Court Opinion

ID: 8629545
Source: CourtListenerOpinion
Date Created: 2022-11-24 19:35:31.137585+00
Date Added: 2024-06-11T16:55:43.268883
License: Public Domain

BENEDICT, District Judge.
In considering the questions which the facts of the case present, it may be noticed at the outset, that, although the circumstances under which this bond was taken afforded opportunity for collusion between the creditor, who attached the steamer, and the agents, who subsequently took the bond, none is suggested here. Had any circumstances appeared in any way pointing to collusion, it would have been incumbent upon the bond-holders to present a full and satisfactory explanation of them, before the court could be asked to consider their demand.
Nor is there anything oppressive in the rate of interest, which was inserted in the bond; but it is shown that the ten per cent., which is provided for, is the usual charge upon commercial advances on merchandise, intended to cover simple interest, with the ■difference of exchange, commissions, and insurance; so that the demand represented by the bond is simply a sum of money advanced by the libellants, with the ordinary expenses of such an advance. The ease thus presents no features of hardship, as against the claimant, but, on the contrary, shows a strong equity in favor of the libellants. There appears, therefore, no reason why the bond in question should not receive that favorable consideration which courts of admiralty are always inclined to give to this class of security. It must also be held subject to those rules which the courts have declared to be applicable to such instruments.
Turning then to the bond, it is found to be composed of two items, differing from each other in their nature. One is that of frs. 16,575, consisting of the general balance of the libellants’ account of advances, as agents of the steamer. As to this balance, it has been shown in evidence that the libellants made no suggestion of security for it, until after the advances had been made, and the vessel was ready to depart, when, on presenting the bond to the master for signature, they stated that they had not intended to ask security for the account, but it might as well be inserted, since a bond was to be given. This evidence brings the portion of the bond now under consideration clearly within the rule which declares that advances cannot be seemed by bottomry, unless made under an agreement, or at least a reasonable expectation, founded upon surrounding circumstances, that such security would be given. The rule must therefore be applied, and, accordingly, it must be held that, as to this item, the bond is invalid.
The remainder of the principal of the bond represents the amount claimed to have been advanced by the libellants, to procure the discharge of the attachment which had been levied upon the vessel for the personal debt of the owner, as to which bottomry security was agreed on by the master.
To this item several objections have been taken, a single one of which-will be noticed here. It is said that the item — assuming that it represents an actual advance by the libel-lants — cannot be allowed, for the reason that the maritime law does not authorize the master of a ship in any case, to raise money by bottomry for the purpose of releasing his ship from an attachment levied to collect a personal debt of the owner, for which the ship herself is in no way liable.
To the important question thus raised I have given great consideration, aided by very careful arguments on the part of the advocates. and a reference to all the eases calculated to throw light upon it. There are, undoubtedly, difficulties and dangers in permitting the exercise of such a pow'er by the master of a ship; but there are also strong reasons against the absolute denial of the power, arising out of the nature, employment, and possible necessities of this peculiar class of property; and I greatly doubt whether the rule contended for by the claimants can be laid down as a fixed rule, applicable in all cases.
Bottomry bonds are the creatures of necessity and distress. They are permitted, in oi'der to enable the ship to save herself from disaster, and to continue the employment for which she is constructed; and when, in any case, that object has been attained in a proper manner, by means of a bottomry bond, as a last resort, it is doubtful whether *710it will do to hold that the instrument is unauthorized.
As Sir William Scott has well said: “Necessity creates the law — it suspends rules— and whatever is reasonable and just, in such cases, is likewise legal.” The Gratitudine, 3 C. Rob. Adm. 266. It would seem neither reasonable nor just to say that a steamer sent out to Europe to be the pioneer vessel in a new line, when attached for a debt of the owner, and the owner's interest liable to be sold by due process of law, must therefore throw herself out of a permanent employment, and abandon her voyage, thereby rendering herself liable in rem to demands by way of damages exceeding the amount of the attaching debt, when she possesses in her bottom a sufficient basis of credit upon which the master could raise the smaller sum needed to discharge her from the attachment, and thus avert the disaster.
If, therefore, the validity of this bond depended upon the question whether a sufficient necessity existed to authorize Its execution by the master, I should be inclined to hold that the peculiar and embarrassing circumstances which attended the seizure of this steamer — certain as they were, in all human probability, to bring disaster to the vessel, and great loss to all interested in her, if the seizure could not be promptly terminated— were such as to authorize the master to raise by bottomry the amount necessary to discharge the attachment. The primary object of the bond was to avoid the disaster to the steamer, which these attending circumstances would certainly entail, if the attachment continued; and the bond should not lose the characteristic which it derives from its primary object, because an incidental effect of it would be to pay a debt for which the ship herself was not liable.
But the validity of this bond cannot be made to depend upon the determination of this question alone, inasmuch as an additional objection, applicable to the whole bond, has been taken by the claimants, which the libellants have not been able satisfactorily to answer; and that is, that the master omitted to communicate with his owner, before executing the bond. Such a communication, when it can be had, is as important to be shown as the necessity of the ship. In the case of The Oriental, where the point escaped the attention of the court below, a reversal was granted upon this point alone. 7 Moore, P. C. 39S. The utility of the rule requiring notice to the owner, when practicable, is obvious. It imposes no additional burden upon the ship, and no difficult duty upon the lender, while its observance makes fraud and collusion more difficult, and often dispels doubts which would otherwise arise in cases of this class. It is a rule which should not be relaxed, and in the present case — a case the equities of-which I have fully stated, in order that my opinion may indicate the importance which I attach to the rule — it is fully applicable, for it is shown that there was, at the time, telegraphic communication between Antwerp and New York, the home of the owner, and that resort was had to-that mode of communication to announce the-steamer’s arrival in Antwerp. This fact must have been known to the libellants, from their position as agents of the ship, and' ordinary prudence on their part would have suggested notice to the owner of the necessity of the ship, and the intention to take a bond. They knew that such notice was practicable,. and that it had not been given, and they are chargeable with knowledge that, in the absence of such notice, under the circumstances, the master was without authority to bot-tomry his ship.
Por this reason, therefore, I must declare the bond in question not to be binding upon-this steamer, and, accordingly, I dismiss the libel, with costs.