Chap. XV. § 1 (iii). Mortgagor may bind mortgagee by charterparty or by lien for repairs. Cesser of rights of mortgagor in possession on default. Matters affecting mortgagee under the ordinary rate of freight of the market. All those acts would be the ordinary incidents of the ownership of the mortgagor, who remains the dominus of the ship with regard to everything connected with its employment, until the moment arrives when the mortgagee takes possession. If the mortgagee is dissatisfied with the amount of authority which the mortgagor possesses by law, it is for him to put an end to the opportunity of exercising that authority by taking the control of the ship out of the hands of the mortgagor." So, where a mortgagor had made a charterparty, which was not shown to be in any way prejudicial to the security, the mortgagees were bound by it (r). And a mortgagee permitting the mortgagor to retain possession and to use the ship, is bound by the lien for repairs of a shipwright to whom it was delivered by the mortgagor for that purpose (8). But if a mortgagor does any act or is guilty of any default which prejudices or injures the security of the mortgagee, sect. 34 ceases to have any binding effect against the mortgagee, subject, as it would seem, to any subsisting contracts entered into by the mortgagor while in possession, of which the mortgagee has notice, or which are consistent with the ordinary use of the ship (t). And, in order to obtain the benefit of such contracts, the mortgagee must give notice to the other contracting party (u). So where an owner had agreed with his mortgagee to insure the ship and subsequently chartered her, the mortgagee was entitled to prevent her from sailing uninsured (x). A mortgagee not in possession cannot be compelled to join in a charterparty (y). He cannot maintain an action of re 2 not in posses-straint (≈); nor can he recover passage-money received by the mortgagor before taking possession (a). sion. Rights of A mortgagee of shares in a ship, on taking possession, is mortgagee of only entitled to his mortgagor's part of the profit-freight after on taking contributing proportionately with the other co-owners to the possession. shares in ship (r) Fanchon, 5 P. D. 173. See also (8) Williams v. Allsup, 10 C. B. N. S. (x) Laming & Co. v. Seator, 16 C. of S. Ca. (Sc.) 828, 4th Ser. (y) Samuel v. Jones, 7 L. T. N. S. 760. (z) Innisfallen, L. R. 1 A. & E. 72. (a) Willis v. Palmer, 6 Jur. N. S. 732. expenses of the outfit and of the voyage (). He is not entitled himself to interfere with the control of the ship; he cannot after the making of the charterparty arrest the ship, or demand bail in action on his mortgage, provided the performance of the charterparty is not prejudicial to his security (c); and, as regards the future control of the ship, it seems that he can only take possession by giving notice of his mortgage to the ship's husband (d), and claiming thereby a proportionate part of the profit-freight (e). Where the mortgagor of shares is also the ship's husband, if the mortgagee joins with the owners of the other shares in the appointment of a new ship's husband before the completion of a voyage, the mortgagor loses all right, as ship's husband, to receive the freight, but he will have a lien on the freight for advances repaid by him on account of the ship previous to his removal (f). Chap. XV. § 1 (iii). The provisions in the statute (g) that persons beneficially Exemption of interested in ships and shares therein shall, as well as the from penalmortgagees registered owner, be subject to pecuniary penalties imposed upon ties. owners, except persons who are beneficially interested by way of mortgage. possession. The duty of a mortgagee who has taken possession of a ship Duty of is to sell as soon as conveniently may be, but he is justified in mortgagee in employing the ship for a reasonable time to avoid selling. So where a mortgagee, instead of selling the ship, employed it in hazardous and speculative adventures, and made great losses, he was charged with the value of the ship and fittings at the time he ought to have sold it (h). What is said by Holt, C. J., in Coggs v. Bernard, against the Liability for use of any chattel bailed by way of necessity, which might be injury to ship. (b) Alexander v. Sims, 5 De G. M. & G. 80. (c) Maxima, 39 L. T. 112. (d) The " 'ship's husband" is an agent specially appointed by the owner or co-owners of a ship to superintend the equipment, repairs, management, and other concerns of the ship. Where there are several owners, one of them is generally appointed managing owner or ship's husband. A ship's husband has the authority of the owners to procure a charterparty and generally to make contracts for their benefit; but he cannot cancel a charterparty. Thomas v. Lewis, 4 Ex. D. 23. The name and address of the managing 8. 