Bray v. Bates

Upon the facts stated in this case, the defend*247ants claim the property in the salt, by force of the agreements of April 22d, and November 9th 1841, and they set up an actual possession of it, by virtue of taking possession of the vessel, and of their right to possession by force of the bill of lading. But we are of opinion that the possession in this case was constructive, and not actual, and is dependent upon the right of property. If, therefore, the right of property was in the plaintiff, by force of the mortgage and assignment of the bill of lading to him, the constructive possession of the defendants will not avail them, supposing the plaintiff’s action to be rightly brought.

A bill of lading of goods consigned to order, it is said, imports an engagement on the part of the master to deliver the goods to the person to whom the shipper shall order the delivery to be made; and such person becomes the consignee of the goods. Considering this as a general proposition, there is no doubt of its correctness; but if the shipper be a mere agent for the owner of the vessel and of the cargo shipped, and a new agreement is made betiveen such owner and the consignee named by the shipper, after such consignment, by which the right to the consignment is affected, and in consequence of it the owner assigns his interest in the cargo, the consignee of the shipper cannot hold it, on its arrival, by the mere force of the bill of lading and the order to deliver the cargo to him, against the assignee of the owner. The possession of the bill of lading by the consignee is only prima facie evidence of title, and of a right to the consignment, and may be rebutted by the lawful owner.

The defendants contend that they had the right to the possession of this salt, by virtue of the agreement of April 22d 1841. It is there provided, that “ any investments of freight money in merchandize to be made with our [defendants’] consent, and shipment made to our consignment, for sales, on which the usual commissions and guaranty of five per cent, to be charged.” This provision is no assignment of such freight, and is a mere agreement for securing a del credere sommission on the consignment. If, therefore, the cargo — *248the proceeds of the freight money—had been consigned to a third person, the defendants could not have maintained a right. to the possession of it for the purpose of securing then commission, and their resort must have been to an action on the agreement. But where such freight was invested in merchandize, and the consignment actually made to them, we think they could lawfully claim and hold such consignment, if the agreement which contained the provision still continued in force. But if the agreement had been settled by the parties, and merged in other contracts, the stipulation would fall with the agreement, and the defendants could not claim the consignment, against the superior title of the owner, pro • vided the defendants’ claim rested on no other foundation than the agreement.

It has been argued for the plaintiff, that the bond given by Broughton, in October 1841, called a bottomry bond, but in fact a mortgage, was a merger of the simple contract debt provided for in the agreement of April 1841. But this bond or mortgage was given as collateral security only, for the purpose of more effectually making the vessel subject to those claims, and not to cancel or extinguish' their prior engagement ; and consequently it could not operate as a merger.

In regard to the advance upon the freight, on the 9th of November 1841, and the transactions growing out of it, we think the master, by sending the bill of lading, indorsed by Burton, to the defendants, gave them such a constructive possession of the salt, on its arrival, that independently of the transactions of March 1842, they would have a good right to claim and retain this cargo, notwithstanding the mortgage and assignment of the bill of lading to the master.

The case turns, in our judgment, on the question whether the transactions of March 5th 1842 were a merger of the proceeding simple contract debts, or were merely collateral securities for the balance of the account then stated.

The facts appear to be these: The defendants were dissatisfied with the manner in which their securities stood, and they proposed to Broughton to make such changes as would *249be satisfactory to themselves; and, preparatory to such changes, they stated their account with him, which showed a balance of $34,598-87 in their favor. In that account is charged the $3500 advance on the freight, and a commission of 2¿ per cent., $87-50, on such advance, with a premium of insurance of $100 on $4000, the estimated value of the outward freight, and $22-50, commissions for effecting the same; and a further commission, on the outward freight itself, of $54-81, on $4384-65 ; on which several sums together, making $3765-81, interest is cast to March 1st 1842. We cannot think, therefore, as has been argued by the defendants’ counsel, that the subject of the return freight could have been overlooked or forgotten. The settlement of the accounts,, showing a balance, including interest to March 1st 1842, of $34,598-87, was made as follows: Broughton gave the defendants three bottomry bonds, one on the Mary Broughton for $17,000, one on the Chusan for $8000, and one on the Zotoff for $5000. And for the balance of $4598-87, a note was given payable in one month, secured by a mortgage on a new vessel building at Newbury, and by a quantity of salt at Marblehead ; and if the note should not be paid at maturity, the defendants were authorized to sell the vessel. The parties also agreed, by an instrument of even date, that the property thus mortgaged was more than sufficient to secure the note, and that the surplus should be held as security for the bottomry bonds and interest; with a further agreement, that Broughton would pay them such sums as they might pay for insuring their interest in said vessels, or any of them, as lenders on bottomry.

The bottomry bond on the Mary Broughton was for a loan of $17,000, and a marine interest of eleven per cent., to be paid on the arrival of the vessel from her said voyage to Amsterdam ; and in case of loss, the lenders were to have all the salvage; and if the vessel were lost by any of the perils covered by a policy of insurance, agreeably to the form of the Equitable Mutual Insurance Company, against total loss, the obligation was to be void. The bonds on the other vessels *250were similar, in their terms, as to payment, and as to securing a marine interest.

