CT. OF APP.] Re THE RIO GRANDE DO SUL STEAMSHIP COMPANY (LIMITED). sion of the ship, and their solicitor wrote to Captain Turner, informing him of that fact, and stating that he might consider himself from that time in their employment as master of the ship, and from that time he received his pay as master from the mortgagees. His solicitors afterwards applied to the mortgagees for repayment of the 1291. 68. 5d., and not receiving the amount, they threatened to take immediate proceedings in the Court of Admiralty to arrest the ship. On the 21st Sept. an order was made by Bacon, V.C., for the winding-up of the company. On the 23rd Sept. the solicitor of the mortgagees wrote to Captain Turner's solicitor, and called his attention to the decision of the Master of the Rolls in Re The Australian Direct Steam Navigation Company (L. Rep. 20 Eq. 325), as an authority that the proper course for Capt. Turner to adopt was to proceed in the winding-up, and not in the Court of Admiralty. Accordingly, on the 28th Sept., Capt. Turner took out a summons in the winding-up, asking that the 1261. 9s. 5d., and the amount of his costs of and incidental to the action, and of and incidental to the summons, might be forthwith paid in full out of the company's assets, or a sufficient security given by the liquidator for payment in full, or that the ship might be sold and the amount of his disbursements and costs paid to him out of the proceeds of sale, or that he might be at liberty to proceed in the Court of Admiralty against the ship, and, so far as might be necessary, against the company, and the liquidator and the mortgagees, or to take and pursue such other remedies in the Admiralty Court as he was entitled to. On the 1st Oct. an order was made in chambers by the Chief Clerk that Capt. Turner should be at liberty to institute a suit in the Court of Admiralty against the ship, and so far as might be necessary, against the company and the liquidator, to recover the 1261. 9s. 5d., and his costs of and incidental to the action and the summons, and of and incidental to the suit in the Court of Admiralty. On the 5th Oct., on a motion made in the winding-up by the provisional liquidator to vary this order,, Bacon, V.C., made an order that Capt. Turner undertaking not to institute a suit in the Court of Admiralty, the provisional liquidator or the official liquidator for the time being should, out of the first moneys that should come to his hands, pay the sum of 150l. into court to the credit of a separate account to answer Capt. Turner's claim, but that this payment should be without prejudice to any application Capt. Turner might make to increase the amount in case it should be insufficient to satisfy his claim. In compliance with this order the 150l. was paid into court. On the 4th Aug. 1876, Capt. Turner took out a summons in the winding-up to increase the 150l. to a sum sufficient to meet the taxed costs incurred by him in defending the action against him on the bill of exchange, and the costs of and incidental to the summons of the 28th Sept. 1875, and the proceedings subsequent thereto, and of and incidental to the motion of the 5th Oct. 1875. This summons was adjourned into court, and came on for hearing on the 28th Nov. 1876, when Bacon, V.C., refused to allow Capt. Turner any [CT. OF APP. costs of defending the action or of the summonses and other proceedings in the winding-up, but ordered that out of the 1501. standing in court, the sum of 1251. 98. 5d., with interest thereon at the rate of 5 per cent. per annum to the 31st Dec. 1876, should be paid to him, and that the residue of the 150l. should be paid to the official liquidator. From that part of the order which refused to give him any costs, Capt. Turner appealed. Fischer Q.C. and Stirling, for the appellant.The case of Re The Australian Direct Steam Navigation Company (L. Rep. 20 Eq. 325), upon which the Vice-Chancellor founded his decision, is in many respects distinguishable from the present case. Here the appellant had a valid lien before the commencement of the winding-up, and he obtained the leave of the court to institute a suit in the Court of Admiralty, while in that case the master of the ship proceeded without the leave of the court, and there were no mortgagees, but all the parties were before the court in the winding-up. The appellant was justified in taking the proceedings which he did in the winding-up, and therefore he is entitled to the costs of all those proceedings. He is also entitled to his costs of defending the action on the bill of exchange, and also the cost of consulting his solicitor whether he could successfully defend that action: (Smith v. Howell, 6 Ex. 730-6.) It is well settled that a master of a ship is entitled to a lien on the ship for his disbursements for necessaries supplied