BOTTOMRY BOND or CONTRACT (for derivation, see bottom). An agreement for a defi nite period of time or for a voyage by the owner or master of a ship, pledging the ship or the ship and its freight or cargo as security for the repayment of money lent for the use of the ship. It is so called because a ship's bottom or keel is figuratively used to express the whole of it. \Viten the cargo alone is pledged for its safe ar rival. the agreement is strictly called a respon dentin bond (q.v.). The loan is made upon a maritime risk, i.e. upon the condition that the loan or debit, together with the stipulated inter est, is repayable only on the safe termination of the voyage; otherwise the lender loses his debt. In consideration of the hazard, he may exact any rate of interest, not grossly e:stortionate. which the nature of the adventure may justify. The agreement is usually in the form of a bond, and must set forth all the necessary terms, especially the maritime risk. The owner may hypothecate the vessel or its freight. and execute a bottomry bond at any time and for any purpose; hut the master can do so only under stress of necessity in a foreign port, destitute of funds and unable to communicate with, or to receive instruction from, the owners.
Contrary to the rule of ordinary mortgages, preference among bottomry bonds is not had according to order of date, but inversely, the latest having priority, on time theory that the last loan saved the ship. The United States
statute which provides for the recording. in the office of the collector of customs of the port. of registry or enrollment, bills of sale, mortgages, hypothecations. and conveyance of vessels, under penalty of their being otherwise invalid as against others than parties having actual notice, and the grantor or mortgagor, his heirs and devisees, expressly except the lien of a hottomry bond from the operation where such lien has been created by loan of money or materials necessary to repair the vessel or to enable her to prosecute time voyage, so that the lien does not lose its priority and is not affeeted in any way by the requirements of the act. A bottomry bond is, however, subordinate to the lien of the seamen for wages, even though in some eases given after the wages were earned, and to liens for repairs or supplies indispensable for the safety of the ship. Where the holder is com pelled to satisfy a lien for wages, it seems that he is entitled to compensation from the owners, and has a lien upon the proceeds of the ship for See DM I RA LTY LAW ; MARI TIME LAM' ; and the authorities there referred to.