40 MARITIME LAW CASES

Ct. o f Ap p.] Bosto n Fr u i t Co. v. Br i t i s h & Fo r e ig n Ma r i n e In s u r a n c e Co. [Ct. o f Ap p. I w ill now consider w hat is the meaning of

clauses 17 and 22, and w hat is th e ir application to the present case, in which i t is an agreed fa ct th a t the collision was caused by the negligence of the master, mates, or crew in charge of the n a v i­

gation of the steamship. Now, what is the meaning of clause 17 P The firs t pa rt of clause 17, down to and including the word “ service,” pro­

vides fo r the cessation of payment o f hire in the event o f loss of tim e fro m collision, stranding, want of repairs, breakdown of machinery, or any cause appertaining to the duties of the owners, pre­

venting the w orking of the vessel more than tw enty-four w orking hours, and the hire is to cease fro m the hour when detention begins u n til the ship be again in an efficient state to resume her service. The clause is clum sily drawn. The loss of tim e which prevents the w orking of the vessel may apparently arise fro m causes over which the owner has no control—fo r instance, a collision m ig h t arise fro m negligent navigation of another ship, or i t m ig h t arise fro m negligence o f the charterer’s servant; or the causes of the loss of tim e m ig h t arise fro m the perils o f the sea, or the loss o f tim e m ig h t arise from imperfections in the machinery provided by the owner— but in each and a ll these cases the payment of hire is to cease, and the owners have an insurable interest in the loss of tim e arising fro m these clauses ; and then the clause provides th a t p o rt charges, pilotages, and other expenses should be borne by the owners i f the vessel should p u t in to any p o rt o r ports other th a n those to w hich she is bound, i f th a t is the consequence of certain causes, and one would expect to fin d the causes identical w ith those before mentioned. B u t they are n o t identical.

“ S tra n d in g ” is omitted, as also the words “ or any cause appertaining to the duties o f the owner,”

an<l the words “ such deficiency ” are introduced.

I t.hink th a t the differences arise sim ply fro m care­

less d ra ftin g , and th a t mere repetition is intended.

Then follows an a n tith e tica l passage— “ B u t should the vessel be driven in to p o rt or to anchor­

age by stress of weather, such detention or loss of tim e shall fa ll on the charterers.” Now, I th in k th a t th is means a stress of weather not resulting in any of the above-mentioned causes as the proxim ate cause of detention. Then clause 17 concludes: “ I t is understood in the event of steamer fro m above causes p u ttin g in to any p o rt or ports other than those to w hich she is bound, th a t the charterers are covered as to expenses, as the owners are by th e ir insurance.” I t is sug­

gested th a t this concluding clause entitles the charterers, at a ll events when read in conjunction w ith clause 22, to the benefit of the policy taken out by the owners as a policy taken out on th e ir behalf, or a t a ll events is consistent w ith the policy having been taken o u t on th e ir behalf. I cannot agree. I cannot believe th a t clause 22, taken alone, means an yth in g more th a n th a t the owners are to pay the premiums on any in s u r­

ance o f the vessel which they should choose to effect, and th a t the owners should n o t be e n title d to charge the charterers in account w ith these premiums. N o r do I th in k th a t the consideration of clause 17 alters th is conclusion. I th in k th a t the effect of the whole charter-party, in c lu d in g clause 17, is to leave the charterers liable, as between themselves and the owners, fo r the con­

sequences o f negligent navigation, and I cannot find in clause 17 itself, or in clause 17 read in

conjunction w ith clause 22, any words sufficient to east on the owners the obligation to insure on behalf of the charterers against collision or detention risks. I do n o t th in k th a t the word

“ covered ” in clause 17 im ports a contract by the owners to effect a policy on behalf o f the charterers. I th in k “ covered ” means no more than th a t the owners w ill give the charterers the pro­

tection o f the policy to the extent th a t they happen to insure against risks cast on the charterers by the charter-party. B u t this does n o t affect the underwriters, and I cannot fin d in the charter-party or elsewhere any sufficient evidence to ju s tify the inference th a t the policy effected by the owners was intended to be effected on behalf of the charterers. On the contrary, I th in k th a t the terms of the charter-party would exclude such an inference, even on the assump­

tio n th a t the onus of proving the exclusion is cast upon the underwriters. Moreover, I th in k i t is impossible to leave out o f consideration the evidence of M r. B ennett in the Am erican litig a ­ tion, given on behalf of the now p la in tiffs, th a t i t was optional w ith the owners whether they insured or not, and th a t insurance did not concern the charterers. I th in k th a t the judgm ent of Bigham , J. should be affirmed, and th is appeal be dismissed w ith costs.

