Hodgson v. Butts.

the vessel should earn, by freight or otherwise. That the vessel proceeded to New Orleans, and from thence, with a cargo, to Jamaica, where the freight was received, and out of the same, the defendant paid Haynes the $384, and applied $800 to the discharge of his own claim. That the vessel then sailed from Jamaica, and arrived at Alexandria on the 27th of November 1800. That after her arrival, and after possession delivered to the plaintiff, the latter paid the expenses and disbursements of the voyage, which became due on her arrival, by the orders of the defendant. The plaintiff also insured the vessel for the said voyage, and paid the premium thereon, after her departure for New Orleans. It was also proved, that on the defendant's return to Alexandria with the vessel, and before the plaintiff took possession of her, and received his absolute bill of sale as aforesaid, the defendant rendered to, and settled with, R. & J. Hamilton, an account-current of the expenses and profits on the said voyage, in which they gave credit for the order in favor of himself, and that in favor of Haynes.

Upon this statement of the evidence, the plaintiff prayed the court to instruct the jury, that he was entitled to recover of the defendant the sum of $1184, thus admitted to have been received for freight, and applied to the discharge of the two orders; which the court refused to do, and directed the jury to find a verdict for the defendant, if they found the facts to be as stated.

The 2d bill of exceptions stated, that the plaintiff prayed the court to instruct the jury, that if they should be of opinion, from the evidence aforesaid, that the defendant received information of the mortgage from Robert Hamilton, before the schooner sailed upon the said voyage, the plaintiff was entitled to recover the said $1184; which the court also refused to do, and directed the jury, as before, that their verdict ought to be for the defendant. This case was first argued at February term 1804.

*February 27th, 1804. E. J. Lee, for the plaintiff in error.-The [*144 law of mortgages is the same both as to land and personal property. The case is to be considered, 1st, upon common-law principles; and 2d, upon the statute law of Virginia.

1st. That the mortgagee is the legal proprietor of the mortgaged subject; and as such, he is entitled to receive the rents and profits, after notice of the mortgage, unless the contrary be stipulated.

The mortgagee of lands leased becomes entitled to the rent, from the time of executing the conveyance; for the rents and profits, as well as the land, are liable for the debt. As soon as the conveyance is executed, the estate is, in law, vested in the mortgagee, and his power to take actual possession exists from that moment. For these principles, see Powell on Mortgages, 79, 80, 81. The mortgagee is the absolute proprietor and the true owner. Ryall v. Rowles, 1 Ves. 361.

If lands be mortgaged to one, the interest in them is in the mortgagee, before forfeiture; for he has purchased the lands upon a valuable consideration, as the law will intend; and though the mortgagor may redeem, by means of an agreement between the parties, if he does not, the estate, in law, is absolute, without any other act to be done, to pass the estate;

Hodgson v. Butts.

although the mortgagor has in him the equity of redemption. 15 Vin.

Abr. 44.

A mortgage is defined to be the appropriation of a specific thing to certain purposes. It does not, in the case of a mortgage, require the delivery of the article, in order to transfer the right and title to it.

*145] *A mortgagee of real property may bring an ejectment to get possession, against any person in possession; and may also bring an action for the mesne profits; so he may bring trover for personal property, and in the estimation of his damages, a charge for the intermediate produce or profits of the article converted, would not be rejected, but would be taken into the account. So, he may bring detinue, without any proof of possession in the mortgagee.

2d. Possession, upon common-law principles, is not necessary, in order to give title in the transferree of property. It is true, that possession in the vendor, after the transfer, is prima facie evidence of fraud, and this is the only effect of such possession; but as to the proof of fraud, it is not conclusive. It may be rebutted, by testimony showing the transaction boná fide. The only use in delivering possession, is to prevent strangers being deceived by a false credit, which the possession in the vendor is calculated to produce. This reason cannot be applicable, in this case, to Butts: 1. Because Butts knew of the mortgage: 2. Because the debt due to him from the Hamiltons was an antecedent debt. If the Hamiltons had been declared bankrupts, their assignees could not have claimed the vessel or the freight; because both were pledged as a security to Hodgson. See the bankrupt law of the United States. Upon common-law principles, the mortgagee must be considered as the legal proprietor of the vessel.

3d. But the act of the legislature of Virginia places the question beyond a doubt, and proves that possession is not necessary to constitute the ownership. See Virginia Laws, 157, Revised Code of 1802; 1 Wash. 177. The legal owner of the vessel is entitled to receive the freight. Marshall on In*146] surance, 93. *The mortgagee of a vessel, in a late case, has been considered as the owner, and as such, liable for repairs done to her before he received actual possession. 7 T. R. 306. In this case, the decision in Chinnery v. Blackburne, 1 H. Bl. 117, is not considered as correct.

