Reported by Ar c h ib a l d J. Nic o lls, Esq., Barrister-at-Law.
A p ril 15,17,18, 19, and 27,1871.
Th e St a f f o r d s h ir e.
Bottomry bond—Communication with owner—B ill of exchange—Collateral security—Frocedure in colonial court.
A British ship, under a charter from London to Callao, put into Melbourne fo r repairs. The master, who was also part owner, fearing that the shipwrights would, unless their claims were paid, detain the vessel, and that she might thus be unable to fu lfil her charter, raised the necessary funds from the ship’s assets at Melbourne upon a
bottomry bond of the ship and freight.
Held,that thebondwas not invalidated by the absence of previous communication between the master and the co-owner; and that the case was distinguishable from The Panama (L . Bep. 3 P. C. 199; 22 L. T.
Hep. N. 8. 73), and from a ll those in which the general duty of previous communications is laid down.
Held also, that, although a bottomry transaction can
not be based upon personal security, bills of ex
change may be given in addition to the bond.
Held also, that the mortgagees of a ship cannot, fo r the purposes of such previous communications as is necessary between the party hypothecating the shiv and the owner, be deemed an owner ; though it may be otherwise i f the mortgagee be also the ship’s agent and agent fo r the owner.
Held also, that it may be presumed that the pro
cedure in the Vice-Admiralty Oourt of Victoria is so f a r analogous to that in the maritime courts of Great B rita in and Ireland, that a shipwright of
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Melbourne would be entitled to arrest a British ship and detain her u ntil his legal demands upon her were
satisfied-Th is was a cause of bottomry, and the petition;
which was instituted on'behalf of the Bank of New South Wales, of Old Broad-street, in the city of London, stated, that the Staffordshire, while on a voyage from London to Oallao, put into Melbourne, and, being in want of funds necessary to enable her to proceed on her voyage, the master, having no credit at Melbourne, and being unable to obtain the necessary money there, wa3 compelled to and did take up and borrow from Henry Dickson and Walter Williams, of Melbourne, on bottomry of the said vessel and her freight, the sum of 3,2651., for the aforesaid purposes; and by a certain bond of bottomry, dated the 7th Sept. 1869, the master of the said ship hypothecated her and her freight to the said Messrs. Dickson and Williams, their executors, administrators, and assigns, as a security for the said sum, which was thereby made payable to them within seven days next after the safe arrival of the Staffordshire at Callao, w ith a condition th at i f the said ship should be lost, cast away, or destroyed before her arrival at the said port, then the said sum should not be recover
able. That, in consequence of the second advance of money, the Staffordshire was enabled to proceed to Callao, where she arrived safely, having earned a considerable freight in respect of her said voyage;
that the plaintiffs were now the assignees and lawful owners of the said bond ; and that frequent applications had been made to the defendants for payment of the amount due thereon, but that they had neglected and refused to pay the same.
The answer put in by the defendant W. H.
Smith, of Hyde-park, w ill be found set out, so far as is material, in the judgment of the court.
Elrington, Q.C., L L.D ., Boyd, LL.D ., and Cor
rigan, LL.D . appeared for the plaintiffs.
Todd, Q.C., Seeds, LL.D ., and Madden appeared for the defendant.
The evidence of Mr. Currie and others, taken by commission in London, on the 6th Dec. 1870 and following days, was read at the hearing.
The following cases were cited :
The Lizzie, L . Rep. 2 Adm .& Ecc. 254; 19 L. T . Rep.
N . S. 71;
The Great Eastern, L. Rep. 2 Adm. & Ee. 88;
The Royal Arch, Swab. 259;
The Jacob, 4 Chr. Rob. 245 ;
The Earnak, L . Rep. 2 Adm. & Ee. 289; 21 L. T . Rep.
N. S. 159; and
The Ariadne, 1 W . Rob. 411; 1 Pritchard’s Dig. 45.
Cur, adv. vuIt.
A p ril 27.—To w n s e n d, J.—The facts of this case, which has been so fu lly and ably discussed, are these : The suit has been instituted to enforce pay
ment of a bottomry bond for 32651, which was executed at Melbourne, in Australia, on 7th Sept.
