Bottomry. On an appeal from the decree of the circuit court, of
Maryland on a libel on a bottomry bond, originally filed in the
district court, it appeared that commissioners appointed by the
circuit court had reported that a certain sum, being a part of the
amount of the bond, was absolutely necessary for the ship as
expenses and repairs in the common course of her employment. No
exception was taken to this report by either party in the circuit
court, and it was accordingly confirmed by that court. The report
is not open for revision in this Court, there being nothing on its
face impeaching its correctness.
It is no objection to a bottomry bond that it was taken for a
larger amount than that which could be properly the subject of such
a loan, for a bottomry bond may be good in part and bad in part,
and it will be upheld by courts of admiralty as a lien to the
extent to which it is valid, as such courts, in the exercise of
their jurisdiction, are not governed by the strict rules of the
common law, but act upon enlarged principles of equity.
It is notorious that in foreign countries, supplies and advances
for repairs and necessary expenditures of the ship constitute, by
the general maritime law, a valid lien on the ship, a lien which
might be enforced
in rem in our courts of admiralty even
if the bottomry bond were, as it certainly is not, void
in
toto.
An objection was taken to the bond that the supplies and
advances might have been obtained on the personal credit of the
owners of the ship without an hypothecation.
Held that the
necessity of the supplies and advances being once made out, it is
incumbent upon the owners, who assert that they could have been
obtained upon their personal credit, to establish that fact by
competent proofs, unless it is apparent from the circumstances of
the case.
It was objected that the supplies and repairs were, in the first
instance, made on the personal credit of the master of the ship,
and therefore could not be afterwards made a lien on the ship.
Held that the lender on the bottomry bond might well trust
the credit of the master as auxiliary to his security, and the fact
that the master ordered the supplies and repairs before the
bottomry was given can have no legal effect to defeat the security
if they were ordered by the master upon the faith and with the
intention that a bottomry bond should be ultimately given to secure
the payment of them. In cases of this sort, the bottomry bond is in
practice ordinarily given after the whole supplies and repairs have
been furnished, for the plain reason that the advances required can
rarely be ascertained with exactness until that period.
It was objected that the advances were for a voyage not
authorized by the
Page 33 U. S. 539
owners; that the original orders were for the master to get a
freight for Baltimore or New York, and if he could not then to
proceed to New Orleans, whereas the master broke up his voyage, and
without any freight returned to Baltimore. By the court:
"It may be admitted that if a bottomry lender, in fraud of the
owners and by connivance with the master for improper purposes,
advances his money on a new voyage, not authorized by the
instructions of the owner, his bottomry bond may be set aside as
invalid. But there is no pretense to say that if the master does
deviate from his instructions, without any participation or
cooperation or fraudulent intent of the bottomry lender, the latter
is to lose his security for his advances,
bona fide made
for the relief of the ships necessities."
Seamen have a lien prior to that of the holder of a bottomry
bond for their wages, but the owners are also personally liable for
such wages, and if the bottomry holder is compelled to discharge
that lien, he has a resulting right to compensation over against
the owners in the same manner as he would have if they had
previously mortgaged the ship.
Graf, one of the owners, had the ship delivered up to him upon
an appraisement at the value of $1,800, and he gave a stipulation
according to the course of admiralty proceedings to refund that
value, together with damages, interest and costs, to the court. He
is not at liberty now to insist that the ship is of less than that
value in his hands, or that he has discharged other liens
diminishing the value for which the owners were personally liable
in solido in the first instance.
To the extent then, of the appraised value of the ship delivered
upon the stipulation, the owners are clearly liable, for she was
pledged for the redemption of the debt, and they cannot take the
fund except
cum onere. But beyond this .there is no
personal obligation upon the owners.
In this case, the value of the ship, the only fund out of which
payment can be made, fell far short of a full payment of the amount
due upon the bottomry bond. But this is the misfortune of the
lender, and not the fault of the owners. They are not to be made
personally responsible for the act of the master because the fund
has turned out to be inadequate, since, by our law, he had no
authority by a bottomry bond to pledge the ship and also the
personal responsibility of the owners. The consequence is that the
loss, ultra the amount of the fund pledged, must be born by the
libellant.
