(From the Shipping and Mercantile Gazette, June 1st, 1846.

Admiralty Court. Before Dr. Lushington.

This was an action to recover the amount of two bottomry bonds - one dated in February, 1844, given at Sydney for �800, bearing maritime interest, at 35 per cent. ; the other, date in May, 1844, given at Pernambuco for �59, and bearing the same premium.

The case originally same before the Court in the 13th of January last, and on the 5th February, Dr. Lushington, after stating the facts of the case, and his general impressions respecting it, referred it to the registrar and merchants for the purpose of reporting on the whole of the accounts, and more specifically whether or not it appeared from them that a balance was due to Mr. Hall, the bondholder, upon which a bottomry bond could be taken ; whether the charges for commission, &c., were fair charges, and any other special matter which might occur to them.

The registrar and merchants having made their report, various objections were now taken to it by the mortgagees of the vessel, by whom the suit has been defended.

Dr. Harding was heard in opposition to the report ; Dr. Addams and Dr. Robinsoa in support of it,

Judgment: When this case originally came before the Court, and was very fully discussed by the counsel on both sides, the Court felt that it was a case involved in very considerable perplexity, and attended with circumstances of a very suspicious nature.

The Court, therefore, not merely for its own satisfaction, but for the purpose of enabling it to do justice with the greater certainty, adopted the course of referring to the registrar and merchants the whole of the accounts in the case, in order for them to ascertain, by examining into them, what might be the real sums advanced by Mr. Hall, the payments he had made, and so forth. But the Court did not give to the registrar any specific directions as to the manner of making up that account, still less did the Court do what it would be contrary to its duty to do, devolve upon the registrar and merchants the solution of any point of law. I resorted to that course, which has been characterised as an unusual one, because of the peculiar circumstances of case, and because it was competent to the Court so to do. if it thought fit, even without precedent ; but my memory much misgives me if there has not been more than one precedent to justify and support the course I took.

Dr. Addams : I did not say it by way of complaining of the Court.

The Court: No; it is obvious that the examination of these accounts, if it did not affect the validity of the bottomry bond, might affect the question of costs, because it is easy to put a case of this description, where a very considerable sum is demanded in the first instance, and afterwards reduced to a petty amount, and that after long litigation. In that case, I apprehend the bottomry bondholder would have no right to claim at the hands of the Court, the costs of a litigation which were necessarily entailed by the grossness of its overcharge, and with reference to which it was necessary that the parties should enter into the suit. But not only is it important with reference to the question of costs. There might be a case in which the investigation before the registrar would show a multitude of improper charges, and, in some cases, a falsification of charges, proving that a system of fraud had been acted on by the party suing ; and in that case a court of justice would not pronounce for a single sixpence.

However, I should say I certainly had not the slightest intention to fetter the registrar and merchants by any directions whatever ; because what wanted was, a statement of the accounts, reserving it to myself to pronounce what items were legally to form part of that account, without the slightest degree of prejudice to the validity of the two bonds in question.

Now the registrar and merchants have made a report in the usual form, and which exactly gives the Court that degree of assistance which it expected to derive from their labours and experience. The objections made to that report resolve themselves into two, and those I will now consider and dispose of. The first and most important question is this, whether Mr. Hall, who, according to his own statement, before he undertook to advance the money on the bottomry bond, or to become agent for the ship, purchased at less than their real amount certain debts, is entitled to be paid in this suit the sums of money which he actually did pay for those debts. It is not attempted to be contended now that Mr. Hall was entitled to take the benefit of those debts by paying himself the whole of their nominal amount, when in point of fact he had paid much less than that amount as the consideration for the purchase of those debts. It is a question of law whether a person can purchase a simple contract debt, and afterwards advance money by bottomry to repay himself, not the whole amount of the debt, but the purchase money actually paid by him. I have a strong recollection of what I said on a former occasion on this question of law, namely, that where a man being a creditor by personal contract - I care not for what amount - afterwards advances money on bottomry he cannot repay himself that sum out of the moneys so advanced by him on bottomry.

In all the observations which dropped from me, and which have been referred to by Dr. Harding, I had in view the case of the Augusta, decided by Lord Stowell. I was counsel in the case, and I think it occurred so far back as 1809. A question there arose with respect to a house in the Baltic which had originally advanced sums on personal credit, and afterwards having reason to suspect the stability of their correspondent, they refused to advance more, except on bottomry. They then advanced money on that security, and repaid themselves their original advances. Lord Stowell was of opinion that the bond was capable of division - that it was valid so far as related to sums subsequently advanced, but invalid as to the former sums.