1869, by W illiam Barrett, since deceased, who was then the master of the Staffordshire, of London, and a part owner of twenty-two sixty-fourths of that vessel, to Henry Dickson and W alter W il
liams, ship agents, who have assigned the bond to the plaintiffs, the London Branch of the Bank of New South Wales. Neither the execution nor the assignment of the bond is disputed, but the de
fendant M r. W. H. Smith, of London, who is owner of the remaining forty-two sixty-fourths of the vessel, disputes the validity of the bond on several grounds, to which I shall hereafter refer.
No other party has appeared in the cause. The
bond binds the vessel and her freight to be earned on her then intended voyage from Melbourne to Callao, and from thence to any other port or ports, and i t is made payable, with 50 per cent, bottomry premium, w ithin seven days after the arrival of the ship at Callao. The condition of the bond recites that the ship had lately arrived from London at Melbourne; that she was in want of funds to enable her to proceed to Callao, where she was then bound and about to go ; and that without suoh funds she could not proceed. I t con
tains no reference to bills of exchange, or to any other security, collateral or otherwise. Before and at that time, the Staffordshire was subject to a mortgage to M r. Gumm, of London, which is stated to bear date 22nd Dec. 1868, and to ,be s till subsisting, but i t has not been given in evidence in this cause, nor does the exact amount appear which it was intended to secure. On the same day as the date of the mortgage, the owners of the ship (Barrett and Smith) gave M r. Gumm a letter, which is in evidence, assigning to him all the freights and earnings of the ship, and the insurances effected and to be effected on the ship and freight, empowering him to effect such insur
ances as he m ight deem necessary, appointing him their attorney for receiving the freights and insur
ance moneys, constituting him ship’s husband, giving him the sole management of thevessel.and ap
pointing him to be her sole agent at home and abroad.
I t does not appear that this letter was specially communicated to Messrs. Dickson and Williams, but Mr^ Dickson states that he understood that Gumm had the principal management of the ship.
The latter, by a letter to Dickson and Williams, dated 19th Deb. 1869, consigned the ship before her arrival at Melbourne to tbeir firm. They had been previously acquainted with M r. Gumm, and had done business for him as ship’s agents. The Staffordshire sailed from London in January 1869 w ith a cargo for Melbourne. She became leaky on the voyage, and when she anchored at Melbourne i t appeared by her log that i t bad been necessary to keep her pumps going day and night. Captain Barrett placed himself in the hands of Dickson and Williams, as agents for the ship, and in a few days told them that he expected to be obliged to expend about 10001. in repairs, but he did not then mention any other disbursements, nor ask for any advances.
This is accounted for by the fact that a sum of 21001. was payable at Melbourne for freight, which sum Messrs, Dickson and Williams were to receive, the ship being consigned to their firm. Dickson states that he knew it was their duty to make the necessary ship’s disbursements out of the freight, but they had no reason to suppose they should have occasion to advance anything beyond the amount of that fre ig h t; and I do not doubt that he was also at that time confident that the freight would supply a sufficient fund for all the ship’s expenditure at Melbourne. When the cargo was discharged i t was found necessary to get the ship into dock to be examined and repaired; and i t appears to have been necessary to keep the ship waiting for a slip u n til some days after the 16th July. The repairs were completed, and the vessel got off the slip before the 13th Aug., but the ship
w rig h t’s b ill was not furnished u ntil about the 24th of that month. The only evidence of what then occurred is that of Mr. Dickson. The bond was then executed. Two bills were also drawn by Captain Barrett on M r. Gumm, one for 35861.,
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and another for a sum of 191. The former was endorsed by Dickson and Williams to the Bank of New South Wales at Melbourne, and the bond was also made over to the bank in the usual manner. The Staffordshire sailed from Mel
bourne for Callao on the 11th Sept., the bond being sent in her, with a letter written by Mr. Dickson, with the permission of the bank, instructing Gibbs and Co. of Lima to take the directions of the Bank of New South Wales in London _ as to enforcing the bond. Dickson states th a t'h e informed the captain of the fact, and that i f the b ill was not honoured the bank would instruct Gibbs and Co. to enforce the bond.
