by the ship-owner; for such insurers are entitled to bring a subsequent bottomry loan into account in diminution of the amount payable to the ship-owner, as a reduction of his insurable interest. Read v. Insurance Co., 3 Sandf. 54, 63; Watson v. Insurance Co., 3 Wash. C. C. 1; Allen v. Insurance Co., 1 Gray, 154; 2 Pars. Mar. Law, 418. By various continental Codes, insurance of sums borrowed on bottomry is void; though every where insurance of moneys lent is valid. German Code, § 873; Italian Code, §§ 638, 599, 607, French Code de Com. §§ 379, 380, 331, 347; Netherlands Code, §§ 675, 599, 600. On a constructive total loss, therefore, the benefit of the salvage ought to inure to the bottomry lender, as much, at least, as to the insurers of the ship; otherwise, the latter would get the whole benefit of the bottomry as a partial insurance, and of all of the wreck besides. The French Code, (section 331,) following, in such cases, the views of Valin, requires a pro rata division. By our law the bottomry lender, in such case, takes the whole salvage; because the insurer stands only in the shoes of the owner; and the latter, contrary to the views of Valin, is not deemed entitled to come into concourse with the lender as respects any excess in the original value of the pledge. This says, Émérigon, is based, not on logical grounds, but on the arbitrary favor accorded to the bottomry lender., 3 Kent, Comm. *359; Insurance Co. v. Gossler, 96 U. S. 652, 656; Émérig. Traité des Assur. c. 17, § 12; 3 Valroger, Droit Mar. §§ 1149–1156. Upon a brief contract like this bottomry draft, therefore, where much is necessarily left to implication, (1 Phil. Ins. § 427,) I think the express lien survives, so long as any part of the res remains, the same as where the average clause is inserted. Such is the right of the ordinary bottomry lender, according to the continental authorities, (Appleton v. Crowninshield, 3 Mass. 463, 467, 8 Mass. 363;) such are the express provisions of various continental Codes, (1 Phil. Ins. § 1170; French Code of Com. § 327; Italian Code, § 599; Netherlands Code, § 588;) and such is the Code of Germany, §§ 691, 692, to which country this vessel belonged. But no lien can survive the loss of the res itself, and of all the proceeds of funds that repre.sent it. If the Ilo Ilo freight money was necessarily expended for the completion of the voyage, in consequence of previous sea periis, and was subsequently lost with the ship, nothing could remain save a possible right of action against the master or owners for a subtraction of the fund, provided the use made of the freight moneys was unlawful; or for indemnity, in case any legal right of indemnity accrued from the master's use of the money. This will be referred to below, in connection with the question of abandonment.

2. This insurance contract was not a divisible contract, as respects the different ports of Ilo Ilo and Manilla; nor was it discharged pro tanto by the master's collection of the $1,900 freight at the first port. Had the case been one of simple insurance by a ship-owner of his whole freight at a valued sum, such would have been the legal effect of the contract, (2 Phil. Ins. § 1499,) for the insurance follows the risk and the subjectmatter insured; and when the freight at an intermediate port is fully earned and collected, without any impairment through prior sea perils,

it becomes immediately available to the owner as his property; and, being no longer at risk, the intent of the insurance contract is pro tanto fulfilled. But the situation of the insured lender on bottomry, and the intent of this contract, are evidently wholly different. This insurance was not an insurance of "the ship" or "freight." Under that language the bottomry lender would not have been covered; his policy would have been of no value. 1 Phil. Ins. § 427. By all the Codes and text writers, sums loaned on bottomry are a separate and distinct subject of insurance. This certificate declares the insurance to be "on advances against the bottomry draft valued at $4,560," and to cover "all sea perils that might prevent its collection, in whole or in part." The insurance began when the risk began, and ended only when the risk ended. The lender's risk was the risk of being unable to collect his advances from the ship and freight; and his risk continued in its entirety until the vessel reached Manilla, or was lost. Even had this contract directly insured "the ship and freight" to the extent of $4,560, the insurers could only have been credited, as respects the $1,900 collected, with such proportion of it as the $4,560 bore to the whole value of the ship and freight, i. e., with probably not over one-fifth of it; the owner being deemed his own insurer as to the residue, and as such entitled to his pro rata of the collections. But the fact that the Ilo Ilo freight had been earned and collected did not diminish in the least the bottomry lender's risk on his advances, because that freight was not then legally available to him, and might never become available; and in that event it could not possibly discharge any part of the obligation of the draft, or of the risk attendant upon it; and hence it did not discharge any part of the insurance contract, which guarantied its "collection" at Manilla as against sea perils. The insurance contract, I repeat, was neither in substance nor in effect an insurance of the Ilo Ilo freight, but an insurance of the $4,560 loan, and of its collection at Manilla, so far as collection might be defeated by sea perils. No collection could avail in discharge of the insurers unless or until it was legally available to the lender; and by the draft nothing was available until arrival at Manilla, or the breaking up of the voyage. The conditions of the draft applied to it as an entirety; and the insurance contract, which was commensurate with the risk, continued in its entirety.

