Co. on the terms of freight being paid at 55s. per ton; and by subsequent arrangement the defendants acquired the rights of J. & Co. :

Held, that H., the first registered mortgagee having abandoned all claim to the freight, the plaintiffs as second mortgagees were entitled to claim it as against the defendants.

ACTION by the plaintiffs who claimed as mortgagees in possession of the ship Stonehouse to be entitled to freight in respect of a cargo of wheat. The following case was stated for the opinion of the Court:

1. The plaintiffs are merchants carrying on business under the style or firm of James Wyllie & Co., in London. The defendants. are corn-factors and brokers carrying on business under the style or firm of Burrows & Perks, in London. The action is brought by the plaintiffs who claim, as mortgagees in possession of the ship Stonehouse, to recover moneys alleged to have become due and payable in respect of freight from the defendants under the circumstances hereinafter appearing.

2. Mr. John Morison of Billiter Street, trading under the style or firm of John Morison & Co., was during the period covered by this case the registered owner of 60/64ths of the Stonehouse; Mr. Bley, the captain, being the registered owner of the remaining 4/64ths.

3. On the 1st of December, 1874, Morison executed a mortgage of his 60/64ths of the ship in favour of the plaintiffs to secure 75007. and interest in account current, and any further sum which might become due.

4. The Stonehouse was at this time at San Francisco seeking employment, and, the freight market being disorganised owing to a recent commercial failure, her captain, Bley, determined, rather than accept the low offers of freight which were being made in the thick of the crisis, to load a cargo of wheat "on account of the ship," hoping by its sale in England to realise a better margin than what was available as freight at the port of loading.

5. Accordingly, a cargo of 23,644 sacks of wheat (being the cargo in respect of which the present claim arises) was obtained through Messrs. Parrott & Co., merchants at San Francisco, and shipped on board the Stonehouse. The invoice, dated the 2nd of December, 1874, stated that the wheat was shipped by Parrott & Co. on

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board the Stonehouse, bound to Falmouth or Downs for orders, consigned to order, that is, to the order of Parrott & Co. (they thus BURROWS. keeping control over the cargo until the money found by them for the purchase thereof should be paid), by order of John Morison & Co., for account and risk of whom it might concern.

6. Bills of lading were made out for the wheat, deliverable to the order of and were handed to Parrott & Co., stating the freight payable on delivery to be 1s. per ton. Parrott & Co. simultaneously drew bills of exchange on Morison at sixty days' sight against the wheat, to recoup themselves for the price of the wheat and their commission, and sold the bills of exchange with three bills of lading indorsed by Parrott & Co. attached thereto, to the bank of British North America.

7. It is a common practice in many places for foreign shippers, when a cargo is to be shipped "for the account of the ship," to draw bills of lading for a nominal instead of a blank freight, there being an opinion among merchants that a blank freight is not a desirable thing.

8. On or about the 3rd of December, 1874, the Stonehouse sailed from San Francisco. The rate of freight general at this date at San Francisco was only 55s. per ton; but the plaintiffs were informed by Morison that they would receive 5000l. to 60007. for the freight of the Stonehouse. The defendants, however, did not know that Morison had given the plaintiffs any information on the subject, or that they had any interest in the ship.

9. On the 21st of December, 1874, Morison accepted the bills of exchange payable at the London and County Bank on the 22nd of February, 1875.

10. On the 1st of January, 1875, Morison effected two policies of insurance in respect of the Stonehouse, on freight valued at 40007. and 10007. respectively.

11. The sum necessary to meet the bills of exchange at maturity was 10,3647. 19s. 4d.; and at some time in December or the beginning of January, it had been arranged between Morison and the defendants that the defendants should advance to Morison the moneys necessary for the purpose, that the defendants in return should be at liberty to sell the cargo and receive the proceeds of sale on Morison's account, and that the bills of lading and policies

of insurance should be deposited with the defendants as security 1876 for their advances.

12. Before making and carrying out this arrangement with Morison, the defendants searched the ship's register at the Custom House, and found that 60/64ths were registered in Morison's name, and that there was no incumbrance whatever on the register. The defendants had no notice in any way that Morison had mortgaged his shares in the Stonehouse.

13. On the 4th of January, 1875, the defendants advanced to Morison 30007., and shortly afterwards, in pursuance of the arrangements then made, received from him the former of the two policies, being the policy on freight valued at 40007.

14. On the 2nd of February, 1875, Morison executed another mortgage in similar terms of his interest in the ship to the plaintiffs, to secure 40007. and further advances. Morison subsequently, on the 2nd of March, 1875, further mortgaged his interest in the Stonehouse to Joseph Harrold, who registered his mortgage on the 3rd of March, 1875, and thus became the first mortgagee, the plaintiffs not having registered their mortgages until the 6th of March, 1875, as hereinafter mentioned.

15. On or about the 16th of February, 1875, the defendants offered the cargo of wheat for sale to divers persons on cost freight and insurance terms, but did not succeed in obtaining a purchaser until on the 19th of February they effected a sale of the cargo on the terms hereinafter appearing.

