is paid can be apportioned. The premium is returnable also, where the assured has no interest in the property insured, and effects the insurance without fraud, for the underwriters could not have been called upon to pay in case a loss had happened. So in cases of short interest, or of over-insurance, or double insurance, the underwriters are bound, to the extent of the overinsurance, to return the premium, - for no risk is incurred by them beyond the value of the property which is actually hazarded. But where the insurance is by a valued policy, the underwriters are not bound, if the goods intended to be covered by the policy are shipped, to return any part of the premium on the ground that the specified value exceeds the real value of the cargo. In cases of double insurance, a rateable return of the premium must be made.

But if the assured be guilty of fraud, he cannot claim a return of the premium; it would be otherwise, however, in the event of fraud on the part of the underwriter.

Where the contract of insurance is illegal, and the voyage has been performed, there is no return of the premium; for in such a case the rule applies-in pari delicto melior est conditio possidentis.

Of course, where there is an express stipulation that the premium shall be returned upon a certain contingency, the parties are bound by it; in some cases an established usage on the subject has been proved.

CHAPTER VIII.

HYPOTHECATION.

1. Hypothecation, what it is.—When Master may Hypothecate Ship, Cargo, or Freight.—Indemnity to Owner of Cargo on Hypothecation.—How Master must Hypothecate.

2. Remedies on the Contract.-Court of Admiralty.-Order of Priority.

3. Sale. When Master may Sell the Ship.-When he may Sell the Cargo.-Indemnity to Owner of Cargo.

1. HYPOTHECATION is a contract of pledge, whereby, in consideration of money advanced for the necessities of the ship, the vessel, freight, or cargo is made liable for its re-payment, provided the ship arrives in safety, and it is usually effected by a deed called a bottomry bond.

The right of the owner to hypothecate is not limited, as is that of the master, to cases of necessity; the latter may hypothecate the ship, freight, or cargo, in cases of necessity only. Necessity is the very foundation of this right. If the master, when in a foreign country, or when placed in any other position in which it is impossible to communicate with his owners, is in want of money to repair or victual the vessel, or for other necessaries, he is bound, in the first instance, to endeavour to raise it on the credit of his owners;

if he can do so, he must; but if he cannot otherwise obtain the money, he may hypothecate. The money must be needed for the ship, and for her present voyage.

As a bottomry bond is altogether void if executed under circumstances not warranting the hypothecation, the lender must, at his peril, ascertain that a necessity for the loan exists, i.e. that without an advance of money the ship cannot proceed, and that such advance cannot be obtained on personal credit. But he is not bound to inquire into the expediency of the intended repairs, unless they are so flagrantly inexpedient as to raise a presumption of fraud, nor is he bound to see to the proper application of the money when borrowed.

In raising money upon bottomry, the master acts exclusively as agent of the shipowner, although the sum requisite for the repairs may exceed the value of the ship when repaired, and the master may be therefore obliged to hypothecate the cargo as well as the ship. But the shipowner is bound to indemnify the owner of the goods against the consequences of the hypothecation.

When the goods are supplied, or the advances made, there must be an agreement that the amount shall be secured by hypothecation, and not by personal credit only. Bills of exchange are often given as collateral securities, and do not affect the validity of the hypothecation. The repayment of the money must also be dependent upon the ship's arrival at her destination.

As these instruments are the creatures of necessity and distress, and usually contain the language of commercial men and not of lawyers, they receive a liberal construction.

The contract of hypothecation being a mere chose in action, is not assignable at law, but in the Court of Admiralty it is considered to be assignable, and proceedings may be taken on it against the ship by the person to whom it is transferred.

2. The hypothecation of the ship does not render the shipowners liable to be personally sued. The remedy of the creditor is either against the master himself, or against the ship, which is liable into whosoever's hands she may come. The usual and most beneficial remedy for the holder of bottomry bond is a proceeding in rem in the Admiralty Court against the ship, freight, or cargo.

The holder of a bond is, in this Court, entitled to priority over all the other creditors, except claimants for wages; but inter se the bond-holders are, in the absence of special circumstances, entitled to priority in an inverse order, the last being paid first, as the last necessary loan saves the ship, and renders the other securities available.

3. The principles which govern the right of the master to sell the ship, are similar to those which have been mentioned as justifying a hypothecation; the two most important points to inquire into in each particular case are, whether the course pursued was absolutely necessary, and whether the master acted

with bona fides in the transaction. If the termination of the voyage is hopeless, and no prospect remains of bringing the vessel home, and nothing better can be done for his employers, the master may sell the ship for the benefit of all concerned; but if the sale be not justifiable, no title to the ship passes to the vendee.

The master may, in cases of absolute necessity, i. e. where there is a total inability to carry the goods to their destination, sell a part, or even the whole of the cargo; and such a sale transfers the property, and binds the owner of the goods. In the case of a wrongful sale, the shipowner is liable in an action on the case at the suit of the owner of the goods.

If the master necessarily sells the goods at an intermediate port for repairs, and the ship afterwards arrives at her destination, the shipper may, at his option, claim from the shipowner either the price for which the goods actually sold, or the amount for which they would have sold at the port of discharge. If, however, the ship is lost on her voyage home, the shipper cannot claim the amount for which his goods would have sold had the ship arrived. Whether, in this case, he is entitled to the price for which they actually sold, has never been determined in our Courts.