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of insurance in our own country, and the policy is expressed to include "all loss or damage by the arrests, restraints, and detainments of kings, princes, and people." The rights created between the parties by such a contract may be briefly stated:
The ship is to be considered as lost by the capture, though she be never condemned, nor carried into any port or fleet of the enemy, and the insurer must pay the value. If, after a condemnation, the owner recover or retake her, the insurer is in the same situation as if she had been retaken or recovered before condemnation. He runs the risk of the insured, and undertakes to indemnify; he must therefore bear the loss actually sustained, and can be liable to no more. If therefore, after condemnation, the owner recovers the ship in her complete condition, but has paid salvage, or been at any expense in getting her back, the insurer must make good the loss so actually sustained. No capture by the enemy can be so total a loss as to leave no possibility of recovery. If the owner himself should retake at any time, he will be entitled; and if an English ship retake the vessel captured, either before or after condemnation, the owner is entitled to restitution upon stated salvage. His chance does not, however, suspend the demand for a total loss upon the insurer; but justice is done by putting him in the place of the insured, in case of a recapture.
Questions arise sometimes, whether a capture was just, and whether a detention was of such a character as to come within the terms of the policy. It has been laid down that detentions or restraints "by people" mean acts by the ruling power of the country, such as an embargo, not any tumultuous seizure by a mob. And the insured forfeits his rights under the policy, if he navigates contrary to the laws of the country where he is detained; for a man is never allowed to take advantage of his own wrong.
IV. The money was to be repaid, if the goods were brought home safe.
Herein this agreement differs from those in the cases of Zenothemis and Phormio, where the ship's safe arrival was made a condition of repayment. We have here a special clause, that, even though the ship be lost, the cargo, if saved, shall enure to the benefit of the creditors. A difficulty occurs in the expression, koɩvà tois daveio aow. I have suggested in a note, that it might be intended to comprise those who had a claim for salvage; but I am bound to say, that this is an uncertain conjecture. Salvage is the compensation paid to those persons, by whose assistance a vessel or its cargo is rescued from some peril of the sea, or recovered after actual loss: as to which there are ordinances in all maritime codes, fixing the rate at which it should be paid, stating the circumstances and conditions under which it becomes due, adjusting the interests of various parties concerned, forbidding plunder and pillage in case of shipwreck, &c. &c.
The principle on which all the Athenian mercantile loans are based-viz. that the lender runs the hazard of the voyage, receiving a high premium if it turns out prosperously, and losing both principal and interest, if the ship or cargo is lost-deserves the reader's particular attention. I have adverted to the perilous character of the speculation in ancient times, when insurance was unknown; and from the examples in the Demosthenic speeches we learn the frauds to which the lenders were exposed. On the other hand, when we see that the merchant could afford to pay twenty or thirty per cent. for half a year's use of the money, we may conclude that the profits of trade must have been very considerable. Contracts on the same principle have been common in modern times, and have been held to be perfectly legal and conscientious, even in countries where there were severe laws against usury; for it was considered that such laws did not apply to adventures, where the lender risked the loss of his principal. In our own country it was not lawful, until very lately, to lend money at higher interest than five per cent. Upon an ordinary loan, for example, of 100%. by A. to B., where the money was to be repaid some time or other at all events, it was not lawful to receive a higher interest than the legal rate. But if he lent 100%. upon such a contract as this, which we are considering, he would not have been amenable to the statutes of usury. Contracts of this kind have been called contracts of bottomry or respondentia; of which I proceed to give a more particular account. I cannot do better than subjoin the definition given of these terms by Park in his treatise on Marine Insurance:
"The contract of bottomry is in the nature of a mortgage of a ship, when the owner of it borrows money to enable him to carry on the voyage, and pledges the keel or bottom of a ship, as a security for the repayment; and it is understood that, if the ship be lost, the lender also loses his whole money; but if it return in safety, then he shall receive back his principal, and also the premium or interest stipulated to be paid, however it may exceed the usual or legal rate of interest. When the ship and tackle are brought home, they are liable, as well as the person of the borrower, for the money lent. But when the loan is not made upon the vessel, but upon the goods and merchandize laden thereon, which, from their nature, must be sold or exchanged in the course of the voyage, then the borrower only is personally bound to answer the contract; who therefore in this case is said to take up money at respondentia. In this consists the difference between bottomry and respondentia; that the one is a loan upon the ship, the other upon the goods: in the former, the ship and tackle are liable, as well as the person of the borrower; in the latter, for the most part, recourse must be had to the person only of the borrower. Another observation is, that in a loan upon bottomry the lender runs no risk, though the goods should be lost: and upon respondentia the lender must be paid his principal and interest,
though the ship perish, provided the goods are safe. But in all other respects the contract of bottomry and that of respondentia are upon the same footing; the rules and decisions applicable to one, are applicable to both.