The ship
Virgin sailed in August, 1822, from Baltimore
to Amsterdam, where she arrived on 12 October of that year under
command of John Cunnyngham. By the plan of the voyage, she was to
return from Amsterdam to Baltimore if she could procure a freight;
otherwise she was positively directed to proceed to New Orleans.
She was owned, when she sailed, by John C. Delplat, who, during her
passage to Amsterdam became insolvent, and on 4 September sold
one-third of her to Frederick C. Graf.
Page 33 U. S. 540
The vessel, on her way to Amsterdam, encountered severe weather,
and arrived there in want of sails and a cable and of various
repairs. At her departure from Baltimore, her owner directed that
at Amsterdam, as the most economical place for the supply, she
should be furnished with a mainsail and topsail and cable, of which
it was foreseen she would then be in urgent need. The vessel had a
cargo of which, except twenty hogsheads of tobacco, all belonged to
Delplat, and all of the cargo was consigned to N. and I. and R.
Vanstaphorst, at Amsterdam, to whom Delplat also consigned the
vessel. The twenty hogsheads of tobacco belonged to Frederick C.
Graf. Agreeably to these consignments, the captain, on arrival at
Amsterdam, delivered to the Vanstaphorsts the cargo and committed
to them all the concerns of the vessel, in consequence of which
they collected and held in their hands all the freight that was
actually payable upon any portion of the cargo, and all the
proceeds of the tobacco belonging to Mr. Graf.
The captain, desiring to refit the vessel and afford her all the
necessaries for her return voyage, applied to the Vanstaphorsts for
the requisite means, and ultimately even offered them a bottomry of
the ship for the funds. After much delay, they refused all
advances, intelligence of the failure of Delplat, asserted by them
to be largely their debtor, having meanwhile reached them. To
provide for the event of this refusal, the captain set on foot a
negotiation through brokers for raising the means by bottomry, and
the application to the Vanstaphorsts, and this provisional
negotiation, were pending for about three weeks -- the captain
knowing no friends of the owner except the Vanstaphorsts to whom he
could apply for the aid. During this period, the captain contracted
on his own responsibility for various supplies, which he designates
in his evidence as all those that were furnished before 1 November.
The payment for these and for the other necessaries of the ship was
made out of the moneys received from the appellee Vyfhius. On 12
November, after the Vanstaphorsts had finally declined making the
advances, the captain contracted with Vyfhius for the loan upon
bottomry of eight thousand guilders, at an interest of ten percent,
all which, he shows, was appropriated for the indispensable uses of
the ship.
Page 33 U. S. 541
About 3 November, the captain received from Mr. Graf a letter
dated in September, 1822, announcing his purchase of one-third of
the
Virgin, and referring to a certificate of his purchase
as enclosed in the letter, which in fact appears not to have been
enclosed. About the same time, by another letter from Mr. Graf and
perhaps also from other quarters, information was given to the
captain of Mr. Delplat's failure, and in consequence the captain,
on consultation, determined that it was his duty to proceed with
the vessel home to Baltimore, and not to dispatch her to New
Orleans. After undergoing repairs, and receiving all her supplies
paid for by the appellee Vyfhius, the
Virgin sailed from
Amsterdam to Baltimore, and arrived there in March, 1823.
The owners refusing to pay the appellee his advances, the libel
in this cause was filed, which prays citation against the owners by
name as well as the captain, and condemnation of the vessel for
paying the loan, and also further relief such as the court may deem
adequate and just. The owners, Delplat and Graf, appeared and
answered; their answers called into question the fact and the
necessity of expenses at Amsterdam, insisting too that the
Vanstaphorsts had property enough of the owners, and which should
have been applied for the wants of the ship, and charging that the
bottomry was really taken by the Vanstaphorsts though colorably in
Vyfhius' name, and maintaining, finally, that all requisite funds
could have been raised on the credit of the owners, or of the
captain.
