To make a bottomry, executed by the master, a valid
hypothecation, it is necessary to show that the master acted within
the scope of his authority, or, in other words, that the advances
were made for repairs or supplies necessary for effectuating the
objects of the voyage, or the safety and security of the ship, and
no presumption should arise in the case that such repairs or
supplies could be procured upon reasonable terms with the credit of
the owner, independent of such hypothecation.
If the master have sufficient funds of the owner under his
control or can procure them on the general credit of the owner to
make a necessary repair, he has no authority to subject the ship to
an hypothecation.
A bottomry bond given to pay off a former bottomry bond must
stand or fall with the first hypothecation, and the subsequent
lenders can only claim upon the same ground as the former lenders,
of whom they are virtually the assignees.
Where money has been advanced, under a stipulation for a
bottomry bond, and the vessel is permitted to go to sea without any
attempt to enforce the stipulation, it is to be deemed a waiver of
the hypothecation and the party cannot on a subsequent voyage
insist upon a bottomry bond for his prior advances.
A
bona fide creditor who advances his money to relieve
a ship from an actual arrest on account of debts incurred on the
ship's account may rightfully stipulate for a bottomry interest to
secure him for such advances, and the master, if he has no other
sufficient funds or credit, may execute a bottomry bond in his
favor.
But it is very doubtful if the arresting creditor could entitle
himself to such a bottomry bond by agreeing to withdraw his
arrest.
If a person making advances for repairs, &c., has in his own
hands funds of the owner which he may apply to pay for repairs, he
cannot entitle himself to a bottomry bond for advances made for
such repairs.
It is incumbent on the lender on bottomry to show the items of
his claim, and if various demands are mixed up in his bond, some of
which would and some would not support an hypothecation, it is his
duty to separate them and exhibit them to the court distinctly
before he can claim a decree for any part of his advances.
The brig
Aurora, commanded by captain Owen F. Smith and
owned by the claimants, sailed in July, 1809, from New York on a
trading voyage to the Brazils, and from thence to the South Sea
islands for the purpose of procuring a cargo for the market of
Canton or Manila, with liberty, after completing this adventure, to
continue in this trade or engage in that between Canton and the
northwest coast of America. The brig duly arrived at Rio Janeiro,
where the principal part of her outward cargo was sold, and from
thence proceeded to Port Jackson, in New Holland. At this port, the
brig underwent considerable repairs, on account of which advances
and supplies were furnished by Messrs. Lord & Williams, who
were merchants there. The original objects of the voyage seem here
to have
Page 14 U. S. 97
been lost sight of, and the brig was chartered by the master to
Messrs. Lord & Williams for a voyage of discovery, and was
actually retained in their service for about a year under this
engagement. At the end of this time, the brig had returned to Port
Jackson, and Captain Smith was here put in gaol by some persons
whose names are unknown for debts contracted, as it was asserted or
supposed, on account of the vessel, and was relieved from
imprisonment by Messrs. Lord & Williams. About this time,
viz., in July, 1811, the brig was again chartered to
Messrs. Lord & Williams for a voyage from Port Jackson to
Calcutta and back to Port Jackson, and a bottomry bond was executed
for the same voyage by Captain Smith in favor of Messrs. Lord &
Williams for the sum of �1,482 6s. 1d. and interest at nine
percent, being the amount, as the bond expresses it, of
"charges incurred for necessaries and stores found and provided
by Messrs. Lord & Williams, of, &c., at various times and
places, for the use of the said brig."
The vessel duly proceeded to Calcutta and landed her cargo
there, but being prevented, as it was alleged, by the British
government in Calcutta from returning to Port Jackson, the voyage
was broken up. In December, 1811, Captain Smith entered into a
contract with the libellants, Messrs. Chamberlain & Co., at
Calcutta by which he engaged to charter the brig to them, to carry
a cargo on their account to Philadelphia, for the gross freight of
12,000 sicca rupees, to be paid to him in advance in Calcutta, and
also to give the charterers the appointment of the master for the
voyage.
