advance freight, it was from the very nature of the case clear that the option could not be exercised when the ship was lost, as the charterer could not then insure the freight. And it was upon these considerations that the case was distinguished in Oriental Steamship Company v. Tylor,' where the defendants loaded a cargo of coals in the plaintiff's vessel under a charter-party, which contained the following clauses :-"Freight to be paid as follows: one-third on signing bills of lading, less three per cent. for interest, insurance, &c., and the remainder on unloading in cash. Captain or agents to sign bills of lading for weight put on board as presented to him according to the railway or dock company's weight . within twenty-four hours after the coals are on board." The ship commenced her voyage before bills of lading were signed, but sank within twenty-four hours of the cargo having been put on board, and the cargo was lost. Thereupon the defendants refused to present bills of lading for signature. In an action by the plaintiffs, the shipowners, against the defendants, the charterers, to recover the amount of the advance freight, or in the alternative, damages for refusal to present bills of lading for signature:-Held, that the loss of the ship did not relieve the defendants from the obligation to present bills of lading for signature, that they were liable in damages for not so doing, and that the measure of the damages was the amount of the advance freight.

1

1 L. R. (1893) 2 Q. B. 518; 63 L. J. Q. B. 128.

Where the charterer is to insure and it is clear from the terms of the charter-party, that the advance is not to be returned if the ship do not arrive at her destination, the charterer must seek from the underwriters the indemnity which the charter-party contemplated that he would have.

Thus, where the defendant chartered a ship of the plaintiff's for a voyage under a charter-party, by which it was stipulated that freight should be paid in advance, less a certain sum to be paid on delivery of the cargo, and also less the cost of insurance to be effected by the charterers at ship's expense. Defendant paid the stipulated portion of the freight in advance, and the ship in the course of the voyage was damaged and incurred expenses which were general average charges; it was held, that the meaning of the charter-party was, that the plaintiff's should retain the portion of the freight advanced, whether the ship arrived at her destination or not, and therefore that it was at the defendants' risk, and consequently, that he was liable to contribute to the general average in respect of the freight advanced, as well as in respect of the cargo.1

It was agreed by the terms of a charter-party, that the charterers should pay one-third of the freight in advance, the same to be returned if the vessel did not reach her destination-the charterers to insure the amount at the owner's expense, and deduct the cost of so doing from the first payment of freight. The charterers paid the one-third freight, deduct

1 Trayes v. Worms, 12 L. T. N. S. 547.

ing insurance premium. The vessel and cargo never arrived. The charterers sued for a return of the freight. The owners pleaded that if the insurance had been properly effected, it would have indemnified them against the loss of the onethird freight stipulated to be returned; but that by the negligence of the charterers in deviating from the usual course of business in effecting the insurance, the insurance had become worthless. Consequently, that the defendants had a right of action against the plaintiff's, to exactly the same amount as that which the plaintiff's had against them. This, if true, would have made the plea good in avoidance of circuity of action. It was held bad, on the ground that the damages for negligence in insuring were not necessarily the same as the freight to be returned. Maule, J., said: "I do not think that the concluding allegation sufficiently identifies the sum mentioned in the plea with that sought to be recovered by the declaration. That which is complained of in the plea would give the defendants a right of action against the plaintiffs, so soon as they were guilty of the negligence charged, and the defendant was thereby damnified. That which happened subsequently does not necessarily determine the amount of damages the defendant would be entitled to. A jury might have given exactly the same amount of damages before as after the loss. The question is, what damages has the party sustained at the time the cause of action vested in him? If nothing had happened, and a

policy might then have been effected, the jury would consider what was probable; if the loss had then happened, they perhaps might have given the full amount; but they were not bound to do so. There were a variety of circumstances which they might properly take into their consideration. Therefore, it is not a necessary and conclusive thing that the sum to be insured by the policy neither more or less, is the sum which the plaintiffs would have to pay, but a compensation for the injury resulting from their negligence. Perhaps after the loss, they would be bound not to give more than the amount of the actual loss, when no greater loss could happen."1

In Thompson v. Gillespie,' it was held, in an action after the ship had been lost, that the shipowner could not recover freight payable in advance unless she had sailed in a seaworthy condition. The stipulation in the charter-party was that one-fourth of the freight should be advanced, less 5 per cent. for insurance,interest and commission. Lord Campbell, in delivering the judgment of the Court said :"By a policy of insurance the merchant was to be indemnified to the extent of the sum he was to advance. But he could not have the benefit of this indemnity unless at the commencement of the voyage the ship was seaworthy. He must be considered to have promised to pay one-fourth of the freight in advance, if when the ship sailed, she was

66

Charles v. Alton, 15 C. B. 46; 23 L. J. C. P. 197; 18 Jur. 1105.

in such a condition as that a policy of insurance on the freight would attach, and enable him to recover the money back in case of a subsequent loss."

If advance freight be not paid at the time specified, there will not be a lien for it on the goods carried, without express stipulation.1

Certain goods were shipped at Liverpool for Sydney, New South Wales, deliverable under the bill of lading, to order or assigns, he or they paying· freight for the same as per margin; and in the margin appeared the sums due for freight, but the following words were added, "freight payable in Liverpool to Æneas Macdonnell, one month after sailing, vessel lost or not lost." This bill of lading passed into the hands of appellants, merchants in Sydney, as indorsees for value, and when the ship arrived, they demanded delivery of the goods, but the master refused this except on payment of the freight in the bill of lading, which had not been paid in Liverpool. Upon these facts the Judicial Committee of the Privy Council held, that as it was money to be paid in advance, and therefore not freight, no lien existed under the circumstances of the case before them.2

A bottomry bond cannot affect a previous contract in a charter-party, so as to take precedence of money advances made subsequently to the bond under the authority of the charter-party.

1 How v. Kirchner, 11 Moo. P. C. 21; Kirchner v. Venus, 12 Moo. P. C. 361; Tamvaco v. Simpson, L. R.-1 C. P. 363; Ex parte Nyholm, in re Child, 2 Asp M. L. C. N. S. 165.

* Kirchner v. Venus, 7 W. R. 155; How v. Kirchner, 6 W. R. P. C. 198.