purpose than in performance of the contract entered into with C.: the bill was dismissed and on appeal the decision was affirmed, the Lord Chancellor considering that specific performance of the charter-party could not be decreed, the highest right against B. being to prevent him from actively interfering to stop the performance of the contract, while the contract remained in force, but that under the circumstances of the case the contract was virtually at an end, upon B.'s taking possession of the ship.1

2

In Keith v. Burrows, a cargo was loaded on board the ship S., lying at San Francisco, "on ship's account," for conveyance to England, the freight named in the bills of lading being the nominal one of 1s. per ton. This cargo was sold by the shipowner; the contract note stating that "as cargo is coming on ship's account, freight is to be computed at 558. per ton," the current rate of freight. The shipowner subsequently for advances assigned away this "freight at 55s. per ton :"—

Held, that a mortgagee of the ship, who took possession after these transactions, was only entitled to a lien on the cargo for freight at 1s. per ton; the freight at 558. per ton," although called "freight" by the parties, being in fact a part of the purchase money. Mellish, J., observing :-"The mortgagee does not become the owner of the ship until he takes possession. Even if we assume in the mortgagee's

1 De Mattos v. Gibson, 28 L.J. Ch 498; Lumley v. Wagner, 21 L.J. Ch.89%. 2 L, R. 2 C. P. D. 163; 46 L. J. C. P. 452,

favour that the mortgage was effected before the voyage began, his right to the accruing freight would be the same. Whether the mortgage happened to have been created prior to the commencement of the voyage, or whether the mortgage money was only advanced and the mortgage created the very day the mortgagee takes possession would make no

difference."

And the Lord Chancellor in affirming this decision in the House of Lords observed :—

be

any

"With regard to the general rights as between mortgagor and mortgagee, there cannot, I think, real controversy. The mortgagee of a ship does not, ordinarily speaking, or by a mortgage such as existed in the present case, obtain any transfer, by way of contract or assignment, of the

freight; nor

nor does the mortgagor of a ship undertake to employ the ship in any particular way, or indeed to employ the ship so as to earn any freight at all. The mortgagor of a ship may allow the ship to lie tranquil in dock, or he may employ her in any part of the world, not in carning freight, but for the purpose of bringing home goods of his own or for his own benefit. Those goods which are so brought home he may sell at their full market price when they arrive in this country, thereby of course bringing into his own pocket the portion of remuneration which represents the value of the carriage of the goods from abroad. Or again, he may in making through the master a contract for freight at a foreign port, attach to the carriage of

the goods a rate of freight which may either be nominal, or may be very far under the ordinary rate of freight of the market. All those acts would be the ordinary incidents of the ownership of the mortgagor, who remains dominus of the ship with regard to everything connected with its employment till the moment arrives when the mortgagee takes possession. If the mortgagee is dissatisfied with the amount of authority which the mortgagor possesses by law, it is for him to put an end to the opportunity of exercising that authority by taking the control of the ship out of the hands of the mortgagor. All these propositions are beyond dispute."1

As long as the dealings of the mortgagor with the ship are consistent with the sufficiency of the mortgagee's security, so long as those dealings do not materially prejudice and detract from or impair the sufficiency of the security comprised in the mortgage, so long is there parliamentary authority given to the mortgagor to act in all respects as the owner of the vessel; and if he has authority to act as owner, he has of necessity authority to enter into all those contracts touching the disposition of the ship which may be necessary for enabling him to get the full value and benefit of his property.

Therefore a mortgagor has full power to deal with the ship provided he does not materially

1 L. R. 2 App. Cas. 636.

Per Westbury, L. J. in Collins v. Lamport, 34 L. J. Ch. 196.

npair the value of the mortgagee's security; so mortgagee cannot object to a charter-party being arried out upon the ground that the effect of so oing will be to remove the ship from the jurisdicion of the Court, and thus make it difficult for him o enforce his security.1

It is settled beyond all dispute that the mortgagee of a ship becomes entitled to all the rights and is subject to all the liabilities of an owner from the moment of taking possession. Amongst those rights so accruing to him must be included the right to receive all freight accruing due after the possession is taken. The mortgagor up to the time of such possession being taken remains absolute owner, under a legal title, for every purpose save this important exception, namely, except in so far as may be necessary for making such ship available as a security for the mortgage debt. He can, therefore, bind the mortgagee by a charter-party, being to that extent in a different position from the mortgagor of real property, who cannot bind his mortgagee by a lease.2

By a statutory deed under the Merchant Shipping Act, dated 25th September, 1862, and duly registered on the 26th, T. was mortgagee of a vessel belonging to H. By another deed, dated also on the 25th, H. assigned to T. all charter-parties, freight, and earnings of the ship as a further security, and covenanted to insure her. Although

The Fanchon, L. R. 5 P. D. 173.

2 Collins v. Lamport, 34 L. J. Ch. 196,

the former deed recited the latter, it did not refer to the assignment of the charter-parties, &c. In fact no charter-party was in existence until the 27th November, 1863, when H. chartered the ship to P. for a voyage from England to Algoa Bay, where she was to take in a complete cargo and return to London and deliver the same, and the freight was to be paid on "unloading and delivery of the cargo." The master was to sign bills of lading; the owners were to have a lien on the cargo, and the freight was to be collected by the charterers. The vessel was still at sea when H., on the 20th May, 1861, assigned her freight and earnings, and the moneys to be received in insurances, to the plaintiff as security for the payment of his bill discounted by the plaintiff, and notice was given to the charterers on the 16th July, 1861. The plaintiff had no notice of the second deed, except so far as it was recited in the registered mortgage. The vessel reached London on the 1st September and broke bulk on the 9th, and it was admitted that the nett freight amounted to a considerable sum. Before the cargo was fully unloaded and delivered, T. took possession of the vessel, and gave notice to the charterers of his statutory mortgage, and of the assignment of the charter-parties, &c. The plaintiff then filed his bill for a declaration of the priority of his charge, on the ground that T. had not given notice to the charterers until after he (the plaintiff) had done so. On appeal it was held, that as the mortgagee of a