These obligations and notes were not taken as collateral security for the balance of the account; they contain no reference to it. And the sums lent on bottomry stand on a higher and different security.

Bottomry is a contract by which the ship, or, as it used to be said, the keel or bottom of the ship is pledged to secure the payment of money borrowed by the owner to fit her for sea, repair her, &c.; and the agreement is, that if the ship is lost by any of the perils enumerated in the contract, the lender loses his money; but if the ship arrives safely, or is in safety at the termination of the' time stipulated for the repayment of the loan, he is to receive back his principal sum and a marine interest, at the rate agreed upon, though it exceeds the legal interest; and in this event, the ship and the borrower himself are equally liable to the lender. If such a contract as this, when merely taken as collateral security for another debt to be paid at all events, could be enforced, it would be a means of avoiding the statute of usury, and of thus sustaining illegal and oppressive contracts; for the creditor would have his remedy on the vessel, and on the insurance ; and on the debtor himself, although the vessel might be lost. He would thus be entitled to the payment of his account and simple interest on it, at all events, and a marine interest on the bottomry bond, in case of the safe arrival of the vessel. If it were not so, it would be a mere mortgage. But these defendants were not satisfied with a mortgage, They chose to put by far the greater part of their debt upon bottomry security and a marine interest; and they procured the papers to be drawn by counsel learned in the law. It is argued that they did not intend to extinguish the debts due from Broughton, or to release any securities held by them, but only to amend legal defects in the assignment of some of the securities, and not affecting their claims upon this freight. But we cannot act upon after expressed intentions. We must decide the case upon the rights of the parties, as expressed by *251their acts at the time, by giving the correct legal meaning and import of those acts. And we are of opinion, that as to the $30,000, the taking of the bottomry bonds was a security differing, not in form merely, but in the nature of the liability, and that it essentially changed the character of the debt from one of simple contract to that of an obligation under seal, and of a peculiar nature, giving the right to receive a higher rate of interest, and putting the principal of the debt at hazard. And in making the proper entries on their books, the bonds would be credited to the account of Broughton; and, also, the note and the account would be balanced, supposing all the vessels should be lost during the pendency of the marine risk, and by perils covered by the agreement. Could the defendants resort to their account, and call on Broughton for payment, and recharge the bonds to him ? Clearly not. For the bonds would be paid by the loss, and the defendants’ only remedy would be on their insurance. But if they were taken as collateral security merely, then the loss of the vessels would touch the subject of security only, and not the matter of the account. The residue of the account ($4598-87) was paid by the note which was fully secured. The case of Thorndike v. Stone, 11 Pick. 183, haá been cited by the defendants’ counsel. But that case merely settles that property may be mortgaged to secure the condition of a bottomry bond. If the bond is avoided by a loss of the vessel, then the mortgage also would be defeated by it. And this kind of security, also, the defendants did resort to, by the agreement in relation to the proceeds of the ship and of the salt at Marblehead, after paying the note.

It has .also been argued, that in the settlement of March 5th 1842, no allusion having been made to the agreement of April 22d 1841, the parties did not intend to vary it in relation to consignments to the defendants of investments of freight, oi in-relation to the securities given for the advances; that even if it was a merger of the debt, it was not a rescission of the contract touching the employment of the vessel. But we are of opinion that the agreement related especially to the *252security of the moneys advanced, and the manner in which the defendants should be compensated for their advances. These moneys were charged in the account, and on the payment of the moneys the agreement would be determined. But the change of securities was equivalent thereto. It was a merger and extinguishment of the preexisting agreements, so far as they remained executory; and other and new agreements were substituted.

In the view thus taken of the relation of the parties on the return of the barque Mary Broughton, we are of opinion, that the agreement to give the defendants the proceeds of the salt, in part payment of the account, had become extinct; that the salt remained the property of Broughton, freed from their lien; and that he had the right to make sale of it, or assign it as security for a debt due from him. The parties might have made a new agreement in relation to the salt, but they did not; and the old agreement is merged in the new contract. The plaintiff, therefore, has acquired the property in the salt, by virtue of the assignment to him.

It has been further objected, that the plaintiff cannot maintain this action, because there has been no such demand by .him, and refusal by the defendants, as to constitute a conversion of the property. If the claim of the defendants had been merely that of a right to sell the property on commission, and to account with the plaintiff for the net proceeds, perhaps no question would have arisen between the parties. But the defendants claimed the property as their own, with a right to appropriate the proceeds independently of the plaintiff’s claim ; and we think their insisting on the right to enter the cargo, under the permit from the custom house, in opposition to the master’s (plaintiff’s) attempt to enter it, and then taking the same from the vessel, notwithstanding his objection thereto, and his again claiming it as his, constituted a conversion of the property, and that the plaintiff can well maintain this action. His act, m sending the bill of lading to the defendants, was in pursuance of orders given prior to the new agreement between Broughton and the defendants, which *253were superseded by such new agreement, and Broughton was thereby enabled to give the plaintiff a title, notwithstanding the form of the shipment; Broughton becoming the absolute owner of the property.

According to the agreement of the parties, an assessor must be appointed to ascertain the damage which the plaintiff has sustained, and judgment "rendered for him hereafter.