These, be says, were the instructions given to the bank. On the day that the vessel left Melbourne Diekson and Williams wrote to Mr. Gumm a letter, which was the first intim ation that appears to have been given to anyone in England of any intention to hypothecate the ship, or of the fact that the bottomry bond had been giveH. M r. Gumm died in the month of October, before the letter arrived in England. I t reached his office in London, as appears from the evidence of Forde, who had been in his employment for some time, who had for a long time the management of tho transaction, and who took part in the subsequent transactions respecting the b ill in London. Forde says that Mr. Gumm was not advised that funds were needed for the repairs; but a letter to him from Capt. Barrett, dated 13th Aug. 1869, must have apprised him that the repairs were likely to cost about 3000i.; and a letter of the same date from Barrett to the defendant stated the same fact, and exDressed a doubt as to how he was to got the money. Neither letter alludes to bottomry, or a necessity for it. Dickson left Melbourne on 12th Sept., and arrived in England on 30th Oct.
The b ill drawn at Melbourne, together with the accounts of Dickson and Williams with M r. Gumm, reached London on 2nd Nov. On that day the bill was presented at M r. Gumm’s office for acceptance, by direction of M r. Currie, the secretary of the London branch of the Bank of New South Wales.
I t was returned to the messenger who presented it, who was merely told that M r. Gumm was dead.
I t was not accepted, nor was he referred to Mr.
Gumm’s executor, or to any other person ; nor was any offer made to consider the matter. On the next day the b ill was presented again by a notary, and the only answer given was “ No advice,” where
upon i t was protested for non-acceptance. Mr.
Gumm’s w ill was not proved until the 10th Dec.
1869; and on the 5th Nov. Mr. Forde wrote a letter, signed by him on behalf of the executors of Gumm, requesting the bank to present the b ill again when due. I t was never again presented, nor was any direct application ever made to the executors of Gumm respecting it. On the 5th Nov. M r. Taylor and M r. Dickson had an interview with M r. Currie, at which Taylor told Currie there would be no difficulty about making an arrangement as to the bill, but that it could not be done that d ay; to which Currie replied, “ Dnless the money is here by four o’clock this afternoon, the b ill w ill go back to the colony.”
Taylor also states that he had another interview w ith M r. Currie in presence of the defendant on the same evening, when the defendant gave to Mr.
Currie Ford’s letter of the 5th Nov. A t this interview one of the directors was also present, who asked, “ Why didn’t you pay the money ? ” to
which Taylor replied, “ You shall have i t when due; surely you do not want i t before. Nothing Beems to have been said respecting acceptance, or about the executors. The next mail for Lima left London on the following day ,(6th Nov.), and by it Mr. Currie advised Gibbs and Co. that the b ill had been dishonoured, and directed them to put the bond in force. On the 11th Nov., before that direction could have reached Lima, and again on the 16th Nov., offers were made by M r. Forde to Mr. Currie to take up the b ill by actually paying the amount. These offers were declined, unless the bank should be indemnified against any conse
quences that m ight ensue from the bond being enforced in Callao, where there was likely to be a loss on the sale of the vessel. M r. Currie’s version of this is very different; but his recollec
tion of the transactions is not perfect. Another unsuccessful attempt at negotiation was made on the 16th Nov. The bond was not paid or enforced at Callao, from which port the Staffordshire sailed on her homeward journey about the 25th Jan. 1870, and on her arrival at Queenstown, on the 13th July, 1870, she was arrested in this suit. The defendant then appeared, and on the 21st July gave bail generally for the ship and freight. The petition prays the condemnation of the defendant and the bail in the sum alleged to be due, the bottomry premium, the interest, and the costs of suit. The answer opposes tho bond on several grounds:
First, that the money was not laid out in expenses necessary to enable the ship to proceed on her voyage; secondly, that the bond was but a collateral security for the amount of the bill, which amount was, i t is alleged, tendered to the plaintiffs’
manager shortly after the b ill arrived at maturity, and was refused by him unless on the terms of getting the guarantee, to which the defendant contends the plaintiffs were not entitled ; thirdly, that the freight sought to be attached was not earned on the voyage from Melbourne to Callao, where the sea risk ended, but since, and was earned in respect of a different cargo from that which was on board when the bond was given;
fourthly, that neither Dickson and Williams, nor Captain Barrett, communicated w ith the defendant as to requiring an advance of money, nor as to any intention to get or to give the bond ; fifthly, that the bottomry premium is excessive. Two of these defences, the third and fifth, may be at once dis
posed of. The bond m ight be good as regards the ship, and yet be invalid as regards the freight, against the mortgagees. But The Jacob (4 Ch.