to the ship, and that his lien is paramount to everything but the lien of the seamen for their wages: The Mary Anne, 13 L. T. Rep. N. S. 384; L. Rep. 1 The Feronia, L. Rep. Ad. & E. 65; 3 Mar. Law. It may be objected that this is a mere appeal for costs, but it involves a question of principle: Cotterell v. Stratton, 28 L. T. Rep. N. S. 218; L. Rep. 8 Ch. 295. They also referred to Aadison on Contracts, 1085. Kay, Q.C. and Speed, for the respondent.Except as regards the costs of the action on the bill of exchange, this is a mere appeal for costs in a matter which was within the discretion of the Vice-Chancellor. As to the action, the appellant, as drawer of the bill, was clearly liable, and was And the not justified in incurring any costs. decision of the Master of the Rolls in Re The Australian Direct Steam Navigation Company is a direct authority that costs should not be given to the appellant. No reply was called for. JAMES, L.J.-Though it has been argued that this is merely an appeal for costs, it really involves an important question of law and principle. The appellant drew a bill of exchange upon the company for expenses which, it was not disputed, were properly incurred by him on behalf of the ship. Beyond all question he had a lien on the ship for the amount of those expenses, and his lien was paramount to the claim of the mortgagees. The bill was dishonoured at maturity, and the appellant paid it, as he was bound to do. Thereupon he was minded to take proceedings against the ship in the Court of Admiralty, as he lawfully might do as against both the mortgagees and the company, who were the owners of the equity of redemption. In this state of things CT. OF APP.] KEITH AND ANOTHER v. BURROWS AND ANOTHER. he received a letter from the solicitors of the mortgagees, directing his attention to the decision of the Master of the Rolls in Re The Australian Direct Steam Navigation Company (L. Rep. 20 Eq. 325), where it was held that the proper mode of enforcing a maritime lien on a vessel belonging to a company which has been ordered to be woundup, is by a proceeding in the winding-up, and not by a proceeding in rem in the Admiralty Court. The appellant acted upon the information thus given to him, and, in accordance with that decision, he took out a summons in the winding-up, varied as the circumstances of the case required, because the mortgagees were not parties to the proceedings in the winding-up. The court had no jurisdiction in the winding-up to summon the mortgagees before it, or to decide any question as between the appellant and them. Therefore he took out a summons, asking for an alternative order, either that his claim and costs might be paid or secured in the winding-up, or that he might be at liberty to institute proceedings in the Court of Admiralty. An order was accordingly made in chambers, on the 1st Oct., giving him leave to institute proceedings in the Court of Admiralty, and I feel bound to say that, in my opinion, notwithstanding everything that has been said to the contrary, that order was precisely the right order to make, unless the liquidator had then been able and willing to give the appellant sufficient security for the satisfaction of his claim, and his costs, charges, and expenses properly incurred as an incumbrancer of the ship. It appears to me that that order was a right order, and that the appellant's costs of obtaining that order were costs properly incurred by him as an incumbrancer. Afterwards the liquidator took out a summons to have that order discharged, but the order has never been in fact discharged, and there has been no adjudication that it was not a right order. With all deference to the opinion of the learned ViceChancellor, it seems to me that the order of the 5th Oct. could only have been made with the consent of the parties, and that the effect of it was only to provide that the appellant's claim should be secured in another way. The ViceChancellor thereby ordered that 150l. should be brought into court by the liquidator to answer the appellant's claim, and the order was expressly made without prejudice to any application by him to increase the amount. So far from the Vice-Chancellor's order of the 5th Oct. being a judicial decision that the order made in chambers on the 1st Oct. was incorrect, it proceeded on the footing that it was correct, for the proceedings under it were stayed only upon the terms of the liquidator giving the appellant all that which he would have got in the Court of Admiralty. In that court his lien on the ship would have been held to include all costs, charges, and expenses properly incurred in enforcing it. It seems to me that the object of the order of the 5th Oct. was to bring into court a sufficient sum as a security for that which he would have been entitled to as against the ship. The appellant is, therefore, entitled to be repaid the money paid by him on the bill of exchange, and to be paid his costs in the winding-up proceedings, that is to say, his costs beginning with the order made in chambers on the first summons, and his costs of all subsequent proceedings, down to and including his costs of the present appeal. As to the costs of the action against him on the [CT. OF APP. bill of exchange, the Vice-Chancellor was of opinion that he could not be entitled to the costs of ascertaining whether he could successfully defend the action. The utmost he can have properly expended in that way would be 68. 