A commission for evidence was sent to Holland, the chief object
of which was to prove the Vanstaphorsts to be really the owners of
the bottomry. The circuit court determined that the bottomry was
invalid, but that the owners are personally liable for all the
necessary supplies furnished by the means of Vyfhius for the
vessel, and that to that extent he was entitled in this cause to
recover against them. The cause was then referred to the clerk of
the court to ascertain, calling to his aid two merchants, the
amount of the necessary supplies referred to. The clerk and his
assistants reported their ascertainment. Exceptions by Delplat and
Graf were filed to it. The case was remanded to the clerk, who
called two other merchants to co-operate with him, and they
reported their statement of the
Page 33 U. S. 542
necessary expenses, which the court confirmed. Thereupon the
court passed its final decree awarding payment to Vyfhius by
Delplat and Graf of the sum of $2,900, with interest from 26
November, 1830, the date of the decree, the principal of the
ascertained expenses being $2,900.
Both parties appealed to this Court.
Page 33 U. S. 548
MR. JUSTICE STORY delivered the opinion of the Court.
This is the case of a libel
in rem upon a bottomry bond
originally instituted in the District Court of the District of
Maryland and thence brought by appeal to the circuit court, and
thence by appeal to this Court. The ship
Virgin belonged
to Baltimore, and being in Amsterdam, in the Kingdom of Holland, in
November, 1822, bond was there given to the libellant by the
master, for the sum of $3,200 and maritime interest at the rate of
ten percent for advances asserted to be made by the libellant to
supply the necessities of the ship on a voyage from Amsterdam to
Baltimore. The voyage was duly performed; and the bottomry loan not
being paid by the owners, proceedings were duly commenced for the
recovery thereof, and the suit has been protracted to the present
period. The owners interposed a claim and defensive allegation,
denying the validity of the bond, and at the hearing in the
district court a decree was entered affirming its validity and
awarding to the libellants the full amount of the bottomry bond,
with interest at the rate of six percent from the filing of the
libel. The circuit court, on the appeal, reversed this decree,
pronounced the bottomry bond invalid, and then proceeded to
entertain the suit
in personam against the owners, holding
them liable for the necessary supplies and repairs of the ship in
the same manner as if the suit had been originally commenced
in
personam against the owners. And after some interlocutory
proceedings, the circuit court awarded a final decree against the
owners for the sum of $2,900, being the amount ascertained by a
report of commissioners as
Page 33 U. S. 549
"expenditures and advances absolutely necessary, and made in the
course of the usual employment of the ship," with interest from the
time of the decree until the payment of the amount thereof. From
this decree both parties have appealed to this Court, and the cause
now stands upon the argument for a final decision.
The first question is whether the bottomry bond was valid in its
origin, and constituted a good lien on the ship. Several objections
have been taken to its validity. In the first place it is said that
the bottomry bond, though taken in the name of the libellant,
Vyfhius, was in fact taken in trust and for the benefit of
Vanstaphorst & Company, who were the consignees of the ship and
cargo and had ample funds of the owners in their hands to meet the
necessary expenditures if any were necessary, and therefore they
cannot now subject the ship to a bottomry lien. But we do not think
that this objection is sustained as matter of fact by the evidence
in the case. The only testimony to support it is a loose statement
of Schimmelpennick, one of the partners of the house of
Vanstaphorst & Company, who stated to a witness
"that the expenses of the
Virgin had amounted to about
eight thousand guilders, and that they would not be so foolish as
to make such an expense for Delplat without securing themselves by
a bottomry."
This language is quite equivocal and admits of different
interpretations, and it does not appear upon what occasion or under
what circumstances it was used. It may mean that they had declined
to make the advances without a bottomry bond, without meaning to
affirm that one had been actually taken for their benefit. But,
what is most important in the case, this declaration cannot be
competent evidence against Vyfhius, who is not shown to have had
any knowledge of it or to have been in privity with
Schimmelpennick, so that as to him it is the mere hearsay of a
third person. And on the other hand, the master of the
Virgin expressly disclaims any knowledge that any of the
advances were made by Vanstaphorst & Company, and affirms that
they were made by Vyfhius at his request, through the
instrumentality of a broker. We may then dismiss all further
consideration of this objection, since the bottomry bond is not
traced home to Vanstaphorst & Company.