I apprehend that case laid down the principle. It is said if you may repay A.B , a personal creditor on the ship, why may you not pay yourself ? For this obvious reason - it always leads to a course of dealing with the ship in which it would be utterly impossible for the owners at home to trace all the ramifications of that dealing, and it would not only open a door to every description of fraud, but would be contrary to the foundation on which bottomry stands.

We have allowed certain debts to be paid, but it is by indulgence only, and it would be extending it beyond the strict principle of bottomry, which was, that money was not to be advanced to pay past debts, but to enable the ship to leave the port by paying persons to be employed to do repairs, or paying persons to be employed to supply absolute necessaries. It never can be contended that a person by purchasing a debt and becoming a personal creditor, can afterwards pay himself out of his own money advanced on bottomry.

It is said that this is contrary to justice and equity. No such thing ; the person who purchases these debts is exactly in the state of the original creditor. If he has any right in virtue of that contract he has a right to resort against the owners or those on whom the claim lies. He has no right to say, I was anxious to convert my personal credit into actual payment from money advanced by myself and secured upon the ship I am clearly of opinion that I must refer back the report to the registrar, to have these items struck out altogether.

With regard to the next point, the learned counsel for the mortgagee of this ship - the real party before the court - objected that there was no special report before the court as to the reasonableness of ten per cent. charged for commission. I take a very different view of that question. I apprehend it is the ordinary course in which the registrar and merchants report. They do not say that such a claim is valid, but they allow it. The necessary inference is, that they have not omitted to take it into due consideration, but they consider it just and right that it ought to be paid. These are the only two points. In fact, the first is not, properly speaking, an objection that arises on the face of the report ; for I stated to Dr. Harding how strong my impression was with respect to the invalidity of the claim for debts that had been purchased, and the learned counsel on the other side scarcely made any observations upon it.

Dr. Addams : The question is, whether these items were covered by the bond ; they form apart of the general account against the ship Mr. Hall received large sums in Sydney which were to be applied in discharge of the debts of the ship so far as they would go.

The Court : That is true; but if a man is to mix himself up in the double capacity of agent and advancing on bottomry, and then to shift his capacity to please himself, the Court never can do justice. The two points which are now reserved are, first, the validity of the bonds. With respect to the bond taken at Sydney, I am clearly of opinion that the Court, after this long investigation, is bound to pronounce for it ; at the same time, I cannot but express my opinion in strong terms as to the difficulty Mr. Hall has placed in the way of his own case - a difficulty which has fully justified the opposition made to it. When I look at the letters written by Mr. Hall in the name of Mr. Rostron, and see the veil thrown over the whole transaction, I am quite sure that those interested in the ship did perfectly right in opposing this bond till its justice was satisfactorily proved. With respect to the Pernambuco bond I confess 1 have much more difficulty. The question has always pressed upon me whether or not the sum of �240 in possession of the master, and stated in the report to be good bills drawn on London, were not negotiable at Pernambuco for the amount of �59.

The Registrar : We mean to report that they were not. They have proved to be good bills, but they were not accepted.

The Court.: Then that difficulty falls to the ground. The question as to whether Mr. Hall ought to have paid the �45 for his passage money would not justify me in pronouncing against that bond. I therefore pronounce for both these bonds, subject to the deductions I have already mentioned. Now comes the question of costs, and undoubtedly it is a material question upon the present occasion. The usual and ordinary course is, that where a bondholder sues in this. Court and succeeds in his suit, and even where by a reference made to the registrar and merchants, no very large deductions are made from the amount claimed, justice requires that the Court should pronounce for the bond, together with the costs. And for this plain and obvious reason, he who succeeds as plaintiff ought to obtain the whole amount of his just demand. The sole question I have now to determine is, whether or not the particular circumstances of this case call on me to make it, an exception to the ordinary rule.

I have taken some pains to consider this subject, and I feel bound to come to this conclusion, that as the case set up by Mr. Hall abounded in suspicion in every part of it, it is the duty of the Court to watch such claims with great vigilance, and I think the mortgagee of the vessel was perfectly justified in prosecuting the investigation. For these reasons I am of opinion that it is my duty to give costs on neither side. I make no order as to costs. I cannot help making one other observation as to the conclusion of an affidavit that has been brought in, and which has been read by Dr. Harding as to, the attendance on the registrar and merchants. It is in these words, " and the proctor of the said Thomas Hayley, was for a like purpose attended by one Robinson, the attorney of the said Thomas Hayley, and by whom, as deponent verily believes, the opposition which has been offered to the two bonds in question in this cause has been principally got up." I hope this affidavit was not drawn up in a proctor's office. I hope no proctor will lend himself to the feelings of any party, however exasperated, in the cause, by unnecessarily attempting to throw obloquy upon another individual who is concerned only in the performance of his duty on the other aide.

SG & SGTL p 294-5

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