The two cases of Jackson v. Vernon, 1 H. Bl. 114, and Chinnery v. Blackburne, which will be relied on by the defendant, will, upon examination, be found not to meet the question which arises in this case. In the case of Jackson v. Vernon, the question was, whether the mortgagee was liable for the repairs to the ship; it was decided, he was not, because, the mortgagor himself ordered the repairs; as the person who makes repairs on a ship, has a claim on the person ordering them, it was supposed, the credit was given to him, and upon this ground, it was held, the mortgagee was not liable.

In the case of Chinnery v. Blackburne, Merryfield acted as the owner; he navigated the vessel, and made all contracts about her, from London to Antigua. He was on board of her, on the voyage, and at Antigua, gave the command of the vessel to another master; he also insured the vessel; and at Antigua, acted personally in command of the ship. This is not like the case at bar; for in this, Hamilton did not furnish the vessel, nor man her, after the mortgage, nor did he insure her; but Hodgson did the last act.

Hodgson v. Butts.

But both cases are doubted in the case 7 T. R. 306, and by Abbott 16, who says, they do not furnish a case for the decision of the question, who is entitled to the freight, which a case of a contract made by the master in that character will; which is our case.

There is a distinction in a court of equity and a court of law, where the mortgagor acts as the master of the vessel. In the court of equity, he is considered as owner; but not so, in a court of law. Marsh. 452-3. Hamilton never acted as master.

*4th. The contract, in words, binds and includes the freight. To [*147 which it is objected, that future freight is too remote an interest to be transferred; freight, or a hope, or expectation, is such an interest as may be insured; and if insurable, it may be granted. Goods, as well as their expected produce, may be granted. Prec. in Chan. 285. It is not competent for Butts, who claims under Hamilton, to object that the freight is not included or passed by the deed. Cowp. 600.

5th. The objection, that Robert Hamilton exercised authority over the vessel, by giving instructions, is not of any weight, in the mouth of Butts ; because Butts had a full knowledge of the lien of Hodgson; and also, because it does not appear that Hodgson authorized this interference. The directions of James Hamilton, that Butts was to wait until the vessel earned enough to pay him, is also without weight; because James Hamilton was ignorant of the arrangement which his partner had made; and of which Butts might have informed him; but not having done so, he is the more culpable.

6th. Hamilton had no right to appropriate the freight to any other person, than that specified in his deed of mortgage. If he had not, Butts, his servant, had not. Butts must be considered, either as the servant of Hamilton, or of Hodgson; if the servant of the former, and undertakes to act as such, he had no right to apply the money in the manner he did. If he undertook the command, as Hodgson's servant, he had no right to apply the freight to the payment of a debt due from Hamilton.

7th. Butts having accepted of the command of the vessel, with a full knowledge of the lien upon her, and her future freight, he tacitly consented to apply the freight according to the agreement between Hamilton and Hodgson; if he intended otherwise, at the *time, he has been guilty of a fraud which ought not to avail him in a court of law.

[*148

8th. The master had no lien for his $800, due for his own wages on the vessel. The mate had no lien on this vessel for $200, they being earned on board of a different vessel, and in a different voyage. The balance of the mate's wages was only $184. The mate, by accepting an order on James Hamilton, for $384, the whole of the wages due him, agreed to accept payment in a different way from the usual one; which destroys the lien on the vessel for the $184. Salk. 131. Besides, for this $184, Butts, as the master of the vessel, when it was earned, was liable; and the moment he paid that sum, the mate's lien was gone. The master has no lien on the vessel, for the wages he pays the seamen, but has on the freight, for the wages of the voyage in which the freight was earned. on James Hamilton, could not assign any 9th. As to the justice of the case.

The mate, by assigning the bill lien he had on the vessel. Hodgson has paid the seamen's

Hodgson v. Butts.

wages for the voyage which earned the freight; and Butts is to receive the benefit.

Jones, contrà.-1st. As to the validity of the deed; and 2d. As to its effect, if valid.

1st. The vessel was in port at the time of the deed, and therefore (possession not having been delivered), it is void as to creditors. The possession is dispensed with, only when the vessel is at sea. Stevens v. Cole, 1 Cooke's B. L. 339; Hall v. Gurney, Ibid. 357; Ryall v. Rolle, 1 Wils. 260; and the case of Russell v. Hamilton, in this court (1 Cr. 309).

As to the act of assembly, if the deed would have been bad, without recording, there is nothing in the act to make it good. From affirmative words, a negative may be sometimes implied, but not è converso. The words

of the act are, "all deeds of trust and mortgages whatsoever *shall *149] be void as to all creditors and subsequent purchasers, unless they shall be acknowledged or proved, and recorded according to the directions of this act:" that is to say, a deed, although good in every other respect, yet if not acknowledged or proved, and recorded, shall be void. It cannot possibly be construed, to make good a deed which would have been before fraudulent.

