C. A. 1905 LAW GUARANTEE SOCIETY V. appear to have made all due efforts to obtain information as to the destination of these ships, but they failed to do so. The mortgagors having conceived the intention of sending them on this hazardous adventure, they appear to have deliberately ND TRUST concealed that intention and to have framed the fictitious documents which were calculated to give a false impression as to the destination of the ships. Their object would seem to have been to prevent the mortgagees from interfering, well knowing that mortgagors, as between themselves and their Mathew L.J. mortgagees, are not entitled to enter into contracts which impair the security. It is contended that the mortgagors were authorized to enter into these contracts by the terms of the debenture trust deed; and for the purpose of that contention reliance is placed upon clause 4, by which the mortgagors are empowered to employ the ships in the business authorized by their memorandum of association, which, it is suggested, would include their employment as contemplated by the charterparties. I cannot agree with that suggestion. I think the shareholders in the defendant company might have intervened, and prevented the ships from being so employed. Then reliance is placed upon clause 24. The object of that clause is that the mortgagees may be informed how the ships are being employed; for the purpose, among others, as it appears to me, of preventing any deviation from the proper course of business with regard to their employment; and also in order that the mortgagees may, if they think it necessary, require that the ships shall be fully insured against the risks involved in their employment. In the present case that information was withheld, and consequently the mortgagees were not in a position to require that the ships should be insured against such risks as were involved in these charterparties. The defendants cannot be heard to complain of that, because it was their own fault. I have no doubt that, if the mortgagees had been informed of the real position of affairs, when the charterparties were entered into, they would have declined to sanction these transactions, and they would never have gone forward. I think the mortgagees have not interposed too late, and that, in accordance with the general principles RUSSIAN BANK FOR FOREIGN TRADE. C. A. 1905 LAW GUARANTEE SOCIETY v. RUSSIAN BANK FOR FOREIGN TRADE. of law on the subject, they are entitled to the declaration which they claim. COZENS-HARDY L.J. I am of the same opinion, and have very few words to add. The main principle applicable in such cases is not disputed, being that which was laid down in Collins v. Lamport. (1) On the question of fact one cannot doubt that the security of the mortgagees was seriously imperilled by these charterparties. They can, therefore, only be supported as against mortgagees, who have taken possession, by something to be found in the special terms of the mortgage deed itself. I have carefully considered the terms of the debenture trust deed, and I can find nothing in it to derogate from what may be called the common law rights of mortgagees. Clause 4, in substance, only provides that, being shipowners, the mortgagors may carry on their business as such, and use the ships for the purposes of that business until the mortgagees take possession of the mortgaged premises. Then it is said that, though that may be so with regard to clause 4 taken alone, clause 24 gives special rights to the mortgagors. When that clause is looked at, it appears to contain nothing in derogation of the rights of the mortgagees, but, on the contrary, provisions for additional protection to them. It provides that proper books shall be kept by the mortgagors, and for the inspection of them by the trustees for the debenture-holders, and for the effecting of ordinary insurances on the ships, and that, if required, they shall be insured against war risks. The provisions of the clause seem to imply that it is the duty of the mortgagors to give the trustees all proper information, so as to enable them to exercise the discretion given to them, and to require the insurance of the ships against war risks if they think it necessary. Nothing of the kind was done in this case; but on the contrary there was studious concealment of what was being done. I cannot find anything in the debenture trust deed to put the plaintiffs for the present purpose in any other than the ordinary position of mortgagees. One word only as to the case of The Celtic King. (2) I do not think that (1) 4 D. J. & S. 500. (2) [1894] P. 175. C. A. 1905 LAW AND TRUST SOCIETY v. Barnes J. in that case intended to say that the doctrine of Collins v. Lamport (1) was generally applicable where the charterparty sought to be invalidated was made previously to the mortgage. There would appear to have been very special GUARANTEE circumstances in that case. The agreement there in question was entered into before the ship was built, at a time when neither the ship nor the mortgage upon it could have been registered. Possibly that may have been the reason why the learned judge thought himself justified in deciding that such Cozens-Hardy an agreement was under the circumstances invalid as against the mortgagees. Appeal dismissed. Solicitors for plaintiffs: Gribble, Oddie, Sinclair & Johnson. RUSSIAN BANK FOR FOREIGN TRADE. L.J. The Mode of Citation of the Volume of the Law Reports, commencing January 2, 1905, See under PRINCIPAL AND AGENT.. 46 APPEAL-From chambers-"Practice and pro- See PRACTICE. 2. 366 Married woman-Costs-Separate property See HUSBAND AND WIFE. 574 Poor-rate-Notice of objection-Time 89 Reference of action to master-Consent of parties See PRACTICE. 1. 368 Summary decision-Leave to appeal- APPORTIONMENT-Nuisance, Notice to abate -Apportion- ment of expenses - Time - 715 APPROPRIATION registered dentist AGRICULTURAL HOLDINGS-Covenant to stack |