This section is from the book "The Law Of Contracts", by Theophilus Parsons. Also available from Amazon: The law of contracts.
An owner of a ship, in possession of her, is liable for all supplies furnished, and all repairs made, and all contracts made, by his authority, for the benefit of the vessel. But the question has frequently arisen, when and how far mortgagees are thus liable.
A mortgagee who neglects to take possession, unless protected * by some statutory provision, may have his title defeated by a party who acquires a right to the ship honestly, and in ignorance of the mortgagee's title. (n) But if he takes possession, and, still more, if besides having taken possession, he takes out a new register in his own name, or does any act which may be regarded as giving public notice that he is owner, he then makes himself responsible as an owner. (o) But if he takes possession he is not liable for necessaries ordered by the master, if it is clear that the master did not order them as his agent. (oo)
If he does no such acts, and takes no actual possession, and is still protected in his title by record or statutory provisions, he has not then such liabilities as spring only from actual possession.
The general rule must be, that a mortgagee who is not in possession, is not liable for supplies or work rendered to the vessel; (p) but he may of course make himself so liable by a bargain, (q) and he will be held to have made this bargain if he authorized the credit to be given to him personally. But not by the mere fact that he is benefited by such supplies or repairs.
The same rule applies to persons who hold a ship as trusteess (qq)
 
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