interest in the ship as might render him her true owner within the meaning of those clauses.

Again, the right of a first registered mortgagee to take possession of the ship is too well settled to be capable of dispute; but the statute confers no such right in express terms; and it only exists by reason of the ownership transferred to the mortgagee by the mortgage itself. A mere charge would confer no such right: see Fisher on Mortgages, 197. But, as a mortgagee, unless in possession, would have no power of sale if it were not expressly conferred upon him, and as the statutory form of mortgage contains no such power, the statute itself expressly confers it on registered mortgagees: s. 71. This, however, affords no argument against the view that the mortgage itself confers on the mortgagee an interest in the sense of ownership in the ship herself.

The conclusion, then, to be drawn from the mortgage and the statute, is, that the mortgagee of a ship, like the mortgagee of any other property, acquires an ownership in the ship, viz. such ownership as the mortgagor has to give. A first mortgagee will thus acquire the whole ownership in the ship, but only of course as a security for his money. Second and other mortgagees will only acquire the interest left in the mortgagor, or, in other words, his right to redeem. That right will be legal or equitable, according as the time for paying off the first mortgage has not yet arrived or has passed.

That this is the true nature of a mortgage of a ship appears not only from the above observations, but also from the following decisions,--Dickinson v. Kitchen (1) and Liverpool Marine Credit Co. v. Wilson. (2)

The plaintiffs in this case having acquired by their mortgage the ownership of the ship, and that title being prior in point of date to the equitable assignment of the freight to the defendants, such title must prevail against the latter, unless there be some sufficient reason to the contrary: see Rice v. Rice. (3) The only reason alleged' is, the non-registration of the plaintiffs' mortgage before the date of the assignment to the defendants. If an unregistered mortgage of a ship were null and void, or if it had no (1) 8 E. & B. 789. (2) Law Rep. 7 Ch. 507.

(3) 2 Drew. 73.

legal effect before the time of registration, then the title of the plaintiffs would have accrued after that of the defendants, and would have to be postponed to theirs: see Lindsay v. Gibbs. (1) But the present Merchant Shipping Acts contain no enactment to this effect; and, as already observed, an unregistered mortgage is not now void. Moreover, s. 69 of the Act of 1854 enacts in effect that, if there is more than one registered mortgage, the mortgagees shall be entitled in priority one over the other according to the dates of registration. So far, therefore, as the Act itself is concerned, the only consequence of not registering a mortgage is to postpone it to a subsequent mortgage or transfer which is registered before it (see s. 43).

But it was contended that, upon general principles of equity, and apart from any statutory enactment, the plaintiffs had lost their priority by reason of their own negligence in omitting to register their mortgage. The case states that the defendants searched the register before they advanced their money on the freight, and they were therefore really misled by the non-registration of the plaintiffs' security: and it is contended that this is one of those cases which ought to be decided according to the rule that, whenever one of two innocent parties must suffer by the acts of a third, he who has enabled such third person to occasion the loss must sustain it. This rule is a well-known rule both at law and in equity; but it is one by no means easy of application, owing to the ambiguity of the word "enabled." The plaintiffs did not register their mortgage; but they were not themselves party or privy to any fraud on the defendants. The plaintiffs did not know that money was being obtained on the security of the freight; and, in truth, there is nothing save the mere omission to register which can be urged against them. But the mere omission by a person to do something which it is not his duty to do, but which if done would have prevented loss to another, is not sufficient to render such person liable for such loss, nor to deprive him of any right which he would otherwise have had against that other. There are decisions to this effect both at law and in equity: see, at law, Arnold v. The Cheque Bank (2), decided by this Court during the last sittings, where the cases at law were fully con(1) 22 Beav. 522. (2) Ante, p. 578.

sidered. In equity, it is well settled now that the mere omission by a first mortgagee to obtain the title-deeds from the mortgagor is not sufficient to postpone the first mortgage in favour of a subsequent mortgagee who bonâ fide advances his money in the belief that the property is unincumbered, and who obtains the deeds: see Evans v. Bicknell (1); Hewitt v. Loosemore. (2) To postpone the first mortgage in such cases, there must be either fraud or such gross and wilful negligence as is equivalent to it.

In the present case, but for Harrold's mortgage the plaintiffs would have had a clear prior legal title to the freight as against the defendants: and although, if the plaintiffs had registered their mortgage when it was made, the defendants would not have been misled, there is no fraud, nor such gross and wilful negligence imputable to the plaintiffs as is sufficient to deprive them of their prior legal rights.

1876

KEITH

v.

BURROWS.