8d., for asking his solicitor whether he had any defence. There will, therefore, be no order with respect to the costs of that action, but the Vice-Chancellor's order must be varied by giving the appellant his costs, charges, and expenses properly incurred of the proceedings in the winding-up, and if necessary the amount paid into court must be increased. BRETT, J.A.—I am of the same opinion. The only reasonable costs of defending the action on the bill of exchange would have been 6s. 8d. for asking a question which any solicitor's clerk could have answered at once. As for the costs in the winding-up proceedings, when the master of the ship had paid the bill of exchange he was in the same position as if he had actually paid for the necessary disbursement for which the bill was given. The fact that here the mortgagees are in possession makes an important difference, and is sufficient to distinguish this case from the case before the Master of the Rolls: (Re the Australian Direct Steam Navigation Company, L. Rep. 20 Eq. 325.) That decision would seem to show that in a case like this it would be necessary to obtain the leave of the Court of Chancery to institute proceedings in the Court of Admiralty. Then, as the Court of Chancery had no jurisdiction in the winding-up over the mortgagees, the master of the ship could not obtain all that he was entitled to unless he proceeded in the Court of Admiralty. He was, therefore, as a matter of law, entitled to have leave to proceed in that court. As a favour to the liquidator, the order giving him that leave was afterwards altered by the order of the 5th Oct., which, in my opinion, was practically a consent order, though in form it was not so. The appellant is, therefore, entitled to be paid, not only what he has paid on the bill of exchange, but also his costs, charges, and expenses as a mortgagee in the usual way. AMPHLETT, J.A.-I am of the same opinion. Order of Bacon, V.C., accordingly varied. Solicitors for the appellant, Barnes and Bernard. Solicitors for the respondent, Nicol, Son, and Jones. SITTINGS AT WESTMINSTER. Reported by J. P. ASPINALL, F. W. RAIKES, and P. B. HUTCHINS, Esqrs., Barristers-at-Law. Feb. 5 and 6, 1877. (Before MELLISH, L.J. and BAGGALLAY and KEITH AND ANOTHER v. BURROWS AND ANOTHER. Mortgage of ship-Rights of mortgagee-Freight. The mortgagee of a ship is only entitled to such freight as is accruing due by a contract existing when he takes possession. M. mortgaged his ship to plaintiffs. M. through P. bought a cargo in California on account of ship; bills of lading to P.'s order were drawn for a nominal freight of 18. per ton. During the voyage defendants, without notice of plaintifs mortgage, which was not registered, advanced money to M. on the security of the cargo. Defen dents and M. sold the cargo to J. by a contract CT. OF APP.] KEITH AND ANOTHER v. BURROWS AND ANOTHER. containing the following clause, "As cargo is coming on ship's account freight is to be computed at 558. per ton, and invoice to be rendered accordingly." Defendants made further advances to M., who paid for the cargo, received the bills of lading, and handed them to defendants with an assignment indorsed of M.'s interest in "the within freight," expressed to be "at the rate of 55s. per ton, and not the nominal amount of 18. per ton." Plaintiffs registered their mortgage. The ship arrived, and plaintiffs took possession and claimed 558. per ton freight. Defendants by arrangement acquired J.'s rights. Held (reversing the judgment of the Common Pleas Division), that the 558. per ton was not really freight, but part of the price of the cargo, that there was no freight beyond 1s. per ton accruing when plaintiffs took possession, and therefore plaintiffs were not entitled to freight beyond 18. per ton. APPEAL from the judgment of the Common Pleas Division in favour of the plaintiffs on the following special case: 1. The plaintiffs are merchants carrying on business under the style or firm of James Wyllie and Co., in London. The defendants are cornfactors and brokers carrying on business under the style or firm of Burrows and 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 and Co., was, during the period covered by this case, the registered owner of sixty sixty-fourths of the Stonehouse, Mr. Bley, the captain, being the registered owner of the remaining four sixtyfourths. 