Page 14 U. S. 98
He further agreed, in consideration of the libellants paying the
bottomry bond of Messrs. Lord & Williams and advancing any sums
necessary for the repairs and supplies of the ship, to execute a
bottomry bond to them for the same voyage for the principal sum
thus paid and expended and 20 percent interest. In pursuance of
this agreement, on 17 December, a certain captain George Lee, with
the assent of Smith, was appointed by the libellants to superintend
the repairs, equipments, and loading of the brig, and afterwards
sailed as master on the voyage. A bottomry bond, for 18,000 sicca
rupees was formally executed by Captain Smith on 23 and a charter
party on 26 December. In the latter part of January, 1812, Captain
Smith resigned his nominal command of the ship to Captain Lee and
delivered to him the ship's papers and letters for the owners. The
ship duly sailed on the voyage and arrived at Philadelphia and
there safely delivered her cargo. The advance freight was paid to
Captain Smith, according to the contract, and he remained behind at
Calcutta under the pretense that, with this advance freight, it was
his intention to prosecute the plan of his original voyage and to
endeavor to repair the losses sustained by his former conduct. It
also appeared in evidence that Captain Smith was, during the whole
voyage, much addicted to intoxication, both at sea and on shore,
and Messrs. Lord & Williams and the libellants seem to have
been fully apprised of his incapacity to manage the concerns of the
voyage. The owners refused to pay the bottomry bond executed at
Calcutta, and the
Page 14 U. S. 99
present libel was brought to enforce it. The district court, at
the hearing, decreed the full amount of the principal and interest
of the bond, deducting the 12,000 sicca rupees advanced at
Calcutta. Upon an appeal, the circuit court reversed this decree,
and upon the merits dismissed the libel.
Page 14 U. S. 102
STORY, J., delivered the opinion of the Court, and, after
stating the facts, proceeded as follows:
Such are the material facts of the case, and the question to be
decided is whether, under all the circumstances, the bottomry bond
executed at Calcutta constitutes a valid lien upon the ship.
The law in respect to maritime hypothecations is in general well
settled. The master of the ship is the confidential servant or
agent of the owners, and they are bound to the performance of all
lawful contracts made by him relative to the usual employment of
the ship and the repairs and other necessaries furnished for her
use. This rule is established as well upon the implied assent of
the owners as with a view to the convenience of the commercial
world. As, therefore, the master may contract for repairs and
supplies, and thereby indirectly bind the owners to the value of
the ship and freight, so it is held that he may for the like
purposes expressly pledge and hypothecate the ship and freight, and
thereby create a direct lien on the same for the security of the
creditor. But the authority of the master is limited to objects
connected with the voyage, and if he transcend the prescribed
limits, his acts become in legal contemplation mere nullities.
Hence, to make
Page 14 U. S. 103
a bottomry bond executed by the master a valid hypothecation of
the ship, it must be shown by the creditor that the master acted
within the scope of his authority, or in other words it must be
shown that the advances were made for repairs and supplies
necessary for effectuating the objects of the voyage or the safety
and security of the ship, and no presumption should arise that such
repairs and supplies could be procured upon any reasonable terms
with the credit of the owner independent of such hypothecation. If,
therefore, the master have sufficient funds of the owner within his
control or can procure them upon the general credit of the owner,
he is not at liberty to subject the ship to the expensive and
disadvantageous lien of an hypothecatory instrument.
Let us now, with these principles in view, proceed to the
consideration of the validity of the bottomry bond executed at Port
Jackson, which enters so materially into the subsequent one
executed at Calcutta. This bond purports on its face to have been
given for advances or supplies furnished for the ship's use, not
immediately before its date but at various times and places, and,
from the other evidence in the case, it distinctly appears that the
greater part was furnished before and during the voyage of
discovery in which she was engaged under the contract with Messrs.
