Court Opinion

ID: 6642626
Source: CourtListenerOpinion
Date Created: 2022-07-20 20:46:57.8577+00
Date Added: 2024-06-11T15:59:17.429371
License: Public Domain

BENEDICT, District Judge.
My first impression was adverse to the claim of the charterer, as presented in this case, and I do- not now see how the claim can be sustained under the rules which are applied in favor of bottomry bonds as against prior bot-tomries, mortgages, and other loans to the master or owner. According to those rules it would seem that it should be held that a bottomry bond binds not only the ship but the entire earnings of the ship upon the voyage which is completed by means of the bot-tomry, in whosesoever hands they may be found.
But I find in the cases a distinction made between advances on freight, and other advances, and that it is held that any sums advanced upon account of the freight must be deducted in preference to the bottomry. In the English cases the distinction has been carried so far as to allow the deduction of a sum advanced by a charterer after the execution of a bond upon the whole freight, where the advance was made with knowledge of the bottomry, but in pursuance of a prior stipulation in the charter-party. The Salacia. 1 Holt, Adm. Cas. 322; less fully reported in 1 Lush. 578.
The language of Dr. Lushington in the case above cited, seems fully to cover this case, when he says, “can the master or the owner of the ship, by any act of theirs (alluding to bottomry,) without the knowledge or consent of the charterer, cancel or alter the terms of the charter, and especially in a case like this, deprive the charter of a security for advances he has bound himself to make? I think not.”2
According to the charter-party now under consideration, there was a clear prior agreement for an advance of freight upon the security of the money to be earned by the ship upon the voyage in question, and I do not see that the character of this agreement is at all changed by the provisions relative to the bills of lading, which are inserted to make the security effective; for although, so far as the charterer is concerned, the freight money named in the bills of lading may be said to be in the cargo and at risk till the termination of the voyage, yet so far as the ship owner is concerned the freight was_ paid to the extent of the advance. and was not at risk. It was paid by the charterer upon account, and upon the faith of being allowed to deduct it from any sum the ship might earn during the voyage.
This sum, being thus appropriated by the master in consideration of the advance, cannot, according to the case of The Salacia, be considered as thereafter within the control of the ship owner or his agent, the master, and so is not affected by the bottomry executed subsequently upon the ship’s freight. “The bondholder stands in place of the-ship owner with reference to the freight, and must also be subject to the same distinctions.” The Catherine, Swab. 264.
If these principles thus laid down in the *824English admiralty are to be applied in this case, it follows that this charterer must be allowed, out of the freight in court, the amount which- he claims.
NOTE, [from original report.] On appeal to the circuit court this decree was affirmed as to the amount of the advances, and reversed as to the excess of the freight above the charter money.
[NOTE. Decree of circuit court nowhere reported; opinion not now accessible.]
Some general considerations affecting contracts of the description here involved, which are becoming, frequent in modern commerce, have led me, not without hesitation, to apply to them the principle applied by Dr. Lushington, in the case of the Sa-lacia, and they may properly be mentioned here.
The power to hypothecate by bottomry not only the ship of the owner, but the cargo of strangers, is one derived from no absolute necessity, but is conferred by the maritime law .in order to facilitate commerce and to enable the ship to mitigate in some degree the effects of those disasters which are attendant upon maritime adventures. It will be in furtherance of the same object to limit this power to the interest of the ship owner in the ship’s freight, and the interest of the owners of the cargo in the property on board, inasmuch as, without in any considerable degree affecting the ability of the master to relieve his vessel in case of distress, the limitation above indicated will enable a charterer to make advances to the ship owner upon the security of the freight to be paid upon cargo, whether shipped by him or procured by him to be shipped, without risk of losing the benefit of his security by subsequent bottomry effected by a master whom he does not select and cannot control.
Thus the ship owner will in many cases be enabled to procure employment for his ship, which lie could not otherwise obtain, and at the same time an advance for the expenses of the outfit at ordinary interest or without interest, and will thus often avoid resort to bottomry, itself always no inconsiderable disaster. Nor will this limitation work injustice to the cargo on board, for, dealing as the sub-shippers do in a case like the present, with the charterer instead of the ship owner or master as to the rate of freight, and shipping by permission of the charterer and for his security and reimbursement, they in fact ship under the charter-party, are put upon inquiry as to its terms, and may justly be presumed to know the extent of their risk and to provide against it.
But if it be said that on general principles the owners of the cargo are entitled to have the value of the vessel and her freight applied to the expenses of the voyage before resort can be had to their property, it may also be said that they are not entitled to have double freight thus applied, and that by shipping in a chartered ship they may well be held to have assented to the terms of the charter, which, by providing for an advance on acount of the freight, has withdrawn so much from the ship owner’s risk, and to the same extent increased their own; nor can it with much justice be insisted that the rules applied to advances made upon bottomry security should be applied to advances of freight, made as part of a charter and upon the security of the ship’s earnings, for the advance of the charterer is not made upon the credit of the ship or of the cargo, but of the freight alone, his interest in the freight over and above the advance is seldom large, — in the present case but $282,— and often nothing, and it is not permitted to him to exact the maritime interest which is allowed to a bondholder to compensate for the risk of a subsequent bottomry. And here it may be remarked that if the amount of the freight list in this case had amounted to a less sum than the £600, which the ship earned under the charter, as might very well be the case, the bondholder might have with great plausibility insisted that the fund bound by the bond was the charter money payable under the charter-party to the owner, and not the freight which the charterer was to have and collect for his security.
Such considerations as these, and the other important one that the interests of commerce require uniformity in the maritime law as administered in maritime courts of all countries, especially in regard to contracts by way of bottomry and charter, are always deemed of weight, if, indeed, not controlling in a court of admiralty, (see remarks of Dr. Lushington in The Olivier, l Lush. 492,) and they have in this case induced me to uphold the present claim as resting upon a distinction laid down in the English admiralty. I do so, however, not without hesitation, and in the hope and expectation that the soundness of the distinction as well as the correctness of my application of it may be tested by an appeal.
In accordance with these views, let a decree be entered in favor of the petitioner, with costs.

 See-, also, the case of The Karnak, 18 Law T. (N. S.) 661.