73. The Manchester Trust, Limited v Furness, Withy & Co. Limited (The “Boston City”) [1895] 2 QB 282 and [1895] 2 QB 539

Bill of lading – time charterparty – master’s authority

The facts

The vessel loaded coal at Cardiff to be carried to Rio de Janeiro.

The vessel was on time charter and the bill of lading was signed by the master. The goods were described as being shipped “for the account” of the charterers.

The time charter contained the usual employment and agency clause, placing the master and crew at the disposal of the charterers. In signing bills of lading, the master was expressly constituted the agent of the charterer.

The charterer discounted the bill of lading and thereafter diverted the ship to Buenos Aires in fraud of the endorsee who sought to hold the owner liable on the bill.

Findings

Mathew J found that the endorsee, as a third party, was entitled to rely on the fact that the master is, in the ordinary course, the agent of the owner. He held the owner liable.

The court declined the invitation to fix the endorsee with constructive notice of the mandate in the charterparty despite the express reference to the charterparty in the bill of lading. The court pointed out that the negotiability of the bills depended on the liability of the owners. In the ordinary course, a third party takes a bill knowing that delivery is backed up by the real security of the ship.

The Court of Appeal upheld these findings.

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