The libelants, moreover, by their loan and draft, did not become owners of any part of the ship or freight. Insurance Co. v. Gossler, 96 U. S. 645, 654. They acquired a lien or privilege upon them, and nothing more. They could not abandon either ship or freight, in case of a constructive total loss; that right belonged to the ship-owner only. The libelants could abandon only their interest in the draft and in the lien created by it. By the very terms of the draft it could not be enforced except upon arrival at Manilla; or, by implication of law, upon the previous loss of the vessel, so far as respects any salvage from the wreck. This is shown conclusively, both by the condition of the whole obligation, and by the further express provision of the draft itself, which directs the "payment of the amount of this obligation [i. e., the whole amount] by the consignees at the final port of destination from the first amount of freight received."

It is a part of the definition of bottomry (article 680 of the German Code) that "the creditor can exercise his rights only upon the hypothecated objects after the arrival of the ship at the place where the voyage ends." Such is clearly the ordinary incident of bottomry. When the $1,900 was collected, the libelant, therefore, even if present at Ilo Ilo, could not have claimed it. He could take no steps to "collect" his draft till the end of the voyage. His own risk and that of his insurers, therefore, continued entire until that time. The rights of the assured are to be judged according to the state of things as they actually existed at that time. The insurance contract speaks as from that time. It admits of no severance as respects the two ports; because the draft admits of no severance, and no part of either contract was fulfilled or discharged.

In view of the above-quoted provision of the draft itself, I think its true construction and intent are practically not to subject the Ilo Ilo part of the freight to the bottomry lien at all. The evidence shows that the Manilla freight would have been three times that of the Ilo Ilo freight, and considerably in excess of the whole draft, to say nothing of the value of the ship, which was also pledged, and the express direction to the consignees at Manilla to pay the whole sum out of the Manilla freights, clearly shows that that was the special fund from which the parties intended the loan should be paid. It was known that freights would be collected at the intermediate port of Ilo Ilo. It is not credible, considering the terms of this draft, that the parties intended or expected that the Ilo Ilo freights should be tied up until the vessel reached Manilla. Had those funds been intended to be applied to the draft, there is no reason why that intent should not have been expressed, and those freights directed, like the Manilla freights, to be applied on the loan, so far as they would go. On the contrary, the Ilo Ilo freights are virtually excluded, both by postponing all payment till the final port of Manilla, (the word "final" being written and interlined in the printed form,) and by devoting the Manilla freights to the payment of the whole amount. The specific provision controls the former general one. This construction of the draft is apparently sustained by the remarks of Émérigon as respects the owner's rights at intermediate ports, on a pledge of cargo, even without the aid of any such special provision as this in the bottomry contract. "The borrower on bottomry of merchandise," says he, "is not bound to put at risk more than the amount of the loan. If he gives more, it is voluntary, and the excess is not irrevocable. He may, in the course of the voyage, discharge such excess of merchandise, without the lender's having any right to complain. * * * If the borrower

See

shows that at the time of the disaster he had effects of his own equal to the sum borrowed, he is freed from all obligation; and the contract, as respects the lender's rights, will be reduced to the value of the effects saved from the wreck itself." Conts. à la grosse, c. 12, § 2, p. 569. Ordinance 1681, tit. 5, § 14; Code de Com. § 329; Italian Code, § 602. Boulay-Paty, in his Conferance, expresses no dissent to this doctrine, and it is sustained by the latest French authors, (5 Desjardines, Droit Com. Mar. § 1192, p. 321; 2 Laurin, Cresp. Droit Mar. 371.) Val

roger (2 Droit Mar. p. 139, §§ 1120, 1133) would limit the owner's right to deal independently with the excess to circumstances contemplated by the contract; such as "upon a loan for a voyage out and back, or one giving a right to deal at intermediate ports;" and such is precisely the present case.

