he thinking the claim of Wilson on the whole maintainable, advised a compromise of the conflicting claims for 450l., and that the captain should raise this sum by bottomry and so procure the release of the ship. Mr. Parish says in his evidence. "After some correspondence with Mr. Wilson, I persuaded that gentleman to accept a compromise, for the payment of all claims, the sum of 450%, which was the estimated value of the coal sold, with some additional expenses thereon. Captain Coleman, acting on my advice, accepted this arrangement, and by so doing the parties who were loading his vessel desisted from their intention to withdraw the charter. Captain Coleman having no money, was unable to pay the amount due to Mr. Wilson, and I had no alternative but to advertise for the money on bottomry; and no person tendering for the same, I induced Mr. Wilson to accept the risk, and to accept payment of his claim in this form. On his agree ing to do so, bottomry bills for the amount of 450/., with an additional premium of 90%., were drawn up and signed in the consulate, and Mr. Wilson withdrew the law proceedings, by a formal act, which I recommended him for his better security to enter into. The prohibition which should have been placed upon the sailing of the vessel was removed, and the ship proceeded to sea.”

The bottomry bond was as follows:

"Ten days after my arrival at the port of Liverpool I promise to pay to the order of Messrs. Wilson & Stevenson this my first bill of bottomry, second and third of this tenor and date not paid upon the schooner Ida, under my command, and bound on a voyage to Liverpool, being for amount of expenses incurred in this port, which sum of 540/. stg., excepting 907. stg., for premium was actually laid out in disbursements and charges for the use of the said schooner, and to enable her to proceed on her present voyage, and for the payment of which sum of 540. stg., in lawful money of Great Britain, ten days after my arrival at Liverpool as aforesaid, I do hereby bind myself, my heirs, executors, and administra tors, firmly by these presents, and particularly the said schooner, together with all her tackle and apparel, and it is hereby declared that the same are thus assigned over for the security of the said 540. stg., and shall be delivered to no other use or purpose whatever until payment of this bill or bond is first made, with the premiums due thereon."

550] And the usual conclusion follows: The bond is signed by Captain Coleman, the master, and Mr. Parish, British consul at Buenos Ayres.

The recital as to the money being "actually laid out in disbursements and charges" is untrue; this recital is indeed part of the printed form of the bond; but, nevertheless, I regret to see it, and I am somewhat surprised that it escaped, as it must have done, the notice of the consul.

The fact is, that no money passed at all between Wilson and the captain, and that the bond was not for disbursements or charges, but to obtain the release of the ship seized and detained on what was in truth a matter of account between the parties to it. Was such an instrument, drawn in such circumstances, a legal bottomry bond?

In the case of The Karnak (1) I reviewed at length and carefully considered all the decisions of this Court bearing upon the subject of bottomry bonds granted for the purpose of raising money to obtain the release of a British ship detained in a

(1) Law Rep. 2 A. & E. 289.

foreign port on account of a lien allowed by the municipal law of that port.

I adhere to the principles of law laid down in that case with the greater confidence because they were subsequently approved of by the Privy Counsel. I think it expedient to refer to two of the authorities cited and relied on by me in The Karnak (') In the case of The Prince George (2), before the Privy Council, their Lordships said:

"If it had been proved that the law of New York gave the lien upon the ship, as suggested, we should have thought, upon the general principle, that where the master cannot in any other way raise money, which is indispensably necessary to enable the ship to continue her voyage, he may hypothecate the ship, this power would extend to a case where the ship might be arrested and sold for a demand for which the owner would be liable. It seems immaterial whether the necessity for funds arises from such a demand, or to pay for repairs, stores, or port duties." I, do not know, however that the law upon this subject has as yet been carried further than to hold valid an hypothecation on account of a lien by a creditor in a foreign port for the necessary expenses and charges in respect of the ship and crew in that port. It is not necessary to decide whether the principles laid down in The Prince George (1) and The Karnak (2) might be *considered to cover the case of a bottomry bond given [551 for the purpose of raising money not to be raised in any other way, and to repeat the language to which I have just adverted, "which was indispensably necessary to enable the ship to continue her voyage," without reference to the character of the expenses to be defrayed by the money received.