"These terms are also applied to another species of contract, which does not exactly fall within the description of either; namely, to a contract for the repayment of money, not upon the ships and goods only, but upon the mere hazard of the voyage itself, as if a man lend 1,000l. to a merchant, to be employed in a beneficial trade, with a condition to be repaid with extraordinary interest, in case a specific voyage named in the condition shall be safely performed; which agreement is sometimes called foenus nauticum, or usura
The contracts above mentioned, as the reader will perceive, closely resemble the vavtikòv ovμßóλalov of the Greeks. It was the opinion of the learned writer, whom I have quoted, that bottomry took its origin from the custom of permitting the master of a ship, when in a foreign country, to hypothecate the ship in order to raise money to refit. True it is, that such a permission has in modern times been found necessary for the carrying on of commerce advantageously; for, unless the master had such power in case of necessity, the ship. might be lost, before he had time to obtain instructions from the owner, or, at least, the object of the voyage might be frustrated; and accordingly the laws of Oleron and the Hanse towns declare distinctly, that "the master being in a strange country, if necessity drive him to it, may take up money on bottomry, if he cannot get it without, and the owners shall bear the charge;" and other laws accord with these, confining the power of the master to foreign countries, where he cannot communicate with the owner in time. The contract itself however, whether made by the master abroad, or by the owners at home, is the same in character with these mentioned in Demosthenes, and was probably handed down from a very early period.
In those fragments of the famous sea laws of the Rhodians, which have been preserved and transmitted to our times, there are evident traces of this species of contract. In one section it is said, "that when masters of ships, who are proprietors of one-third of the lading, take up money for the voyage, whether for the outward or the homeward bound, or both, all transactions shall pass according to the writings drawn up between the master and lender, and the latter shall put a man on board the ship to take care of his loan." But in another place these laws speak more explicitly, and with a direct reference to the distinction between naval interest and that which is given for a land risk-"If masters or merchants borrow money their voyages, the goods, freights, ships, and money, being free, they shall not make use of suretyship, unless there be some apparent
danger either of the sea or of pirates. And for the money so lent the borrowers shall pay naval interest." From these two quotations, little doubt can be entertained that the Rhodians used to borrow and lend upon the hazard of the voyage for an increased premium. It has been mentioned that the Rhodian laws in general were adopted by the Romans, and consequently that branch of them which relates to bottomry, amongst the rest; for you can hardly open a book upon the Roman law, but you meet with chapters, de nautico fœnore, de nauticis usuris, which plainly show that this contract was well known to the jurists of that distinguished nation. It was also called by them pecunia trajectitia; because it was given to the borrower to be employed by him in commerce upon and beyond
The temptations, to which a needy merchant was exposed under a bottomry contract, are obvious. He might take up loans far beyond the value of the articles pledged. When he had agreed to purchase and ship goods in a foreign port, he might put none on board, or some of trifling value only, and these he might contrive to sink or destroy. There might be a conspiracy between the merchant and the master or ship-owner, such as that of which Zenothemis and Hegestratus are accused, to sink the vessel and cheat the creditors. A multitude of frauds of a similar nature are practised in these days against underwriters and insurance companies, upon naval policies, and upon fire and life policies. A man insures his house and the goods which it contains against fire, greatly overrating their value, and then purposely sets them on fire. Life assurance, one of the most valuable institutions of modern times, has occasionally led not only to fraud but to murder. It is important to bear in mind, that misrepresentations by the parties effecting an insurance, irrespective of any criminal or fraudulent intention, will generally vitiate the policy. The frauds committed against insurers and lenders on bottomry fell under the notice of the English legislature in the reign of Charles II., and a statute was passed for their repression, which has been followed by others, imposing the severest penalties on such practices. I may here mention, that all frauds of this kind, committed by the master or mariners of a ship, whether by running away with her, sinking her, deserting her, embezzling the cargo, and the like, are designated by the general term barratry, derived from the Italian barratrare, which signifies to cheat; and they are commonly among the perils insured against by a sea-policy.
