CHAPTER II.

OF THE SHIPOWNER'S LIEN FOR FREIGHT; AND HEREIN,

SECT. 1. Maritime and French Law on this Subject, p. 237.

2. Of the Clause in Charter-parties whereby the Merchant binds the Goods, p. 238.

3. Of the Lien for Freight of the Owner of a Chartered Ship, p. 241.

4. Of Cases in which the Shipowner's Lien for Freight has been held to have been Limited by him, p. 252.

5. Cases in which Questions have arisen as to the Waiver or Reservation by the Owner of his Lien, p. 255.

6. Remarks on the Cases cited, p. 256.

7. Provisions of the Merchant Shipping Act Amendment Act, 1862, as to this subject, p. 260.

1. Maritime and French Law on this Subject.

By the marine law, the ship and freight are bound to the performance of the covenants of the shipowner, and the goods to the performance of the covenants of the merchant. "Le batel," says Cleirac,“ est obligé à la marchandise et la marchandise au batel" (a). By the French ordinance it is expressly provided, "That the ship, with her furniture, equipment, and apparel, and the cargo, are respectively bound to the performance of the covenants in the charterparty." And this provision is adopted, word for word, in the Code de Commerce. Valin informs us that the word affectés in this article is to be read affectés par privilège (b). But the right of the merchant who would seek to make this privilege available, ranks low in the order of precedence of privileged claims against the ship; the legal expenses attending a sale, the demands for pilotage and custody of the vessel, for stowage of furniture and apparel, for repairs at the last port, for the wages of master and mariners accrued due during the last voyage, for moneys borrowed by the master on his last voyage, for purchase-money of ship, furniture and stores, remaining unpaid, for sums due to material men, shipwrights, and lenders on bottomry, before her last departure from port, and for premiums of insurance, being preferred to it. The privilege of the shipowner against the goods for his freight is of a more beneficial character. Under the empire of the ordinance, the master was not entitled to detain the goods in his ship until payment of the freight due upon them, because that would have deprived the consignee of the opportunity of inspecting them, and of ascertaining if they had been injured by

(a) Cleirac on art. 21 of the Jugemens (b) Valin, Com. sur l'Oleron, liv. 3, tit. 1, d'Oleron: Us et Coutumes de la Mer, p. 72. art. 11. Code de Commerce, art. 191.

the master's fault; but he was at liberty to stop them in the lighter, on the quay, or in the warehouse; and if third parties had not previously acquired an interest in them, he might, by a formal demand of the freight within a fortnight of their delivery, preserve his privilege against the creditors of the consignees.

By the Code de Commerce (c), these regulations have been modified. The master cannot, it seems, now detain the goods in his ship, but he has a right to insist upon their deposit in a warehouse until his claim for freight is satisfied; and, within a fortnight after the delivery to the consignee, he may, unless they have passed by sale and transfer to third parties, in which case the maxim, "Meubles n'ont pas de suite étant en tierce main" applies, assert his claim upon them in preference to the claims of other creditors.

Clauses are now usually inserted in French charter-parties, by which the contracting parties expressly recognise these dispositions as the basis of their agreement (d).

2. Of the Clause in Charter-parties whereby the Merchant binds the

Goods.

In England, also, it is usual for each of the parties to these contracts to bind himself, his heirs, executors, and administrators; and the owner or master to bind the ship and her freight, and the merchant the cargo to be laden, in a pecuniary penalty for the true performance of their respective covenants. This is commonly done by a clause at the end of the instrument. Such a clause is not the absolute limit of damages on either side. The party may, if he thinks fit, ground his action upon the other clauses or covenants, and may in such action recover damages beyond the amount of the penalty, if in justice they shall be found to exceed it (e). On the other hand, if the party sue on such a penal clause, he cannot in effect recover more than the damage actually sustained.

But although the ship and freight are by the terms of a charterparty expressed to be bound to the performance of the covenants on the part of the owners or master, and this is conformable to the maritime law; yet, as I have before observed (f), there does not appear to be at present any mode of obtaining in this country the benefit of the security of the ship itself in specie for the performance of such a contract made here.