59. (e) Maxima, 39 L. T. 112. (f) Beynon v. Godden, 3 Ex. D. 263, C. A. (g) Sect. 58. (h) Marriott v. Anchor Reversionary Society, 3 De G. F. & J. 117; De Mattos v. Gibson, 1 J. & H. 83. And see European, &c. Co. v. Royal Mail, &c. Co., 4 K. & J. 676. Chap. XV. injured during the use made of it, cannot apply to the mortgage of a ship (i). § 1 (iii). Liability of mortgagee for repairs. Costs of taking possession. Right to freight. So long as the mortgagor, being in possession, continues, by virtue of sect. 34, to be the owner of the ship, the mortgagee incurs no liability as to repairs or necessaries by reason of his legal title, nor is his security postponed to or affected by a claim in respect of necessaries, unless the payment for them is made with the sanction of the Court (k); but if the mortgagee enters into possession, he will be liable for repairs and necessaries ordered by his authority, and his legal title and actual possession, in that case, render the captain his agent for the purpose of implying such authority (7). But neither the owner nor mortgagee of the majority of the shares in a ship, who is in possession, can recover from the mortgagees of other shares a proportionate part of payments made without their request (m). If a mortgagee pays necessary expenses in order to obtain possession of the ship, he is entitled to recover the money from the mortgagor or other person liable to pay such expenses ("). In an action to redeem the mortgage of a ship, the expenses of taking and holding possession of the ship are properly chargeable as "just allowances" under Ord. XXXIII. r. 8, without any direction in the decree for the purpose (0). A mortgagee who takes possession of a ship during a voyage becomes entitled to receive the unpaid freight earned in that voyage (p); but the earnings of a ship in the hands of a mortgagee are liable for the expenses of the voyage (q). It was formerly considered that the mortgagee could not recover freight already earned previous to his taking possession (r); and the rule now appears to be settled that the mortgagee on taking possession is entitled only to freight earned after taking possession (s). (i) Ld. Raym. 909, 916. (1) Hibbs v. Ross, L. R. 1 Q. B. 534, (m) Ripon City (No. 2), (1898) P. 78. (n) Johnson v. Royal Mail Co., L. R. 3 C. P. 38; Orchis, 15 P. D. 38, C. A.; Heather Bell, (1901) P. 272, C. A. (0) Wilkes v. Saunion, 7 Ch. D. 188. (p) Kerswell v. Bishop, 2 Cr. & J. 529; Dean v. M'Ghie, 12 Moo. 185; Chinnery v. Davidson, 2 Br. & B. 379; Keith v. Burrows, 2 App. Ca. 636; Japp v. Campbell, 57 L. J. Q. B. 79. (q) Green v. Biggs, 6 Ha. 395; Alexander v. Sims, 5 De G. M. & G. 57. (r) Chinnery v. Evans, 1 H. Bl. 117, n. (8) Shillito v. Biggart, (1903) 1 K. B. 683. amount to A mortgagee in possession of a ship will not be charged with Chap. XV. wilful default for not concurring in a hazardous charterparty (t). § 1 (iii). If the circumstances are such as to prevent a mortgagee from What acts taking immediate possession, it seems that notice to the parties taking interested, followed by taking actual possession at the earliest possession. opportunity, will be equivalent to possession as from the date of the notice. So, where the mortgagee of a ship which was proceeding on a voyage gave notice to the mortgagor and the charterer claiming the freight, and took actual possession of the ship on its arrival at the port of destination, he was held to be entitled to the freight earned during the voyage (ù). possession to A mortgagee of a ship on taking possession is not entitled to Right of seize cargo on board belonging to the mortgagor, unless such mortgagee in cargo is included in the security; and cargo will not be included cargo. by