I say it is not necessary to make a decision upon this point, because the case before me presents a circumstance which raises another principle of the greatest importance relative to instruments of this peculiar character, namely, the capacity of the particular person to become the obligee of such a bond, or, in other words, the capacity of the captain to grant the bond to Wilson. It is contended by the defendants that the failure of Wilson to fulfil his contract with respect to receiving the cargo by himself or his consignees within a reasonable time at the proper port, caused the expenses in order to defray which the sale of the coal became necessary, which act subsequently necessitated the bottomry bond; and now it is not denied that such default was made by Wilson. His contention is that, nevertheless, on a balance of accounts between him and the captain, the latter is still his debtor; and therefore he arrested the vessel. In The Karnak (1) I cited a decision bearing on this point of Mr. Justice Story, which I will now read. That very learned judge said:

"It is undoubtedly true that material men and others who furnish supplies to a foreign ship have a lien on the ship, and may proceed in the Admiralty Court () Law Rep., 2 A. & E., 259. (2) 4 Moo. P. C., at p. 25.

to enforce that right; and it must be admitted that in such a case a bona fide creditor who advances his money to relieve the ship from an actual arrest on account of such debts may stipulate for a bottomry interest, and the necessity of the occasion will justify the master in giving it if he have no other sufficient funds or credit to redeem the ship from such arrest. But it would be too much to hold, as was contended for by the counsel for the appellants, that a mere threat to arrest the ship for a pre-existing debt would be a sufficient necessity to justify the master in giving a bottomry interest, since it might be an idle threat which the creditor might never enforce, and until enforced the peril would not act upon the ship itself; and if, supposing a just debt might in such a case be a valid consideration to sustain a bottomry interest in favor of a third person, such an effect never could be attributed to a debt manifestly founded in fraud or injustice. Nor does it by any means follow, because a debt sought to be enforced by an arrest of the ship might uphold an hypothecation in favor of a third person, that a 552] general creditor would be entitled to acquire a like interest. It *would seem, as against the policy of the law, to permit a party in this manner to obtain advantages from his contract for which he had originally stipulated. It would hold out temptations to fraud and imposition, and enable creditors to practice gross oppressions, against which even the vigilance and good faith of an intelligent master might not always be a sufficient safeguard in a foreign country." That is the case of The Aurora. (1)

Now, by accepting this bottomry bond Wilson has not only converted a personal debt into a bottomry transaction, but he has as Mr. Clarkson clearly and forcibly said, turned an unliquidated into a liquidated claim with a bottomry premium. I am of opinion that it was not competent to him to take this step. I agree with the opinion of my predecessors in this chair, that bottomry bonds ought to be, so to speak, favored by this Court ; that is, that the interests of commerce require that they should not be invalidated upon technical or minute grounds. But to pronounce for the validity of this boud in the circumstances which I have stated, and in the hands which now hold it, would be to introduce a new principle into the law relating to these instruments, which would be, I think, contrary to the foundation on which they rest, and not conducive to the interests of commerce. I must decree in favor of the defendants, with costs. Proctors for the plaintiffs: Toller & Sons.

Solicitor for the defendants: Thomas Cooper.

(1) 1 Wheaton, 96.

CHANCERY APPEALS.

L.C. May 27, 28; June, 5. 1872. 1871 L. 33.

*LARIVIERE V. MORGAN.

[Law Reports, 7 Chancery Appeals, 550.]

[550

Foreign Government — Enforcing Contract - Deposit in this Country - Payment-Certificates refused.

Where a foreign government has made a contract in this country, and has lodged money' in the hands of agents in this country for payment of the sums to become due under the contract, the Court will not refuse relief to the contractor because the contract was with a foreign government, nor because the foreign government does not appear before the Court.

