the making of the charterparty arrest the ship, or demand CHAPTER XV. 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).

The provisions in the statute (g) that persons beneficially Exemption of interested in ships and shares therein shall, as well as the mortgagees from penalregistered owner, be subject to pecuniary penalties imposed ties. upon owners, excepts 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. injured during the use made of it, cannot apply to the mortgage

of a ship (i).

(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

CHAPTER XV.

Liability of mortgagee for repairs.

Costs of taking possession.

Right to freight.

What acts amount to taking possession.

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).

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 (m).

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 (n).

A mortgagee who takes possession of a ship during a voyage becomes entitled to receive the unpaid freight earned in that voyage (0); but the earnings of a ship in the hands of a mortgagee are liable for the expenses of the voyage (p).

It was formerly considered that the mortgagee could not recover freight already earned previous to his taking possession (q); but the rule now appears to be settled that the mortgagee on taking possession is entitled to all freight then unpaid, whether previously earned or not.

A mortgagee in possession of a ship will not be charged with wilful default for not concurring in a hazardous charterparty (r). If the circumstances are such as to prevent a mortgagee from taking immediate possession, it seems that notice to the parties interested, followed by taking actual possession at the earliest opportunity, will be equivalent to possession as from the date of

the notice.

(k) Lyons, 57 L. T. 818.

(1) Hibbs v. Ross, L. R. 1 Q. B. 534, and cases there cited; Rusden v. Pope, L. R. 3 Ex. 269, at p. 272; Orchis, 15 P. D. 38, C. A.

(m) Johnson v. Royal Mail Co., L. R. 3 C. P. 38; Orchis, 15 P. D. 38, C. A.

(n) Wilkes v. Saunion, 7 Ch. D. 188. (0) 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. Cas. 636;
Japp v. Campbell, 57 L. J. Q. B. 79.

(p) Green v. Biggs, 6 Ha. 395; Alexander v. Sims, 5 De G. M. & G. 57.

(a) Chinnery v. Evans, 1 H. Bl. 117, n.

(r) Samuel v. Jones, 7 L. T. N S. 760.

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 (s).

CHAPTER XV.

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" (t).

ship.

A mortgagee who has taken possession obtains control of the Control of 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 (u).

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 (x), obtain the appointment of a receiver.

The statutory power of the mortgagee to arrest and sell the ship arises upon any default of the mortgagor in payment of principal or interest (y), or upon any act or default of the mortgagor imperilling or impairing their security (z), 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 (a), and that it is carried out in accordance with the terms of the statutory power or any stipulation modifying the same (b), otherwise he may be liable in damages.

When mortgagee's power

of sale arises.

can sell free

tracts.

The mortgagee will be entitled to sell the ship free from any How far he contracts entered into by the mortgagor which were subsisting from mortat the time of the mortgage, but of which the mortgagee had gagor's conno 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 (c). It has been seen that a mortgagee will be bound

Rusden v. Pope, L. R. 3 Ex. 269. Langton v. Horton, 5 Beav. 9. See Brancker v. Molyneux, 3 Man. & Gr. 84. (u) Fairport, 10 P. D. 13.

(x) Truman v. Redgrave, 18 Ch. D. 547.

(y) Wilkes v. Saunion, 7 Ch. D. 188. ee Cathcart, L. R. 1 A. & E. 314, 327.

(z) Collins v. Lamport, 34 L. J. Ch.
196; Cathcart, sup. See also Blanche,
6 Asp. N. S. 272.

(a) Cathcart, L. R. 1 A. & E. 314.
(b) Brouard v. Dumaresque, 3 Moo.
P. C. 457.

(c) Celtic King, (1894) P. 175.

CHAPTER XV. 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 (d).

Costs of sale.

Transfer of mortgage.

Transmission

of interest of mortgagee by death, bankruptcy, marriage, &c.

Entry of discharge of mortgage.

Mistake in entry.

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 (e).

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 registrar shall, on the production of the mortgage deed, with a receipt for the mortgage money indorsed thereon duly signed and attested, make an entry in the register book to the effect that the mortgage has been discharged, and on that entry being made, the estate (if any) which passed to the mortgagee shall vest in the person in whom (having regard to the intervening acts and circumstances, if any) it would have vested if the mortgage had not been made.” Where the first mortgage is by mistake discharged on the registry, a subsequent registered mortgage has priority (f);

(d) Ante, p. 264.

(f) Bell v. Blyth, L. R. 4 Ch. A.

(e) Wilkes v. Saunion, 7 Ch. D. 188. 136.

but where the entry of discharge of a mortgage had been made CHAPTER XV. by mistake, and a bill of sale by the mortgagee to a purchaser had consequently been refused, the Court directed the purchaser to be registered (g).

There is no provision which authorizes the registrar to erase entries of mortgages upon their being discharged (1⁄2).

vi.-Disabilities.-Disabilities are thus provided for by the

Act:

Sect. 55. "Where, by reason of infancy, lunacy, or any other cause, any person interested in any ship, or any share therein, is incapable of making any declaration, or doing anything required or permitted by this Act to be made or done in connection with the registry of the ship or share, the guardian or committee, if any, of that person, or, if there is none, any person appointed, on application made on behalf of the incapable person, or of any other person interested, by any Court or judge having jurisdiction in respect of the property of incapable persons, may make such declaration, or a declaration as nearly corresponding thereto as circumstances permit, and do such act or thing in the name and on behalf of the incapable person; and all acts done by the substitute shall be as effectual as if done by the person for whom he is substituted."

On sale of a ship to an infant, the vendor is a trustee for the infant (i).

Sect. 55 of the Act does not enable the guardian of an infant shipowner to mortgage the ship for repairs, although it may be that, in the exercise of his necessary power to repair, a lien may be created upon the ship ().

vii.-Order and Disposition in Bankruptcy.-If the mortgage of a ship, or any share therein, is duly registered according to the Merchant Shipping Act, 1894 (7), the rights of the mortgagee will not be subject to the order and disposition clause of the Bankruptcy Act, 1883 (m). By sect. 36 of the Act of 1894, it is enacted as follows:

Provision for cases of infancy or other incapacity.

"A registered mortgagee of a ship or share shall not be affected Mortgage not by any act of bankruptcy committed by the mortgagor after the affected by date of the record of the mortgage, notwithstanding that the mort- bankruptcy.

(g) The Rose, L. R. 4 A. & E. 6; Chasteauneuf v. Capeyron, 7 App. Cas. 127, J. C.

(h) Chasteauneuf v. Capeyron, sup.
(i) Stapleton v. Haymen, 2 H. & C.

918.

95.

(k) Michael v. Fripp, L. R. 7 Eq.

(1) 57 & 58 Vict. c. 60.

(m) 46 & 47 Vict. c. 52, s. 44 (iii).