Ro m e r, L .J . read the follo w in g ju d g m e n t:—

This case took a long tim e to argue, and many questions were discussed in the course of the argument. B u t in the view I take, the apppeal should be dismissed on grounds th a t after what m y L o rd has said I can state shortly. The policy o f insurance on the face of i t states ^ th a t the insurance company is contracting w ith John H olm an and Sons “ as well as in th e ir own name as fo r and in the name and names of a ll and every other person or persons to whom the subject- m a tte r of the policy does, may, or shall appertain in p a rt or in a ll.” T h a t is a common fo rm which has often received ju d ic ia l consideration and interpretation. On the face of i t a large number of persons m ig h t be included. B u t on the autho­

ritie s i t appears to me th a t i t has long been decided, and is settled law, th a t i t is not every person included in the wide term s of the policy who is of rig h t e n titled to the benefit of the insurance as against the insurer. O nly those persons are e n titled on whose behalf the policy was in fa c t effected. I n some o f the cases estab­

lish in g th is the expressions used are th a t only those are e n titled who at the tim e the policy was effected were the persons “ contemplated ” as being or “ intended” to be, covered by the policy, h u t I th in k these expressions mean w hat I have stated. Now, I need n o t consider the question, i f there be no facts adm itted or proved to show on whose behalf the policy was in fa ct effected, whether any one who comes w ith in the wide terms of the policy could n o t properly sue on i t ; for, in m y opinion, in the present case there are facts which enable me to come to a conclusion as to the persons e n titled to sue on the policy. I t is adm itted th a t the policy was in fa ct taken out by the brokers on the instructions of the agent of the owners of the ship. Now, i t is not sug­

gested on behalf of the charterers th a t they ever gave any instructions to the brokers ; and when I look a t the terms of the policy I fin d i t is such a policy as the owners m ig h t well take o u t fo r themselves w ith o u t regard to anyone else. T h a t

Ap p. ] La w Gu a r a n t e e & Tr u s t So c i e t y v. Ru s s i a n Ba n k f o r Fo r e i g n Tr a d e, &c. [ Ap p.

being so, the conclusion I draw fro m the above facts in the absence o f any other sufficient facts established leading to the opposite view, is th a t the owners on whose behalf the brokers were instructed were the persons, and the only persons, on whose behalf the policy was, as a m atter of fact, effected, and therefore the only persons e n titled to sue upon it. T h a t leads me to a con­

sideration whether there are any other circum ­ stances in th is case sufficient to prevent the above p rim a facie view being maintained. The only circumstance relied on by the p la in tiffs is the charter-party, and, in particular, clauses 17 and 22. As to this I can only say, a fte r a careful consideration of th a t document, and o f the two clauses in p articular, th a t I cannot come to the conclusion th a t by the charter-party the owners contracted w ith the charterers th a t they, the owners, would effect an insurance on the ship on behalf of the charterers as well as on behalf of themselves. N o r do I feel able to in fe r fro m th is charter-party th a t the policy in question was or ought to be treated as taken out on behalf of the charterers. A n d i t is satisfactory fo r me to know from the proceedings in the U n ite d States of America th a t th is view appears to have been fo r some years the view taken alike b y the owners and by the present p la in tiffs . I th in k th a t on these grounds the appeal fails.

St i r l i n g, L . J .—I am o f the same opinion, and cannot usefully add anything.

Solicitors fo r p la in tiffs , Thorne and Welsford.

Solicitors fo r defendants, Waltons, Johnson, Buhh, and Whatton.

F rid a y , M arch 31, 1905.

(Before L o rd Al v e r s t o n e, C.J., Ma t h e w and Co z e n s- Ha r d y, L .J J .)

La w Gu a r a n t e e a n d Tr u s t So c ie t y v.

Ru s s ia n Ba n k f o r Fo r e ig n Tr a d e a n d o t h e r s, (a)

A P P E A L PR O M T H E K I N G ’ S B E N C H D I V I S IO N .

Charter-party—Mortgagor in possession—Im p a ir ­ ing security o f mortgagee— Carriage o f contra­

band o f w ar to belligerent p o rt— V a lid ity o f contract as against mortgagee.

Mortgagors in possession o f certain ships entered into charter-parties fo r the carriage o f contra­

band o f w ar to belligerent ports, the ships not being insured against ris k o f capture. The ships sailed.

Held, th a t the mortgagees were entitled to a declaration th a t they were not bound by the charter-parties re la tin g to the ships on the ground that such charter-parties im paired their security.

Ac t io n b ro u g h t b y th e p la in tiffs ag ainst th e defendants c la im in g a d e c la ra tio n th a t th e p la in ­ tiffs , th e m ortgagees o f c e rta in steamships, were n o t boun d b y th e c h a rte r-p a rtie s a n d b ills o f la d in g re la tin g to th e steam ships Heathbanh, Heathburn, and Heathcraig, and th e cargoes now on b o ard .the m .