3. On the 1st Dec. 1874, Morison executed a mortgage of his sixty sixty-fourths of the ship in favour of the plaintiffs to secure 7500l. 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 and Co., merchants at San Francisco, and shipped on board the Stonehouse. The invoice, dated the 2nd Dec. 1874, stated that the wheat was shipped by Parrott and Co. on board the Stonehouse bound to Falmouth or Downs for orders, consigned to order, that is to the order of Parrott and Co. (they, thus keeping control over the cargo until the money found by them for the purchase thereof should be paid) by order of John Morison and 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 and Co., stating the freight payable on [CT. OF APP. delivery to be 18. per ton. Parrott and 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 and 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 Dec. 1874, the Stonehouse sailed from San Francisco. The rate of freight general at this date at San Francisco was only 558. 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 Dec. 1874, Morison accepted the bills of exchange payable at the London and County Bank on the 22nd Feb. 1875. 10. On the 1st Jan. 1875, Morison effected two policies of insurance in respect of the Stonehouse on freight valued at 40001. and 1000l. respectively. 11. The sum necessary to meet the bills of exchange at maturity was 10,3641. 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 money necessary for the purpose, that the defendants in turn 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 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 sixty sixty-fourths 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 Jan. 1875, the defendants advanced to Morison 3000l., 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 40001. 14. On the 2nd Feb. 1875, Morison executed another mortgage in similar terms of his interest in the ship to the plaintiffs to secure 40001. and further advances. Morison, subsequently on the 2nd March 1875, further mortgaged his interest in the Stonehouse to Joseph Harrold, who registered his mortgage on the 3rd March 1875, and thus became the first mortgagee, the plaintiffs not having registered their mortgages until the 6th March 1875, as hereinafter mentioned. 15. On or about the 16th Feb. 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 Feb., they effected a sale of the cargo on the terms hereinafter appearing. 16. On the 19th Feb. 1875, the defendants, on CT. OF APP.] KEITH AND ANOTHER v. BURROWS AND ANOTHER. behalf of Morison and on their own account to the extent of their advances, sold the cargo to Henry Jump and Sons, of Liverpool. The following is a copy of the contract signed by Harris Brothers and Co., brokers, on behalf of the buyers: London, 19th Feb. 1875. Bought of Messrs. John Morison and Co., through Messrs. Burrows and Perks, for Messrs. Henry Jump and Sons, Liverpool, a cargo of Californian wheat of fair average quality, of the season's shipment when shipped. Shipped per Stonehouse, first class, from San Fran. cisco, bill of lading dated about 2nd Dec. 1874, say 23,644 bags, containing 3,089,775lb., at the price of 43s. 6d. per qr. of 500lb. 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 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 underwriter's, 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 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 waiting 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 2240lb., and invoice to be rendered accordingly. HARRIS BROTHERS AND CO., Brokers. 17. The defendant would have had a difficulty in disposing of the cargo without allowing an amount equivalent to freight to remain unpaid until the vessels' 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 at San Francisco sold to Messrs. Henry Jump and Sons, Liverpool, as per contract of 19th Feb. 1875: 68 4 10 £9,511 16 7 BURROWS AND PERKS. London, 22nd Feb. 1875. 19. On the 22nd Feb. 1875 Morison obtained a further advance from the defendants of 9000l., making, with the sum of 3000l. previously advanced, the sum of 12,0001. 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 Feb. 1875, in pursuance of such last mentioned arrangement, Morison handed the bills of exchange, with the three bills of lading [CT. OF APP. attached, to the defendants, and the following memorandum was endorsed on the bills of lading, and signed by Morison : We assign our interest in the within freight to Messrs. Burrows and 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. 