Welsh v. Cabot
Welsh v. Cabot
Opinion of the Court
The opinion of the court was delivered,
It was an undoubted rule of civil law, that he who had repaired or furnished necessary supplies for a ship, or who had lent money to be employed for those purposes, had a lien, and was entitled to payment out of the proceeds of the ship, in preference to other creditors, even without an express contract of hypothecation. The rule still prevails in those tribunals which have adopted the civil law as the basis of their jurisprudence. It has found less favour, however, in England, and it was early denied as applicable to repairs and necessaries furnished in that country. Neither a court of admiralty, nor any other court, recognises an implied lien — a lien without express contract — in favour of a shipwright who has once parted with the possession of a ship, or has worked upon it without
The American cases, it must be admitted, have inclined more to the doctrine of the civil law. Though they are not harmonious, the majority of them unquestionably recognise the existence of an implied lien upon the ship for repairs made or supplies furnished in a foreign port. Such is the doctrine of the Massachusetts and New York courts, and such has been the ruling of the Supreme Court of the- United States.
But an implied lien does not necessarily arise out of the mere fact that necessary supplies have been furnished for the ship. They must have been furnished on the credit of the ship, and whenever it appears that the ship was not relied on originally, but the personal security of the master or owners, or others was taken, there is no lien. To this the authorities generally agree, and for the best reasons. If such a lien can exist at all, it is an anomaly, not because it exists independently of possession of the ship, but because it is evidenced neither by possession nor by writing, and is created by one who is not the owner. It ought not, therefore, to be regarded with favour. He who claims such an unusual right oiight to show that his money was advanced in reliance upon it. In Carrington v. Pratt, 18 Howard 63, it was said to “ be well settled that the lien implied by the general
Taking this to be the law, we are of opinion that Thomas P. Rich, as executor of the will of James Christie Rogers, has no lien upon the fund in dispute. For the money advanced, Mr. Rogers took regular bills of exchange, drawn by the master upon Messrs. Diehl & Co., the owners, payable sixty days after sight. There was no special agreement to hypothecate the vessel as a security for the advances, and within less than three months after the bills were drawn, Mr. Rogers took a bottomry bond for other and greater sums advanced for repairs to the same vessel. All this is inconsistent with the allegation that the first advances for which the bills were taken, were made on the credit of the ship, and it shows a waiver of the implied lien which might under the circumstances have existed. In addition to this, the master (to whose report no exception was taken) has found on the evidence, “that the moneys represented by the bills in question were advanced on the personal credit of the master and owners, and not upon any pledge of either vessel; cargo, or freight.” He has also refused to find (though asked to find it), “ that it was the belief of the parties,- whether erroneously or not, when the said bills were drawn and the money advanced, that thereby the holder of the bills had the ship as a security.” The facts already stated, and those found by the •master, negative the existence of any lien in favour of this appellant upon the ship, and his appeal is therefore dismissed.
The claimants to the fund are thus reduced to two, Odenheimer & Cook, and Joseph Cabot, liquidator of the firm of
Thus, in the case of the Prince Regent, cited by Abbott 106, a bond had been given on ship and cargo only, not mentioning the freight. The ship proved insufficient to pay the bond, but the cargo was ample. Lord Stowell decreed that the bondholder should be paid the balance of the proceeds of the ship, wages deducted, and to be put in possession of the cargo so far as was necessary for the full payment of the bond. The freight had been paid over to other parties. But the owner of the cargo prayed a munition against the owners of the freight, who rested their defence on this, that the freight was not bound, not being named in the bond. Lord Stowell required the freight to be brought in, and decided that the ship and freight must be exhausted before resort was had to the cargo. In Morrison v. Parsons,- 2 Taunt. 407, it was ruled that if the owner of a ship, having chartered her for a voyage, assigns her before the voyage, though he afterwards assign the charter-party to another, if she earns freight, the assignee of the ship is entitled to the freight, as incident to the ship.
Had Diehl & Co. made no assignment of the freight to Bevan & Humphreys, it is clear that they could not have insisted on the payment of the bottomry bond first out of the proceeds of the ship. On the contrary, Odenheimer & Cook would have been entitled in equity to have had it paid primarily out of the freight. The bond was a paramount lien upon both ship and freight, and its holder would have been compelled to resort to that fund upon which the mortgagees had no security, and to exhaust it before coming upon the other. And what difference can it make that Diehl & Co. assigned the freight ? Even if the assignment was for a valuable consideration, it was still subject, in common with the ship, to the paramount lien of the bottomry bond, and it was subsequent to the mortgage to Cook & Odenheimer. Now the rule is fully established in this state, that if several pieces of property encumbered by a common lien, be successively alienated
And still more, the case shows that Bevan & Humphreys were not assignees of the freight for a valuable consideration. They took it as a collateral security for an antecedent debt, paying-nothing for it at the time the transfer was made to them. That the holder of a chose as a collateral security for an antecedent debt is not a holder for value, was decided in Petrie v. Clark, 11 S. & R. 377, in Hartman v. Dowdel, 1 Rawle 282, and it has often been decided since. In his hands it is subject to all the equities which existed against it in the hands of the assignor. If, therefore, the freight of the Venice, in the hands of Diehl & Co., would have been primarily liable, or even only equally liable with the ship to pay the bottomry bond, its liability must remain unchanged by the pledge to Mr. Cabot as liquidator of Bevan & Humphreys. He not only had paid nothing for it, but he knew at the time when he took the assignment that it was liable to respond to any bottomry bond that might thereafter be given upon it and the ship. He is not, therefore, in a situation to ask a chancellor to give him the freight at the expense of the mortgagees of the ship, who had an equity to have it go in relief of the hypothecation in bottomry.
These principles tend directly to the conclusion that the freight should first be applied to the discharge of the bottomry, in marshalling the equities between Odenheimer & Cook and Mr. Cabot, and so I think we should decree. A majority of the court, however, are of opinion that the bottomry bond should be charged pro rata upon the freight, and the proceeds of the sale of the ship, and therefore a decree will be so made.
The decree entered at Nisi Prius must be reversed, and the fund in the hand of the complainants distributed as follows:—
The expenses agreed to be paid by the Messrs. Welsh are to be considered as having been paid out of the general average, and the remainder of the average as applied to the bottomry. The balance of the bottomry bond is to be treated as paid pro rata out of the freight, and the net proceeds of the sale of the vessel. After these payments thus made, the unappropriated portion of the freight will be decreed to Joseph Cabot, and the unappropriated portion of the proceeds of sale of the ship to Odenheimer & Cook. The result will be the following: — Of the sum remaining in the hands of the Messrs. Welsh, $3823.78 will be decreed
Let a formal decree be so prepared.
Reference
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- Welsh versus Cabot
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