The clause whereby the merchant binds the cargo does not give to the owner a lien on the cargo by way of general security for the performance of the covenants in the charter-party, nor for any payment for which he might not detain it in the absence of such a clause; so that, with us, the clause is inoperative. In the cases where a lien is allowed, it is not derived from this clause, but either from some

(c) Art. 306.

(d) Formulaire, tit. 6; Code de Commerce, par Rogron.

(e) Harrison v. Wright, 13 East, 343. (f) Ante, p. 103.

general principle of law or some special contract. Where it depends upon a general principle of law, it is confined to the specific chattels, or some part thereof, in respect of which the payment is claimed, and consequently, goods actually brought by a ship cannot be detained for a breach of a covenant to furnish a full cargo; nor for demurrage (g); nor for pilotage or port charges, although the freighter may have engaged to pay them (h). A lien may be extended further, or wholly excluded, by particular contracts, or special circumstances.

In the case of Birley v. Gladstone, an entire ship was chartered for a voyage out and home, and by the terms of the charter-party the merchant covenanted to pay for the homeward cargo at certain rates per ton, on delivery of the cargo at Liverpool, by bills at three months; to load a full cargo, and to pay demurrage, and he bound the goods to the performance of his covenants. The Court of King's Bench decided that the owner could not detain the goods, either for the freight of such as were put on board, but afterwards relanded by compulsion, or for dead freight, or for demurrage. A bill was afterwards filed in Chancery for the purpose of obtaining a declaration that the shipowners were entitled to a lien in equity, but the Master of the Rolls, Sir William Grant, dismissed the bill. In the course of his judgment, his Honour said, "There can be but one right construction of the clause; and if it could be said that the Court of King's Bench had ill construed it, this is not a court of appeal in which their decision can be corrected. It was asked, What effect the clause could have if it gave no lien either in law or equity? A court of equity is not bound to find an equitable effect for a clause, merely because the construction which a court of law has put upon would leave it inoperative; in truth, it has been copied from foreign charter-parties, with very little consideration of the effect that might be allowed to it in the law of this country. I think it very probable, that in other countries it would have the effect of entitling the shipowner to retain the cargo for every sort of demand that could accrue to him under the charter-party" (i).

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Neither can the owners in all cases have the full benefit of this clause, as giving a lien on the cargo for the payment of what is usually denominated freight. To this purpose, the following case is in point :Two persons, who were factors, hired a ship of one Paul, at the rate of 481. per month, and executed a charter-party, by which the goods to be put on board were made liable to him, and they had power to appoint the master and mariners. Some merchants in the West Indies loaded the ship with goods, and allowed the factors 91. per ton for the carriage. The factors who had thus chartered the ship in their own name became bankrupts. Paul instituted a suit in the Court of Chancery to compel the merchants to pay him for the hire of the ship, insisting that they were liable to do so by reason of the clause in the

(g) Phillips v. Rodie; Birley v. Gladstone, 3 M. & S. 205.

(h) Faith v. East India Company, 4 B. & A. 630.

(i) Gladstone v. Birley, 2 Mer. 401. Birley v. Gladstone, 3 M. & S. 205.

charter-party. But the Lord Chancellor Hardwicke decided that he should recover of them no more than they had engaged to pay the factors for the freight, and that they were not liable to make up the deficiency to him. His lordship observed, that by the general law the cargo is liable to pay the freight; but that in this case the 487. per month was improperly termed the freight of the goods, being rather the hire of the ship; that the factors had made an agreement with the master on their account, and not on the part of the merchants, and therefore the merchants were not liable; otherwise they would be in the hardest case imaginable, for they would be liable to any private agreement between the occupier of a ship and the original owners of it. "A person," said his lordship, "that lets out a ship to hire, ought to take care that the hirer is a substantial man; it is his business to look to this; and if the persons who hire are not competent, the master must suffer for his neglect. Whatever hardship, therefore, there may be on the one hand to the person who lets out to hire, the hardship is much greater on the other side; and what gives additional weight to the merchant's case is the great inconvenience this gives to trade in general (z).