24th Feb. 1875. J. MORISON and Co. Such endorsement, although dated the 24th Feb. 1875, was not really made and signed until about the 26th Feb. 21. At the same time Morison handed to the defendants the aforesaid invoice, made out in pursuance of the contract with Messrs. H. Jump and Sons for transmission to the buyers, together with a letter to the defendants themselves, dated the 25th Feb. 1875, and enclosing the policies therein referred to, which letter was as follows: 21, Billiter-street, 25th Feb. 1875. Messrs. Burrows and Perks. Dear Sirs,-We further give you in security policy of insurance on wheat 1500l. and on freights 1000l., 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 AND CO. Both of the above policies are in the Marine Insurance Company. 22. The invoice was duly forwarded by the defendants to H. Jump and Sons, who thereupon paid the balance thereon appearing of 95111. 168.7d. in pursuance of their contract. The cargo was subsequently resold by Jump and Sons to Ross T. Smythe and 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 respectively. Mr. Harrolds debt being more than secured by the ship, he laid no claim to the freight. The Stonehouse proceeded in the possession of Harrold and the plaintiffs, to Liverpool, where she arrived on 19th April 1875, on which day Messrs. Lowless and Co., on behalf of the defendants, wrote a letter to the plaintiffs' attorneys, Messrs. Freshfields and Williams, as follows: Dear Sirs,-We have a telegram that this vessel (Stonehouse) is now off the port, and that the market is a falling one. Should there, therefore, be any difficulty in obtaining delivery, the purchasers may repudiste their bargain, and a loss of 1000l. might easily be sustained, in addition to the charges for landing and warehousing-will you, therefore, please let us have your determination instantly. We are obliged to give you notice that our clients will seek to recover all damages sustained from Messrs. Wyllie and Co., and we have given you special notice of the circumstances, in order that our clients may be entitled to recover. We hope, however, that there will be no necessity tor this. LOWLESS AND Co. 25. The plaintiffs refused to allow Messrs. Ross, T. Smythe and Co., to take delivery of the cargo, except on payment of freight at 55s. per ton, and were prepared to protect themselves in the manner indicated in the Merchant Shipping Amendment Act 1862, but to avoid such detention of the cargo and the deterioration and the expenses which would have been the result of it, the following agreement was ade between the plaintiffs and the defendants, through their respective attorneys: It is hereby agreed between Messrs. Freshfields and T. OF APP.] KEITH AND ANOTHER v. BURROWS AND ANOTHER. Williams, as representing Messrs. James Wyllie and Co., and Messrs. Lowless and Co., and representing Messrs. Burrows and Perks, that 3500., being the amount of freight on the cargo of the ship Stonehouse, claimed by Messrs. James Wyllie and Co., as second mortgagees in possession of the Stonehouse, shall be paid into the London and Westminster Bank, in the joint names of Messrs. Freshfields and Williams, and Messrs. Lowless and Co., to abide the result of an action to be brought by Messrs. James Wyllie and Co., against Messrs. Burrows and Perks, who hereby admit for the purposes of the action, that they are the owners of the cargo under the bill of lading thereof, and liable to pay whatever freight may be due thereon. The action to be commenced within thirty days from this date, and duly prosecuted. In the event of no action being brought within the time aforesaid, or of Messrs. James Wyllie and Co. not obtaining a verdict in the said action, the amount so deposited with any interest thereon is to be paid to Messrs. Burrows and Perks, or order; and in the event of Messrs. James Wyllie and Co. recovering a verdict for the said sum of 3500l., or any part thereof, the amount of such verdict is to be paid to them or order out of the sum deposited, and the balance (if any) to Messrs. Burrows and Perks, or order. It is admitted, for the purposes of the said action, that the amount of freight specified in the bill or bills of lading has been tend red Messrs. James Wyllie and Co. to withdraw any stop which they may have put upon the goods on the money being deposited. Messrs. Burrows and Perks to have the same right of recovering interest on the sum to be deposited as if the money had been paid at the proper time into a wharfinger's hands under the provisions of the Merchant Shipping Amendment Act. FRESHFIELDS AND WILLIAMS. Dated 19th April, 1875. 26. It was subsequently found that freight at 558. per ton amounted to 35771. 58. 7d., and upon the execution of the agreement and the payment of the 35771. 58. 