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STORY'S DEFINITION, INTEREST, RISK.
157), where it is said : “ A bottomry bond is a contract for a loan of money on the bottom of a ship, at an extraordinary interest, upon maritime risks to be borne by the lender, for a voyage, or a definite period.”
But this, though in itself incomplete, is still excellent so far as it goes. Had there been added the necessity, or exigency, or the circumstances under which and by whom the bond was executed, it would have been still more complete ; as that it were given by the master (perhaps consul or agent), if in a foreign port; or the owner if at home, to enable the borrower to prosecute the voyage, or secure for the ship her requisite repairs and supplies.
To constitute a valid contract of bottomry where a large marine interest is reserved, both principal and interest should be put at risk. 11 Pick. 187, Thorndike v. Stone ; 2 Pet. Adm. 295, Rucher v. Conyngham ; ibid. note, Wilmer v. Smilax ; 4 Binney, 244, Jennings v. Insurance Company of Pennsylvania.
So essential is a marine interest to the real validity of a bottomry loan, that unless it be expressed in the bond, there will arise a legal presumption that such interest is included in the named principal. 1 Paine, 671, The Sloop Mary.
In Reade v. Commercial Insurance Company (3 Johns. 352), it was decided that in case of necessity, the mas ter might hypothecate his ship as well at the port of destination as at any other foreign port.
In Selden v. Hendrickson (1 Brock. 396), C. J. Marshall held, that the master of a ship belonging to Richmond, Virginia, might hypothecate his ship in New York, for money loaned him to make such repairs as were necessary to enable him to pursue the voyage to a successful termination.
ADVANCES SHOULD BE NECESSARY.
But this cannot be done in the port from which the master first sails (Bee, 250, Sloan v. Ship A. E. I.; ibid. 345, Turnbull v. The Enterprise), nor unless in case of great distress and when the master has no other means of relief. Gilpin, 457, Patton v. The Randolph ; Bee, 120, Tunno v. The Mary.
And the obligee of the bond must show affirmatively that his advances were necessary to effect the objects of the voyage or secure the safety of the ship. See the cases 'already cited; and also The Golden Rose, Bee, 131; The Polly, ibid. 157; The John, 1 Wash. C. C. 293; Walden v. Chamberlain, 3 ibid. 290; Crawford v. William Penn, ibid. 484.
In the Hannah (Bee, 348), and the Santissima Trinidad (ibid. 353), as well as 2 Pet. Adm. 295, Rucher v. Conyngham, it has been held, that a bottomry bond to be valid, should be given at a place where neither the owner nor master has personal credit, nor funds at the command of the latter.
If there should be funds in the hands of a resident agent or consignee, resort to hypothecation is inadmissible ; and so if advances be procurable in any other way than by executing a bottomry bond, the principal borrowed is not to be burdened with marine interest. See ubi sup., and also The Packet, 3 Mason, 255; 1 Wash. C. C. 49, The Lavinia v. Barclay; 2 Wash. 148, Hurry v. Hurry; and 8 Greenl. 304, Descadillas et al. v. Harris.
r For prior advances, the master cannot hypothecate his ship. Bee, 339.
But yet, in the Toiva (1 Spinks' Rep.), 185, it was held that where a first bond had been given, such first bond might be paid and the amount included in a fresh or second bond; provided it be done during the same
CONSIGNEES MAY LOAN.
voyage; but the same doctrine would not be held if the new bond should be given in a subsequent voyage.
Consignees may, in certain cases, lend money on & marine interest and take for such loan a valid bottomry bond running to themselves : as where, for instance, being directed by the owner of a ship and cargo to apply the whole proceeds to discharge the owner's engagements, such consignee is not bound to reserve or apply such proceeds to discharge ship's expenses; but may lend his own money therefore on bottomry. 1 Wash. C. C. 49, Lavinia v. Barclay.
