U.S. Supreme Court
The Schooner Freeman v. Buckingham, 59 U.S. 182 (1855)
The Schooner Freeman v. Buckingham
59 U.S. 182
Under the admiralty law of the United States, contracts of affreightment, entered into with the master in good faith and within the scope of his apparent authority as master bind the vessel to the merchandise for the performance of such contracts, wholly irrespective of the ownership of the vessel and whether the master be the agent of the general or the special owner.
If the general owner has allowed a third person to have the entire control, management, and employment of the vessel and thus become owner pro hac vice, the general owner must be deemed to consent that the special owner or his master may create liens binding on the interest of the general owner in the vessel as security for the performance of such contracts of affreightment. chanroblesvirtualawlibrary
But no such implication arises in reference to bills of lading for property not shipped, designed to be instruments of fraud, and they create no lien on the interest of the general owner, although the special owner was the perpetrator of the fraud.
Though in such a case the special owner would be estopped, in favor of a bona fide holder of the bill of lading, from proving that no property was shipped, yet the general owner is not estopped.
The case is stated in the opinion of the Court. chanroblesvirtualawlibrary