In May, 1850, the parties entered into a contract in writing in the city of New York, by which it appears that Hoppock was to advance to Braynard the sum of $1,500, on the brig Sophia, then loading in New York and bound for San Francisco. In consideration thereof, Braynard agreed to pay Hoppock twelve per cent commission, and interest at seven per cent per annum. Braynard was to give Hoppock a bill of sale of the brig for $1,500, and to transfer to him a policy of insurance on the vessel, together with a policy of insurance on the freight and the bill of lading of *Page 575 the cargo. The vessel was to be consigned to one J.B. Bidleman, to San Francisco, who was to do the vessel's business and charge his commissions, and to remit to Hoppock, at New York, from the net proceeds of vessel's account, the above amount of fifteen hundred dollars, and twelve per cent commission and interest, and interest added until the funds can be placed in said Hoppock's hands in New York. The balance was to be paid to Braynard, and in case of receipt by Hoppock of the foregoing amount, the policy of insurance and bill of sale to be returned to Braynard, and in case of loss, the insurances to be collected by Hoppock, and after payment of his claim, the balance to be paid to Braynard. Some months afterward, Hoppock ordered the further sum of three hundred dollars substantially on the same terms, except the commission was fifteen per cent.
The brig sailed from New York and arrived at San Francisco in March, 1851, in a damaged condition, and subject to claims and demands amounting to from $8,000 to $10,000, including a bottomry bond given at Valparaiso, and seamen's wages. Nothing was realized by the parties from the vessel, and Bidleman received only between two and three hundred dollars on account of the cargo. The bottomry bond was for over $7,000, and the vessel was finally sold at auction for $600. In November, 1851, Hoppock collected from the insurance companies about $1,000 on account of policies on the vessel, and $133 on freight policy, and these two amounts were all that were received by him.
Shortly thereafter this action was commenced by Braynard to recover from Hoppock these sums of money, on the ground that the original transaction was usurious, and it was so held in the Superior Court of New York, and a judgment rendered in favor of Braynard for the amount so received by Hoppock. On the trial, it appeared that the commissions in New York, on advances on vessel, freight or cargo, from New York to San Francisco, was from twelve to fifty per cent, and that twelve per cent was very low. The defendant, Hoppock, appeals to this court.
The true definition of a bottomry bond, in the sense *Page 576 of the general maritime law, says Mr. Justice STORY, "is a contract for a loan of money on the bottom of the ship, at an extraordinary interest upon maritime risks, to be borne by the lender for the voyage, or for a definite period." This contract may be entered into by the master in a foreign port, virtuteofficii when the necessities of the ship require it, or it may be entered into by the owner as the dominus navis, who may employ the money as he pleases. The security may be in the shape of a bond, or it may be given by a transfer of the title. The hypothecation of the vessel, and the transfer of the right to collect the freight, in this case, was a maritime contract, and not within the statute of usury, as Hoppock was only to receive his money back from the net proceeds of the vessel's account, I mean, of course, without reference to the question of insurance. If Hoppock had advanced the fifteen hundred dollars, and taken as security the vessel and the freight to be earned on her then contemplated voyage, I suppose there is no doubt but he might have taken out a valid insurance policy to protect himself to the extent of his advance, that is, as far as a policy would be a protection. Then if, at the time of the advance, the owner of the vessel has obtained policies of insurance on the vessel and freight, and says, in addition to the hypothecations of the vessel, I will also transfer to you, as further security, those policies, does such transfer necessarily make the transaction usurious? The judge who tried the cause, found, as matter of law, that the transactions were usurious. If we look into the evidence, it will be seen that the rate of commissions paid in New York on advances, on the security of vessel and freight on voyages from New York to San Francisco, was from twelve to fifty per cent. Twelve per cent was the lowest, and may have been taken, in this case, in consequence of the further security afforded by the transfer of the policies. No note, bond or other personal obligation was given by Braynard, the owner of the vessel. All that could be said as to the policies is, that they were further and additional securities to the hypothecation of the vessel. There was no positive liability on the part of *Page 577 Braynard himself, or of any insurance company, to return the money in any event. Apart from the fact that many an insurance company has failed to pay its losses, there are perils attending the vessel which goes out on the great deep, which no ordinary marine policy protects against. In this very case there was a lien created at Valparaiso by way of bottomry bond, and that, together with seamen's wages, amounted to probably as much or more than the vessel was worth when she arrived at San Francisco. As bottomry securities, differing from other liens, are paid in the inverse order of their creation, the last first, the bottomry lien of Hoppock was virtually gone when the vessel reached her port of destination. He was then thrown back on his policies, from which he seems to have realized a considerable portion of his advance.
Looking at this whole contract simply as it was written out, it seems to me that the hypothecation of the vessel, and the transfer of the policies, all having reference to the one vessel and one voyage, was together but one single maritime transaction, and was not in and of itself usurious. There was, I think, a complete maritime risk, and maritime interest might be taken. Where bottomry bonds are given by the master in a foreign port, and, at the same time, bills of exchange are drawn on the owners for the amount, the validity of the bond is not affected when it is made to appear that the lender relied on it mainly for his security. (3 Mason, 341; Ware, 249.) In such a case, the bills of exchange would be a further and additional security, whether available or not, depending on the willingness of the owner to accept, and his ability to pay.
It has often been said, both in England and this country, that these maritime contracts ought to be treated with great favor by the courts. The obtaining money on bottomry bonds, especially in foreign ports, by the master, is often absolutely necessary, in order that the vessel may be repaired and proceed on her voyage. And at home, the owner may often be obliged to pledge his ship, in order to fit her out for sea, and put her in a condition to become available. *Page 578
If this contract is not usurious on its face, as I think clearly it is not, then there may still be a question of fact, whether it was a mere pretense or arrangement to avoid the statute against usury, or whether it was a fair maritime transaction, and so considered by the parties at the time. From the evidence showing the rates of commission on such advances, it appears to have been what might be a common and entirely fair transaction. But, at all events, if there was any doubt, the fact ought to be fairly tried and found by the judge or by a jury. For this reason, I think the judgment should be reversed, and a new trial awarded.
Judgment affirmed. *Page 579