Lord & Williams and for their immediate benefit. Not the
slightest account is given of the earnings of the ship during this
long voyage of a year nor of the terms or stipulations of the
charter. This silence would be wholly unaccountable
Page 14 U. S. 104
if it were not in proof that Captain Smith was guilty of the
most shameful misconduct, and either fraudulently sacrificed or
grossly neglected the interests of his owner.
The advances made by Messrs. Lord & Williams do not appear
to have been originally made upon a stipulation for an
hypothecation of the ship. On the contrary, there is the strongest
reason to believe that they were originally made upon the general
credit of the owner or master or both. If there had been a
stipulation for an hypothecation, it must have been carried into
effect by the parties on the next ensuing voyage, and as this was
not done, there arises an almost irresistible presumption that
Messrs. Lord & Williams looked for their reimbursements out of
the freight of the voyage in which the ship was then engaged by
them. If indeed there had been a stipulation originally for an
hypothecation, it must be deemed in point, of law to have been
waived by the omission to have had it attached to the first voyage
then next to be prosecuted, and the party who thus waives his right
cannot be permitted, at a subsequent time and under a change of
circumstances, to reinstate himself in his former condition to the
injury of the owner. It is said that the ship might have been
arrested for these advances, and that in point of fact the captain
was put in jail on account of debts contracted for the ship, and
was relieved from imprisonment by Messrs. Lord & Williams. That
Captain Smith was imprisoned on account of some debts appears in
the evidence, but it is by no means clear that these
Page 14 U. S. 105
debts were contracted for the use of the ship. The presumption
is repelled by the consideration that the necessaries and supplies
are expressly stated in the bond to have been furnished by Messrs.
Lord & Williams, and the only other creditors who are alleged
to have furnished stores, are admitted not to have instituted any
suits. It is undoubtedly true that materialmen and others who
furnish supplies to a foreign ship have a lien on the ship and may
proceed in the admiralty to enforce that right. And it must be
admitted that in such a case a
bona fide creditor who
advances his money to relieve the ship from an actual arrest on
account of such debts, may stipulate for a bottomry interest, and
the necessity of the occasion will justify the master in giving it,
if he have no other sufficient funds or credit to redeem the ship
from such arrest. But it would be too much to hold, as was
contended for by the counsel for the appellants, that a mere threat
to arrest the ship for a preexisting debt would be a sufficient
necessity to justify the master in giving a bottomry interest,
since it might be an idle threat which the creditor might never
enforce, and until enforced, the peril would not act upon the ship
itself. And even supposing a just debt might in such a case be a
valid consideration to sustain a bottomry interest in favor of a
third person, such an effect never could be attributed to a debt
manifestly founded in fraud or injustice. Nor does it by any means
follow, because a debt sought to be enforced by an arrest of the
ship might uphold an hypothecation in favor of a third person, that
a general creditor would be entitled
Page 14 U. S. 106
to acquire a like interest. It would seems against the policy of
the law to permit a party in this manner to obtain advantages from
his contract for which he had not originally stipulated. It would
hold out temptations to fraud and imposition and enable creditors
to practice gross oppressions against which even the vigilance and
good faith of an intelligent master might not always be a
sufficient safeguard in a foreign country.
These are not the only difficulties which press upon the claim
of Messrs. Lord & Williams. The terms of the charter party,
entered into by them on the voyage to Calcutta as well as on the
voyage of discovery, are nowhere explained. It was certainly their
duty in the first instance to apply the freight in their hands
earned in these voyages to the discharge of the debt due to them
for advances. What was the amount of this freight, and what was the
manner in which it was to be paid, and how in fact it was paid or
appropriated, are inquiries which have never been answered. These
inquiries are at all times and in all cases important, but are
emphatically so in a case where there is but too much reason to
suspect that the interests of the owner were willfully abandoned by
the fraud or the folly of the master.
