Thus, the mere statement of serious injuries to a ship, which render considerable and expensive repairs necessary, is not a sufficient intimation that money must be raised by a bottomry bond, so as to make one given after such a communication valid.' lender. ment of The absence of such reasonable inquiries by the lender Duties of as are within his power will invalidate the bond. Such inquiries must be as to the need of money for the ship, the impossibility of obtaining it save by bottomry, and communications by the master to the owners. The repayment of the loan must be contingent on the safe Repayarrival of the ship, otherwise it is not a contract of bot- loan. tomry, and the Admiralty Division has no power to enforce it. The loan is repayable in the case of a constructive total loss,5 as where the ship has been sold at an intermediate port or lost after deviation, and is only gone when there is an absolute and actual total loss of the ship or cargo at sea7 or by capture of an enemy. It is usual for the borrower to pay interest on the Interest. sum lent; this is at a rate higher than is usual in the case of ordinary loans, in consequence of the maritime risk which the lender incurs. When a dispute arises as to the validity of the bond, the absence or presence, the small or large amount of interest, are circumstances which are always considered important evidence. Thus, a low premium raises a strong presumption against the validity of the bond. If the interest is exorbitant, the Court will 1 The Onward, L. R. 4 Ad. 38; 42 L. J. Ad. 61; Kleinwort v. Cassa Maritima of Genoa, L. R. 2 App. Cas. 156; 36 L. T. 118. The Nelson, 1 Hagg. 169 (176); The Prince of Saxe Coburg, 3 Hagg. 287; The Faithful, 31 L. J. Ad. 81. 3 The Hamburg, 32 L. J. Ad. 161; Br. & L. 253. The Atlas, 2 Hagg. 49. 5 Broomfield v. The Southern Insurance Co. L. R. 5 Ex. 192; 39 L. J. Ex. 186. 6 Western v. Wildy, Skinner, 152. 7 The Great Pacific, L. R. 2 P. C. 516; 30 L. J. Ad. 45. 8 Joyce v. Williamson, 3 Doug. 164. 9 The Emancipation, 1 W. Rob. 124; The Royal Arch, Swa. 269 (286). Bond as collateral security. Delay. reduce it to a proper rate.1 The fact that no premium is agreed upon will not necessarily invalidate the bond, if otherwise good; but the Court will, if it pronounce for the bond, refer, if necessary, the question of the amount of interest to be paid to the registrar. The rate usually sanctioned from the time at which the bond becomes due until it is paid is four per cent.3 In some instances attempts have been made to enforce payment of extra interest, or of a premium in respect of any time which thus elapses. The Court has, however, never allowed more than four per cent. to be charged against the cargoowners, and if the shipowners were to refuse to pay a higher rate their contention would no doubt be upheld, as the master has not authority to bind them to pay unusually high interest after the maritime risk has ceased.* A bond may be given as a collateral security if all the circumstances required to establish its validity are present.5 The usual practice in such cases is for the bond not to be put into effect if the bill of exchange is duly paid. Even in such instances the bond is really the primary security, for without it the bill would not in all probability be given. The sum lent may be insured by the lender. Delay in enforcing a bond postpones it to the claims of those who have pursued their rights with diligence, and will, if very gross, altogether avoid the bond. On the other hand, there should not be an undue haste in enforcing it; thus, when a bond was payable seven days after the arrival of the ship, and the bondholder instituted a suit before that 1 The Huntley, Lush. 24 (reduced from 40 per cent.); The Heart of Oak, 1 W. Rob. 205 (215). 2 The Change, Swa. 240. The Cecilie, L. R. 4 P. D. 210; 40 L. T. 200. The Sophia Cook, L. R. 4 P. D. 30; 49 L. J. Ad. 16. The Staffordshire, L. R. 4 P. C. 194; 41 L. J. Ad. 49; The Onward, 42 L. J. Ad. 61 ; 28 L. T. N. S. 204. 6 The Indomitable, Swa. 446. It is doubtful if an agreement by which the borrower insures for the lender does not vitiate the contract, as the risk is not then incurred. 7 The Indomitable, Swa. 446. time had elapsed, the shipowner, on paying the amount of the bond with interest into Court, obtained the condemnation of the bondholder in the costs of the proceedings.1 But an agreement whereby payment is postponed, though it may be legally valid, cannot be enforced by the Admiralty Division, in pursuance of its peculiar jurisdiction.2 Whilst the Admiralty Division recognises the negotiability of bottomry bonds, it aids their transfer with reluctance. It has enforced an agreement for a bond. Again, when freight was hypothecated for a certain sum, and the vessel earning it was lost by a collision with another ship, and a sum in respect of such freight, less the cost of completing the voyage, was recovered as part of the damages from the other ship, the Court ordered the owners to repay to the lenders the proportion of the loan which the amount recovered bore to the whole freight. The ground of this decision, though not stated in the judgment, apparently is that the freight having in fact been received, the loan should in equity be repaid, the subjectmatter of it not being in fact lost.5 It is an essential element of a bottomry bond that it Lien. confers a maritime lien on its subject for the amount lent and for the interest agreed on. time law. The law by which the contract of hypothecation is to be Governed governed has been held to be the general maritime law. by mari Thus a communication with the owners previous to the making of a bond was expressly decided to be necessary 1 The Eudora, L. R. 4 P. D. 208; 48 L. J. Ad. D. 36. 2 The Royal Arch, Swa. 269 (282). There seems to be no reason why delay, so long as no one's rights are prejudiced thereby, should invalidate the rights of the lender. See The Helgoland, Swa. 491 (499); The Rebecca, 5 C. Rob. 102. 3 The Rebecca, 5 C. Rob. 102. The Aline, 1 W. Rob. 111 (120). The Empusa, L. R. 5 P. D. 6; 48 L. J. Ad. D. 36. The Bonaparte, 8 Moo. P. C. 459; The Hamburg, 2 Moo. P. C. N. S. 290; Br. & L. 253; The Onward, L. R. 4 Ad. 38; 42 L. J. Ad. 61. on this ground. The case of Lloyd v. Guibert1 no doubt contains expressions adverse to the decision of questions by such a maritime law, and even to its existence, and tends to show that a bottomry bond should be governed by the law of the flag. As this decision was not, however, upon a bottomry bond, but upon a contract of affreightment, and as the previous case of The Hamburg has been recently directly approved in the Admiralty Division, the decision of the Privy Council must be considered as laying down the existing rule.2 1 Lloyd v. Guibert, L. R. 1 Q. B. 115; 33 L. J. Q. B. 241, CHAPTER IX. SECTION I. Forfeiture of Ships. A SHIP is forfeited to the Crown if (a) anyone uses the Forfeiture of ship. British flag, or assumes the national character on board any ship owned wholly or in part by anyone not legally entitled to own a British ship; or (b) if the owner or master does any act or permits papers to be carried with intent to conceal the British character of the ship; or (c) if any unqualified person obtains a legal or beneficial interest in a British ship; or (d) if any person makes a false declaration touching his qualification for the ownership of British ships; or if the master or owner of a ship uses or attempts to use a certificate of registry not legally granted in respect of it. To carry out these rules, any commissioned officer on full pay, or any British officer of customs, or any British consular officer, may seize such ship, and then proceed by an ordinary action in the Admiralty Division to obtain a declaration that the ship shall be forfeited to the Crown. The right of the Crown to have a ship forfeited arises at the instant when the wrongful act is done, and like a maritime lien clings to the ship, so that it overrides the 1 M. S. A. 1854, s. 103; The Sceptre, 35 L. T. N. S. 429. |