The H eath L in e L im ite d were the owners of the ships.

The p la in tiffs were the trustees fo r the deben­

ture-holders in the H eath L in e L im ite d , and as such were the mortgagees o f i he ships.

Vo l. X ., N. S.

( a ) RonnHnd j,y y f DE

3

The charter-parties re la tin g to the three ships were entered in to between the owners and other persons who were also defendants in the action as agents.

On the 16fch Sept. 1904 a charter-party was entered in to fo r the charter o f the Heathbank fo r the carriage o f a cargo of coals fro m B a rry to V ladivostok a t a fre ig h t o f 40s. a to n —a very high rate of fre ig h t—30s. of w hich was paid iiy advance.

The Heathburn was chartered on the 28th Oct.

1904 to carry a cargo of coals to V ladivostok at the same rate of fre ig h t, 30s. of which was paid in advance.

The Heathcraig was chartered on the 7th Dec.

1904 to carry a cargo o f coals at a sim ilar rate of fre ig h t, 30s. o f w hich was paid in advance.

The to ta l amount o f the fre ig h t paid in advance in respect o f the three ships was 25,6501.

The defendants, the Russian B ank fo r Foreign Trade, were the holders of the b ills of lading, and i t was adm itted th a t the cargoes were really shipped fo r the Russian Government. Inasmuch as the cargoes were contraband, and were destined fo r a belligerent port, other documents were entered in to in respect of each ship, the p o rt of destination in the case of the Heathbanh being stated to be M anila, in the case o f the Heathburn being Shanghai, and in the case of the Heath­

craig also Shanghai; and the ships were cleared at B a rry fo r those ports.

The ships were n o t insured against war risks.

I n Feb. 1905 the p la in tiffs ascertained th a t the ships were destined fo r V ladivostok, and they obtained an in ju n c tio n restraining the ships from proceeding to Vladivostok.

The defendants, the Russian B ank fo r Foreign Trade, were n o t parties to th a t proceeding and had no notice of it, b u t on the 9 th March the p la in tiffs passed a resolution to take possession of the ships as mortgagees, and on the 15th M arch the w rit in the present action was issued.

B y the tru s t deed which secured the debentures in the H eath L in e L im ite d i t was provided by clause 4 th a t u n til the security thereby constituted became enforceable and the trustees were in a position to enforce the same, the trustees should p e rm it the company to hold and enjoy the m o rt­

gaged steamships and to carry on the business authorised by the memorandum o f association of the company.

B y clause 6, upon the security becoming enforceable, the trustees m ig h t enter upon and take possession of the mortgaged p roperty and sell the sam e; and i t was provided th a t the security should become enforceable on the breach by the company of any covenant or stip u la tio n in the deed.

B y clause 24 the company were to carry on and conduct the business of the company to the greatest possible advantage, and were a t a ll times to give to the trustees such in fo rm a tio n as they should require re la tin g to the business o r affairs of the com pany; and the company were to insure and keep insured such of the mortgaged property as were of an insurable nature, in clu d in g the ships, against loss or damage by fire in th e ir fu ll value at such office o r offices as the trustees should appoint,

A n d as t o th e s a id ve sse ls u n d e r p ro p e r m a rin e p o lic ie s c o n ta in in g th e o r d in a r y c o n d itio n s a p p lic a b le t o s te a m

-G

42 MARITIME LAW OASES.

Ap p.] La w Gu a r a n t e e & Tr u s t So c ie t y v. Ru s s ia n Ba n k f o r Fo r e ig n Tr a d e, &c. [ Ap p.

s h ip s w i t h th e u s u a l c o llis io n c la u s e s , a n d w i l l e n te r a n d k e e p th e s a id ve sse ls p r o p e r ly e n te re d i n som e p r o ­ t e c tio n c lu h o r a s s o c ia tio n t o be a p p ro v e d i n w r it in g b y th e tru s te e , a n d s h a ll f o r t h w it h , u p o n e ffe c tin g su ch in s u ra n c e s a n d e n t r y , g iv e n o tic e th e r e o f i n w r it in g t o th e tr u s te e s t a t in g th e f u l l p a r t ic u la r s o f s u c h p o lic ie s a n d e n trie s , w it h th e d a te s a n d a m o u n ts th e r e o f, a n d w i l l d e p o s it a ll s u c h p o lic ie s w it h th e tr u s te e , a n d w h e n e v e r re q u ir e d so t o d o b y th e tr u s te e in s u r e th e s a id ve ssels i n s u c h o ffic e o r o ffice s as a fo re s a id u n d e r p r o p e r m a rin e p o lic ie s a g a in s t s e iz u re , c a p tu re , a n d w a r r i s k s .

