Greeley v. Waterhouse

The opinion of the Court was by

Weston C. J.

The plaintiffs, as acceptors, having paid the bills, indorsed by George Jewett, he had no remaining interest or liability in relation to them, and was clearly a competent witness. And the interest of Luther Jewett is balanced in the case, it being a contest between bona fide creditors of his for security. The objection made at the trial to the testimony cannot prevail, and is not pressed by the counsel for the defendant.

The doctrine in relation to bottomry and respondentia bonds is very elaborately considered and exhausted by Mr. Justice Story in Conard v. the Atlantic Ins. Company, 1 Peters, 386, and in the case of the brig Draco, 2 Sumner, 157. He investigates, with his accustomed ability their origin and history, illustrated by adverting to the authorities, English and American, bearing upon the question, as well as to the works of distinguished jurists on the continent of Europe. It is very satisfactorily made out, that they may be executed by the owner of a ship at a home port, and that their validity does not depend upon the application of the money, when obtained by the owner, to the purposes of the ship, or of the voyage. But it is of the very essence of a bottomry bond, that it is for money taken up on maritime risks, at the hazard of the lender. Case of the Draco, 2 Sumner, 187; Simonds & al. v. Hodgson, 3 Barn. &, Adol. 50.

The instruments, upon which the plaintiffs rely, copies of which make part of the case, are based upon loans apparently •of this character. Nothing is there disclosed, which shows that the loans were not made upon the risk, essential to this species of contract. But when the rights and interests of third persons are to be affected, the true nature of the transaction is open to investigation. Property is not to be put out of the reach of vigilant creditors, and the truth shut out by the mere form of instruments. Clapp v. Tirrell, 20 Pick. 247.

Looking at the facts proved, it appears that the money, intended to be secured by the bonds, was not originally advanced upon the credit or hypothecation of the vessels named in the conditions, but as security for debts, due from Luther Jewett to the plaintiffs, which had accrued some months before, principally for advances on bills drawn on them by Jewett. If the account of the plaintiffs had been thereupon discharged, as far as the same had been secured by the bonds, it might have been regarded virtually as a new loan on bottomry. In Conard v. the Atlantic Ins. Company, 1 Peters, 435, one of the loans obtained was applied in part to the payment of a prior loan. But in this case the bonds wexe manifestly proffered and received as collateral security.. It does not appear that Jewett was discharged from his indebtedness on account, or as drawer of the bills, or that he had credit in account for the sums stated to have been advanced by the plaintiffs in the condition of the bonds. From the correspondence it appears, that they were looking to the sales of goods belonging to Jewett under their control, which after the receipt of these bonds, they insist must be made available for their benefit, although the market was unfavorable. In Jewett’s letter to the plaintiffs, enclosing the bonds, he advises that he sends them as a guaranty, and as such they must be presumed to have been accepted. The movement appears to have been altogether voluntary on his part. If the security was collateral, which is plainly deducible from the facts, the debt was not at risk, although the collateral security was to be available only upon a contingency. It results, that these instruments cannot have effect as bottomry bonds, as the obligation of the debtor to refund the consideration, upon which they were based, did not depend upon a maritime risk, but remained in force at all events.

It is insisted, however, for the plaintiffs, that if their title cannot be sustained as lenders upon bottomry security, they have a right to hold the vessels in question as mortgagees. It is an objection fatal to their claim upon this ground, that their mortgage was not recorded, as required by the statute of 1839, c. 390. This is dispensed with only where delivery and possession accompanies the mortgage. No delivery was made by Jewett, nor did the plaintiffs attempt, to take possession until some time after the bonds were executed. According to the agreement of the parties, the default must be taken off and the plaintiffs became nonsuit.