The statute of Charles II., passed in the 22nd year of his reign, after reciting "that it often happens that masters and mariners of ships having insured or taken upon bottomry greater sums of money than the value of their adventure, do wilfully cast away, burn, or otherwise destroy the ships under their charge, to the merchants' and owners' great loss," enacts "that if any captain, master, mariner, or other officer belonging to any ship, shall wilfully cast away, burn,
or otherwise destroy the ship, unto which he belongeth, or procure the same to be done, he shall suffer death as a felon."
This has been followed by divers others, one of which, the 11th George I. chapter 29, section 6, enacts-"That, if any owner of, or captain, master, mariner, or other officer, belonging to, any ship or vessel, shall wilfully cast away, burn, or otherwise destroy the ship or vessel, of which he is owner, or to which he belongeth, or in anywise direct or procure the same to be done, with intent or design to prejudice any person or persons, that hath or shall underwrite any policy or policies of insurance thereon, or any merchant or merchants that shall load goods thereon, or any owner or owners of such ship or vessel, the person or persons offending therein being thereof lawfully convicted, shall be deemed and adjudged a felon or felons, and shall suffer as in cases of felony without benefit of clergy."
Lastly, I subjoin a few modern forms of contract, the perusal of which may be found instructive.
HYPOTHECATION OF SHIP AND CARGO AT LISBON.
Know all to whom this instrument of bond and bill of maritime risk and bottomry may come, that on the day of A.D. 1820, in the city of Lisbon, in my office personally appeared Iacomo Mazzola, captain of the ship called the Gratitudine, whom I know to be the real person; and he declared to me the notary in the presence of the witnesses hereinafter mentioned, that within twenty-four hours after the arrival of his said ship at London, or any other port, and previous to beginning to make any delivery of the cargo at the port aforesaid, or any other port, he, the captain, or whosoever may act in lieu of him, or in case of his absence, perform his duties, shall pay by this bill of risk, sea exchange, and bottomry, to Francis Manoel Calvert, or to his order, the sum of 2,000l., principal and premium of risk and sea exchange, at the rate of twenty per cent., the which principal he acknowledged to have received here of the said Francis Manoel Calvert, in current money of this kingdom, under the denomination of true and legitimate money of sea exchange and bottomry, on the hull, keel, and appurtenances of the said ship, and therewith to supply the wants of the repairs, and of the cargo of the same, on which he had effectively invested it; the said Francis Manoel Calvert taking upon himself, in consideration of the aforesaid premium of twenty per cent. agreed for and settled between them, to run the sea risk on the said hull, keel, and appurtenances, and cargo of the said ship, in her ensuing voyage, which the said captain is about prosecuting from this port of Lisbon to that of London, these being the risks which the said Francis Manoel Calvert takes on himself, and is to run, viz. of the sea, winds, fire, stranding, and shipwreck, enemies, detentions of princes, and reprizals, during the whole of the said voyage, excepting