3. It remains to consider the effect of Harroid's mortgage. This, although subsequent in point of date to the plaintiffs' mortgage, was registered before it, and by s. 69 of 17 & 18 Vict. c. 104 became entitled to priority over it. By reason of this statutory priority Harrold became first mortgagee of the ship, and became entitled to take possession of her and to receive her freight. Having paid himself, he would hold any surplus for the benefit of the subsequent incumbrancers according to their priorities. In point of fact, Harrold was content to look to the ship only, and he laid no claim to the freight. But the plaintiffs had also taken possession of the ship; and they claim the freight as second mortgagees. The priority gained by Harrold cannot affect the rights of the plaintiffs as against the defendants; and, Harrold's claims being satisfied, his mortgage may for all present purposes be disregarded. The mortgage of the plaintiffs became, as between them and Harrold, a second mortgage instead of a first mortgage; but the plaintiffs' mortgage continued to be, as it always was, prior in point of date to the assignment to the defendants. Even, therefore, if the plaintiffs' mortgage became, for all purposes, and as against all persons, an equitable as distinguished from a legal mortgage, its priority in point of date remained unaffected. It was, indeed, contended that, by reason of Harrold's mortgage and (1) 6 Ves. 174, 183. (2) 9 Hare, 449.

1876

KEITH

v.

BURROWS.

its priority over the plaintiffs' mortgage, this last could only be regarded as an equitable mortgage dating from the time of its registration. But this contention is based upon the erroneous supposition that an unregistered mortgage has no validity until it is registered.

It was further contended that the plaintiffs, having become second mortgagees, had no right to take possession of the ship, and that their right to freight was never therefore perfected. But, although a second mortgagee has no legal as distinguished from equitable right to possession, and although he cannot take possession as against a first mortgagee, yet, as against all other persons, he has a right to take possession, and can enforce such right, if necessary, by obtaining the appointment of a receiver: see Liverpool Marine Credit Co. v. Wilson (1), where the rights of a second mortgagee of a ship are pointed out. In this particular case, the plaintiffs took possession; and it was therefore unneces sary to apply for a receiver. If they had neither taken possession nor applied for a receiver, still, as the first mortgagee did take possession, it was probably unnecessary for the plaintiffs to do more than give him notice of their claim; for, he would, after paying himself, hold all surplus moneys received by him in trust for the persons beneficially interested in them, according to their priorities.

For these reasons our judgment is for the plaintiffs.

Judgment for the plaintiffs.

Solicitors for plaintiffs: Freshfields & Williams.

"Solicitors for defendants: Lowless & Co.

FRENCH AND ANOTHER v. GERBER AND OTHERS.
Shipping-Construction of Charterparty-Proviso for Cesser of Liability of the
Charterers-Demurrage-Lien for Freight.

The defendants chartered a ship to carry a cargo of rice from Akyab to a "good and safe port" in the United Kingdom, &c., calling at Queenstown or Falmouth for orders, which were to be forwarded within forty-eight hours after notice of her arrival. The charterparty contained the following clause,-"It is further agreed that the liability of the charterers shall cease as soon as the cargo is on board, provided the same is worth the freight at port of discharge; but the owners of the ship to have an absolute lien on the cargo for all freight, dead-freight, and demurrage, which they shall be bound to exercise."

In an action against the charterers (who had sold the cargo before arrival) two breaches were assigned,-1. that the defendants or their agents failed to give orders as to the ship's port of discharge,-2. that they gave orders for the ship to discharge at a port which was not a "good and safe port" within the meaning of the charterparty; whereby the plaintiffs were delayed and put to expense in obtaining payment of the freight:

Held, on demurrer, that the above clause discharged the charterers from all liability for acts and defaults of themselves or their agents happening after as well as before the ship was loaded, whether covered by the owners' lien or not.

DECLARATION that the plaintiffs, by the master of the Theresa, and the defendants, by Burot, Gerber, & Co., their agents at Akyab, entered into a charterparty in the words and figures following:Akyab, 8th April, 1874.

It is this day mutually agreed between Mr. R. C. Downie, in command of the good ship or vessel called the Theresa, classed A. 1 until end of 1874, under British colours, whereof pro tem. R. C. Downie is master, of the measurement of 705 tons or thereabouts, now off Akyab, and Messrs. Burot, Gerber, & Co., of Akyab, merchants and freighters, that the said ship, being copper-sheathed or yellow-metalled, tight, staunch, and strong, and every way fitted for the voyage, shall with all convenient speed sail and proceed to a loading berth in the port of Akyab, or so near thereunto as she may safely get, always afloat, and there, having discharged her cargo or ballast, and being copper-sheathed or yellowmetalled, tight, &c., load from the agents of the freighters, who may direct the ship to the most convenient safe anchorage, a full and complete cargo of cargo rice in bags as usual, which the freighters bind themselves to ship, not exceeding what she can reasonably stow and carry over and above her tackle, apparel, provisions, and furniture, and, being so loaded, shall therewith proceed with all dispatch to Queenstown or Falmouth (at the option of the master) for orders, to be forwarded within forty-eight hours after notice of said arrival has been given to and received by charterers' agents in London or lay-days to count, to discharge at a good and safe port in the United Kingdom or on the Continent between Bourdeaux and Hamburg, both inclusive, or so near thereunto as she may safely get, and deliver the same in any dock freighters may appoint, always afloat, agreeably to bills of lading, on being paid freight in full of all port-charges,

1876

June 14.