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BOTTOMRY
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BOTTOMRY , a maritime See also:contract by which a See also:ship (or bottom) is hypothecated in See also:security for See also:money borrowed for expenses incurred in the course of her voyage, under the See also:condition that if she arrive at her destination the ship shall be liable for repayment of the See also:loan, together with such See also:premium thereon as may have been agreed for; but that if the ship be lost, the lender shall have no claim against the borrower either for the sum advanced or for the premium. The See also:freight may be pledged as well as the ship, and, if necessary, the See also:cargo also. In some cases the See also:personal See also:obligation of the shipmaster is also included. When money is borrowed on the security of the cargo alone, it is said to be taken up at respondentia; but it is now only in rare and exceptionalcases that it could be competent to the shipmaster to See also:pledge the cargo, except under a See also:general bottomry obligation, along with the ship and freight. In See also:consideration of the risks assumed by the lender, the bottomry premium (sometimes termed maritime See also:interest) is usually high, varying of course with the nature of the See also:risk and the difficulty of procuring funds. A bottomry contract may be written out in any See also:form which sufficiently shows the conditions agreed on between the parties;-but it is usually See also:drawn up in the form of a See also:bond which confers a maritime See also:lien (q.v.). The document must show, either by See also:express terms or from its general See also:tenor, that the risk of loss is assumed by the lender,—this being the consideration for which the high premium is conceded. The lender may See also:transfer the bond by indorsation, in the same manner as a See also:bill of See also:exchange or bill of See also:lading, and the right to recover its value becomes vested in the indorsees. (See BOND.) According to the See also:law of See also:England, a bottomry contract remains in force so See also:long as the ship exists in the form of a ship, whatever amount of damage she may have sustained. Consequently, the " constructive See also:total loss " which is recognized in marine See also:insurance, when the ship is damaged to such an extent that she is not See also:worth repairing, is not recognized in reference to bottomry, and will not absolve the borrower from his obligation. But if the ship go to pieces, the borrower is freed from all liability under the bottomry contract; and the lender is not entitled to receive any See also:share of the proceeds of such of the ship's stores or materials as may have been saved from the See also:wreck. Money advanced on bottomry is not liable in England for general See also:average losses. If the ship should deviate from the voyage for which the funds were advanced, her subsequent loss will not See also:discharge the obligation of the borrower under the bottomry contract. If she should not proceed at all on her intended voyage, the lender is not entitled to recover the bottomry premium in addition to his advance, but only the See also:ordinary See also:rate of interest for the temporary loan. As the bottomry premium is presumed, in every See also:case, to See also:cover the risks incurred by the lender, he is not entitled to See also:charge the borrower with the premium which he may pay for insurance of the sum advanced, in addition to that stipulated in the bond.
The contract of bottomry seems to have arisen from the See also:custom of permitting the See also:master of a ship, when in a See also:foreign See also:country, to pledge the ship in See also:order to raise money for See also:repairs, or other extraordinary expenditures rendered necessary in the course of the voyage. Circumstances often arise, in which, without the exercise of this See also:power on the See also:part of the master, it would be impossible to provide means for accomplishing the voyage; and it is better that the master should have authority to See also:burden the ship, and, if necessary, the freight and cargo also, in security for the money which has become requisite, than that the See also:adventure should be defeated by inability to proceed. But the right of the master to pledge the ship or goods must always be created by See also:necessity; if exercised without necessity the contract will be void. Accordingly, the master of a See also:British ship has no power to See also: 194). Increased facility of communication, by See also:telegraph and otherwise, has given additional stringency to this See also:rule, and caused a decline in the practice of giving bottomry bonds. The bottomry lender must use reasonable See also:diligence to ascertain that a real necessity exists for the loan; but he is not See also:bound to see to the application of the money advanced. If the lender has originally advanced the funds on the personal credit of the owner he is not entitled to require a bottomry obligation. A bond procured from the shipmaster by improper compulsion would be void. See also:Roman Skin Bottles, from specimens at See also:Pompeii and See also:Herculaneum. The power of the master to pledge the cargo depends upon there being some reasonable prospect of benefit to it by his so doing. He has no such power except in virtue of circumstances which may oblige him to assume the See also:character of See also:agent for the cargo, in the See also:absence of any other party authorized to See also:act on its behalf. Under ordinary circumstances he is not at See also:liberty to pledge the cargo for repairs to the ship. If indeed the goods be of a perishable nature, and if it be impossible to get the ship repaired in sufficient See also:time to obviate serious loss on them by delay, without including them under the bottomry contract, he has power to do so, because it may fairly be assumed, in the case supposed, that the cargo will be benefited by this See also:procedure. The general principle is, that the master must act for the cargo, with a reasonable view to the interests of its proprietors, under the whole circumstances of the case. When he does this his proceedings will be sustained; but should he manifestly See also:prejudice the interests of the cargo by including it under bottomry for the See also:mere purpose of relieving the ship, or of earning the freight, the owners of the cargo will not be bound by the bottomry contract. Any bottomry or respondentia bond may be See also:good in part or See also:bad in part, according as the master may have acted within or beyond the See also:scope of his legitimate authority in granting it. If two or more bottomry bonds have been granted at different stages of the voyage, and the value of the property be insufficient to discharge them all, the last-dated bond has the priority of See also:payment, as having furnished the means of preserving the ship, and thereby preventing the total loss of the security for the previous bonds. When the sum due under a bottomry bond over ship, freight and cargo is not paid at the stipulated time, proceedings may be taken by the bondholder for recovery of the freight and for the See also:sale of the ship; and should the proceeds of these be insufficient to discharge the claim, a judicial sale of the cargo may be re-sorted to. As a general rule the value of the ship and freight must be exhausted before recourse can be taken against the cargo. A bottomry bond gives no remedy to the lenders against the,owners of the ship or cargo personally. The whole liability under it may be met by the surrender of the property pledged, whether the value so surrendered covers the amount of the bond or not. But the owners of the ship, though not liable to the bondholder for more than the value of the ship and freight, may be further liable to the proprietors of the cargo for any sum in excess of the cargo's proper share of the expenses, taken by the bondholder out of the proceeds of the cargo to satisfy the bond after the ship and freight have been exhausted. The bottomry premium must be ultimately paid by the parties for whose benefit the advances were obtained, as ascertained on the final See also:adjustment of the average expenditures at the port of destination. The practice of pledging property subject to maritime risks was See also:common among the See also:ancient Greeks, being known as g cSooes or Savaov (see See also:Demosthenes' speeches See also:Pro Phormione, Contra Lacritum and In Dionysodorum) ; it passed into Roman law as foenus nauticum or usura maritima. See also L1'EN: Maritime; and generally See also:Abbott on See also:Shipping (14th ed., 1901). 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