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Navires, art. 2, and the Commentary of Valin thereon; Pothier, Charter Partie, sect. 2, art. 3; Welwood's Sea Laws, tit. 15. The obligation of the owner in respect of the master's contracts in bottomry are governed by the same principles as those that apply to his contracts in general. They are treated of in the civil law under the same head: (Dig. de exercitoriâ actione). The onus of proving that the bottomry loan was necessary rests, according to English law, on the lender, Rocher v. Busher, 1 Starkie, 27; Palmer and others v. Gooch, 2 Starkie, 428. Dr. Franck considers the rule thus so well established in our law to be of universal force, or at least to be binding according to first principles, secundum Jus per se.* We do not, however, by any means perceive the soundness of this position. Omnia presumuntur rite esse acta. The owners, therefore, ought, we think, to be presumed to have appointed a person who would not improperly, hypothecate the property entrusted to him. In a case decided in the Admiralty Court in Scotland in 1807, Craigie v. Ogilvie and Tygett, cited in Abbott on Shipping, 8th Ed., 141, the judge recognised a distinction between the furnishing of stores and the loan of money, considering the onus of proving the necessity of the loan to rest on the lender only in the latter case. . The English rule does not go to this extent, although it requires a less degree of proof in cases where the loan consists of supplies, than where it consists of money. The rule in Craigie v. Ogilvie might, we think, be very safely admitted. At all events, it is the rule which we should deduce from Jus per se.
The lender on bottomry is certainly not bound, even according to English, law, to see to the application of the money he advances ; vide The Gratitudine v. Mazzola, 3 Robs. Adm. Rep., 272. The American rule on this point appears to be very sound. It raises a presumption in favour of the lender, that he instituted the proper inquiries and was reasonably satisfied of the existence of a necessity for the loan.
In our English code the lender of the money is also bound to ascertain whether the necessary supplies could not have
* P. 12. † Parsons on Maritime Law, p. 419. VOL. XIV.-NO. XXVII.
been obtained on the personal credit of the owner, without resorting to the bottomry bond. Heathorn v. Darling, 1 Moo. C. C., 5; The Augusta, 1 Dods. 286, 287. This rule probably sprang, not so much from any jealousy of the law in respect of the master's opportunity of injuring or defrauding the owner by contracting unnecessary bottomry loans, as from its abhorrence of all usurious transactions. Perhaps the supposed inconsiderateness of all seafaring men has also had some influence in establishing the rule. Not only has the lender thus to take into account the necessity of the loan itself, but also of the particular mode of its being contracted. The difficulties of the lender are somewhat diminished by the statute 3 & 4 Vict., c. 65, s. 6, which has conferred upon the Court of Admiralty jurisdiction to determine what are necessaries in the case of foreign ships. The case of The Gospatrick, 4 Jur. N. S. 742, throws much light upon the scope of this enactment. Dr. Franck is of opinion that the lender on bottomry should, besides establishing the necessity of the loan, also prove the absence of the owner. In other words, Dr. Franck considers* the power to borrow on bottomry is not implied secundum Jus per se in the office of master, but may be connected therewith by special circumstances. As the master, however, cannot well be said to enter upon the discharge of his duties until the ship puts to sea, the question cannot often be conceived as arising in practice. If it were not useless to speculate on the relations to first principles of a rule now inflexibly established in our courts, we should feel disposed to contend that, according to Jus per se, the master has inherent power to borrow on bottomry. The contrary, indeed, is the rule laid down by all states: Hanseatic Ordinances, art. 58; Hanseatic Ordinances of 1614, tit. 6, art. 1; French Ordinances, liv. 2, tit. 1; Du Capitaine, art. 17, and liv. 3, tit. 5; Des Contrats à la Grosse, art. 8; Emerigon, tom. 2, p. 424; Molloy, book ii., lib. 11, sect. 11; Weskett, 4, tit. Bottomry, sect. 20, 23; Lister v. Baxter, 2 Stra., 695. Even in the present days of railways and electric telegraphs the question has perhaps lost none of its legal importance.
* P. 12.
