1876 ALLISON บ. BRISTOL MARINE INSURANCE CO. MR. JUSTICE freight, either by repaying it or insuring it for the Defendant. H. L. (E.) The plea was held to be bad for several reasons. But Baron Watson gave this reason, "There is no doubt what is meant by this stipulation. It provides for a payment of freight in advance. The Defendant, then (who was the charterer), was the only person who could have insured the freight. It therefore seems clear, that the payment by the Defendant was to be subject to a deduction for the expense of the insurance which he was to effect." This case shews the true meaning of the stipulation, that the charterer will advance freight, or a part of it, "subject to insurance," or "less insurance." If there had been no advance, the shipowner would have had to insure. If the charterer had advanced without deduction, the shipowner would have obtained the full freight without the burden of having to insure, and the charterer would have had to pay the full freight, and besides to insure. In order to restore the position of both to what it would be if the freight were to be paid at the end, instead of at the beginning, of the voyage, the advance is paid, less insurance. The shipowner gets the freight at the beginning, less what he would have had to pay for insurance if he were only to get the full freight at the end; the charterer pays the freight at the beginning, less the amount which he must, for so doing, have to pay for insurance against the risk cast upon him by the prepayment. This is precisely the explanation of the present charterparty given by Baron Cleasby in the Court of Exchequer Chamber. In Byrne v. Schiller (1) the action was on a charterparty between the Plaintiff as owner, and the Defendant as charterer, to recover a sum of £737, alleged to be due for advance freight, although the ship was lost on the voyage. The charterparty was to carry rice in bags from Calcutta to Colombo, the charterer paying freight on the same at, &c., per bag of rice delivered; such freight to be paid as follows: £1200 to be advanced at Calcutta against master's receipt, and to be deducted, together with 1 per cent. commission on the amount advanced and cost of insurance, from freight on settlement thereof, and the remainder on right delivery of the cargo at port of discharge. The master to sign bills of lading at any current rate of freight required, without prejudice to the charter (1) Law Rep. 6 Ex. 20; in error, Ibid. 319. 1876 ALLISON บ. BRISTOL INSURANCE CO. MR. JUSTICE BRETT. H. L. (E.) party, but not under chartered rates, except the difference is paid in cash. It was held, that both the £1200 and the £737, which was the difference between the bill of lading and charter freight, were sums agreed to be paid as advance of freight, and therefore that the Plaintiff was entitled to recover the whole of both, although the ship was lost on the voyage. In the Court of Error, it was argued by Mr. Butt for the Defendant, in an exhaustive argument of great research, that a prepayment of freight is not final, but can be recovered back if the goods are lost, and the freight, therefore, never earned. In answer, Cockburn, C.J., said: "We are all agreed that the law is too firmly settled for us to depart from it, even in a Court of Appeal, that where freight is paid in advance it cannot be recovered back." It was also held that, upon a true construction of the charterparty, both sums, that of £1200 and that of £737, were payments to be made in advance of freight. It should be observed, as to the £1200, that not only that sum was to be deducted, but also the cost of insuring it was to be deducted, from the freight to be earned. And, farther, that no one suggested that anything less than the whole advance freight was payable, although the whole cargo was lost. It becomes necessary, in the next place, in consequence of the argument founded on them, to consider the true import of the often-quoted words of Lord Kingsdown in Kirchner v. Venus (1). In that case there was no dispute that the freight was payable by the shipper in advance. It was agreed that it should be paid by him in advance at Liverpool. The port of discharge was Sydney. The bills of lading were indorsed for value. The shipper did not make the stipulated payment in advance. The captain at Sydney claiming a lien on the cargo for freight, refused to deliver the cargo to the assignee of the bill of lading without payment by him of the freight. The advice of the Council was, that there was no lien. It was not necessary to say, that advance freight was not freight at all. It was only necessary to say, that the incident of lien did not attach to freight so to be paid. And I think that the latter is all that is said by Lord Kingsdown. He does not say, that the money payable in advance is not freight at all. Contrasting the characteristics or incidents of the money agreed (1) 12 Moo. P. C. 361. 1876 ALLISON v. BRISTOL MARINE INSURANCE Co. MR. JUSTICE to be paid in advance for the carriage of goods in a ship, with H. L. (E.) those of money to be paid on delivery of the goods, he says, that the first does not acquire the legal character of the other, nor does it acquire its legal incidents. By the first, he is alluding to the characteristic of freight not being payable till earned by carriage, and by the second, to the incident of lien. So, in the next phrase, he does not say that the money is paid for taking the goods on board, &c., but that it is so in effect. He did not mean to say that prepaid freight, or money to be paid in advance of freight, is not freight, or a part of the freight for the carriage of the goods, otherwise, in the first place, he would, if the whole freight were to be prepaid, leave it,-that the cargo was to be carried on the voyage for nothing, and indeed, as it would seem, that there would be no contract to carry on the voyage; and in the second place, at least, he would reduce such advance to a loan, and so hold in contravention of all the cases. The decision is, that where the agreed time of payment of the freight is not contemporaneous with the time of delivery of the cargo, there is no implied right of lien. The