2d. The deed is also void, for want of containing the register according to the directions of the act of congress. (1 U. S. Stat. 294, § 14.) This act is mandatory, and if the construction of the act of assembly contended for is correct, the register is necessary; for the affirmative words of the act of congress imply a negative as strongly as the act of assembly implies an affirmative.

3d. The plaintiff waived this deed, by taking possession under a new and absolute deed of the same property, before the mortgage was forfeited, and before he had exercised any right of ownership. This new deed implies a new consideration, and that a new bargain was made, by which the old contract was waived.

4th. The consideration of the deed was indemnity. A mere possibility of suffering is not a sufficient consideration against third persons. It is only good between the parties.

II. As to the effect of the deed, if valid. The plaintiff, by the terms of the deed itself, could not meddle with the schooner, until days after her return from her then intended voyage to New Orleans, and a failure on the part of the mortgagors to indemnify him; and his only authority then. would be to sell the vessel and cargo, if not previously sold by the mortgagors. If, then, the defendant did know of the mortgage, he must be presumed to know the whole terms, and that the plaintiff could not interfere until long after his return. He also knew that, before a forfeiture of the mortgage, and while the mortgagor holds the possession, the latter is to be considered the owner. Jackson v. Vernon, 1 H. Bl. 114, and Chinnery v. Blackburne, Ibid. 117. Even in the case of lands, a mortgagor has been

held to be a freeholder, and entitled to vote at elections. And the *150] mortgagee of a leasehold estate cannot be sued by the lessor, as assignee of the lessee, until the mortgagee is in possession, although the mortgage be forfeited, and he has a right of possession. Eaton v. Jacques,. Doug. 455; Keech v. Hall, Ibid. 22.

Hodgson v. Butts.

The mortgagors had a right to receive the freight, and if so, they had a right to appropriate it. The freight is not like rent, which is said to grow out of the land. It depends upon a mere personal contract. If they had received the freight, their receipt would have been good against the plaintiff.

As to the payment of the expenses of the voyage by the plaintiff, it was voluntary. He had his reasons. He made a new contract, and paid the money after he had possession under his absolute purchase of the vessel.

The extrajudicial doubts of Lord KENYON and Abbott cannot control the strong and decisive cases of Jackson v. Vernon, and Chinnery v. Blackburne.

As to the covenant respecting the freight, it is merely a personal contract, and the plaintiff trusted to the personal security of the mortgagors. Even if they had sold the inward cargo, the plaintiff could not recover against the vendees. But the freight was not even a chose in action; it was only a possibility; it was not in being, and therefore, not capable of a legal assignment.

Swann, in reply.-The vessel was of less value when she returned, than when she was mortgaged, by at least the difference of the freight. Hodgson paid the expenses of the voyage. It is equitable, therefore, that he should receive the freight. The defendant had no lien on the vessel or freight.

Two questions seem to arise in this cause. 1. What relation does the mortgagor stand in to the mortgagee? 2. What relation does the defendant stand in to both?

*1. By the English law, possession must accompany the deed, [*151 except as to vessels at sea. But here possession is not necessary, if the deed be proved and recorded in a certain manner. It is then as valid, to all intents and purposes, as if possession had been delivered with the deed.

THE COURT said, he need not argue that point: it had been settled. (a) Swann.-What, then, are the rights which it conveys? As to mortgages of lands, the law is settled; but not so in the case of a mortgage of a ship. In England, it is settled, that a mortgagee of a ship in possession, is entitled to all the rights of property: but if a vessel be mortgaged while at sea, some doubts have arisen. But here, by the statute, the deed has the same effect as if possession had been given. The mortgagee, therefore, has all the right of property; and if in the thing itself, he has it also in its profits.

itself.

But this is not a mere mortgage. It is also an assignment of the freight It is said to be the general understanding, that the mortgagor shall enjoy the profits, until forfeiture, or possession given to the mortgagee. But if the mortgagor covenants expressly that the mortgagee should receive the profits, this destroys the tacit presumption that the mortgagor should receive At best, a mortgagor is only "like a tenant at will," and the mortgagee may put an end to his right of taking the profits whenever he pleases. said, that the freight was not in esse, and therefore, could not be the subject of assignment. But if the covenant does not operate as an assignment of the

them.

an

freight, it is sufficient to destroy the tacit understanding, that the mortgagors were to receive and might dispose of it as they pleased.

(a) Probably alluding to the case of Claiborne v. Hill, 1 Wash. 177.