The contract of bottomry is essentially different in its nature from almost all others. It differs from a simple contract of loan, because, in a loan, the money lent is at the risk of the borrower, and must be paid at all events; whereas, in bottomry, it is at the risk of the lender during the voyage. Upon a loan, the legal interest only can be reserved ; in bottomry, on the other hand, any interest may be legally reserved, which is stipulated between the parties. The con tracts of bottomry and insurance, however, resemble each other in several particuhrs ; for the lender on bottomry, or at respondentia, runs almost the same risks, with respect to the property on which the loan is made, that the insurer does, with respect to the ef fects insured. The lender and the insurer are alike liable to the perils of the sea ; the former receives the marine interest, and the latter the premium, as the price of the risk, which varies, of course, according to the length and danger of the voyage. Neither the marine interest nor the premium of insurance is due, if no risk be run, even should this be prevented by the voluntary act of the borrower. There are, how ever, several material distinctions between these two contracts. Thus, in bottomry, the lender supplies the borrower with money to purchase those effects upon which he is to run the risk whereas an insu rer furnishes no part of the property insured. Vari ous other distinctions might be pointed out between these two contracts ; but it is presumed they will readily occur to the reader, from a consideration of the nature of the several obligations.
In the contract of bottomry, or respondentia, there are principally four things to be considered : The situation of the parties contracting ; the articles to be hypothecated, or pledged in security ; the nature of the risk which is to be run ; and the rate of the premium, or marine interest.
With regard to the parties in this contract, it be observed, that all persons, who arc capable of en teeing into a contract, may lend money on bottomry ; and any person, who has a vested assignable property in a ship or cargo, may borrow money on bottomry, or respondentia, to the extent of his interest. We have already observed, that this contract appears to have derived its origin from the practice of permitting the master of a ship, when in a foreign country, to hypo thecate the ship in cases of necessity, in order to raise money to refit. Such a permission, indeed, is absolutely necessary for the safety of the ship, and to ensure the success of the voyage ; and it seems to he implicitly given him in the very act of constituting him master, not indeed by the common law, but by the marine law, which, in this respect, is reasonable : For if a ship happen to be at sea, and spring a leak, or the voyage be likely to be defeated for want of ne cessaries, it is better that the master should have it in his power to pledge the ship and cargo, or either of them, than that the ship should be entirely lost, or the object of the voyage otherwise defeated. • With
respect to the purposes of this contract, however, the master possesses no such power, until he actually be comes master, or, as far as this business is concerned, until after he sets sail. And therefore, although he has this power while abroad; because it is absolutely necessary for the purpose of commerce and naviga tion, yet the very same authority, which gave that power in such cases, has denied it when he happens to he in the same place where the owners reside. Hence, if he borrows money on bottomry in the place where his owners reside, without their express authority, the act can only be binding on himself', and affect his own interest on board. Nor is the master allowed in a foreign country, and in absence of the owners, to raise money on this contract for any debt of his own, but merely for the use of the ship, and that only in cases of necessity; which necessity must appear in the written contract, otherwise the lender will have neither a lien on the ship, nor an action against the owners, the master alone being liable. This seems clear from the laws of Oleron and of the Haase towns, and also from the cases which have been determined at the common law upon the subject. The lender, however, is not bound to look to the ap plication of the money which he may have lent upon bottomry contract, hut shall have his lien on the ship, and his action against the owners, without being obliged to prove that the money was properly applied, unless indeed he be himself an accomplice in any fraudulent misapplication of it, on which ground the owners may impeach the contract.
There is no express restriction, by the law of Eng land, as to the persons to whom money may be lent on bottomry, or at res/rondentia. A statute, indeed, (21 G. H. c. iv.) was once introduced into our code of laws, with a view of preventing insurances from being made on the ships or goods of Frenchmen, du ring the then existing war with France ; which also prohibited his majesty's subjects from lending money on bottomry, or at respondentia, on any ships or goods belonging to the subjects of France. But that act was not of long continuance, on account of the peace which almost immediately followed it ; and the re straints thereby imposed upon this species of contract were never afterwards revived by any positive law.
As insurances, however, upon the property of an my, in time of war, are held to be illegal at common law ; so also is the lending of money on bottomry, or at respondentia, in similar cases.