7d., as subsequently agreed, instead of 3500l. into the London and Westminster Bank, the plaintiffs gave delivery of the cargo. The question for the opinion of the court (who were to have liberty to draw all inferences of fact) was, whether the plaintiffs were entitled to refuse delivery except on payment of freight at the rate of 558. per ton, or whether any freight was due on the said cargo beyond freight at the rate of 18. per ton. If the opinion of the court on either point should be in the affirmative, judgment was to be entered for the plaintiffs for 35771. 58. 7d., with costs; if in the negative, for the defendants. The Common Pleas Division (Brett, Archibald, and Lindley, JJ.) gave judgment for the plaintiffs, and the defendants appealed. The judgment of the court below is reported ante p. 280. R. E. Webster for the defendants (Thesiger, Q.C., with him).-There is no freight payable on which the mortgagee can claim. He is not entitled to freight as shipowner until he takes possession. Suppose freight payable in advance, the mortgagee could then have no lien on the cargo. In Brown v. Tanner (18 L. T. Rep. N. S. 624; L. Rep. 3 Ch. 597) the mortgagee had taken possession of the ship before the freight became payable. A document creating freight of which the mortgagee can claim the benefit must be either a freight note or shipping document, or some kind of contract in respect of the carrying of the goods: Mercantile and Exchange Bank v. Gladstone, 18 Howard v. Tucker, 1 B. & Ad. 712; Gumm v. Tyric. 33 L. J. 97, Q. B.; 34 L. J. 124, [CT. OF APP. In the judgment of the court below the fact is not noticed that Morrison received the cargo, and dealt with it. [He was stopped by the court.] Herschell, Q.C., for the plaintiffs. As between mortgagor and mortgagee, upon the latter's taking possession, a contract to pay a reasonable freight arises. The law regards the enhanced value of the cargo as freight, because the ship, although carrying the owner's goods, is really earning freight by enhancing the value of the cargo. That value can be insured as freight: (Flint v. Flemyng, 1 B. & Ad. 45.) Supposing that, in fact, during the voyage, the ownership of the goods becomes different from the ownership of the ship, why should not the freight follow the ordinary rule, and go with the ship. When the owner of the ship ceases to be the owner of the cargo, you must deal with the question of freight as if the ownership had all along been distinct. R. E. Webster in reply, MELLISH, L.J.-As we have not heard any argument on the second point, we are bound to assume that the plaintiffs have all the rights of a mortgagee of a ship who has taken possession of the ship; and those rights are, as is is well settled, these; he has a right to all the accruing freight which he finds accruing at the time he takes possession; and if he finds any cargo on board in respect of which freight has accrued, and on which the mortgagor has a lien, the mortgagee succeeds to that lien, and can enforce it in a court of law. And the question to be determined in this case is whether there was any accruing freight to which the mortgagees were so entitled. The It was argued by Mr. Herschell as the foundation of this case, that the mortgagee has a greater right than that, and that if the mortgagor had carried a cargo on his own account, which cargo the mortgagee found on board when he came to take possession, the mortgagee would be entitled to a lien on it for the freight as against the mortgagor, although it is obvious that in that case there is no contract of any kind, because the mortgagor would have carried the goods on his own account. Now I am clearly of opinion that the mortgagee has no such right. mortgagee does not become the owner of the ship until he takes possession, and there is a clause in the Merchant Shipping Act (17 & 18 Vict. c. 104, sect. 70) to that effect. Mr. Herschell seemed to argue that he ought to have that right; but, assuming this was true as far as this particular case was concerned, that the mortgagee was mortgagee before the voyage commenced, he seemed to argue that the goods had, in fact, been carried in the mortgagee's ship. But that was an entirely accidental circumstance; the rights of the mortgagee would be exactly the same whether the mortgage happened to have been created prior to the commencement of the voyage or the very day before he took possession of the ship. Therefore it is not true that the goods have been carried in the mortga gee's ship; the ship was the mortgagor's until the mortgagee took possession, and the mortgagee has in my opinion no further rights than the purchaser of a ship has, the difference being that the purchaser takes a right to all accruing freight and to all profits of the ship from the time of the assignment and the transfer of the ship to him, whereas the mortgagee only has such right from the time he takes possession. Now, if the mortgagor were |