It is incumbent upon the creditor who claims an hypothecation to
prove the actual existence of the necessity of those things which
give rise to his demand, and if, from his own showing, or
otherwise, it appears that he has had funds of the owners in his
possession which might have been applied to the demand,
Page 14 U. S. 107
and he has neglected or refused so to do, he must fail in his
claim. So if various demands are mixed up in his bond, some of
which would sustain an hypothecation and some not, it is his duty
so to exhibit them to the court that they may be separately weighed
and considered. And it would be perilous indeed if a court were
called upon to grope its way through the darkness and intricacies
of a long account without a guide, and decide upon the interests of
the ship owner by obscure and doubtful lights which here and there
might cross the path.
Upon the whole it is the opinion of the Court that the bottomry
bond of Messrs. Lord & Williams cannot be sustained as a valid
hypothecation upon the proofs now before the Court. It appears to
have been founded, to a very large amount, upon advances made by
Messrs. Lord & Williams in previous voyages, and if some
portion of the debt might have been immediately applicable to the
necessities of the ship at the time of the voyage to Calcutta, that
portion is not distinctly shown, and no reason as yet appears why
the freight in their hands, if the transactions were
bona
fide, might not have been applied in discharge of these
necessities.
As the bottomry bond of Messrs. Lord & Williams has not been
established, the subsequent bottomry bond executed at Calcutta, so
far as it includes and covers the sum due on the first bond, cannot
be sustained. The plaintiffs in this respect can claim only as the
virtual assignees of Messrs. Lord & Williams with the assent of
the master, and the same defects which infected the original title
pass along
Page 14 U. S. 108
with the muniments of that title under the assignment.
And this observation leads to the consideration of the validity
of the bottomry bond executed at Calcutta as to the sum remaining
after deducting the amount of the first bond. Notwithstanding some
obscurity in the testimony, it must be taken as true from the
express acknowledgments of Captain Smith that the whole sum
expended in repairs and supplies of the ship in Calcutta, including
the sum of ten thousand seven hundred and thirteen sicca rupees
paid on account of the first bottomry bond did not exceed the sum
of eighteen thousand sicca rupees. It follows, therefore, that a
sum a little more than six thousand rupees was expended in these
supplies and repairs. By their charter party with the master, the
plaintiffs agreed to pay an advance freight to Captain Smith of
twelve thousand sicca rupees for the voyage to Philadelphia. There
was therefore within their own knowledge an ample fund provided for
all the repairs and supplies necessary for the voyage, and this
fund absolutely within their own control if they were disposed to
act for the interest of the owners, instead of lending their aid
still further to involve them in difficulty and distress. There is
therefore but too much reason to believe, that the plaintiffs were
not unwilling to derive undue advantages from the intemperance and
negligence of the master, whatever might be the sacrifices brought
upon the owners. The plaintiffs expressly stipulated in their
charter party for the right to appoint a new master for the voyage,
obviously
Page 14 U. S. 109
from a total want of confidence in Captain Smith. They would not
even suffer the repairs and loading of the ship to be made except
under a master specially in their own confidence. They retained
Captain Smith in the nominal command of the ship until all their
own purposes were answered, and then discarded him with as little
ceremony as any indifferent personage. Yet at the very moment that
they were withdrawing their whole confidence from him, they
advanced the whole freight of the voyage, to be applied at his own
pleasure to any objects disconnected with the voyage. They could
not be ignorant that the master was not about to return to the home
of the owner and that the ship was, and the argument which imputes
to them a collusive combination with the master is certainly not
without considerable weight. At all events, here funds are shown to
exist sufficient to meet the necessities of the ship, and
consequently a resort to the extraordinary expedient of an
hypothecation was not justified in point of law.
On the whole it is the opinion of the Court that the decree of
the circuit court ought to be affirmed with costs.
Decree affirmed.