Rob. 245) shows that the mere including of the freight of a subsequent voyage would not of itself invalidate a bottomry bond; and in Parsons on Shipping, vol. 1, p. 160 (where The Zephyr, 3 Mason, 441, is cited), i t is stated that a general hypothecation of the freight of a ship is construed to include all the freight of the whole voyage, whether earned at the time the bond is given or not, provided i t has not been paid to the master or owner. I have now to determine, in the first place, is the bond valid as a bottomry transaction P The alleged excessive amount of the premium is no objection to the validity of the bond, because, if it be excessive, the court has authority to moderate i t : La Ysabel (1 Dod. 277). There is no evidence that the transaction was any fraud between the Melbourne agents and Captain Barrett. I t is ad
mitted, and indeed cannot be denied, that a ship agent may, when acting with good faith and
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integrity, lend money on bottomry, provided that the transaction be in other respects legally valid.
And here we have ship agents dealing with a part owner of the ship, and making every reasonable effort to correspond with the gentleman who had consigned her to them ; nor is there a single mis
statement in any one of their communications with him that had been read. The first ground of ob
jection to the bond cannot, in my opinion, be sustained. I f the amount for which the bond was given includes any expenses not necessary for enabling the ship to proceed on her voyage, such expenses may be disallowed in a Court of Adm iralty, and a decree m ight be made for so much as is not open to objection and is sustained by sufficient proof. But I find i t îb given principally for the shipbuilder’s accounts for repairs done, w ith the concurrence of Captain Barrett, interested as a part owner, and under the inspection of the sur
veyors of the Chamber of Commerce, to a vessel which could not possibly have gone to sea leaking as described. The questions iu the case are thus reduced to two—both very important—the second and the fourth. I t is quite certain that the fourth objection is true in fact, whatever be its effect in law. The defendant contends that notice of the intention to hypothecate a vessel must be given to the owner, if possible ; and in support of that proposition the cases of The Olivier (Lush.
484) and The Oriental (7 Moo. P. C. 398) have been cited. In the former case D r. Lushington stated the rule as laid down by the Superior Court to be that the master, before giving a bond on ship and cargo, should, if practicable, correspond with the owners of the cargo, as well as with those of the ship, and receive instructions from them ; and that the lender on bottomry, before he enters into an engagement to advance, should satisfy himself that such communications have been made. He says : “ The whole question resolves itself into this, Was i t reasonably practicable for the master to have any such correspondence with the shippers and consignees of the cargo ?” The Oriental (7 Moo. P. C.), decided by the Court of Appeal, lays down the rule that, to ju stify the agent of the ship in taking a bottomry bond on the vessel, an express communication must be made to the
484) and The Oriental (7 Moo. P. C. 398) have been cited. In the former case D r. Lushington stated the rule as laid down by the Superior Court to be that the master, before giving a bond on ship and cargo, should, if practicable, correspond with the owners of the cargo, as well as with those of the ship, and receive instructions from them ; and that the lender on bottomry, before he enters into an engagement to advance, should satisfy himself that such communications have been made. He says : “ The whole question resolves itself into this, Was i t reasonably practicable for the master to have any such correspondence with the shippers and consignees of the cargo ?” The Oriental (7 Moo. P. C.), decided by the Court of Appeal, lays down the rule that, to ju stify the agent of the ship in taking a bottomry bond on the vessel, an express communication must be made to the