3. In either point of view, therefore, I must hold the respondents prima facie liable for the whole amount of the insured draft, because there was an actual total loss of the ship and of the Manilla freight by sea perils before reaching Manilla, in excess of the amount insured. If, however, it appeared that there was any other fund available to pay any part of the draft, either from the existence of the Ilo Ilo freight moneys in specie, or of any subsisting legal claim by reason of the use made of that money by the master or owners, (assuming that that part of the freight was subject to the pledge,) the insurers, on payment of the draft in full, would be entitled to the benefit of such fund or claim for their reimbursement. The loss, taking the Ilo Ilo freight into account, would not, in that case, be an actual total loss, but only a constructive total loss; and the assured, on demanding payment in full, would be required to abandon that claim to the insurers, if any express abandonment, or notice of abandonment, in such a case were necessary. From the correspondence between the parties, it is evident that the libelants did make a demand of payment in full, which the insurance company rejected on the ground that the $1,900 Ilo Ilo freight was applicable to the draft, and was of itself a pro tanto discharge of the insurance; a defense which, as I have above held, is not tenable. The agents of the company seem to have been the first to receive intelligence that freight had been collected at Ilo Ilo; and soon after (in February, 1884,) they suggested that the libelants, "for their own protection, should have their friends at Ilo Ilo attend to the collection of so much of the draft as was covered by the freight on that portion of the cargo." In July following, payment of the amount, less the $1,900, was made to the libelants, without prejudice. Afterwards, in August, the libelants, through their adjusters, applied to the indorsers of the draft for payment of the balance, which was refused. Negotiations seem to have been continued with the respondents, who, in a letter of September 27, 1884, promised to aid the libelants, through their counsel, "in arriving at a proper settlement of the $1,900 collected and sent to the owners." Much delay seems to have ensued in ascertaining where the owners were, or in communicating with them. In May, 1886, application was made by letter to one of the owners at Barth, Germany. In June, 1886, he replied:

"The general average of the vessel in question has been settled some two years ago. According to our law, the agents [owners] are not personally responsible for your demands, and I am thus not able to collect anything from the former owners. * * From the money collected by Captain Stickleberg at Ilo Ilo, I received nothing. The same was only enough to pay expenses for discharging at a port of distress, and the owners got no benefit."

*

While these various efforts were being made, the libelants, on the 24th of January, 1885, gave to the defendants a formal notice of abandon

ment of their interest in the bottomry draft, which the respondents a few days afterwards declined to accept, without any statement of their reasons. I greatly doubt, in a case of this kind, where no specific property remains to be dealt with, but at most only a possible right of action for indemnity, whether there is need of any abandonment by the insured beyond that which is implied in the claim of a total loss. See Insurance Co. v. Southgate, 5 Pet. 604. 2 Phillips (Ins. §§ 1682, 1683, 1723) concludes that "the claiming of a total loss is a sufficient expression of an intention to abandon." Lowndes (Ins. §§ 144, 248) says that "the mere act of claiming a total loss is equivalent to abandonment; and, if made in time, no other notice is requisite." As respects a mere claim for indemnity against a third person, the language of the supreme court in the case of Insurance Co. v. Transportation Co., 117 U. S. 312, 6 Sup. Ct. Rep. 750, 1176, seems clear and decisive on this point, although there was notice of abandonment in that case. The court says, (page 320:)

"When goods insured are totally lost, actually or constructively, by perils insured against, the insurer, upon payment of the loss, doubtless becomes subrogated to all the assured's right of action against third persons who have caused or are responsible for the loss. No express stipulation in the policy of insurance, or abandonment by the insured, is necessary to perfect the title of the insurer."

There can be no doubt that on payment of the draft in full, the insurers in this case would have been entitled to any right of action, if any there was, that the libelants had on account of the master's use of the Ilo Ilo freight to complete the voyage. When the libelants made their demand of full payment, it is not conceivable that they intended to retain, or that the defendants imagined that they intended to retain, for their own benefit, any right of recourse against the master or owners; nor, if such had been their intention, would it have been of any avail against the defendants' legal rights by way of subrogation. Again, the ground upon which payment in full was refused, viz., that the insurance contract was pro tanto discharged upon the collection by the master of the $1,900 freight at Ilo Ilo, was equivalent to a waiver of notice, if that were otherwise necessary; for the refusal on that ground rendered notice of abandonment an idle ceremony, and was equivalent to a rejection of any abandonment; because that ground was incompatible with the acceptance of any abandonment. See 2 Phil. Ins. § 1684 et seq. Both parties were acting on the supposition that this freight money, or part of it, had been "sent to the owners," which, upon the correspondence offered in evidence by the defendants, it now appears was not the fact. The assured, if abandonment was necessary, were also entitled to a reasonable time to ascertain the facts; and the express notice of abandonment in this case, though nearly a year after the loss of the vessel, was a year and a half before the facts were fully ascertained. In endeavoring to learn these facts they had the assistance of the respondents; and there is no indication that the latter sustained the slightest prejudice through the delay before formal notice of abandonment was in fact given.

I am further of opinion that upon the facts, as they appear upon the