16. On the 19th of February, 1875, the defendants, on behalf of Morison, and on their own account to the extent of their advances, sold the cargo to Henry Jump & Sons, of Liverpool. The following is a copy of the contract signed by Harris, Brothers, & Co., brokers, on behalf of the buyers:

London, 19th February, 1875. Bought of Messrs. John Morison & Co. through Messrs. Burrows & Perks, for Messrs. Henry Jump & Sons, Liverpool, a cargo of Californian wheat of fair average quality of the season's shipments when shipped.

Shipped per Stonehouse 1st class from San Francisco. Bill of lading dated about 2nd December, 1874, say 23,644 bags, containing 3,089,775 lbs., at the price of 43s. 6d. per quarter of 500 lbs. shipped; bags weighed and paid for as wheat; including freight and insurance to any safe port in the United Kingdom of Great Britain and Ireland, calling at Falmouth or the Downs for orders. Vessel to discharge afloat. No charge for dunnage or bags. Payment, cash in

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London within seven days, less discount for unexpired portion of two months from this date at 5 per cent. per annum in exchange for bill of lading and policies of insurance (free of war risk) effected with approved underwriters, but for whose solvency sellers are not responsible. Damage by sea-water or otherwise (if any) to be taken as sound.

Invoice quantity is to be final. Sellers to pay our brokerage of half per cent. contract cancelled or not cancelled. Any average incurred before this date to be for account of and settled by sellers. Sellers to give policies of insurance for 2 per cent. over the invoice amount including the per cent., and any amount over this to be for sellers' account: three days for awaiting orders at port of call. To discharge according to the custom of the port. Should any dispute arise, it is agreed by buyer and seller to leave the same to be settled by two London cornfactors respectively chosen, with power to call in an umpire, whose decision is to be final.

As cargo is coming on ship's account, freight is to be computed at 55s. per ton of 2240lbs., and invoice to be rendered accordingly.

Harris, Brothers, & Co., Brokers.

17. The defendants would have had a difficulty in disposing of the cargo without allowing an amount equivalent to freight to remain unpaid until the vessel's arrival, and would not have obtained so large a price for it.

18. In accordance with the above contract an invoice was subsequently made out by Morison, of which the following is a copy:

Invoice of cargo wheat per Stonehouse @ San Francisco sold to Messrs. Henry Jump & Sons, Liverpool, as per contract of 19th February, 1875. 23,644 sacks wheat, weighing 3,089,775 lbs.= 6179375 qrs., at 43s. 6d. per 500 lbs.

Freight on tons 1379:7:1:3 55s. per 2240 lbs.

£

s. d.

13,440 10 5

3793 5 0

9647 5 5

67 4 0

9580 1 5

68 4 10

£9511 16 7

Burrows & Perks.

19. On the 22nd of February, 1875, Morison obtained a further advance from the defendants of 90007., making with the sum of 30007. previously advanced the sum of 12,0007. With such advance he paid the said bills of exchange at maturity, and received the bills of exchange and the bills of lading thereto

attached from the London and County Bank, as arranged with the defendants.

20. On the 23rd of February, 1875, in pursuance of such lastmentioned arrangement, Morison handed the bills of exchange with the three bills of lading attached to the defendants, and the following memorandum was indorsed on the bills of lading and signed by Morison :—

We assign our interest in the within freight to Messrs. Burrows & Perks, London, whose receipt, or that of their appointed agent, will be sufficient discharge.

The freight assigned is at the rate of 55s. per ton, and not the nominal amount of 1s. per ton. J. Morison & Co.

24/2/75.

Such indorsement, although dated the 24th of February, 1875, was not really made and signed until about the 26th of February.

21. At the same time Morison handed to the defendants the aforesaid invoice made out in pursuance of the contract with Messrs. H. Jump & Sons for transmission to the buyers, together with a letter to the defendants themselves dated the 25th of February, 1875, and inclosing the policies therein referred to, which letter was as follows:

Messrs. Burrows & Perks,

21, Billiter Street, 25th Feb., 1875.

Dear Sirs, We further give you in security policy of insurance on wheat 1500l. and on freights 10007., both in the Stonehouse. Should this vessel be lost, we trust you will give us the collection on them as well as on the former policies. J. Morison & Co.

Both of the above policies are in the Marine Insurance Company.

22. The invoice was duly forwarded by the defendants to H. Jump & Sons, who thereupon paid the balance thereon appearing of 95117. 16s. 7d. in pursuance of their contract. The cargo was subsequently re-sold by Jump & Sons to Ross T. Smythe & Co., of Liverpool.

23. On the 6th of March, 1875, the plaintiffs duly registered their mortgages.

24. On the 13th of April, 1875, the Stonehouse arrived at Falmouth for orders. She was then taken possession of by Mr. Harrold and the plaintiffs as first and second mortgagees respec

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