The agreement in that case between the charterers and the owner appears to have been locatio rei, the lease at a rent of a ship to be manned and navigated by the lessee's servants. Such formerly were the contracts between the East India Company and the owners of ships taken up by the company for the purposes of its trade and government. Where the contract between the owner and employer of a ship is of this character, the question of lien for freight does not arise. The ship is taken out of the owner's possession, like a house let to a tenant, and placed in the possession of the hirer, who, if he choose to use it in the carriage of the goods of other persons, will have the right which the owner so employing it would have had, in the absence of express stipulations restricting it or inconsistent with it, of detaining the goods until the stipulated payment or freight for their carriage was paid to him.

This contract, locatio navis, the demise of a ship to be manned and employed by the lessee, is not, properly speaking, the contract of charter-party, which is either

(1.) Locatio operis transvehendarum mercium, a contract by the

owner or lessee of a ship to carry in it, by his servants, goods to be shipped by another person, leaving the whole or some principal part of the ship vacant, and at his disposal, for their reception; or,

(2.) Locatio navis et operarum magistri et nautarum ad transvehendas merces, a contract by the owner of a ship with a person who agrees to take it and its master and mariners into his employment for a voyage or a term, the master to act as the agent of such person within the ordinary scope of a master's authority in contracting with third parties for the carriage of goods.

(z) Paul v. Birch, 2 Atk. 621; and see Odams v. Avery, 19 L. T. C. P. 68.

In the first of these modes of chartering a ship-it is obvious that the owner or lessee retains the possession of it, without any diminution of the responsibilities of an owner to the shippers of goods, or the rights of an owner against them, and that as long as he retains the possession of a shipper's goods, he has a lien upon them for the freight due for their carriage.

In the second-the owner's right of lien for freight on the goods carried by his ship, depends upon the question-one occasionally of not a little difficulty-whether he has entirely parted with the possession of his ship (a), or retains the possession of it through his servants the master and mariners, whose services he has placed with the ship, at the charterer's orders.

If in possession through them of his ship, he may, without entirely parting with his lien, have limited it by express agreement, as respects the goods of third parties, to the amount payable for their carriage under any contract by bill of lading to be made by the master, and such an agreement has, in some cases, upon the principle omnia facta magistri præstare debet qui eum præposuit, alioquin contrahentes deciperentur (b), been implied against a shipowner in favour of third parties, from the mere fact of the master having been left by him in charge of his ship, and ostensibly in the unfettered exercise of a master's authority.

An attentive consideration of the features presented by these two modes of contracting for the use of ships, will greatly facilitate the solution of the frequently recurring question respecting the shipowner's lien for freight. It will be found, on a careful examination of the numerous cases in which that question has arisen, that the shipowner's lien for the freight of goods carried by his ship, or the hire of his ship employed by another person in the carriage of goods, has always been upheld in its integrity, except when the owner has, by express contract, parted with the possession of his ship, or allowing the master to act in the double character of agent for him in charge and possession of his ship, and agent of the charterer to enter into contracts with third persons for its employment, expressly or impliedly waived or limited his right of lien.

3. Of the Lien for Freight of the Owner of a Chartered Ship.

The word lien, in its proper sense in the law of England, imports that the party asserting it is in the possession of the thing which he claims to detain. Where there is no possession, actual or constructive, there can be no lien.

(a) Hutton v. Bragg, 7 Taunt. 14, post, p. 242. Fowler v. M'Taggart, 1 East, 515; 3 East, 390, post, p. 243. Frazer v. Marsh, 13 East, 238, ante, p. 36. Vallejo v. Wheeler, Cowp. 143, ante, p. 36. New

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berry v. Colvin, 1 Clk. and Finn. 283, ante, p. 39. Belcher v. Capper, 4 M. & G. 502, post, p. 249.

(b) See ante, p. 36, and post, pp. 252-3.