words of general import, such as "appurtenances” (x). A mortgagee who has taken possession obtains control of the Control of ship. ship, and if the master by order of the mortgagor interferes with such control he will be guilty of misconduct, and no compensation for dismissal can be awarded to him as against the mortgagee (y). If a mortgagee of a ship is unable to arrest or otherwise Receiver. obtain possession of the ship, he may, apparently, like any other mortgagee (2), obtain the appointment of a receiver. of sale arises. The statutory power of the mortgagee to arrest and sell the When mortship arises upon any default of the mortgagor in payment of gagee's power principal or interest (a), or upon any act of default of the mortgagor imperilling or impairing their security (b), or upon any breach by the mortgagor of the express terms of the mortgage contract. And the mortgagee must be careful to see that his exercise of the power of sale is justified by some such act or default (c), and that it is carried out in accordance with the terms of the statutory power or any stipulation modifying the same (d), otherwise he may be liable in damages. (t) Samuel v. Jones, 7 L. T. N. S. 760. (u) Rusden v. Pope, L. R. 3 Ex. 269. (x) Langton v. Horton, 5 Beav. 9. See Brancker v. Molyneux, 3 Man. & Gr. 84. (y) Fairport, 10 P. D. 13. (2) Truman v. Redgrave, 18 Ch. D. 547. (a) Wilkes v. Saunion, 7 Ch. D. 188. (b) Collins v. Lamport, 34 L. J. Ch. 6 Asp. N. S. 272. (c) Cathcart, L. R. 1 A. & E. 314. Chap. XV. § 1 (iii). How far he can sell free from mortgagor's contracts. Costs of sale. Transfer of mortgage. Transmission of interest of mortgagee by death, bankruptcy, marriage, &c. Entry of The mortgagee will be entitled to sell the ship free from any contracts entered into by the mortgagor which were subsisting at the time of the mortgage, but of which the mortgagee had no notice, or subsequent contracts which are so inconsistent with the ordinary use of the ship that the mortgagee could not be deemed to have authorized them by leaving the mortgagor in possession, or which are of such a nature as to impair the security (e). It has been seen that a mortgagee will be bound by contracts entered into by the mortgagor in possession subsequently to the mortgage which are reasonable and proper for the ordinary employment or maintenance of the ship (ƒ). Where a mortgagee seizes and proceeds to sell a ship under a power, he is entitled to charge the mortgagor with the costs of and incident to the sale (g). iv.-Transfer and Transmission of Mortgages.-With regard to the transfer and transmission of mortgages, the Act of 1894 contains the following provisions: Sect. 37. "A registered mortgage of any ship or share may be transferred to any person, and the instrument effecting the transfer shall be in the form marked C. in the first part of the First Schedule to this Act, or as near thereto as circumstances permit, and on the production of such instrument the registrar shall record it by entering in the register book the name of the transferee as mortgagee of the ship or share, and shall, by memorandum under his hand, notify on the instrument of transfer that it has been recorded by him, stating the date and hour of the record." Sect. 38.-(1.) Where the interest of a mortgagee in a ship or share is transmitted on marriage, death, or bankruptcy, or by any lawful means, other than by a transfer under this Act, the transmission shall be authenticated by a declaration of the person to whom the interest has been transmitted, containing a statement of the manner in which and the person to whom the property has been transmitted, and shall be accompanied by the like evidence as is by this Act required in case of a corresponding transmission of the ownership of a ship or share. "(2.) The registrar, on the receipt of the declaration and the production of the evidence aforesaid, shall enter the name of the person entitled under the transmission in the register book as mortgagee of the ship or share.” v.-Discharge of Mortgage.-The Act enacts as follows as regards the discharge of mortgages: Sect. 32. "Where a registered mortgage is discharged, the regis (e) Celtic King, (1894) P. 175; Heather Bell, (1901) P. 272, C. A. (f) Ante, p. 278. (g) Wilkes v. Saunion, 7 Ch. D. 188. |