Page 33 U. S. 550
The next objection is that the advances were not necessary for
the supplies and repairs of the ship. This objection is not now
fairly open upon the record. The second and last report of the
commissioners expressly finds that the sum of $2,900 of the
advances was absolutely necessary for the ship as expenses and
repairs in the common course of her employment. No exception was
taken to this report by either party, and it was accordingly
confirmed by the circuit court, so that it is not now open for
review in this Court, there not being anything on its face
impeaching its correctness. It is true that the bottomry bond was
taken for a larger amount, but that furnishes no ground of
objection to the bond except for the surplus, for a bottomry bond
may be good in part and bad in part, and it will be upheld by
courts of admiralty as a lien to the extent to which it is valid,
as such courts, in the exercise of their jurisdiction, are not
governed by the strict rules of the common law, but act upon
enlarged principles of equity. There are many authorities to this
effect, but it is only necessary to cite the cases of
The
Augusta, 1 Dodson 283;
The Tartar and the Nelson, 1
Hag.Adm. 169, 176. And indeed, except so far as regards the
maritime interest of ten percent, the question would be
unimportant, for it is notorious that in foreign countries supplies
and advances for repairs and necessary expenditures of the ship
constitute, by the general maritime law, a valid lien on the ship,
a lien which might be enforced
in rem in our courts of
admiralty even if the bottomry bond were, as it certainly is not,
void
in toto.
The next objection is that the supplies and advances might have
been obtained upon the personal credit of the owners, without an
hypothecation. Now, the necessity of the supplies and advances
being once made out, it is incumbent upon the owners, who assert
that they could have been obtained upon their personal credit, to
establish that fact by competent proofs unless it is apparent from
the circumstances of the case. Now not only is there no proof to
this effect upon the record, but it is fairly repelled by the
testimony of the master as well as by the other circumstances of
the case. When the ship sailed on her voyage from Baltimore for
Amsterdam, she was exclusively owned by Delplat, and she as well as
her cargo, a great part
Page 33 U. S. 551
of which was also owned by Delplat, was consigned to
Vanstaphorst & Company. Delplat failed during the voyage, and
about that time assigned one-third of the ship to Graf and the
other two-thirds to other persons. The cargo, on the ship's
arrival, was delivered pursuant to the consignment to Vanstaphorst
& Company, and certainly could not be rightfully withheld from
them under the bills of lading. Delplat, after deducting all his
consignment, remained in debt to Vanstaphorst & Company, in
19,000 guilders. And after they were apprised of Delplat's failure,
and after a negotiation of some weeks between them and the master
for advances, they declined to make any to him, and he was thus
compelled to obtain them elsewhere.
It is wholly immaterial in this case whether Vanstaphorst &
Company had funds in their possession which ought to have been
advanced by them for the relief of the ship. It is sufficient to
justify the master that he could not obtain them, and the
nonexistence of funds, and the nonability to get at them, must, as
to the master, be deemed to be precisely equal predicaments of
distress. It would not be very easy to convince any lender of money
that he could safely trust to the personal security of an insolvent
debtor, and although Graf was not involved in the failure of
Delplat, yet his title was acquired on the eve of Delplat's
failure, and did not appear on the ship's papers, so that a
cautious lender might well hesitate as to the ability of the master
to bind Graf, even if it had appeared, which it does not, that
Graf's credit was so unquestionable at Amsterdam that his personal
security, given by an acknowledged agent, would have been
satisfactory. But the truth is that the master's testimony
negatives any other adequate means of supplying the ship's
necessities without resort to a bottomry bond, and there is not the
least reason to suppose that he did not act with entire good faith
and from a consciousness that funds could not otherwise be
obtained. It is certainly incumbent on the owners, if they assert
that such means existed, to give some solid proofs in support of
their assertion.
