The European and Australian Royal Mail Company Ltd v The Royal Mail Steam-Packet Company
| Jurisdiction | England & Wales |
| Judgment Date | 23 July 1858 |
| Date | 23 July 1858 |
| Court | High Court of Chancery |
English Reports Citation: 70 E.R. 281
HIGH COURT OF CHANCERY
Merchant Shipping Act, 1854. 17 & 18 Vict. c. 104, s. 70. Power of Mortgagee to Use Ship. Registered Owner. Equitable Interest in a Ship.
[676] the european and australian royal mail company, limited, v. the eoyal mail steam-packet company. July 22, 23, 1858. Merchant Shipping Act, 1854. 17 & 18 Viet. c. 104, s. 70. Power of Mortgagee to Use Ship. Eegistered Owner. Equitable Interest in a Ship. A mortgagee of a ship has power, under the 70th section of the Merchant Shipping Act, 1854, to use, as well as sell, the ship-semble. Where a mortgagee claimed under a special contract, which did not contemplate a sale by him until two months had elapsed after a demand for payment: Held, upon the construction of the agreement, and especially having regard to the circumstance that the ship would otherwise remain useless in that interval, that he was at liberty to use the ship. In such a case, the circumstance of the mortgagee being registered as absolute owner is not conclusive as to the rights of the parties. Further observations as to the power of the Court, under the Merchant Shipping Act, 1854, to recognise equitable rights in a ship as distinguished from those of the registered owner. Previously to July 1857 the Plaintiffs adopted a contract for the Australian Mail Packet service, then lately entered into with the Government by another company; and for the purpose of carrying out that contract they provided four steam-vessels and made arrangements for providing an additional number, including a ship called The Tasmanian, for the building of which they entered into a contract with certain shipbuilders at Glasgow. In July 1857, finding their vessels and capital insufficient for the fulfilment of their contract with the Government, the Plaintiffs opened a negotiation with the Defendants for an amalgamation of the Plaintiffs' and Defendants' companies; but as this object could not be effected without the authority of Parliament, it was determined to apply to Parliament for an Act for that and other purposes. By an agreement, dated September 1857, entered into between the Defendants and the Plaintiffs in anticipation of the amalgamation of the two companies, and with the view to their being in the meantime worked in terms of the amalgamation approved of by the said companies re-[677]-spectively, it was agreed (inter alia) that the Defendants should undertake the fulfilment of the Plaintiffs' contracts with the Gorvernment; that the vessels required for the service should be furnished by the Plaintiffs to the extent of the then existing stock of vessels, which should continue to be used so far as required in and towards performing the service between Suez, Australia and India; that the Defendants should provide the stores and all other matters required in the employment of the ships, and should receive all moneys payable for freight, passengers or otherwise in connection with the service; that application should be made to Parliament for an Act to enable the two companies to amalgamate; and that, in the event of the failure of such application, the now-stating arrangement should be in force for nine months. On the 24th of December 1857, the Defendants having applied to the Plaintiffs for security for the amount expected to become due, in consequence of the agreement of September, in the event of the proposed amalgamation not being effected, the Plaintiffs executed an assignation of that date, whereby they assigned in favour of the Defendants all their right and interest in The Tasmanian, then still in building and incomplete, with full power for the Defendants to receive, and, if necessary, to sue for delivery of that steamer, and to receive, and, if, necessary, to sue for delivery '282 EUROPEAN AND AUSTRALIAN EOYAL MAIL CO. V. 4K. &J. 678. of the builder's certificate, and to register themselves as owners thereof, and generally to do everything in the premises which the Plaintiffs could have done at or before the granting of such assignation. On the same day the Plaintiffs and Defendants executed a memorandum of agreement of even date, whereby, after reciting the assignation, it was declared and agreed with reference thereto as follows:-1. The Plaintiffs bound themselves to complete The Tasmanian at their own ex-[678]-pense. 2. In case the Defendants should advance any sum or sums of money to complete and finish the said steamer, which, however, they should be in no ways bound to do, such advance or advances should form a preferable claim on the said steamer. 3. After...
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