observations of Lord Kingsdown are pointed to that question. The true meaning of them is, that, so far as concerns a question of nothing being due until delivery, or a question of lien, it is the same, in effect, as if the money were to be paid for taking the goods on board, &c., and as if it were not to be paid for carrying them. The case of Tamvaco v. Simpson (1), in the Court of Exchequer Chamber, is in accordance with the case in the Privy Council. The case of Watson v. Shankland (2) was relied on. It was an appeal from Scotland. There is great doubt whether the English rule as to prepaid freight applies in Scotland. If it does not, I should venture to think that prepaid freight is, in Scotland, a loan. If it does, I should venture to think that the advance, on such a contract as was proved in the case, was prepaid freight, and on that ground could not be recovered back. The decision, however, was, that, assuming the advance to be a loan, it could not be recovered back. If in the present case, which is to be decided according to English law, the advance could be treated as a loan, it might be necessary to consider that case with the utmost atten(1) Law Rep. 1 C. P. 363. (2) Law Rer. 2 F. L., Sc. 304. 3 Q VOL. I. 1876 H. L. (E.) tion; but it was not argued in this case that the advance was a mere loan, and it would, as it seems to me, be impossible to hold that it was, without overruling all the cases on this subject, or the doctrine assumed in all which have been decided, since the time of Charles II. ALLISON v. BRISTOL MARINE INSURANCE CO. BRETT. I have drawn attention to all the cases, in order to shew how MR. JUSTICE uniform the view has been as to what construction is to be put upon shipping documents in the form of the present charterparty, and as to the uniform, though perhaps anomalous rule, that the money to be paid in advance of freight must be paid, though the goods are before payment lost by perils of the sea, and cannot be recovered back after, if paid before the goods are lost by perils of the sea. Although I have said that this course of business may in theory be anomalous, I think its origin and existence are capable of a reasonable explanation. It arose in the case of the long Indian voyages. The length of voyage would keep the shipowner for too long a time out of money; and freight is much more difficult to pledge, as a security to third persons, than goods represented by a bill of lading. Therefore the shipper agreed to make the advance on what he would ultimately have to pay, and, for a consideration, took the risk in order to obviate a repayment, which disarranges business transactions. It seems to me, and I submit that, on a review of all the cases, the true construction of the charterparty in this case is, that the £2000, which were to be paid and were paid in advance, constituted a prepayment of the freight payable under the charterparty, and no part of it could be recovered back by the charterer from the shipowner, and that the stipulation as to deduction for insurance did not alter this right of the shipowner. I do not understand that it is denied that the freight to be earned, and earned by the shipowner in this case, was £2 per ton on the amount of coal delivered at Bombay. Indeed, to hold otherwise would be flatly to contradict the charterparty. But it is suggested, and was held in the Exchequer Chamber, that the prepayment under such a contract is not in respect of the freight which is eventually earned, but of the freight which would be earned if the whole cargo should arrive and be delivered, so as to be a prepayment of so much per ton on every ton of the cargo shipped. Let this be 1876 ALLISON v. BRISTOL MARINE INSURANCE Co. BRETT. tested on the assumption that no part of the advance can be paid H. L. (E.) back, which I submit is conclusively proved to be a correct assumption by the cases I have cited, and that there is no insurance by either party. Taking the figures of the present case, if 1000 tons are delivered, the freight earned is £2000; but the charterer could, upon the assumption, only affirm effectually that £1 per ton had been prepaid in respect of those 1000 tons; there- MR. JUSTICE fore he must pay the other £1 per ton, or £1000, for freight. The charterer will have paid £3000, and the shipowner will keep £2000, and receive £1000, or in the result have £3000. The one will in effect have paid, and the other have received, £3000 for the delivery, after transport, of 1000 tons. In effect that will be £3 per ton. If 500 tons are delivered, £500 are to be paid for freight; £2000 are to be kept; £2500 are in effect paid and received, or in effect £5 per ton. If 1500 tons are delivered, £1500 are to be paid for freight; £2000 are to be kept; £3500 are in effect paid and received, or in effect £2. 6s. 5d. per ton. The charterer, upon the assumption, must in effect pay more than £2 per ton in every case, except where the whole cargo is delivered. And if the shipowner is to pay back a part, then either a part is a mere loan, or money which is prepaid freight must be paid back, both of which views are contrary to all the cases. Whereas, on the contrary, if the amount of freight earned is set down according to the quantity of cargo delivered, and so debited to the charterer, and he is credited against it, as a whole, with the amount paid in advance, every word of the charterparty is satisfied, no word is contradicted, and nothing is done in conflict with any decided case. It follows that, in my opinion, the shipowner, the Plaintiff in this case, could not have claimed anything more from the charterer than the £2000 which had been prepaid; that the only freight which the Plaintiff had at risk was the balance, if any, of freight to be received at Bombay, if the ship with sufficient cargo arrived there; that the freight which was insured was that freight or balance of freight which was to be received at Bombay if the cargo should arrive safely, and lost if it did not, and that there was a total loss of such insured freight. I entirely agree with the judgment of Baron Cleasby in the Exchequer Chamber, and with the reasons given by him for it. I cannot |