Then again it is objected that the supplies and repairs were in
the first instance made upon the master's credit. But how were they
made? There is not a title of proof that the materialmen originally
trusted to his personal credit exclusively,
Page 33 U. S. 552
waiving the lien which the foreign law would give on the ship
for them, or the general responsibility of the owners. On the
contrary, they might well trust to his credit, as auxiliary to
these sources, and the fact that the master ordered the supplies
and repairs before the bottomry bond was given can have no legal
effect to defeat that security if they were so ordered by the
master upon the faith and with the intention that a bottomry bond
should ultimately be given to secure the payment of them.
In truth, in cases of this sort the bottomry bond is in practice
ordinarily given after the whole supplies and repairs have been
furnished, for the plain reason that the advances required can
rarely be ascertained with exactness until that period. In a case
before Lord Stowell, [
Footnote
1] an objection of a similar nature was taken,
viz.,
that the advances were made before the bottomry bond was taken; but
that learned judge overruled it and said that it was sufficient
that it was the understanding of the parties at the time that the
money should be secured by means of bottomry, and that it was of no
consequence whether the money was advanced at once and the bond
immediately entered into or whether the master received it from
time to time in different sums, and gave a bond for the whole
amount. And he added, what is very significant under the
circumstances of the present case, that the party who lent the
money had a right by the maritime law to detain the ship and cargo
until the debt was repaid, and it was only by the means of the bond
that the owners had the benefit of the liberation of their
property.
In the next place it is objected that the advances were for a
voyage not authorized by the owners; that the original orders were
for the master to get a freight for Baltimore or New York, and if
he could not, then to proceed to New Orleans, whereas the master
broke up his voyage and without any freight returned to Baltimore.
Now it may be admitted that if a bottomry lender, in fraud of the
owners and by connivance with the master for improper purposes,
advances his money on a new voyage not authorized by the
instructions of the owner, his bottomry bond may be set aside as
invalid.
Page 33 U. S. 553
But there is no pretense to say that if the master does deviate
from his instructions, without any participation or cooperation or
fraudulent intent of the bottomry lender, the latter is to lose his
security for his advances,
bona fide made for the relief
of the ship's necessities. In the present case, there is no proof
that Vyfhius ever saw the master's instructions, much less that he
fraudulently cooperated with him in a willful disobedience of the
orders of the owner. A new and unexpected state of things had
arisen. The owner had failed and new owners had been substituted,
with some of whom he had not had any communication. Under these
circumstances he applied for advice to the friends of his former
owners, and they advised him to return home, as not only prudent
and proper, but as required by the change of ownership. His own
judgment coincided with theirs, and there is no ground to assert
that he did not act with entire good faith, and that under all the
circumstances, the course adopted by him was not discreet and fit
for such an emergency. To set aside a bottomry bond given under
such circumstances would be to impair in no small degree the
general confidence of the commercial community in their security,
and would overturn the great maritime policy upon which they have
been hitherto held sacred and privileged liens.
We have thus considered the principal objections urged against
the bottomry bond, and are of opinion that they are unmaintainable.
The consequence is that the bond must be upheld to the extent of
the property pledged for the security of it. It has been said that
the seamen have a prior lien on the ship for their wages, and that
the amount of the wages ought first to be deducted. Undoubtedly the
seamen have such prior lien, but the owners are also personally
liable for such wages, and if the bottomry holder is compelled to
discharge that lien, he has a resulting right to compensation over
against the owners in the same manner as he would have if they had
previously mortgaged the ship.
But in strictness, no such question arises on the present
record. Graf, one of the owners, has had the ship delivered up to
him upon an appraisement at the value of $1,800, and he has given a
stipulation according to the course of admiralty proceedings to
refund that value,
Page 33 U. S. 554
together with damages, interest and costs, to the court. He is
not at liberty now to insist that the ship is of less than that
value in his hands, or that he has discharged other liens
diminishing the value for which the owners were personally liable,
in solido, in the first instance.
