CHAPTER XV. Deposit of registered mortgages. Unfinished ship. gagor, at the commencement of his bankruptcy, had the ship or share in his possession, order, or disposition, or was reputed owner thereof, and the mortgage shall be preferred to any right, claim, or interest therein of the other creditors of the bankrupt, or any trustee or assignee on their behalf." Where the registered mortgages of vessels were deposited by the mortgagees with their bankers, they were held not to be in the order and disposition of the mortgagees, for an assignment of a mortgage of a ship can only be made by indorsement on the instrument of mortgage (n). As a general rule, an unfinished ship in the builder's yard is not within the clause (o). A mortgage of an unfinished ship registered after the completion and registration of the ship was held to prevail against the trustee in bankruptcy of the owner of the ship (p). SECTION II. MORTGAGES OF FREIGHT. Freight is the sum paid by a merchant or other person chartering a ship or part of a ship, or sending goods in a general ship for the use of such ship or part, or the conveyance of such goods during a specified voyage or for a specified time (q). A charterparty is an agreement in writing by which a shipowner agrees to let a ship or part of a ship for the carriage of goods on a specified voyage, or for a specified time, for a sum of money agreed to be paid for their carriage (r). If there is no charterparty, the freight is usually fixed by the bill of lading, but if no freight is expressly agreed upon, the fact that the goods were laden on a ship to be conveyed will raise an implication in law of a contract by the owner of the goods to pay for the carriage, the liability being controlled by the special custom of the trade (s). Freight is not earned until the cargo is ready to be delivered CHAPTER XV. to the consignee at the appointed place (t), in the absence of When freight express stipulation to the contrary (u). is earned. It has been seen that a mortgage of a ship does not pass the Separate right to the freight to the mortgagee until he takes possession. of freight. assignment The freight, if in a charterparty, may be assigned independently of the ship, and will not be within the Registry Acts; and the Courts will grant an injunction to prevent payment to the mortgagor (a). And though the ship and freight were included in one contract, it might have been good as to the freight, though bad as to the ship (y). freight. The future earnings can be assigned, and will be good against Assignment the trustee in bankruptcy, at least if the earnings are due before of future the bankruptcy (z). A general assignment of all the future earnings of a ship, which might for ever separate the ship and freight, though for security of a debt, was held to be bad in Robinson v. Macdonnell (a). But in Douglas v. Russell (b), Lord Brougham, C.., held otherwise; in that case, however, the ship had been previously assigned to the same parties (c). An assignment of a ship, with all its future freight, earnings, and cargo, by way of security, is clearly valid (d); and à fortiori the assignment of a ship and the freight to be earned during a particular voyage (e). rights of The right to the freight is incidental to the ownership, and Relative can be originally dealt with only by the owner of the ship (f); respective and a mortgage of freight by the owner will bind a subsequent mortgagees of ship and mortgagee of the ship who has notice of the prior charge; but freight. where the owner of a ship assigned the freight not yet earned, and three days afterwards, with the knowledge of the assignee, mortgaged the ship to the defendants, who registered their mort (t) Cato v. Irving, 5 De G. & S. 210; Brown v. Tanner, L. R. 3 Ch. A. 597. See Bright v. Cowper, 1 Brownl. 21; Moller v. Young, 5 E. & B. 7, 755; Sanders v. Vanzeller, 4 Q. B. 277, 291; Castel and Latta v. Trechman, 1 C. & E. 276. See Turnbull v. Great Eastern and Peninsular Navigation Co., 1 C. & E. 595. (u) As to the right to freight of the mortgagee of a ship, see ante, p. 266. (x) Mestaer v. Gillespie, 11 Ves. 637; Gardner v. Lachlan, 4 My. & Cr. 129. (y) Mestaer v. Gillespie, sup. ; Davenport v. Whitmore, 2 My. & Cr. 177. (z) Leslie v. Guthrie, 1 Bing. N. C. 697; Gardner v. Cazenove, 26 L. J. Ex. 17; Belcher v. Capper, 4 Man. & Gr. (a) 5 M. & S. 228; Speldt v. Lech- (b) 3 My. & K. 488. But see Re Ship Warre, 8 Pri. 269, n. (c) See Douglas v. Russell, 4 Sim. 535, where the facts are stated. (d) Curtis v. Auber, 1 J. & W. 526; (e) Langton v. Horton, 1 Ha. 549. upon CHAPTER XV. gage, the assignee having neglected to give notice of his claim the freight to the mortgagees, it was held that the assignee was not entitled to set up any right to such freight in opposition to the rights of the mortgagees (g). Notice of prior charge including freight. Priorities as between mortgagee of ship and of freight. Notice to be given to mortgagee of ship. Where ship-brokers made advances for a ship's use, thereby obtaining a lien on the freight, with notice of a mortgage of the ship by an indorsement on the certificate of registry, and such mortgage was, in fact, a mortgage