Where goods are to be paid for when received, and money is lodged for payment on the production of certificates from an agent of the purchaser, the Court, if certificates are refused, may direct an inquiry and order payment of what is due to the contractor who has supplied the goods.

The French government contracted in England for the purchase of a large number of cartridges, which were to be inspected, and when accepted were to be paid for through the French ambassador; and bankers in England, who had in their hands funds belonging to the French government, wrote to the contractor in England that a special credit for £40,000 had been opened in his favor, and would be paid to him upon receipt of certificates from the French ambassador. Some cartridges were supplied and paid for, and others were delivered to agents for the French government; but other agents of the French government alleged that the time for the delivery had expired. Certificates were refused, and the bankers refused to make any further payments. The contractor thereupon filed his bill against the bankers and the French government, praying to have the balance of the £40,000 brought into Court, and for an inquiry and payment. The French government did not appear. The bankers were ordered to bring the money into Court; and the contractor was declared to be entitled to payment for all cartridges delivered under the contract; and inquiries what cartridges had been delivered were directed.

Decree of Malins, V.C., affirmed, with variations.

P. A. LARIVIERE, the plaintiff in this case, and one E. B. des Minières, in November, 1870, entered into a contract with Leon Gambetta, who was then acting as Minister of War for the committee or government of the national defence in France, and the other members of that committee or government, acting by M. Joulin, their agent in this country. This contract was dated the 30th of November, 1870, and was signed by the Minister of War and M. Joulin, and was, as translated, in the words following: "War Department.

"Contract with Messrs. Bellot des Minières and Larivière to supply ball cartridges for rifles, model 1866.

*Between the undersigned, M. Bellot des Minières and [551 M. Larivière, both of whom reside in London, and the minister of war, represented by M. Joulin, his delegate in London, the following agreement has been made:

"Messrs. Bellot des Minières and Larivière engage themselves to supply the French government 20,000,000 ball cartridges for

1872

Larivière v. Morgan.

L.C.

rifles according to model 1866, at the rate of 150 francs per 1000.

"The delivery will take place in London, in lots of 25,000 or more, in cases or barrels of uniform model, containing about 3000 each.

"These cases or barrels will bear particular and distinct marks indicating their contents and the model of the cartridge.

"Out of the 20,000,000 cartridges to supply, 7,000,000 must be delivered before the 5th of December, and the remainder before the 10th of January, 1871; and time will be considered the essence of the contract.

"The cartridges will contain five grammes (French weight) of fine English musket powder, and will be tried in London by a French delegate charged with this office, who will deliver a certificate stating that the cartridges are efficient for war service, and serviceable for the rifles of the model 1866.

"Experiments will be made by trying fifty cartridges taken out of the bulk of each lot, and must not contain more than 5 per cent rejected.

"Any lot containing a greater percentage of rejected cartridges will not be accepted.

"The Lots will, immediately after having been duly accepted on the responsibility of the delegate of the Minister of War in London, be paid for through the care of the French ambassador, who will issue checks for the amount.

"The contractors cannot claim acceptance of any of the merchandise after the 10th of January, 1871, and cannot claim any indemnity for goods supplied after the herein before stipulated time."

In consequence of the war and the difficulties in communication the plaintiff, as he alleged, before incurring the responsibility of buying materials, &c., required the delegates of the committee of national defence to deposit in the hands of the defendants Morgan & Gooch a sum of £40,000. Messrs. Mor552] gan & Gooch were *bankers in London, and, as financial agents for the then French government, had lately raised a loan of £10,000,000, in respect of which they had large sums of money in their hands, and by the direction of M. Joulin, who, under the orders of the then French government, had a large credit with them, they wrote to Larivière and Des Minières a letter, dated the 1st of December, 1870, as follows:

"Gentlemen,- We are instructed by Mr. L. Joulin to advise you that a special credit for the sum of £40,000 (say forty thousand pounds), equivalent to frs. 1,000,000 (one million franes), has been opened with us in your favor, and that it will be paid to you rateably as the goods are delivered upon the receipt of