But, where a consignee is bound to advance freight, due on the cargo, he must first pay such freight, before he can advance money to the owner on marine interest, and secure such loan by bottomry bond. Ibid. Still, as a general rule, the master cannot hypothecate in favor of a consignee.
An hypothecation of a vessel, upon maritime risks and at extraordinary interest, draws after it a maritime lien. 2 Sumn. 157, The Draco.
A bottomry bond, given by the owner at the home port, with an express pledge as security, is valid ; and cognizable in admiralty; even though the money be not advanced for the necessities of the ship, cargo, or voyage. It would be otherwise, where the money has been borrowed by the master, acting in his capacity as master (ibid.); for the master can only, virtute officü, make a valid bottomry bond, where there exists a marine exigency; requiring such expenditure for supplies or repairs as are essential to enable the vessel to prosecute and complete her contemplated or unfinished voyage; or save the vessel itself from loss, partial or total, and so justifying the payment of a marine interest.
MASTER AND OTHERS MAY TAKE BONDS.
A bond, by the owner to the master, given to secure certain advances and wages due to him, is a valid bottomry obligation, and has been so held. The Rebecca,
Fraud, practised by the borrower or his agents, cannot affect the validity of a bond, unless the lender participate therein. 4 Wash. C. C. 662, Atlantic Insurance Company v. Conard.
A valid bond will be upheld, even against a bonâ fide purchaser without notice, if there be no laches on the part of the lender. 2 Sumn. 157, The Draco.
The validity of an hypothecation is not affected by the master's previous or subsequent irregular conduct toward his owner, if the lender bė not privy to it. 8 Pet. 538, The Virgin ; 2 Pet. Ad. 300, note, The Smilax; Bee, 361, The Santissima Trinidad.
A clause of sale in a bottomry bond does not destroy its character or operation. 2 Johns. Cas. 250, Robertson v. U. S. Insurance Company.
If the value of the ship fall short of the debt, the lender loses the balance, as the master has not the right to pledge the ship and the owner's personal responsibility also. The Virgin, ubi supra.
Assets will be so marshaled in admiralty, that the proper priorities will be given in favor of shippers against the property of the master and owner. 3 Mason, 255, The Packet.
If various demands (only part of which will sustain an hypothecation) are mixed up in the bond, the holder is bound to so exhibit them to the court, that they may be separately considered. 1 Wheat. 107, The Aurora.
In such case the bond will be sustained, so far as it is good, but only to that extent; and if the premium
shall appear to be inflamed by extortion, the court will moderate it. The Virgin, and The Packet, ubi supra.
Seamen's claims for wages have priority over those of a bottomry bond-holder; and if compelled to pay the wages, such holder has a right to compensation against the borrower. The Virgin, supra.
If freight be hypothecated, freight for the whole voyage is thereby meant, and not merely freight for that part of the voyage not performed at the execution of the bond. 3 Mason, 341, The Zephyr.
Admiralty will enforce a bond for repairs of a ship employed as a cartel, even if the repairs be made in an enemy's port, and though the contract therefor be entered into with an alien enemy. Pet. C. C. 106, Crawford v. William Penn.
A holder of a bond may lose his lien by laches. Thus, if he permit the ship to make several voyages, without asserting his lien, and executions are levied on her, his lien is lost. 4 Cranch, 328, Blaine v. The Charles Carter.
Many other English and American cases might be cited, affirming substantially doctrines similar to those already laid down; but it will be perhaps sufficient to refer only to those more recent decisions which may seem to enunciate novel or qualified doctrines in regard to the rights and duties of holders of bottomry securities.
There are cases, in which the power of the master to pledge the cargo or sell the ship, is upheld ; or an agent may bottomry for his own advances. Some of these are, The Bonaparte, 1 Eng. L. & E. 641; The Catharine,
1 ibid. 679; and The Oriental, 2 ibid. 546.
In the case of the Bonaparte, the master of a Swed