If the port of registry of the ship is situate in the United By any person not named in the certificate. See s. 88 as to foreign port of registry. 42. A certificate of mortgage and a certificate of sale shall contain a statement of the several particulars by this Act directed to be entered in the register book on the application for the certificate, and in addition thereto an enumeration of any registered mortgages or certificates of mortgage or sale affecting the ship or share in respect of which the certificate is given. As to forms, see s. 65, Part II. of 1st Schedule, and Appendix, p. 523. 43. The following rules shall be observed as to certificates of mortgage: (1.) The power shall be exercised in conformity with the directions contained in the certificate: |