Scottish Court of Session Decisions

This is an action laid upon a bill, and arises out of the following circumstances:—The defender Bjornstrom is master of the ship Tahti of Russia, and the other defenders are its owners. In November 1863, the vessel being at Liverpool, the master and the owners entered into a charter-party with Messrs Ogle and Co., London. By this contract it was provided that sufficient cash at current exchange, not exceeding £1000, was to be advanced on account of freight for ship's disbursements at Calcutta, free of interest and commission, but subject to insurance. The vessel arrived in Calcutta, and when there in July 1864, the master applied to the charterers’ agents in Calcutta, Messrs John Ogle and Co., and having received £800 on account of disbursements for the ship, drew a bill on the charterers in London, in favour of their agents in Calcutta, Messrs John Ogle and Co. The bill is in the following terms:—

“2767. 23d Nov. 23d Nov.

A 5978. No Exchange for £800, 0s. 0d.

Calcutta 9 th July 1864.

At three months after sight, pay this our First of Exchange (second and third of same tenor and date not paid) to the order of Messrs John Ogle and Co., the sum of eight hundred pounds sterling, value received, and charge the same to account of freight, per ship Tahti.

(Signed) M. Bjornstrom,

Master of the Ship Tahti.

To

Messrs Ogle & Co.,

21 Great St Helens, London, E.C.

B 357. Refer to acct.

Indorsed on back——

John Ogle & Coy.,

Walker, Cotesworth, & Coy,

Pay Messrs Barclay Bevan & Co. for the North-Western Bank (Limited), Liverpool.

A. Edmondson, Manager.

Barclay & Co.”

The bill was indorsed by John Ogle and Co. to Walker, Cotesworth. and Co., and by them to the pursuers, the North-Western Bank (Limited). It was accepted by Messrs Ogle and Co. of London, but ultimately remained unpaid in consequence of their insolvency. The pursuers, therefore, brought their action for the amount of the bill against the parties and the owners of the ship. Besides maintaining their non-liability, the defenders aver

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that a bill was fraudulently obtained from the master in place of a receipt, and that he signed it under essential error as to its nature, and under false representations on the part of John Ogle and Co., but the judgment of the Court did not turn on these averments. The Lord Ordinary (Kinloch) assoilzied the defender, the master, on the ground that the Court had no jurisdiction over him, he being an undomiciled foreigner; and the owners, on the ground that the master was not entitled to bind them in that manner. The following are the parts of the Lord Ordinary's note explaining his judgment:—

“It appears to the Lord Ordinary that, in the circumstances set forth by the pursuers themselves, the master had no authority whatever to draw this bill. He was, of course, bound to provide for the ship's necessary disbursements at Calcutta. But the charter-party expressly stipulated that, in order to make these disbursements, the charterers’ agents were to pay in cash a sum not less than £1000. The sum so to be paid was to be a payment on account of freight. The master had no authority to do anything but receive the amount, grant a receipt for it on behalf of the owners, and then expend the sum on behalf of the ship. He had no authority whatever to draw a bill for the amount on the charterers in London. This was contrary to the terms of the charter-party, which stipulated, not for a bill drawn from Calcutta, but for cash paid down at Calcutta. The effect of his drawing this bill, and by implication making his owners parties to it, was just that, if the charterers failed (as in point of fact they did), a claim for the amount would be made against the owners (as it is now), and if this claim were made good, the owners would have simply to pay back out of their pockets the sum which they lawfully received under the charter-party.

In the view of the Lord Ordinary, it is unnecessary in the present case to consider what authority the master might have had to draw a bill for necessary furnishings, not otherwise provided for. The proper bill to draw in that case would have been a bill on his owners. The present is not a bill on his owners. It is a bill on the charterers for a sum to account of freight, a thing in which the master had no right whatever to mix himself up. The question is not now raised as to whether a master in want of necessary furnishings, and supplied by a house abroad with the sum required, can pledge the credit of his owners by a bill which may be indorsed away to an onerous holder, as the bill was in the present case. The general rule is that a ship-master cannot bind his owners in a bill-debt, and that to raise, the obligation requires some extrinsic ground of liability— London Joint-Stock Bank Co. v. Stewart, 15th July 1859, 21 D. 1327. But the special circumstances of the present case exclude the general question. It is enough that the master had no right or authority to draw such a bill as that now sued on. The pursuers cannot succeed in their present claim unless by making good such authority.

The Lord Ordinary has therefore had no difficulty in assoilzieing the defenders Bergbom, the owners of the vessel, with whom the question is competently tried through an arrestment jurisdiction fundandæ causa laid on the vessel. Excluding the claim against the owners, there remains a claim against the master, Mathias Bjornstrom, individually. It is only in his individual capacity, not in that of master, that the claim can lie if the owners are not bound. This defender may probably be bound as a subscribing party to the document. But the Court has no jurisdiction to give decree against him. The arresment of the vessel was not an arrestment of individual property of his. He is an undomiciled foreigner. It is said that the summons was executed personally against him. But this will only give jurisdiction where the contract was made in this country. It was not so made in the present case.”

The pursuers reclaimed.

The Lord Advocate and Lee, for them, argued-The owners are liable both under the bill as drawers, and also in respect the money was advanced for necessary and proper charges and disbursements on account of their ship. Having obtained the advance of the sum concluded for by means of the bill they are not entitled to resist payment on the ground that the master had no power to bind them in that form. The pursuers are in the same position as indorsees of the bill—as the pursuers in the cases of London Joint-Stock Bank Co. v. Stewart, 15th July 1859, 21 D. 1327; and Drain & Co. v. Scott, Nov. 25th 1864, 3 Macp., 114. The case as against the shipmaster was not insisted in.

Millar and Guthrie Smith, for answered—The action is laid entirely upon the bill, and the defenders, the owners of the vessel, are no parties to it. Further, the master of a ship is not entitled to bind the owners by a bill debt.

At advising,