To the extent, then, of the appraised value of the ship,
delivered upon the stipulation, the owners are clearly liable, for
she was pledged for the redemption of the debt, and they cannot
take the fund except
cum onere. But beyond this there is
no personal obligation upon the owners. It has been correctly
remarked by Lord Stowell [
Footnote
2] that the form of bottomry bonds is different in different
countries, and so is their authority. In some countries they bind
the owners; in others not; and where they do not, even though the
terms of the bond should affect to bind the owners, that part would
be insignificant; but it would not at all touch upon the efficiency
of those parts, which have an acknowledged operation. In England
and America, the established doctrine is that the owners are not
personally bound except to the extent of the fund pledged which has
come into their hands. [
Footnote
3] To this extent, indeed, they may correctly be said to be
personally bound, for they cannot subtract the fund and refuse to
apply it to discharge the debt. But in that case, the proceeding
against them is rather in the character of possessors of the thing
pledged than strictly as owners. In the present case, the value of
the ship, the only fund out of which payment can be made, falls far
short of a full payment of the amount due upon the bottomry bond.
But this is the misfortune of the lender, and not the fault of the
owners. They are not to be made personally responsible for the act
of the master because the fund has turned out to be inadequate,
since, by our law, he had no authority by a bottomry bond to pledge
the ship, and also the personal responsibility of the owners. The
consequence is that the loss, ultra the amount of the fund pledged,
must be borne by the libellant.
But as the owners have had the full benefit of the bond under
the appraisement and delivery during this protracted
controversy,
Page 33 U. S. 555
it is but reasonable that they should be responsible for
interest upon the appraised value from the time when the delivery
upon the appraisement took place.
The view which has been thus taken of the present case renders
it wholly unnecessary to consider whether a decree
in
personam could be made by the circuit court upon a libel and
proceedings instituted
in rem. That and the other
questions respecting the exercise of the admiralty powers of the
court may well be left for decision when they shall constitute the
very points in judgment.
The decree of the circuit court must be
Reversed, and a decree will be entered conformable to the
opinion of this Court to be carried into effect by that
court.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the District of
Maryland and was argued by counsel, on consideration whereof if is
declared by this Court that the bottomry bond in the case stated is
and ought to be held valid for the sum of $2,900, being the amount
ascertained by the second and last report of the commissioners to
be due to the libellant for expenditures and advances absolutely
necessary and made in the course of the usual employment of the
said ship
Virgin, and also for the additional sum of ten
percent, the maritime interest agreed on, and payable by the terms
of the said bottomry bond, amounting, in the whole, to the sum of
$3,190, and that the said libellant is entitled to the said last
mentioned sum, with interest thereon at the rate of six percent
from the commencement of the present suit to the time when the
decree of this Court shall be carried into effect by the circuit
court. And it is hereby ordered, adjudged, and decreed by this
Court accordingly. And it is hereby further ordered, adjudged, and
decreed that the decrees of the district and circuit courts, so far
as they differ from this present decree be, and hereby are,
reversed accordingly. And this Court, further proceeding to render
such decree as the circuit court ought to have rendered in the
premises, it is further ordered, adjudged, and decreed that the
said claimant, Graf, do
Page 33 U. S. 556
forthwith pay into the said circuit court the sum of $1,800,
being the amount of the appraised value of the said ship
Virgin, delivered to him on stipulation as in the
proceedings mentioned, together with interest thereon, at the rate
of six percent, from 24 March, 1824, when the same was delivered to
him on stipulation as aforesaid, unto the day when the same sum
shall be so paid into the circuit court, together with the costs of
the district and circuit courts, and unless he shall do so within
ten days after the said circuit court shall require the same to be
done, that execution do issue in due form of law upon the
stipulation aforesaid, against all the parties thereto. And upon
the payment of such sums, then that the claimants, as owners of the
said ship
Virgin, be and hereby are forever exonerated
from all other and further payment in the premises. And it is
further ordered, adjudged, and decreed that this cause be remanded
to the said circuit court with directions to carry this decree
forthwith into effect.
[
Footnote 1]
La Ysabel, 1 Dodson 273, 276.
[
Footnote 2]
The Nelson, 1 Hag.Adm. 176.
[
Footnote 3]
The Tartar, 1 Hag.Adm. 1, 13;
The Nelson, 1
Hag.Adm. 169, 176.