The saying of Oxenstiern, quam parvâ sapientiâ regitur mundus, has in modern times received numerous illustrations from the many advantages that have resulted to commerce from the removal of the restrictions upon private enterprise which an ill-judged system of bureaucratic intervention had imposed. Our allies still groan somewhat heavily under the bureaucratic yoke. They forbid, for instance, an insurance or the contracting of a bottomry loan on the freight only, unless it is actually earned at the time when the contract is entered into. Dr. Franck's remarks* on the impolicy of such a restriction are exceedingly sound and sensible. He correctly states the fundamental principles of insurance to be, first, that the insured is to suffer no detriment or to gain any advantage by any casualty happening to the thing insured. The French law, which prohibits the insurance of contingent freight, fret à faire, as distinguished from fret acquis, or freight actually earned, clearly violates the first of these principles. The German and English codes, on the other hand, allow the whole freight to be insured, and thus give the insured a slight interest in the failure of the adventure even at the outset, before much expense has been incurred with respect to wages and provisions. With respect to insurance and bottomry transactions regarding the freight, we think a close adhesion to the rule prescribed by Dr. Franck would be more troublesome than it is worth. The English rule, which obtains likewise throughout Germany, Italy, Portugal, and the Hanse Towns, is sufficiently correct for all practical purposes. In cases of general average, as the value of the freight at risk when the general average sacrifice was made can be readily estimated when the adjustment of the general average contribution takes place, the rule advocated by Dr. Franck may no doubt be readily applied. With this view, the General Average Congress at Glasgow in 1860, in their last rule, recommended that any legislation on the subject
* P. 20.
of general average should provide “ that in fixing the value of freight the wages and port charges up to the date of the general average act ought not to be deducted, and the
wages and port charges after that date ought to be deducted from the gross freight, at the risk of the shipowner.” We do not see, in fact, how the rule preferred by Dr. Franck could be applied to freight. For, though the capital to be expended in gaining the freight is only gradually expended, the capital which is to meet the cost of wages and provisions is set apart for this purpose, and may, therefore, for most, if not all practical purposes, be deemed to be at risk.
Furthermore, if Dr. Franck's rule were observed with the rigour which he prescribes, some portion of the freight should at all times continue uninsured, unless it were to be made the subject of daily insurance, and thus the first maxim of insurance law cited by our author be broken.
“Incidit in Syllam qui vult vitare Charybdem.” The observations we have offered on this head respecting the insurance of freight, or contingent profits, apply equally to loans on bottomry on the freight only.
Our author gives * a very able exposition of the essential qualities of the condition in bottomry, viz. the successful termination of the adventure. The creditor, being his own insurer, undertakes all the risk incidental to the adventure. But out of these perils the deterioration in value of the thing hypothecated by means of any vice propre is by most writers excepted. Dr. Franck disapproves of the principle of this exception. We think that the common rule is preferable to Dr. Franck's view, which would throw open a wide door to fraud. The consideration of this question, however, is not very important. Every species of adventure must, as a general rule, be successful; for no shipper transmits commodities that are likely to suffer much by any vice propre unless the price of the part sold is sufficient to replace the capital expended in its purchase together with the ordinary profits. An accidental injury is of course nowise different from any other loss in its relations to bottomry, or insurance in general.
* P. 22.
The concluding chapter of the First Part of this treatise relates to the proof of bottomry, and contains a statement of the essential requisites of a bottomry contract. It should describe, according to Dr. Franck, the names of the parties, the sum borrowed, the thing hypothecated, the condition of the agreement, the route and name of the ship, the name of the master, the rate of interest, the promise of repayment, the time and place at which the contract was entered into, and the subscription of the borrower's name.
But the memorandum need not specify, Dr. Franck thinks, the nature of the adventure. The paramount necessity of expressly stating that the lender undertook the liability of the sea risks, in order to justify the reservation of the maritime interest during the period when the laws against usury were in force in almost every country, having ceased to exist, we think that any memorandum of agreement which would be regarded by a commercial man as a bottomry instrument ought to be held to be such by a Court of Admiralty, vide Symonds v. Hodgson, 6 Bing. 114; 3 B. & Ad. 50. In practice sometimes a bond, at other times a bill of sale, is made use of; Johnson v. Shipper, 2 Lord Raym., 982. There is, however, no one item the insertion of which we would consider to be more important than a description of the nature of the adventure, nor which would be in greater harmony with the principle of these contracts, viz., that the peculiar perils of maritime adventure constituted a sufficient ground of exception to the laws against usury. A curious point on this head was decided in the case of Ex parte Halket, 3. Ves. & Beames, 135, in which a bill of exchange drawn by the master on the owner as security for advances made to the master was not considered as an instrument of hypothecation, although it was accompanied with a verbal stipulation by him that the ship should be liable. If bottomry, however, be originally contemplated, no form of collateral security will affect the