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notice to the managing owner that they declined to be bound by any new charter-party. The managing owner, who had been appointed manager with the sanction of the plaintiffs, had on the day when the above notice was given to him, concluded an arrangement for a charter-party, and had himself signed the charter-party, though it was not signed by the charterers till some days afterwards :— Held, that the charter-party was not binding on the plaintiffs.1
Part owners who do not dissent from the employment of a ship, and are aware that other part owners have dissented, are liable to bear the expenses, and are entitled to receive the profits of the ship in the proportion which their shares bear to the number of shares in the ship, after the deduction of the shares of the dissentient part owners.1
The purchaser of a ship takes a right to all Rights of accruing freight; to all profits of the ship from the time of the assignment to him, and the transfer of the ship to him; whereas a mortgagee only takes it from the time he takes possession."
A vessel was chartered for twelve months, and during the currency of the charter the charterers made default in certain payments and the charter lapsed. The vessel was chartered by a voyage
charter from K. to England. During the performance of this voyage the defendant purchased a share in this vessel :-Held, that the defendant was not liable to bear any of the losses occasioned by the time-charter.1
Butt, J. in delivering judgment on appeal, said:-"I am clearly of opinion that there is no liability on the part of the defendant to contribute towards any loss arising from the voyage on which the "Meredith" was engaged when he purchased his share in her, except in respect of that arising out of the voyage-charter. The time-charter was at an end before the defendant became a part owner, so that he cannot be liable in respect of anything arising out of it. Nor, indeed, am I quite satisfied that the defendant was liable to contribute towards the loss from the voyage-charter, but as he does not appeal against this portion of the report, it is unnecessary for me to decide this question."
The master of an American vessel arriving in England, authorised by the owners to sell or charter the ship, entered into a charter-party with the plaintiffs for a voyage to Ceylon and back. A few days afterwards, the defendants purchased the ship from a party acting under a power of attorney from one of the owners to sell her.
The greater part of the cargo had been put on board under the charter-party. The defendants attempted to stop the sailing of the ship.
1 The Meredith, L. R. 10 P. D. 69.
Held, that the master having authority to charter the ship, which he had done, and the defendants knowing of the charter-party, an injunction would lie to restrain the purchasers from interfering with the sailing of the ship in pursuance of the charter-party.1
A purchaser of shares in a ship, which at the time of the sale is on a voyage, is liable for the expenses of this voyage, and of the vessel's outfit for it, and is entitled to a share of the freight."
Under the 66th section of the Merchant Shipping Rights of Mortgagor and Act, 1854, and the 3rd section of the Merchant Mortgagee. Shipping Act Amendment Act, 1862, the Court will look behind the register to the real character of transactions between co-owners, and treat as a mortgage that which is on the face of it an absolute transfer, if it should appear that such was the intention of the parties.
Under the 70th section of the Merchant Shipping Act, 1854, a mortgagee not in possession of the vessel cannot maintain an action of restraint.
But the Court would in some cases recognise an agreement by which a person might be for some purposes an absolute owner, and for others a mortgagee, if such an agreement were clearly proved and definite.
Thus, a vessel having been arrested in a cause of restraint between co-owners, the Court, on a motion
Messageries Imperiales Co. v. Baines, 7 L.T.N.S. 763. See also Lumley t. Wagner, 1 DeG. M. & G. 618.
The Vindobala, L. R. 14 P. D. 50.
17 & 18 Vict. c. 104.
25 & 26 Vict. c. 63.
by the charterer to whom the vessel had been let for a voyage, ordered her release; it appearing that the alleged co-owner was only a mortgagee.1
Under the 70th section a mortgagor of a ship remaining in possession, retains all the rights and powers of ownership, and his contracts with regard to the ship will be valid and effectual, provided his dealings do not materially impair the security of the mortgagee; and a mortgagee will be restrained, by injunction, from interfering with the duc execution of such contracts.
Therefore, a mortgagor in possession of a ship having entered into a beneficial charter-party, the mortgagees were restrained at the suit of the charterer from dealing with the ship in derogation of the charter-party.
So in the case of "The Keroula," in an action of restraint, a bail bond given by the defendants before the trial, for the safe return of a ship is only an ordinary step in Admiralty litigation to prevent the expense and possible loss arising from arrest, and the Court will set it aside if, at the hearing, it appears that the plaintiff was not entitled to institute the action.
Where shares in a ship are mortgaged, possession being retained by the mortgagors, and the managing owner, duly appointed by all the co-owners including the mortgagors, charters the ship for a foreign voyage, and she loads and is about to proceed on
1 The Innisfallen, L. R. 1 A. & E. 72.
2 L. R. 11 P. D. 92.
the voyage, the mortgagee, even though he takes possession of his shares before the sailing of the ship but after the making of the charter-party, cannot arrest the ship or demand bail in an action brought by him to compel payment of his mortgage debt, provided the performance of the charter-party is not prejudicial to the security; and the Court will, upon the application of the co-owners, release a ship so arrested, and will condemn the mortgagee arresting in costs. Sir Robert Phillimore stating that:-"It would be very injurious to the shipowning interest if, after a charter-party has been made, a mortgagee could step in and set aside what the managing owner has done, merely because he seeks payment of his debt at that moment."1
Where a person takes a mortgage on a ship with the knowledge that the ship is under charter, he must abstain from any act which would have the immediate effect of preventing the charter being performed. So where A., being equitably entitled to a ship, entered into a charter-party with C., and afterwards mortgaged the ship to B., the mortgagee having notice of the charter-party. The ship proceeded on her voyage, but shortly afterwards was obliged to put into port for repairs, which were paid for by B., and B. took possession of the ship. C. filed a bill against A. and B, praying specific performance of the charter-party, and for an injunction to restrain the use of the vessel for any other
The Maxima, 4 Asp. M. L. C. 21.