Tbe p la in tiffs contended th a t they were e n title d to take possession and to sell, and were not bound by the charters, on the a u th o rity o f the p rin cip le la id down in Collins v. Lam port (11 L . T.

Rep. 497; 4 D . J. & S. 500). The defendants, the Russian B ank, contended th a t the contracts were b in d in g on the p la in tiffs fo r the fo llo w in g reasons: (1) U nder the M erchant Shipping A cts the mortgagors had power to make contracts bin d ­ in g on the p la in tiffs ; (2) by the special terms of the tru s t deed fo r the debenture-holders, a u th o rity was given to the H eath Lin e , the owners, to make the contracts; and (3) i f there were no such a u th o rity , then by estoppel the contracts were b in d in g upon the p la in tiffs.

P ickford, K . C . a n d M aurice K i l l f o r t h e p l a i n t i f f s .

Scrutton, K .C . and Leclc fo r th e defendants, the Russian B ank fo r F oreign Trade.

Carver, K .C . and Cozens-Hardy; H am ilton, K .C . and Bailhache fo r the other defendants.

M arch 27.—Ch a n n e l l,' J .—In th is case the L a w Guarantee Society, as mortgagees o f certain ships belonging to the H eath Line, have brought an action asking fo r a declaration (they having taken possession recently under th e ir mortgage) th a t they are n o t bound by certain charter-parties and b ills of lading re la tin g to the three steam­

ships and to the cargoes now on board. I do not th in k i t is necessary th a t I should go through a ll the facts o f the case, because there is re a lly no dispute about them, and so fa r as I have to refer to them i t perhaps may be more convenient to refer to them in reference to the pa rtic u la r points which I have to deal w ith . I t seems to me th a t there are three questions which arise in the case

— three grounds upon which i t may be contended, and, I th in k , as to each i t has been contended, th a t these contracts are binding. The firs t is th a t the shipowners, the mortgagors, who are owners subject to the mortgage, had power under the M erchant Shipping A c t to make these contracts and to make them b inding upon the p la in tiffs.

The second point, w hich is the one th a t I th in k was m ostly insisted upon by M r. Scrutton, was the p o in t that, by the special terms o f the tru s t deed o f J u ly 1903, w hich p ra ctica lly was the document containing the term s o f the m o rt­

gage, the fo rm a l mortgages being, o f course, in the proper and usual terms under the Merchant Shipping A ct, the p la in tiffs became bound by these mortgages : T h a t is to say, there was a u th o rity given by th a t contract to the H eath Line, the owners, to make them, and then, the th ir d p o in t was th a t even i f there was n o t any actual authority, ye t th a t the contracts were binding upon the p la in tiffs by estoppel or ostensible a u th o rity or whatever i t may be called, as between them and the th ird parties.

Now, i t would be convenient to deal, I th in k , w ith those three questions in th a t order. The firs t is one m ainly of law as to the extent o f the au th o rity of a m ortgagor o f a ship, the registered owner, subject to the mortgage. Now, I th in k th a t I must take the law as la id down by L o rd W estbury in Collins v. Lam port (2 M ar. Law Cas. O. S. 153;

11 L . T. Rep. 497; 4 D. J. & S. 500) as settled law. He there had to consider a question o f the then M erchant Shipping A c t, which is identical in term s w ith the section under the pi’esent A c t except th a t the order o f the words is transposed ; and under th a t section, which stated th a t a mortgagee should n o t by reason of his mortgage be deemed to be the owner of a ship or any share therein, no r shall the m ortgagor be deemed to have ceased to be owner except in so fa r as may be necessary fo r m aking the ship or share avail­

able as security fo r the mortgage debt, L o rd W estbury held th a t the tru e construction of th a t section was th a t a contract which had the effect o f m a te ria lly im p a irin g the security of the mortgagee was n o t a contract binding upon the mortgagee, b u t th a t other contracts made in reference to the ship which had not th a t effect were binding. Now th a t appears to have been recognised as law in a ll the cases w hich have arisen since. I t is quite true, as M r. S crutton has pointed out, th a t in most

able as security fo r the mortgage debt, L o rd W estbury held th a t the tru e construction of th a t section was th a t a contract which had the effect o f m a te ria lly im p a irin g the security of the mortgagee was n o t a contract binding upon the mortgagee, b u t th a t other contracts made in reference to the ship which had not th a t effect were binding. Now th a t appears to have been recognised as law in a ll the cases w hich have arisen since. I t is quite true, as M r. S crutton has pointed out, th a t in most