not only of the ship, but also of the freight, it was held that their lien must be postponed to the claim of the mortgagee to the freight, though he did not take possession of the ship till the completion of the voyage (h). The first registered mortgagee of a ship by taking possession obtains a legal right to receive all freight not completely earned, in priority to a mortgagee of freight, of which he has no notice at the time (i); and he may tack to the amount due on his mortgage the amount of any subsequent charge which he may have acquired on the freight in priority to any mesne charge on the freight specifically of which he had no notice; and it makes no difference that the mesne incumbrancer was the first to give to the charterer notice of his charge on the freight (k). But a mortgagee of freight will not be postponed to a subsequent second mortgagee of the ship, inasmuch as the interests of both are equitable, and must generally rank in priority of date (7). A mortgagee of freight, as he cannot complete his title by taking possession, should give notice of his charge to the registered mortgagee of the ship, and any other incumbrancer of whom he has notice, as well as to the charterer. (g) Wilson v. Wilson, L. R. 14 Eq. 32; Rusden v. Pope, L. R. 3 Ex. 272. (h) Gibson v. Ingo, 6 Ha. 112. (i) Brown v. Tanner, L. R. 3 Ch. A. 597. (k) Liverpool Marine Credit Co. v. Wilson, L. R. 7 Ch. A. 507. (1) Ibid. at p. 511. SECTION III. MORTGAGES OF CARGO. CHAPTER XV. entitled to A mortgage of a ship, either simpliciter or "with the appur- Mortgagee of tenances," will not pass to the mortgagee the cargo, unless ship not expressly included in the security (m). Even in the case of a cargo. whaling ship, when the cargo constitutes the whole earnings of the ship, an assignment of the ship "with its appurtenances will not pass to the mortgagee, as of the nature of freight incident to the employment of the ship, the cargo of oil gained during the adventure (n). cargo does not In the absence of any special agreement to the contrary, the Mortgage of cargo belongs to the mortgagor, who may assign it independently require regisof the ship, and such assignment will not require registration tration. either under the Merchant Shipping Act (0), or under the Bills of Sale Acts (p). future cargo. An assignment may be made of a future cargo, which will be Mortgage of valid, and such title will not be affected by a subsequent execution by a judgment creditor, at all events if due diligence is used to complete the title by notice (9). power over The master is intrusted with the cargo for the sole purpose of Master's taking reasonable care of it and conveying it to its destination, cargo. and is bound to make every possible exertion to accomplish that purpose (r). A duty is cast on him, in many cases of accident and emergency, to act for the safety of the cargo in such manner as may be best under the circumstances in which it may be placed, and, as a correlative right, he is entitled to charge its owner with the expenses properly incurred in so doing (s). He has no power to sell or mortgage the cargo or any part thereof except under the pressure of severe consummate distress (t) either of the ship, as when the master has no other means of procuring supplies or repairs, or of the cargo, as where it lies perishing at some intermediate port. It is not sufficient to prove that the master was doing the best for all concerned (u). Though (m) Alexander v. Simms, 5 De G. M. & G. 57. (n) Langton v. Horton, 5 Beav. 9. (0) Ibid. (p) 41 & 42 Vict. c. 31, s. 4. (q) Langton v. Horton, 1 Ha. 549. See Bryans v. Nix, 4 M. & W. 775. (r) Notara v. Henderson, L. R. 7 Q. B. 225. VOL. I.-R. (s) Tronson v. Dent, 8 Moo. P. C. 419; Notara v. Henderson, sup. ; Australasian Navigation Co. v. Morse, L. R. 4 P. C. 222; Cargo ex Argos, L. R. 5 P. C. 165. (t) Gratitudine, 3 C. Rob. Adm. 240. (u) Tronson v. Dent, 8 Moo. P. C. 419; Acatos v. Burns, 3 Ex. D. 282; Atlantic, &c. Co. v. Huth, 16 Ch. D. 481, C. A. T CHAPTER XV. the ship is a wreck, and the cargo on the wreck, still 'he has no power to sell the cargo if he can store it (x). Notice to master. Bottomry bonds and A mortgagee of cargo should, immediately upon the execution of the mortgage, give notice thereof to the master of the ship. Where mortgagees of cargo did not send notice of their mortgage till two months after the date of the deed, so that such notice was not received by the master till after the mortgagor had become bankrupt, and it appeared that there were means of earlier communication, it was held that the cargo was in the reputed ownership of the mortgagor at the commencement of the bankruptcy (y). Hypothecations of cargo, otherwise than by way of mortgage, respondentia. will be considered in a subsequent chapter (s). (x) Cammell v. Sewall, 3 H. & N. 617; Ewbank v. Nutting, 7 C. B. 777; Notara v. Henderson, L. R. 7 Q. B. 227; Acatos v. Burns, 3 Ex. D. 290; Atlantic, &c. Co. v. Huth, 16 Ch. D. 481, C. A. (y) Exp. Lucas, Re Gwire, 3 De G. & J. 113. See Acraman v. Bates, 6 Jur. N. S. 294. See further, as to reputed ownership, ante, pp. 177 et seq. (2) Post, Chap. LXIV. sect. ii, pp. 1494 et seq. |